Quotation of the Day…

by Don Boudreaux on November 10, 2011

in Current Affairs, Growth, Inequality, Myths and Fallacies, Standard of Living

… is from Steve Chapman’s column in Sunday’s Chicago Tribune:

Ten years ago, the richest person on Earth couldn’t buy a device that does what the iPhone does.  Today, anyone can get one free upon signing a two-year carrier contract.  Entry-level cars are vastly better in amenities and reliability than your father’s Cadillac decades ago.

Lifesaving and life-changing medicines and therapies once unknown are now commonplace.  Food costs a fraction of what it once did.  TV viewers used to have three channels to choose from.  Now they have hundreds.

Read the entire column.  (HT Dan Polsby)

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Chris Bowyer November 10, 2011 at 8:27 am

This is a point I’ve often made with others: it’s not just that things the rich could afford before are now accessible to more people. It’s often that the things we have today weren’t available at any price to anyone in the world a decade ago, because they didn’t even exist.

Darren November 10, 2011 at 1:44 pm

True, but omniscient government could have directed money to the necessary research and to the necessary production lines and we’d have even more that this.

Jon Murphy November 10, 2011 at 2:04 pm

Like flying cars?

Chris Bowyer November 10, 2011 at 8:42 am

I realize I’ve done nothing more than repeat the premise of the quote, but…well, it bears repeating.

Corey November 10, 2011 at 8:46 am

I agree with everything except this sentance. “Lifesaving and life-changing medicines and therapies once unknown are now commonplace.” The healthcare industry has been subsidised and coddled so much that the last significant innovation was penicilin. We should really stop romanticizing the medical establisment so much. They barely deliver even 1% of what they could if the state wasn’t propping it up.

Will November 10, 2011 at 12:28 pm

Are you saying that the only reason the medical establishment has done anything is because of the subsidies and could not do 1% of what they are doing with out them? If so, what about all the FDA regulations crushing innovations by adding so much to the cost of developing new drugs? I suspect there would not be the need for subsidies if it did not cost so much to create a drug and get it approved by the FDA.

brotio November 11, 2011 at 12:30 am

I think you misread Corey (or I did).

I took his point to be that, absent massive government interference, the medical establishment would have accomplished far more than we’ve seen over the last 75 years.

McBrideR November 10, 2011 at 4:31 pm

Penicillin became a commercial treatment in or around 1945. The development history is much longer. Since that time, numerous major innovations in medical care have occurred. Without doing any serious research, the polio vaccine (commercialized 1962), the heart defibrillator (first human defibrillation 1947, first closed chest in the 50′s, portable units 1960′s, portable biphasic units with much higher success rates in the late 1980′s), clot-busting drugs for emergency stroke treatment, and various non-invasive diagnostic techniques come immediately to mind.

It is not obvious to me what are the subsidies, regulations, and other state activities that are alledgedly “propping up” the “medical establishment”.

I would note that historicaly health care has had heavy state and/or organized religion based charity involvement, if not dominance. It is my impression that the current US model of largely for-profit health care is relatively modern.

It is also quite unclear how we could expect a 100-fold improvement by any measure if this alleged state support were eliminated.

Don’t get me wrong. It is clear the the US medical care system is inefficient and expensive on the average. But, belittling the advancements and offering a vague remedy that seems to ignore all of the current non-political discussion on the subject is not productive.

Nikolai Luzhin, Eastern Promises November 11, 2011 at 8:13 am

health care is absolute proof of my constant observation that governments create markets.

The current market is driven by the tax exemption of employer provided health care. Employers are not in a position to purchase health care themselves, so we have licensed companies, whom we call insurers but whom do not provide insurance, to perform this task.

There companies purchase health care at “wholesale” from hospitals, doctors, pharmacies, and others, and then resale the purchased health care to employers, marking up the price 20 to 25 %. The product is not insurance, for the insurers take no risk. The contracts are written so that all costs are passed through to employers (what health care insurer has recently failed due to underwriting risk?).

Governments of all types are the largest single purchaser of health care, with the most byzantine and stupid rules one can imagine. Local, county, and state employers are not in the same plans; such plans are not open to citizens, on could go on and on and on.

Because Obamacare attacked some of these problems large parts of its scores as deficit reduction by the CBO, which is why it will be very hard to repeal—-the deficit goes up.

Jon Murphy November 10, 2011 at 8:49 am

I still attest I am richer now that King Louis ever was

WhiskeyJim November 10, 2011 at 10:21 am

You need to go visit his house:)

Economiser November 10, 2011 at 10:33 am

I’d rather stay in the local Marriott. Versailles is very pretty but doesn’t have electricity, heat, A/C, telephones, television, etc.

Jon Murphy November 10, 2011 at 11:11 am

That, and if I want Jackson Browne to play in my apartment, I just have to push play. If I want bananas, I go to the store. If it’s too hot, I turn on the a/c. Too cold, the heat goes on. I can have all the light I want. I have hot water simply by turning a knob. I have more forms of entertainment than I can count. It takes seconds to send a greeting to my aunt in California.

Economiser November 10, 2011 at 11:25 am

No doubt. I imagine King Louis would trade half his kingdom for access to the modern internet.

nailheadtom November 10, 2011 at 12:03 pm

Jackson Browne isn’t playing in your apartment, funny noises are coming out of a machine. Heating and AC are part of an artificial environment erected to keep reality away. What’s the logical culmination of this technological development? Is it a construct where temperature, entertainment, all stimulus is pre-determined and regulated? How does one gain first-person knowledge of anything when cloistered in an envelope of self-chosen artifice? Aren’t we creating a faux universe for ourselves that rejects the realities faced by the less technologically endowed?

Jon Murphy November 10, 2011 at 12:04 pm

Thanks Tom…now I’m gonna feel cloistered in my apartment :-P

SaulOhio November 10, 2011 at 12:24 pm

nailheadtom: No. We are simply dealing with the realities by changing them. Its too hot, turn on the AC and it gets cooler. We are not evading the reality of high temperature. We are changing it.

nailheadtom November 10, 2011 at 12:48 pm

OK, you’re changing realities in the air conditioned space, I’ll give you that. But it’s still 95F or whatever outside. Two of the most important parts of being human are memory and experience. Without either of them, what’s the use? You might as well be a fungus. Surrounding yourself with what you perceive to be the optimum situation at a given moment eliminates the possibility of encountering unforseen, serendipitous stimuli that might be if not more congenial, at least more enlightening. For instance, people get on a cruise ship with air-conditioned cabins and American food in Long Beach that stops for a few hours in Cabo San Lucas and Mazatlan and think that they have somehow experienced Mexico. Or maybe they just went on a cruise. Anyway, the more techno-artifice that either stands between you and reality or actually becomes reality, the more you lose in experience. That’s one reason why television is such an unqualified evil. It gives the viewer the idea that he’s experiencing something, gaining knowledge about it, when the reality is usually far different.

Jon Murphy November 10, 2011 at 3:01 pm

Wow…now I’m going to be afraid to turn on my heat.

khodge November 10, 2011 at 10:27 am

No, we are not going to start referring to you as King Jon.

King Jon Murphy November 10, 2011 at 10:47 am

Done and done :)

WhiskeyJim November 10, 2011 at 10:26 am

It hardly requires mentioning on this forum why this phenomenon is driving health care costs up while it drives costs down in technology and other industries.

What is beyond my understanding is why it causes so much confusion about what to do about it. We could drive health care costs down 40% or more in less than a year. Then see where usage goes. And innovation.

William B November 10, 2011 at 10:55 am

“Entry-level cars are vastly better in amenities and reliability than your father’s Cadillac decades ago.”

That is simply not true. According to Wikipedia, power door locks became fairly common in 1956, and power windows in 1941, yet I still have to pay extra for these features on most entry- and mid-level American-made cars. This is most likely due to union wages, benefits and pensions nullifying the improvements in technology that have occurred since that time.

William B November 10, 2011 at 10:59 am

Imagine if computers still came with a floppy disk drive that you had to pay extra to upgrade to a CD-ROM, and still more to get a DVD drive…

khodge November 10, 2011 at 11:18 am

“Fairly common” is not really accurate in the context of your comment. They definitely were not available on any entry-level car until decades later and rare on mid-level cars.

William B November 10, 2011 at 11:22 am

Seems to me that society is being deprived of the benefits of technological advances that we would otherwise be able to enjoy. The point still stands.

Russell Nelson November 12, 2011 at 3:12 am

Ridiculous. I was born in 1958, and we didn’t have a car with power door locks until 1995 (I’m guessing). Power windows in 1941?? Absurd. What article are you reading?? I want to see the cites.

sym November 10, 2011 at 11:08 am

Yes yes this is all good, but it doesn’t matter. Rich(er) people still have more stuff and that’s all this is all about.

At the end of the day, #occupy/socialists/etc are enthralled by a really basic idea: getting something for nothing. Surely you can dress it up in all sorts of entitlements and moral sugar, but at the end of the day, it’s still something for nothing. Other people’s money.

This idea is so simple that even the most naive, stupid person can grasp it (and boy, do they!) and has been powerful enough throughout the (recent) history to kill tenths of millions of people and destroy hundreds of millions of lives. And, look, it still works. Hats off.

Fred November 10, 2011 at 12:28 pm

Envy sells.

Jon Murphy November 10, 2011 at 12:31 pm

Like hotcakes.

Russell Nelson November 12, 2011 at 3:15 am

If you listen to them, they sound pretty critical of mercantilism. So should the rest of us be.

muirgeo November 10, 2011 at 11:26 am

Yes and these advances occurred in almost exclusively in social democracies with absolutely NO contribution by ANY libertarian ordered societies….NONE!

Greg Webb November 10, 2011 at 11:32 am

George, that is a conclusion unsupported by any evidence, fact, or reality.

Russell Nelson November 12, 2011 at 3:15 am

This is muirgeo we’re talking about. She doesn’t bother with facts; she has no use for them.

Jon Murphy November 10, 2011 at 12:03 pm

How many of these inventions came from a central planner?

Fred November 10, 2011 at 12:36 pm

Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive
-Joe Biden

Randy November 10, 2011 at 12:50 pm

In other words, politicians like to take credit for good things that happen. So what else is new…

Also, most improvements aren’t “great ideas”, but rather, millions upon millions of small continuous improvements made by millions upon millions of specialists.

Anonymous November 10, 2011 at 12:56 pm

Yep. Al Gore invented the internet. LOL!

Jon Murphy November 10, 2011 at 3:01 pm

I’m guessing AL Gore also invented the iPhone

Nikolai Luzhin, Eastern Promises November 11, 2011 at 1:12 am

Atomic Bomb: mother of all inventions

Hydrogen Bomb

AK-47: What device has impacted human history more since WWII?

Maned Space Flight, Mankind’s flights to the moon

NASA’s space toys


Nuclear Reactors

Jet Engines and Airplanes (Germans, WWII)

Computer drive by software (Germans, WWII)

Greg Webb November 11, 2011 at 8:40 am

Yep. And all of these devices were the ideas of people who had been conscripted or forced into government service because of war, which is caused by silly politicians holding government office. No one knows what they would have come up with had they been left alone to pursue other activities. Without a doubt, they would not have created devices designed to kill other people.

Jon Murphy November 12, 2011 at 4:59 pm

Actually, Nik, only one of those things can be attributed to a central plannner: Space flight & NASA (I’m grouping the two into one for simplicity’s sake).

The atomic & hydrogen bombs were responses to demand for more powerful weapons.

The AK-47 was response to the need for a multi-use weapon.

The Internet was developed in response to need for faster communication, both civilian and military.

Nuclear power was the natural development from the atomic bomb.

Jet Engines were response to need for faster planes.

In no case (except space flight) did the government say “We want the Internet” or “We want the Atomic bomb.” There was a demand, and the market responded to it.

On a side note, if your examples of centrally planned innovations are weapons of war, you may want to reconsider your position.

McBrideR November 10, 2011 at 12:28 pm

Anybody find the map to which Chapman refers in the beginning of his article? I didn’t get there in the time I was willing to devote to it using the ThinkProgress website..

IzJakeErika November 10, 2011 at 12:38 pm

How about someone calculating how far back we have to go to find that the richest person in the US at that time was worse off than a poverty level person in the US today? In other words, Gates was probably the richest person in the US twenty years ago. Is today’s poor person better off than he was then, considering what Gates could purchase then and what a poor person could purchase today?
My own unscientific guess is that today’s poverty level person is better off than the wealthiest person of twenty years ago.

Fred November 10, 2011 at 12:46 pm

Some say the lifestyle of the poor exceeds the lifestyle of the middle class of thirty years ago.
For example the lifestyle of today’s poor is better than the middle class of 1980, and the lifestyle of the poor of 1980 was better than the middle class of 1950. And so on and so forth.

Nikolai Luzhin, Eastern Promises November 11, 2011 at 1:19 am

from a recent Forbes

Our price index of luxury goods rose 4.5% versus 3.6% for inflation.

ITEM / 2010 PRICE / 2011 PRICE / % CHANGE
COAT / $200,000 / $240,000
Natural Russian sable, Maximilian at Bloomingdale’s +20%

TRAVEL BAG / $1,225 / $1,460
Keepall Bandouliere 50, Louis Vuitton +19%

Article Controls

SHOES / $4,187 / $4,917
Men’s black calf wingtip, custom-made, John Lobb, London +17%

THOROUGHBRED / $275,551 / $319,340
Yearling, average price, Fasig-Tipton Saratoga summer select sale +16%

HELICOPTER / $13,000,000 / $14,800,000
Sikorsky S-76D, VIP options +14%

WATCH / $17,400 / $19,800
Patek Philippe classic men’s in gold (Calatrava), alligator strap +14%

FACE-LIFT/ / $17,000 / $18,500
Well-recognized and experienced facial plastic surgeon, N.Y. +9%

CATERED DINNER / $6,828 / $7,374
Serving 40, Ridgewells, Bethesda, Md. +8%

Will November 10, 2011 at 12:49 pm

This entire debate about technology, progress, and standard of living makes me think of the Back to the Future movies. When he traveled to the 1950s in the first movie, the neighborhood he grew up in was the next great luxury neighborhood to the people in the fifties, but by the time he was living in the neighborhood in 1985, it was your typical lower middle class home. The same thing was true in the second movie with the house he found out he was going to be living in 30 years in the future. If you do the math, we are only a few years away from the future as described in Back to the Future II. He traveled 30 years into the future from 1985. If you watch the movie most of the technology they were only dreaming of is either a reality or already outdated. Nobody on the left understands that standard of living should be the measure to which we judge whether or economic system is the best their is. Just because rich get richer, even if it is faster than income of everyone else grows, it does not matter if everyone’s income is going up. That is something I think most people would miss in the back to the future movies and reality has confirmed as being true.

Nikolai Luzhin, Eastern Promises November 10, 2011 at 3:18 pm

And, what is the point of this observation?

Sean W. Malone November 10, 2011 at 9:32 pm

Fyi, that quote is actually a passage from Matt Ridley’s book, The Rational Optimist. Literally just read it on the train today.

McBrideR November 10, 2011 at 11:23 pm

Well, the quote is definitely in the Trib article that Don cites. Perhaps Chapman stole it from Ridley, perhaps Ridley just said something similar. I’ve not read Ridley’s book. I’ve seen a number of similar observations, but I’m afraid that I can’t cite them off the top of my head.

Am I the only one that actually reads the articles that get referenced on this blog site?

Jon Murphy November 11, 2011 at 7:57 am

I think this observation and variations have been around for a while.

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