I have a question that I hope someone out there can answer. At the end of Chaper 3 of TMC, ESR writes: "Lowering the cost of a good tends to increase, rather than decrease,total investment in the infrastructure that sustains it. When the price of cars goes down, the demand for auto mechanics goes up -- " This just has me confused, and seems to be wrong. If this is basic economy theory then I'll shut up and go away. How does this follow? In the old days, cars were cheap and there were LESS mechanics, no used car dealerships, etc. People used cars for a couple of years and disposed of them to buy new ones. You could do that - they were cheap. As cars became expensive, all that infrastructure grew up to support used cars and keep cars running longer. Am I missing something? Look at TVs and VCRs - there used to be shops where you could get them repaired. Now there aren't - because they are CHEAP. This should read "Lowering the cost of a good *eliminates* the infrastructure that exists to support it".
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I have a question that I hope someone out there can answer. At the end of Chaper 3 of TMC, ESR writes:
"Lowering the cost of a good tends to increase, rather than decrease,total investment in the infrastructure that sustains it. When the price of cars goes down, the demand for auto mechanics goes
up -- "
This just has me confused, and seems to be wrong. If this is basic economy theory then I'll shut up and go away.
How does this follow? In the old days, cars were cheap and there were LESS mechanics, no used car dealerships, etc. People used cars for a couple of years and disposed of them to buy new ones. You could do that - they were cheap. As cars became expensive, all that infrastructure grew up to support used cars and keep cars running longer. Am I missing something?
Look at TVs and VCRs - there used to be shops where you could get them repaired. Now there aren't - because they are CHEAP.
This should read "Lowering the cost of a good *eliminates* the infrastructure that exists to support it".
- Brannen