| That's a hell of a question. First of: compared to when? If your baseline is, say, 1870 or 1770, life is far cheaper in terms of hours of work required to purchase basic goods. There's a long literature of basic worker incomes and expenditures, reading of which is fascinating. If the question shifts to, say, 1950 - 2000, and your focus is the US or Western Europe (and we're considering a majority ethnicity male), I'd argue that life may or may not have gotten more expensive (though I think it has), but it's become tremendously less stable. Lifetime employment means not having to worry about losing your current job, finding a new one, and supporting yourself and dependents in the meantime. Doing all of that on a barely-sufficient income (e.g., minimum savings), or worse, an insufficient income, becomes quite challenging. Emma Rotshchild (yes, one of those Rothschilds), a Smith scholar, notes that his liberal philosophy isn't just philosophically liberal but materially liberal. Having income surplus to needs allows making choices. Or, as Eric Ravenscraft put it at Lifehacker: "When you’re broke, the only freedom you have is to make bad decisions." He explains that: Paying rent isn’t really a “good decision” so much as a responsibility. You don’t get a pat on the back for paying your rent. It’s great when you’re able to do it—you can’t always be sure you can when you’re poor—but it’s just treading water. You can’t choose to invest wisely or save for emergencies. http://lifehacker.com/feeling-poor-doesnt-stop-once-you-make... Putting yet another spin on this: a life in which you've optimised every decision and every action is one in which your only freedom, your only option, your only inconsistency, in any way, is something which will make your situation worse. I can't think of a better argument for why a fully-optimised, fully-efficient life or existence would be hell. Back to your question. There are multiple elements of this: 1. What are market dynamics, and who has negotiating or bargaining advantage? Adam Smith notes that the upper hand lies with "masters" (employers), not labour. 2. What is price, and how does it relate to cost and value (and what's value, while we're at it) as well? To what extent are these givens, and to what extent are they fictions of market, ideology, or political strengths? 3. The Jevons Paradox. Another dilemma of efficiency is that making something more efficient is the same as reducing its cost, all else constant. Which means you'll increase demand, either individually or in aggregate. The things which have become cheaper (e.g., clothes) we now buy far more of (a closet full, rather than your work-day wear, and a suit for religious service). 4. Social signalling. Thorstein Veblen's contribution -- expensive information costs (both sending and receiving) make social signalling through appearance and consumption critical. 5. Price dynamics of wages, products, extractive materials, and rents. In particular, whilst some prices are drivers (higher-cost raw materials increase market prices), others follow general market prices (higher wages create higher rents). Unless supply of rented goods or services is fungible (e.g., Bay Area housing), well, you know what happens. |