Fine details of economic growth

A few days ago I posted about Peter Thiel’s off-base criticism of the Boskin Commission’s proposed adjustment of the Consumer Price Index to improve new products and quality.

I didn’t address his point that we’re not seeing the big technological changes he hoped for as a young man.

I think he misses the small picture. By that, I mean that he misses the thousands of ways that life is improved because of new products that are only marginally better than old products. Donald Boudreaux has a metaphor for this: the prosperity pool.

EconLib, April 4, 2016, in an article titled “The Prosperity Pool,” Don wrote:

These are [Pool] Noodles are a wonderful and wonderful—but often overlooked—characteristic of a modern, thriving market economy. The characteristic is that such an economy is essentially the result of many small innovations, each of which is not very significant but whose enormous accumulation creates our unprecedented modern prosperity.

Another quote:

Take a close look around your home. There, you’ll find rolls of disposable paper towels that make cleaning your kitchen even easier. Towel rolls were not invented until 1931. Moreover, unlike Arthur Scott’s original paper towels, today’s towels are two- and sometimes three-ply, and are textured and embossed—all to increase their strength and absorbency. How poor would you be if your paper towels were flat and one-ply? In fact, how poor would you be if someone had never invented the disposable paper towel? Somewhat but not much.

Continue looking around your home. The can of soup in your pantry can be easily opened with a simple pull on the pull-tab which is now a common feature on canned goods. (When I was a kid, opening a can always required a can opener.) And its contents are ready to eat, unlike decades ago when to make edible soup from a can, the consumer had to add water. Of course, these days, you can heat your soup in a microwave oven in a fraction of the time it takes to heat it up using your stove burner.

Don’s article is worth reading or re-reading.

Leave a Reply

Your email address will not be published.