Lion of the Blogosphere

Cost disease

Greg Pandatshang provided a link to a blog post by Scott Alexander about cost disease. This is the best link I’ve received in a long time, I urge everyone to read the blog post.

This is a topic I’ve touched on many times before, but I didn’t realize it was called “cost disease,” nor did I link so many related examples together.

For example, I’ve previously written about how Governor Chris Christie had to cancel the project to build a new train tunnel under the Hudson River because New Jersey couldn’t afford it. Yet somehow, we were able to afford to build a tunnel in 1908, which was 104 years ago.

I previously pointed out that in 1934, the Empire State Building was completed in only 410 days for a cost of $372.8 million in 2012 dollars (and $24.7 million in 1930s dollars). It cost $3.8 billion to build the Freedom Tower and it took 8 years to complete. The only other building in Manhattan taller than the Empire State Building is 432 Park Avenue, which cost $1.2 billion to build, but only has 15% of the floor space. So when you look at price per square foot, 432 Park Avenue is something like 21 times as expensive.

I believe that declining IQ is one factor that Scott Alexander missed.

I believe that another key factor is value transference, combined with inflation being a lot higher than the reported. What that means is that wages have not actually held steady, as reported by conventional inflation reporting, but perhaps real wages declined by 50%. The value created by workers, which used to go to the workers, is now being transferred to the top 1%.

And then there’s the hypothesis that the United States has moved into a post-scarcity economy, and no one really knows what happens to prices in a post-scarcity economy. Because people spend most of the money they earn, falling prices for things like manufactured goods and food cause the prices of other things to go up, creating the illusion of scarcity where none actually exists.

Written by Lion of the Blogosphere

May 30, 2017 at 6:29 pm

Posted in Economics

106 Responses

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  1. “I previously pointed out that in 1934, the Empire State Building was completed in only 410 days for a cost of $372.8 million in 2012 dollars (and $24.7 million in 1930s dollars). It cost $3.8 billion to build the Freedom Tower and it took 8 years to complete.”

    i loved this example. one of my favorite posts from your early writing. made me stop and think.

    rivelino

    May 30, 2017 at 6:33 pm

    • i’m not sure that’s all that insightful of a comment. There were insurance dollars to be paid out over the WTC site. there was a design competition with a lot of terrible ideas. People’s “feelings” had to be considered. lots of worker safety concerns today – 5 fatalities building the original empire state.

      Not to mention, there’s a very real possibility that NYC didn’t really need all that new office space. Yes we lost WTC but the securities industry changed, jobs were shifted to other locations etc. So new WTC is competing with older but functional offices. So why rush to put it on the market.

      I would also argue – pick either building in brand new condition – empire state vs WTC. Which would you rather work in. I suspect other than the 9-11 stigma, on quality of space, 50-to-1 workers would prefer WTC style building.

      ralph

      May 30, 2017 at 9:52 pm

      • The WTC shouldn’t have been built in the first place, let alone by the Port Authority. It’s a huge, continuing scam that commuters on the George Washington Bridge pay $15 tolls to pay for the WTC, when the tolls were established initially to pay off the bonds on the GW Bridge, which has been paid off for years (and the tolls used to be $4).

        Dave Pinsen

        May 31, 2017 at 12:26 am

      • There’s also the extreme security measures. The first 20 floors are a concrete base so the building can survive a truck bomb, and there is an extensive gas filtering system to defend against gas attacks. The entire building is constructed to a much higher standard than any other skycraper ever built.

        alex

        May 31, 2017 at 12:56 am

      • People’s “feelings” had to be considered. lots of worker safety concerns today – 5 fatalities building the original empire state.

        Safety and efficiency coincide. The Empire state building was still riveted. The rivets were heated red hot in a furnace and thrown at the riveter who had to catch them and hammer them in place quickly. Welding, especially electric arc welding is faster, safer, cheaper and provides better joints. Crane operators use cameras and radio communications. There is pre-fabrication.

        Similar things happened in factories and mining. Automation, mechanization and better, electronically controlled machines reduce human error, fatigue and therefore accidents and improve efficiency and reduce cost at the same time. Many safety measures like hard hats have no downside and could have been introduced much earlier. So the notion that cost increased because of safety is nonsense. Also, the workers back then did not engage in accurate cost-benefit analysis and proper risk management. They did not charge enough for their dangerous labor.

        Construction, education, production, health care and many other things should really be much cheaper, not more expensive. So Scott Alexander’s graphs actually underestimate the problem.

        Contrarian

        May 31, 2017 at 2:58 am

      • “the GW Bridge, which has been paid off for years (and the tolls used to be $4).”

        The original toll in the 1930s was 50 cents. By 1975 it was only $1.50. Here’s a toll history:

        http://www.nj.com/traffic/index.ssf/2014/12/tolls_going_up_at_bridges_tunnels_to_nyc_a_look_at.html

        peterike

        May 31, 2017 at 9:14 am

      • “The WTC shouldn’t have been built in the first place, let alone by the Port Authority. It’s a huge, continuing scam that commuters on the George Washington Bridge pay $15 tolls to pay for the WTC”

        PATH is what really sucks up Port Authority revenues, and so does the Port Authority Bus Terminal to a lesser but still considerable extent.

        Peter

        ironrailsironweights

        May 31, 2017 at 9:27 am

      • Yes, in general, the tolls on bridges subsidize the costs of public transportation. They probably made a profit on the WTC in the long run (although I am welcome to being proven wrong). A lot of rich-sounding finance-industry companies rented office space there.

      • >>The WTC shouldn’t have been built in the first place, let alone by the Port Authority. It’s a huge, continuing scam that commuters on the George Washington Bridge pay $15 tolls to pay for the WTC, when the tolls were established initially to pay off the bonds on the GW Bridge, which has been paid off for years (and the tolls used to be $4).<<

        For those with modest income, bridge and tunnel tolls have become increasingly burdensome, to the point that they have to consider declining or accepting a job based on how much in tolls they have to pay every day. For others, it doesn't matter.

        One of my former colleagues, owned his own company, didn't give a damn about tolls or parking. He would drive in everyday from a nice part of Queens, go through the Midtown Tunnel and park at an expensive garage right next to his office, near 42nd and Lex. (he always drove a leased Mercedes, traded it in every 3 years). I suggested to him once that he could save a little money by at least taking the 59th street bridge. He looked at me with puzzled contempt.

        Daniel

        May 31, 2017 at 4:46 pm

      • The tolls on the bridge should pay for maintenance on the bridge, now that it’s paid off, and nothing else. They shouldn’t have been diverted to pay off bonds on the original WTC. It’s a complete ripoff, as is the Port Authority in general. There are Port Authority cops making $250k per year. It’s a wealth transfer from commuters, most of whom are in precarious private sector jobs they can get fired from at any time, to government employees and union contractors with safe, high-paying jobs.

        There’s more at work there than cost disease. There are agency conflicts at work.

        IIRC, one of the original liberal arguments for generously paying government workers was that it would lead to higher pay for similar jobs in the private sector. That’s a complete fail, as you can see, for example, by comparing police salaries with those of private security guards. Similarly, one argument for generous benefits for government workers was that they were giving up potentially higher incomes in the private sector. That’s false too.

        Dave Pinsen

        June 1, 2017 at 4:09 am

  2. Progress is exciting, decay banal. One cost disease is credential inflation e.g. nursing used to be a 2-year degree now it’s 4 or more. Physical therapy used to be a BS degree now it’s a MS degree.

    I’ve wondered when this began. A data point is when Personnel became Human Resources.

    JW Bell

    May 30, 2017 at 7:03 pm

    • Physical therapy is a doctorate degree now.

      Stealth

      May 30, 2017 at 7:27 pm

      • Not all PT’s are doctors though. Most aren’t.

        I broke my arm in the 70’s as a kid and the only physical therapy I got was sitting at home in a bathtub with warm water and moving my arm every night for a few weeks until I could bend my elbow and move my wrist. Now that would cost 1000.00. It worked well.

        ttgy

        May 31, 2017 at 9:55 pm

      • I broke my arm in the 70’s as a kid and the only physical therapy I got was sitting at home in a bathtub with warm water and moving my arm every night for a few weeks until I could bend my elbow and move my wrist. Now that would cost 1000.00. It worked well.

        You didn’t miss much. I broke my collar bone as a kid and got no physical therapy either.

        Had my rotator cuff repaired a couple of years ago, and got PT for it. The most useful part of that was the massage/manipulation by the therapist, but you got about 5 minutes of that, and the rest of the time you were doing exercises you could do in a gym, plus 5 minutes of ice and electrical stimulation. And that just gets you your range of motion back. You’ve got to hit the gym after to get your strength back.

        Dave Pinsen

        June 1, 2017 at 4:12 am

    • my mom is a nurse with an associates earned in 1996. her hospital required new nurses to have a bsn about ten years ago. i asked her what the difference in their jobs are, and she said there isn’t one.

      • There has been a steady dumbing-down of college degrees at all levels. Your mom’s Associate degree is probably the equivalent of today’s Bachelor degree.

        The same has happened in engineering. Once upon a time only a Bachelor of Engineering was needed to sit for the licensing examples (even that only happened in the 1970s), but now there is a strong movement to require the Master of Engineering. The main reasons are that so many technology courses have been stripped out of the modern BSE and the total hours required have been reduced. A ME in 2017 merely gets you back to 1967.

        There is also the issue of creeping credentialism. Prior to the 1970s, you could sit for the EIT and PE exams without a degree if you had sufficient apprentice experience under a licensed engineer.

        bob sykes

        May 31, 2017 at 7:24 am

      • In France being a public school teacher required only a high school diploma in the 1970s. Then it was a licence (+3) and now a master (+5).

        What’s impressive is that new school teachers are dumber than before.

        Thomas

        May 31, 2017 at 7:56 pm

    • Physical Therapy is such a bogus “profession”, and it costs a ton of money to use.

      My brother had a double hip replacement surgery, so naturally a physical therapy was recommended and prescribed. All the therapist did (for 6 weeks or so) was come around 3 times per week and walk him around the living room for 20 minutes. That’s it. What a scam. I’ll bet the physical therapist was easily earning six figures.

      Daniel

      May 31, 2017 at 4:52 pm

      • If you think physical therapy is a scam, wait until you see mental therapy in action.

        You spend a hundred bucks an hour for a few fortune-cookie insights that are almost always inferior to, and always no better than, those you can find in philosophy, history, religion and old folk tales

        Thomas

        May 31, 2017 at 7:53 pm

      • >>If you think physical therapy is a scam, wait until you see mental therapy in action.

        Most honest psychiatrists have given up on the talk therapy/psychoanalysis model. It doesn’t work. They prescribe pills, and the pills are mostly ineffective. I have been to around 5 psychiatrists and been on 4 different pill regimens (I have even tried Ketamine infusion therapy). Currently, I’m on Lexapro. Has any of it worked? Who knows. I’m still fairly miserable most days, and have been so for over 40 years. I would like to try this micro-dosing of LSD, but of course it is almost impossible to get a hold of real LSD. Sad to say, but the best drug regimen has been booze, until I wake up the next morning with a hangover. Psychiatry sucks.

        Daniel

        May 31, 2017 at 8:51 pm

      • I broke my arm in the 70’s as a kid and the only physical therapy I got was sitting at home in a bathtub with warm water and moving my arm every night for a few weeks until I could bend my elbow and move my wrist. It worked well.

        No therapist was needed and no money was spent.

        Now that would cost 1000.00.

        The exercises can be helpful, but once you learn them you can do them at home without going to the office in many cases. I am sure there are exceptions where people really need to go to an office and have someone help them though.

        ttgy

        May 31, 2017 at 10:02 pm

      • “Most honest psychiatrists have given up on the talk therapy/psychoanalysis model. It doesn’t work. They prescribe pills, and the pills are mostly ineffective. I have been to around 5 psychiatrists and been on 4 different pill regimens (I have even tried Ketamine infusion therapy). Currently, I’m on Lexapro. Has any of it worked? Who knows. I’m still fairly miserable most days, and have been so for over 40 years. I would like to try this micro-dosing of LSD, but of course it is almost impossible to get a hold of real LSD. Sad to say, but the best drug regimen has been booze, until I wake up the next morning with a hangover. Psychiatry sucks.”

        Same experience, only booze truly works. I try to steer clear of becoming an alcoholic, though. I only drink when my mood really needs a big lift, not as a habit.

        Thomas

        June 1, 2017 at 12:24 am

      • Most honest psychiatrists have given up on the talk therapy/psychoanalysis model. It doesn’t work. Most honest psychiatrists have given up on the talk therapy/psychoanalysis model. It doesn’t work.

        Oh, that’s not why most psychiatrists have stopped doing talk therapy. They’ve stopped because they can make more money doing 3 or 4 15-minute med checks in an hour than they can doing an hour’s worth of talk therapy. The Last Psychiatrist used to write about this.

        They prescribe pills, and the pills are mostly ineffective. I have been to around 5 psychiatrists and been on 4 different pill regimens (I have even tried Ketamine infusion therapy). Currently, I’m on Lexapro. Has any of it worked? Who knows. I’m still fairly miserable most days, and have been so for over 40 years. I would like to try this micro-dosing of LSD, but of course it is almost impossible to get a hold of real LSD. Sad to say, but the best drug regimen has been booze, until I wake up the next morning with a hangover. Psychiatry sucks.

        Ketamine! Amazing. I saw a friend of a friend stoned out of his mind on that in a Manhattan club back in the early oughts. I think that used to be used to tranquilize horses or something.

        Dave Pinsen

        June 3, 2017 at 4:41 am

  3. Since Lindsey Graham has deemed the Kushner story to be Fake News, NeoGaf is now claiming that Graham is *also* compromised by Russia. Exactly how deep does this conspiracy go?

    Please see this hysterical article from Brian Beutler: https://newrepublic.com/article/142937/republicans-helping-trump-destroy-uss-global-credibility

    Sane liberals like Beutler and the Vox crowd are realizing that the party is going to stand by Trump, or at least is not going to reign him in.

    Otis the Sweaty

    May 30, 2017 at 7:05 pm

    • “Exactly how deep does this conspiracy go?”

      Well, it could have included Comey. But now that he’s at odds with Trump…

      destructure

      May 31, 2017 at 1:01 pm

    • >>NeoGaf is now claiming that Graham is *also* compromised by Russia

      And in the case of Graham, what do you think NeoGraf means by “compromised”? The left is al over anybody who make the slightest “homophobic” statement, even if done so inadvertently, but they will not hesitate to draw out the accusation when it suits them.

      Daniel

      May 31, 2017 at 8:54 pm

  4. 1) More regulations. Security regulations in construction are insane. It slows down work and increases bureaucratic costs.
    2) Minimum wage + higher rental costs for workers that must be covered.
    3) Lower intrinsic motivation and work ethic. In the distant past, workers probably worked more out of a sense of religious duty or patriotism than just for the payroll.

    I don’t believe declining IQ played a role or is even real for the time period we’re speaking about.

    Thomas

    May 30, 2017 at 7:12 pm

    • The IQ of the people actually doing the work has likely declined a great deal. That German or Swedish construction worker in the 1930s had kids that became lawyers and magazine editors. He was replaced by Italians and Poles who were replaced by Mexicans and Yakovs Tajik or whatever. Down down down.

      Peterike

      May 30, 2017 at 8:47 pm

    • There is a decline in IQ, primarily caused by relaxed standards about who can perform a given job. The effect of this has been to degrade the quality of most goods, trades, and services, while imposing a greater temporal and financial cost on the higher achievers of society in order to virtue signal.

      Panther of the Blogocube

      May 30, 2017 at 10:52 pm

  5. I believe that another key factor is value transference, combined with inflation being a lot higher than the reported. What that means is that wages have not actually held steady, as reported by conventional inflation reporting, but perhaps real wages declined by 50%. The value created by workers, which used to go to the workers, is now being transferred to the top 1%.

    I’d read Scott Alexander’s Cost Disease post, but the quote above doesn’t fit with your NYC building examples. I’m pretty sure construction workers in NYC today are getting paid more, in constant dollars, than the ones who built the Empire State Building during the Great Depression.

    A big difference between then and now is there are more intangible costs up front: environmental assessments and legal wrangling. Part of that is unavoidable. There was a major legal dispute between the leaseholder of the WTC site and the Port Authority that had to be resolved before the Freedom Tower could be built, for example.

    Dave Pinsen

    May 30, 2017 at 7:33 pm

    • I’ve read that Germany has been having a lot of problems with building its infrastructure in a cost effective manner in recently. The Green Party is very strong in Europe, especially Germany and has gotten pretty good at tying up infrastructure projects in years of litigation.

      In reference to the United States, there is a direct correlation between Blue States, the cost disease and overall poor state of infrastructure (especially NJ): http://www.zerohedge.com/news/2017-03-24/sad-state-americas-infrastructure-one-infographic

      Just look at that map. The Northeast is really, really bad.

      JerseyGuy

      May 31, 2017 at 4:43 pm

  6. Main cause is inflation being much higher than reported.

    Out of control government spending with debt on everything including pensions (which must be under captured in wages somehow) is a cause.

    Regulations are also much tighter

    Wages for these workers are doing fine. I think people running tunnel boring machines might out earn the lion. And if they could bore more holes they would.

    Ron

    May 30, 2017 at 7:55 pm

  7. Administrative bloat. 40 years ago the person who knew the status of your work, served as intermediary between other departments, and kept you on track was your secretary. Your boss generally had lots of experience and technical knowledge, and could help you with your work.

    Now people who do secretaries’ jobs are called “managers” or “project managers” and they are paid generous salaries to simply go around repeating “what is the status of THIS, what is the status of THAT.” They’re all “that’s not MY job” if you ask for pointers or get stuck.

    Fiddlesticks

    May 30, 2017 at 8:03 pm

    • Not so sure about that. Excel, Word, and Powerpoint replaced a lot of admin staff. And whole office trades like typesetters and typists are gone.

      Dave Pinsen

      May 31, 2017 at 12:29 am

      • the type of employees who would be typists or cashiers getting some extra clothes and help-parents money for a few years after high school – essentially a temp job and paid commensurately – now work as degreed, student-loaned “benefit claims administrators,” “mortgage processors” “customer excellence specialists” or “project managers” who are paid as full-time careerists, despite having poorer reasoning/writing skills than their HS-educated predecessors.

        Fiddlesticks

        May 31, 2017 at 10:47 am

      • No, Fiddlesticks is right. He wasn’t talking about typesetting, etc. There’s bloat in engineering organizations, with overpaid people doing non-technical work… work you don’t need an engineering degree for.

        I assume it’s because engineers are generally too dorky to act in their own defense, even when they know they are being swindled. As long as I don’t lose ALL my dignity, I’m okay, right?

        Lowe

        May 31, 2017 at 10:55 am

      • No, Fiddlesticks is right.

        That typists and typesetters (and file clerks and human calculators) were part-time workers? Nonsense. There were several workers doing what one Excel spreadsheet does now.

        Dave Pinsen

        June 2, 2017 at 12:51 am

  8. “And then there’s the hypothesis that the United States has moved into a post-scarcity economy, and no one really knows what happens to prices in a post-scarcity economy. ”

    This makes no sense.

    A post-scarcity economy would mean that everything is really cheap. If things are scarce, prices would be high. If there was a glut (post-scarcity), vendors could not charge much and prices would go down.

    High prices are the opposite of post-scarcity.

    Dan

    May 30, 2017 at 8:05 pm

    • Many things are relatively affordable to anyone, with the exception of housing in safe cities that matter, which is the only thing that counts as “scarcity”.

      JS

      May 31, 2017 at 12:55 am

  9. I think that a lot of “cost disease” comes from the increase in litigiousness, fear of lawsuits, more safety regulations. I’m guessing fewer people died building the Freedom Tower than the Empire State Building. That would be partly due to technology and partly to the fear of lawsuits.

    Glossy

    May 30, 2017 at 8:14 pm

  10. i read scott’s post earlier this year and was floored. this, btw is why healthcare will never be as cheap as it was in the past, or what other countries have. the inflation already happened. the best we can do is slow down the growth rate.

    • This is wrong. If enough useless immigrants were kicked out of our country, and hospitals were legally allowed to turn people away, then medical costs would go down.

      Lowe

      May 31, 2017 at 11:01 am

      • Overall spending would decline, but prices would still rise. Other countries have lower costs because medical care providers are forced to negotiate with fewer buyers (monosopy).
        We’d get the same result with antitrust exemptions on the demand side.

        Dsgntd_plyr

        June 1, 2017 at 9:15 am

  11. “What that means is that wages have not actually held steady…”

    Costs are rising, but wages are not even close to keeping up.

    Higher education provides a great example. The cost of a university education is going through the roof, but you probably won’t believe how poorly universities pay the people teaching their classes. They employ as many part-time instructors as possible and pay them per class. In fact, most teaching is done by grad students, contingent employees, and adjuncts. Only about a quarter of the teachers at American colleges are traditional professors with regular salaries and benefits.

    The comment below is cut and pasted from a thread on the “100 reasons not to go to grad school” blog. The amounts listed are what people are paid for teaching one course. Full-time is usually 3 courses per semester. You do the math.

    http://100rsns.blogspot.com/2014/10/94-it-warps-your-expectations.html

    ***

    AnonymousMay 11, 2017 at 11:28 AM
    Chronicle Data is amazing. It’s where people employed to teach at colleges can anonymously report on their total compensation and leave comments about their jobs. If you want to get depressed, read the adjunct reports.

    Adjunct – Foreign Language
    September 24, 2014
    $6,931
    University of California at Santa Cruz

    I have a doctorate in my field and have not been able to find a full-time position. I work at 4 different institutions. Last year I taught 9 courses. Last Spring I had a schedule where I drove 4 hours a day and taught for 6. This is definitely not what I expected coming out of graduate school.

    Adjunct – General Studies
    September 30, 2013
    $1,650
    Concordia University at St. Paul

    The salary has remained the same since I began in 2008. Although one year I was able to teach 10 courses, this year will only be 2 courses. Each course requires about 12 – 16 hours of time per week. Even if I could get 10 courses, the time commitment is exhausting and the total salary (with no benefits whatsoever) would be $22,000 for the year. Prior to this program I taught at a different local school that paid $1350 total for a 3-credit undergrad course (not per credit!), taught weekly in-person, taking about 16 hours a week to prepare, teach, and grade. That school still pays that wage. It is incredibly difficult to explain why it is simultaneously discouraging to not be able to get more classes, and not wise to try (given the effort and salary). For the record, I have a PhD from a Big Ten school, JD, have published 3 books, and have 20+ years corporate and law experience.

    Adjunct – Philosophy
    March 8, 2013
    $3,072
    City University of New York John Jay College of Criminal Justice

    Taught at John Jay for 6 years. I was generally treated well by the department, who understood we were being exploited. The adjuncts were generally of fairly low quality and sometimes taught up to 8 courses per semester at surrounding schools. All the college adjuncts share a hot, nasty room filled with cubes for offices, containing around 35 shared, gross desks. It was an embarrassing space to speak with students.

    Adjunct – Composition, Rhetoric, Writing
    February 19, 2013
    $3,969
    Central Michigan University

    No respect, voice, or job security–labor-intensive comp courses only, although I have a Lang and Lit degree. The guy with three teeth and a GED that picks up my garbage makes more money and has much more job security. Union worthless.

    http://data.chronicle.com

    SQ

    May 30, 2017 at 8:16 pm

    • the only thing that makes me feel remotely okay about this is that the vast majority (98%) of college professors are extremely leftist, and thus are getting their just deserts

      jjbees

      May 30, 2017 at 9:58 pm

      • Maybe it’s a vicious circle. Intelligent highly trained people who get paid crap wages tend to get bitter. Even if they start out as leftists, which most of them probably do, the current system makes them angry at “the Man” and jealous of their less educated former classmates who make a lot more money in business or law. That just reinforces their prejudice that the capitalist system is the problem. Back when we had fewer professors and they were much better paid we also had more conservatives in academia. Not an accident I am guessing.

        Peter Akuleyev

        May 31, 2017 at 6:30 am

    • All colleges in America are vocational schools up to the Ivy Leagues. Outside of the Anglo-Prole Sphere, colleges/universities in Continental Western Europe are intellectual centers of thought, not job preparation. Québec is somewhat in the middle ground between these 2 spectrum.

      JS

      May 31, 2017 at 12:47 am

      • Living in the past, maybe?

        All colleges these days are merely cash-grabs. Not enough 110+ IQ students coming? No problem – propagandize the myth that a college degree is the be-all and end-all, introduce the equivalent of “participation trophy-type” degrees (Black Studies, Women’s Studies, Aboriginal Studies et al – these folk can’t even handle the Humanities/Social Studies that were the former alternative to REAL degrees in STEM).

        Jack up the prices continuously. Cater to the crazies. Ka-ching!

        gda

        May 31, 2017 at 12:41 pm

      • This is extremely misleading. People majoring in womens studies and aboriginal studies have higher IQ than the average college student and also tend to have rich parents. The bottom-of-the-barrel students are all majoring in vocational-sounding subjects.

      • JS “All colleges in America are vocational schools up to the Ivy Leagues. Outside of the Anglo-Prole Sphere, colleges/universities in Continental Western Europe are intellectual centers of thought, not job preparation.”

        It used to be this way in England too until fairly recently. There were universities for academic courses and polytechnics for vocational subjects. The Conservatives merged them in the early 90’s, just as Labour in the 60’s merged academic grammar schools and the more vocational Secondary Modern schools.

        Our need to bring in skilled labour from Eastern Europe demonstrates the success of these policies, yet funnily enough the people who insist we need imported labour to meet our skills gap never seem to draw the conclusion that something must therefore be wrong with our education system.

        prolier than thou

        May 31, 2017 at 1:12 pm

      • “People majoring in womens studies and aboriginal studies have higher IQ than the average college student”

        Cite? Saying so don’t make it so Lion.

        These are joke “studies”. Perhaps a few high-IQ scam artists take these but you would have to show me some solid studies for me to believe that they attract high-IQ students on average.

        Surely anyone with a brain doesn’t want a participation trophy, unless they’re looking to scam the system and have specific “jobs” targeted. I would imagine these students might in general be found between 90 and 110 IQ. Let’s even say an average of 100. The IQ of the average college student is still (supposedly) around 115.

        I’ll eat crow if you show me 2 reputable studies which back you up.

        gda

        May 31, 2017 at 7:50 pm

      • This link shows what college students are majoring in.

        There seems to be the false perception among some readers of this blog that most college students are majoring in stuff that’s stupid. But from looking at the linked-to chart, it looks like two-thirds of college degrees are conferred in subjects that are practical or vocational. “Business” is the most common major, representing 335,254 of 1,563,069 Bachelor’s degrees granted in 2007-2008.

        The much derided women’s studies major is very rare. Only 8,454 degrees were granted in “area, ethnic, cultural, and gender studies.”

        “Social sciences and history,” the second most common major, may sound useless at first glance, but it includes “economics” which is a very popular major because it sounds businessy.

        In conclusion, the majority of college students major in something that is training them for some sort of career.

    • If one receives a Ph.D, even from a prestigious institution, one is so much better off becoming a high school teacher, or getting tenure at a community college, where most instructors are union protected and receive good compensation and benefits.

      An adjunct, even at prestigious universities such as the Ivies are treated like shit, with little chance of getting tenure. Just get a nice job in a good school district where parents are involved with their kids. Life will be so much more pleasant.

      Daniel

      May 31, 2017 at 5:00 pm

    • On the other hand high school and grade school teachers get very good wages and great pensions. Some retire at 53 or 54 with 75% of their current salary and 3% increase for life.

      It’s really outrages. I get a small pension from the company I worked 13 years for and it doesn’t increase. I get another smaller pension from a job a I had for 6 six years and then I took a lump some from another job I had for 7.

      You don’t hear too many teachers complaining about low pay anymore. They really suckered the public.

      ttgy

      May 31, 2017 at 10:09 pm

  12. Freedom tower is the worst example. Around here things get torn down and replaced quickly.

    A Reader

    May 30, 2017 at 8:26 pm

  13. Like other’s have mentioned.

    The source of the cost increase is fairly straightforward.

    Government bloat.

    Kaz

    May 30, 2017 at 10:46 pm

  14. EMPLOYERS HAVE TOO MUCH POWER.

    A *very* small group of people run massive organizations and call all the shots on who gets paid what. They have *total* control of profits that is the product of thousands of workers time and labor. These people collude and unionize in the Chamber of Crony Capitalism. They want an inexhaustable supply of cheap labor and reserve army of the unemployed, PERIOD. They socialize the costs and privatize the profit.

    Unions and a *severe* check on the top power in organizations is absolutely necessary to prevent gross value transference. Some jerk in an air-conditioned office should not make 1000x much as a worker who actually does the work.

    Workers don’t/can’t unionize. Union have been smashed and are powerless. Workers cannot organize because the workers are “bowling alone” and don’t even speak the same languages. Workers are balkanized; the big bosses are NOT.

    There are so many unemployed that bosses can lower wages and increase necessary qualifications and no one will dare challenge them.

    Say what you will about Marxist theory, but in the reality of the actual workplace it is SPOT ON.

    fakeemail

    May 31, 2017 at 12:00 am

    • “Say what you will about Marxist theory, but in the reality of the actual workplace it is SPOT ON.”

      Yup. The problem now is that the “Marxists” are 100% aligned with the agendas of big business. Only the Marxists are too stupid to realize it and they think they are outsiders trying to shake the system, when in fact they are totally doing the work of the system.

      peterike

      May 31, 2017 at 9:33 am

    • This is right. We need to kick out all the non-productive or non-English-speaking immigrants, form unions, and get an aggressive anti-monopolist/oligopolist push from the state. Those three things would fix almost all our civic and economic problems.

      Union membership and fees should be voluntary, though. Otherwise it’s just a tax.

      Lowe

      May 31, 2017 at 11:16 am

    • Marx got it wrong.

      Marx predicted that surplus value would increase, but profits would decrease. Labor would be squeezed out until the proletariat would revolt and take ownership in the end. Examples of cost disease show that surplus value actually did not necessarily increase.

      He wrongly believed that value transference was purely based on capital ownership. The reality is that value transference is orthogonal to class structure. It can occur at all levels of class structure and even screw over owners.

      Contrarian

      May 31, 2017 at 5:24 pm

  15. That’s correct, not only do we live in a post scarcity world, many goods and services are irrelevant to a technological society, and are heading to obsolescence.

    The only scarcity measure is expensive real estate in cities like Manhattan and San Francisco.

    JS

    May 31, 2017 at 12:52 am

  16. Lion,
    I saw this post linked to on a bunch of NRx blogs. Regarding the cost disease, if you want to see a few depressing statistics, just compare these two stats:

    – Cost of the Interstate Highway System in 2015 dollars: $511 billion
    – Cost of the Obama Stimulus Program: CBO now estimates that the total impact over the 2009– 2019 period will amount to nearly $840 billion.

    Everyone can see the tangible benefits of the Interstate Highway System in terms of commuting, freight movement, leisure, etc.

    I consider myself to be a very well informed person. However, I cannot think of any tangible benefits from the 2009 stimulus program in my personal life other than re-paving of a few highways in my area. What was all of this money spent on??? Spending almost 2/3 greater the amount of money compared to the interstate highway system and we literally got nothing out of it.

    Biggest factors are largely environmental regulations and just the overall litigious nature of various interest groups.

    JerseyGuy

    May 31, 2017 at 8:05 am

    • Didn’t most of the “stimulus” go to Obama crony groups, like teachers and feminist orgs and stuff like that? Wasn’t it a lot of payback for supporting him in the election? Boy, imagine if Bush or Trump had pulled that stunt.

      I’m sure there’s a website somewhere showing where the money went, but I’m too lazy to look.

      peterike

      May 31, 2017 at 9:31 am

      • Yeah I think much of it went to the states to subsidize public school teachers from being laid off due to the decline in state revenues because of the financial crisis. It was sold as providing “shovel ready” jobs but I think only about 100 billion was actually earmarked for infrastructure.

        Mike Street Station

        June 1, 2017 at 6:35 am

    • Healthcare went from 3% of the economy to 20% (GDP wise) in 30 years. Take 17% off the sticker price of everything, does that help?

      Paul Ryan's Sickly Old Lapdog

      May 31, 2017 at 11:02 am

  17. What is it with the Left and climate change?

    On NeoGaf they are taking Trump’s withdrawal from the Paris accord worse than they took the healthcare vote even.

    In contrast, they are taking Trump’s destruction of the immigrant community relatively well because it isn’t getting the big headlines.

    Otis the Sweaty

    May 31, 2017 at 9:23 am

  18. It’s worth checking out this post on that matter. Apparently (as far as healthcare goes), costs in the U.S. are in line with its GDP per capita:

    Health, consumption, and household disposable income outside of the OECD – Random Critical Analysis

    JayMan

    May 31, 2017 at 9:39 am

  19. “Yet somehow, we were able to afford to build a tunnel in 1908.”

    Making the comparison even more extreme, in 1908 there was no federal income tax and New Jersey had neither a state income tax nor a sales tax.

    Mark Caplan

    May 31, 2017 at 9:46 am

  20. Salary trivia:

    We just got back from a cruise followed by a visit to Walt Disney World. Out of sheer curiosity I looked at the official hiring site for The Mouse (which is the largest single-site employer in the country with 62,000 employees, ahem, cast members). It helpfully listed the starting pay rates for hourly wor – cast members, and I was shocked. Here are some examples of current openings:

    1. Parking lot attendant (broil in the hot sun all day) – $10/hour.
    2. Water slide attendant (deal with screaming children) – $10/hour.
    3. Snackbar or gift shop clerk (be bright and smiling with schmucks) – $10.25/hour.
    4. Custodian (filth + heat) – $10.45/hour.
    5. Monorail operator (you can literally die on the job) – $10.45/hour.
    6. Resort hotel housekeeper (clean up peoples’ filth) – $10.50/hour.
    7. Kitchen food handler (hot and backbreaking work) – $10.55/hour.
    8. Lifeguard (f*** up and someone can die) – $11.25/hour, but only $10.50 for shallow water pools.

    My theory is that the perceived glamor of working at WDW ensures a steady flow of applicants and allows the company to keep pay very low. It’s not as if people have no other alternatives, as Orlando has an excellent economy. Anyway, the company can’t afford to pay too much, the liquid nitrogen for Walt’s tank isn’t cheap.

    Peter

    ironrailsironweights

    May 31, 2017 at 9:52 am

  21. Inflation that is unreported and plunder.

    Ed

    May 31, 2017 at 11:28 am

  22. Did you really think that all the OSHA and EPA regulations passed since 1970 would have no effect on the speed and cost of building things? It was obvious that this was going to happen.

    CamelCaseRob

    May 31, 2017 at 11:32 am

  23. Part of why this is happening is the rise of cheap consumer credit.

    Two in the Bush

    May 31, 2017 at 11:34 am

  24. Try rearing 4-5 children and a housewife on a blue collar salary to see the real costs of things. You don’t even have to pay for all their (now pointless) college the way a 1950’s man could, and they all ought to be home schooled, and it’s still impossible without 80 hour workweeks fueled by crystal meth. White collar yuppies are basically being paid not to reproduce any more than 1.2 feeble autistic children by age 40. It’s the best system the West can have, if you’re an oil-rich Islamist.

    Leftists ignore any costs even remotely associated with the collapse of social conservatism and the new degeneracy of the working class. They either think they’re so enlightened and intelligent they will never have prole descendants or they’re childless anyway, so it means nothing to them. They don’t get their way by winning elections, just by cheating through law school and making all the policies they want that way. Conservative cucks haven’t looked critically at the nature of law schools since the late 19th century. Or ever, for that matter.

    Leftist “solutions” of redistributing wealth by the tax system or yet more government oversight are deliberately ineffective, and these leftists are nowhere to be found when legitimate conservatives try to attack the federal reserve and real financial privilege, etc. Just see how the occupy movement worked out. If cultural leftism against the working class doesn’t drive up costs, then neocon conservatism gets the job done.

    Anonymous

    May 31, 2017 at 11:45 am

  25. OT:

    https://dissention.wordpress.com/2017/05/27/my-opinion-about-the-ancient-astronaut-theory-1/

    Devil’s Advocate is now a self-confirmed nutcase. Glad he exposed himself in such a way after all those years of nonsense.

    bombexpert

    May 31, 2017 at 11:46 am

    • Looks like guidos, not NAMs.

      • Snooki probably made a surprise visit. She probably initiated the brawl by getting punched in the face.

        Daniel

        May 31, 2017 at 9:08 pm

  26. One would need a comparison of the costs that go into building a skyscraper to know what’s going on. Is it labor? materials? regulations? insurance? I really don’t know. But I’d bet almost everything purchased in the 1930’s was less expensive because it was the middle of the depression. There was excess capacity in labor and materials. As for time, I’ll bet a lot of that is spent trying to schedule things.

    destructure

    May 31, 2017 at 1:10 pm

  27. gothamette

    May 31, 2017 at 2:27 pm

    • Yes. The destruction of the immigrant community is moving ahead on all fronts.

      Illegal border crossings are way down, deportations from the interior are way up and self deportations are also up.

      There are 2 main bits of fake news about Trump’s immigration agenda: 1. He is increasing refugees and 2. the Wall is not being built.

      As York has pointed out, the Wall is being built. As for the refugees, the State Dept has cleared the way for them to enter but DHS is still blocking them and will continue to do so.

      Otis the Sweaty

      May 31, 2017 at 6:46 pm

  28. Just about everything on Slate Star Codex is worth reading. Scott Alexander is the most self-aware liberal in America (?by far? I’m not sure who comes in second).

    Greg Pandatshang

    May 31, 2017 at 3:01 pm

    • Agree. Hard to imagine how he has time to put together such brilliant posts and still work full time.

      Mike Street Station

      June 1, 2017 at 6:40 am

  29. Off topic, but do any of your readers have anything to say about some American celebrity (I assume) called Kathy Griffin posing with what is supposed to be the severed, bloody head of Donald Trump?

    Quite apart from the obvious license to dehumanise their enemies that the liberals allow themselves, I don’t think it’s a coincidence that beheading is the mode of execution deemed suitable by Muslims (aka ‘extremists’) for heretics and unbelievers. There is an obvious deep and growing affinity for the most extreme forms of Islam on the part of Western liberals, and this affinity is growing rather than receding as Islamic atrocities and savagery advance across the West.

    It’s not hard to think of many reasons why this would be the case. Lacking any strong moral and cultural compass themselves, they are drawn to the ruthlessness, clarity, fanaticism and single-minded purpose of Islam, which perhaps calls to an emptiness and extremism within themselves that identity politics and white guilt is not enough to fill. Liberals seem to be filled with a sense of ennui, and like many brought up in safety and comfort are drawn to the glamour of violence and savagery which they call ‘vibrancy’. This was previously sated with cultural excursions into black gangster and Hip Hop culture, but perhaps they have become desensitised to this and need stronger stuff to get the same transgressive hit. Furthermore, Islam offers them a way out of the train-wreck that their values have made of Western societies without having to endure the humiliation of having to cede power back to conservatives and traditionalists–the enemies of my enemies are not only my friends, they are also our preferred rulers. If liberals lose under Sharia, then at least it will hurt conservatives more. Liberals also have little in the way of backbone when it comes to an implacable enemy and, as is consistent with their generally feminine nature, are gradually submitting to the stronger will without ever quite telling themselves they are doing so.

    Anyway, point is: the liberal elite won’t need to capitulate to Islam, they will run towards it with their arms (and legs?) outstretched.

    prolier than thou

    May 31, 2017 at 4:47 pm

    • yeah…ok, never try and mix metaphors. You can’t run towards something with your legs outstretched…but you take my point. I do wish you had an edit function.

      prolier than thou

      May 31, 2017 at 4:50 pm

    • bad art is still art. Griffin was trying to protest the President, went too far and then apologized. It happens.

      The real violence against Trump supporters is an outrage, but celebrities being idiots is just celebrities being idiots. Plenty of people, including lots of state level GOP politicians made jokes about killing Obama.

      Otis the Sweaty

      May 31, 2017 at 6:48 pm

      • Not in any kind of polite public conversation, lest you be ostracized. Reality is Obama was treated deferentially even by his opponents, despite his quite apparent hatred for (White) America.

        Panther of the Blogocube

        May 31, 2017 at 9:29 pm

    • “I don’t think it’s a coincidence that beheading is the mode of execution deemed suitable by Muslims (aka ‘extremists’) for heretics and unbelievers. ”

      Oh we got the message all right.

      Mike Street Station

      June 1, 2017 at 6:42 am

  30. 432 Park Avenue is a butt ugly building. A blight on the cityscape. Should never have been permitted to be built.

    Daniel

    May 31, 2017 at 5:01 pm

    • I haven’t been to NYC in years so I had to look the building up. My God it’s appalling. A sort of perfect architectural representation of the kind of grotesque moyenne bourgeoisie who no doubt inhabit it. I agree, it’s unbelievable they would let such an eyesore be built.

      Two in the Bush

      May 31, 2017 at 7:18 pm

    • There are plenty of buildings in NYC which are atrocious aesthetically. Wats da mattah huh!

      If parasitic landlords can bank on money from chumps who pay an arm n leg for their space, then it’s golden.

      Welcome to American Capitalism!

      JS

      June 1, 2017 at 12:55 am

  31. the american molech, “the free market”, reaches an equilibrium…the ultimate problem is that the commanding heights are occupied by technically incompetent people who have no idea what work is. it’s an abstraction for them, just another commodity input to production. this is worst in the US by far. the slave master has no idea how to pick cotton.

    silly little man

    May 31, 2017 at 6:08 pm

  32. I’m late to the comment game, but I was terrifically electrified by this post in the morning. Allow me to add my two cents:

    A few years back I worked on a project to diffuse the LED lights in the elevators in the Freedom Tower. I was working with a lighting design company that was working with Otis that was working with whoever to install the elevators. And this was just one tiny little aspect of the building. The point being how many other bells and whistles were thrown into it? Some may deem them unnecessary, but I think it’s a sign of wealth.

    That’s why the Empire State Building comparison is not apples-to-apples. There is a lot more panache that can be added. I mean, we aren’t comparing the Model T to all the advanced features in a Mercedes, are we? The fact a society can afford to have the Freedom Tower is, in theory, a sign of increased prosperity.

    What I would like to know is how much it would cost to build the Empire State Building again…maybe slightly more expensive because of the regulations but not exponentially higher?

    A Dilettante

    May 31, 2017 at 6:53 pm

    • The bells and whistles are not the cause of the immense disparities on cost. Note, Otis built and maintains the elevators in the Empire State Building and built and maintains the elevators in the Freedom tower. For the past 100 years, the world over, Otis is the company to go to when you want quality elevators built. Otis is doing the same job today that it did 100 years ago, it’s just that EVERYTHING costs more. The bells and whistles are not the problem.

      Daniel

      May 31, 2017 at 9:05 pm

      • Actually, Otis used to build the elevators in the United States, but now they build the elevators in China, to save money. http://www.nytimes.com/1996/04/03/business/new-otis-factory-in-china.html

      • Sure, I agree, the Otis elevator in the Freedom Tower functionally is the same as it is in the Empire State building. But its form is completely different. Likewise with every other nook and cranny (automated faucets, occupancy sensors for lighting, digital sound systems, etc.) that is built-in now at scale. (I even forgot about the flooring options now compared to almost a century ago.)

        How much of this is necessary for a building is a separate question. But this “decadence” I think is more fundamentally the driver of the cost disparity than “incompetence”. And this still drives to the heart of the issue: human work being directed more apishly to peacock (or “virtue signal”) than to actually better posterity, which is a drive toward an intangible, conceptual future; and the hallmark of civilization.

        A Dilettante

        May 31, 2017 at 11:49 pm

    • The Empire State Building just spent 550 million in 2011 on upgrading the elevators alone.

      http://www.montereyherald.com/article/ZZ/20110617/NEWS/110618121

      ttgy

      June 1, 2017 at 1:11 am

  33. […] While the author of that article blames “politics” and “complacency,” he completely ignores the real culprit, which is cost disease (as I blogged about yesterday). […]

  34. Maybe Karl Marx’s son-in-law IDd the problem.

    “In proportion as the machine is improved and performs man’s work with an ever increasing rapidity and exactness, the labourer, instead of prolonging his former rest times, redoubles his ardour, as if he wished to rival the machine. O, absurd and murderous competition!”

    Paul Lafargue

    https://www.google.com/search?client=safari&channel=iphone_bm&site=&source=hp&ei=33svWcDgO-aN0gKi7pGoAQ&q=paul+lafargue&oq=paul+lefa&gs_l=mobile-gws-hp.1.2.0j0i10k1l4.3905.15491.0.19969.10.10.0.5.5.0.392.2274.0j5j3j2.10.0….0…1.1.64.mobile-gws-hp..0.10.1155.3..41j46j0i131k1j0i155k1j0i46k1.KzLEJSt6zrY#imgrc=iFRQX0Cj-LhhEM:

    Curle

    June 1, 2017 at 12:01 am

  35. Fascinating article, thanks for sharing.

    martinslag

    June 1, 2017 at 2:07 pm

  36. Cost disease? No such animal. Almost all taxation in some way feeds the welfare state, whether you’re counting its recipients or government administrators.

    The blogger you linked to is trying to intellectualize away the blinding obvious answer staring him in the face: women’s suffrage and Diversity mean we can’t have nice things, and instead must waste money feeding, clothing, and housing brown people and women.

    It’s pure macco’s rozar. People blessed with high IQ sometimes prefer these types of masturbatory intellectual exercises over acknowledging obvious evidence and simple conclusions because they think it makes them sound smart.

    hard9bf

    June 1, 2017 at 2:23 pm

  37. Is there a correlation between intelligence and resourcefulness?

    Dumber people spend more money on unnecessary things. Most things consumed by Americans are unnecessary to begin with.

    JS

    June 4, 2017 at 9:35 am

    • Most people spend all the money they have, so doesn’t this apply to everyone?

      • There’s seems to be a correlation between IQ/race and class when it comes to savings and investment rate. I know because I get to see people’s financials from the various demographics. And there is a prole drift given the fact that American SWPLs are not great savers and often dip into their investment accounts to pay for all kinds of frivolous things like vacations and eating out.

        With Whites, it’s culture, and Anglo Sphere Whites are consumption pigs.

        1) blacks are terrible with money, even middle class blacks.

        2) then comes the proles and this includes Hispanics, who are usually of the prole class.

        3) SWPL types, who now have low savings rate.

        4) Non-Anglo, Euro Expats, who are great savers, and have incomes equal to many American SWPL types. Those in executive/elite positions have very high savings.

        5) South Asians

        6) East Asians, who have the highest savings rate of all the groups, on par with many Euro Expats in elite occupations.

        JS

        June 4, 2017 at 4:16 pm

  38. Here’s a good example of cost disease in the SWPL world — The Metropolitan Museum wants to charge a mandatory fee for out of town visitors, instead of the suggested “but pay whatever you want” admission charge.

    What is it that the museum needs in terms of revenue? Nothing has really changed during all these years in terms of infrastructure and additions, except now you have more visitors from around the world and swarms of unnecessary employees who happened to be non-white.

    In reality, it’s all value transference and more lavish salaries for the upper echelons of the museum’s administration.

    JS

    June 4, 2017 at 8:54 pm


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