[RD] Economics people, please explain this to me.

[Bamspeedy]

"Depreciation" of a new car is essentially just the price of putting it back on the market against new cars. Doesn't matter if you aren't trading regularly. But an old car can easily cost more to repair than it can fetch as a sale price.

Obviously a $1,000 car could end up costing more than $1,000 in repairs and a $22,000 car is never going to cost $22,000 to repair (unless totaled with no insurance). That $22,000 car will lose half of it's value in what, 5-10 years? Even replacing a 'beater' car a few times with another 'beater' car in that same 5-10 year period won't come close to that.
Personally, I get cars that are 5+ years old with still less than 100k miles on it. I need something more reliable than the 'beater' cars.

 

[Cutlass]

Obviously a $1,000 car could end up costing more than $1,000 in repairs and a $22,000 car is never going to cost $22,000 to repair (unless totaled with no insurance). That $22,000 car will lose half of it's value in what, 5-10 years? Even replacing a 'beater' car a few times with another 'beater' car in that same 5-10 year period won't come close to that.
Personally, I get cars that are 5+ years old with still less than 100k miles on it. I need something more reliable than the 'beater' cars.

Depends on the models you choose. You can get some extremely good deals, if you select models that are solid cars, but not popular ones. But some popular models hold their values very well, and the resale price of a late model used is pretty close to the sale price (not MSRP) of a new one.

 

[innonimatu]

Look at the TVs that you can get for ~150€ market price these days. Those are things that would have been luxury products for rich people a decade or so ago. When you buy while an Entertainment Show throws out their old stuff to make space for a new generation, you can sometimes get large flat screen TVs for below 100€. That's insane if you look at it through the eyes of a person living 10 years in the past.

Yes and no. There's the keep up with the Joneses effect at play, in these things that are mostly conspicuous consumption. A 100€ TV will not bring the same satisfaction to its buyers now that the same spec TV (much more expensive and scarce) would have brought 10 years ago...
In every class of products that are consumed not only for practical reasons but also for "social" ones, this effect is present.

Then why can't people on minimum wage get a small house?

Oh they can. Just not anywhere desirable. Owners of those spots will charge as much as they can to allow someone new in. The poor get priced out. Either the desired spots are decentralized (thus allowing more people access) or they are rationed somehow. Price being just the "liberal/libertarian" choice means of discrimination.
Yet another reason why I believe that decentralization, political and economic, should be one of the most important political aims. Alleged efficiency be damned. Unfortunately the people ate the top usually seek the opposite.

 

[Perfection]

You guys didn't read Bamspeedy's post.

I didn't get to 49,468 posts by reading what other people said.

 

[El_Machinae]

I was under the impression that the Austrian school of Economics was largely discredited and no longer used because it doesn't really work.

That would perhaps explain why things it predicts aren't happening?

Their main problem is that they don't understand the money part of economics, as in, legal tender. They can actually say a lot about how supply and demand can create efficiencies. They just weren't able to properly model how money fit into things.

 

[Narz]

I would argue it does happen.
I live in a post scarcity wonderland compared to how my great-grandfather lived.
Hell, I live in a post scarcity wonderland compared to how I myself lived the first couple years of my life (born 1984).

Not me, I had my own room as a child, now I share a room with my gf and have a housemate.

I have a smart phone and Internet but I think people equate technology too much with quality of life. I was pretty happy with my NES and Apple IIe. Quality of life stagnated in the 70s iirc. Even length of life is stagnating in the US, rates of depression skyrocketing even as use of antidepressants also skyrockets (maybe the solution is even more drugs :idea: )

Cliffnotes : modern industrial civilization is an unsustainable bubble and economists are generally wrong and dumb (especially older ones, it's like old school psychology except even less scientific than that)

 

[Narz]

I keep hearing stuff like this from libertarians. It's obviously false, but I don't know how to explain why.

Ask em why their sperm count is less than half their grandpa's. They'll probably put their hands in the ears and say 'lalala'. No one wants their masculinity questioned.

 

[Narz]

One thing to remember is that cars are legally subject to ever increasing regulation for build quality, safety, and emissions. When you get a new car (in the US) it's legally required to have seat belts, air bags, crumple zones, catalytic converters, tire pressure monitoring systems, anti-lock brakes, traction control systems, etc. etc. etc. All these additional features cost money, in direct cost, cost to develop, and cost to validate and certify.

As a result of these features hundreds of thousands of people have not died.

Meh, the pollution from cars will kill millions. Cars are still crap. Still very inefficient. And oversized people buying big to feel safe while the icecaps melt.

 

[Cutlass]

I didn't get to 49,468 posts by reading what other people said.

I got to 41,376 in 2/3 the time while occasionally reading some of them.

 

[sophie]

So is this a thread about politics or economics?

The subject is called "Political Economy" for a reason.

 

[Hygro]

Okay, guys, I know I talked about cars but that was just an example. Surely there are other things (amenities, decent food, air conditioning, etc).

Clothes.

 

[El_Machinae]

Well, the answer to the 'cars' question tends to work with other things. Things break down, to the point where they're not useful beyond a certain point. The old car goes from 'can be bought by a poor person' to 'not worth buying'.

There's a category that doesn't suffer from this degradation, information. And some information actually does trickle down. A movie studio spends a lot of money making a big budget movie, and eventually the movie file is pirated and distrubuted at a vastly lower cost in order to provide benefit to poor people. Information of the more directly useful kind (how to tie your shoes better) doesn't even need to remain digital in order to maintain most of its contribution. It can be directly be discovered, paid for by rich people paying well-to-do researchers, and then actually become increasingly available as its communication becomes more efficient.

 

[Cutlass]

Some information degrades. Much of it, actually. The design specs of that Model T, the chemical composition of its tires, useless info now. The design of a 286 CPU. Useless.

 

[El_Machinae]

It's partially 'useless' because more useful information has replaced it. The trendline is the complete opposite of real depreciation. It's unlike the dropping utility of the old car, it's more like the trash in our alleyways.

I was walking the other day in the rain, and I'd pulled a garbage bag over me to act as a rain shield. And I was somewhat meek, because I know I looked funny. And then I wondered ... how much gold would Napoleon have given me for what I had? A garbage bag with holes in it, acting as a rain shield? Probably a rather sizeable sum.

But yes, I won't deny that the modern economy has a certain homeostasis when discussing the utility of the information we can access. I'll ponder this. The 286 CPU stats aren't useless because something more useful has replaced it, the second half is that all of society has structured itself to make it completely inefficient to make use of those design specs.

 

[Birdjaguar]

I was walking the other day in the rain, and I'd pulled a garbage bag over me to act as a rain shield. And I was somewhat meek, because I know I looked funny. And then I wondered ... how much gold would Napoleon have given me for what I had? A garbage bag with holes in it, acting as a rain shield? Probably a rather sizeable sum.

The title of this picture is "lady with a bag on her head"

 

[Narz]

That pic would be better if it was longer

 

[Traitorfish]

That pic would be better if it was longer

 

[civvver]

Comparing rent prices doesn't fit the model though because there is a finite amount of space. If you still live in the same suburbs or city as when you grew up there are more people there now, less space, more demand for it, higher prices. Makes sense.

But beyond looking at cheaper tech, better medicine etc, there's tons of other things I think people take for granted. Look at food variety. I can go to the supermarket and get avacados any time of year, I can get high quality imported bronze cut italian pasta that's maybe double what bargain brands cost but still only like $3 for a pound of it and tastes way better. I can watch all the movies I want for $10 a month.

Also the value of time, technology reduces a lot of the tasks we used to have to do. I can order tons of stuff online including groceries. My car needs less repairs, I don't have to do a bunch of maintenance myself, same with tons of stuff around the house. All that stuff your grandparents spend tons of time doing like laundry even 50-60 years ago is greatly sped up now.

I think the issue is simply we have so much free time we get depressed. We have time to be depressed or at least think about it. Social media shows us how the rich guys live even better and we get depressed. We see our friends on vacation, can't afford one ourselves and get depressed. It's kind of like that saying how there's value in a hard day's work. There's value is just being busy sometimes so you don't have to think about being miserable.

That's probably why people don't think they are actually happier.

 

[Traitorfish]

I think the issue is simply we have so much free time we get depressed. We have time to be depressed or at least think about it. Social media shows us how the rich guys live even better and we get depressed. We see our friends on vacation, can't afford one ourselves and get depressed. It's kind of like that saying how there's value in a hard day's work. There's value is just being busy sometimes so you don't have to think about being miserable.

That's probably why people don't think they are actually happier.

We're sad because we have the time to realise that we don't have money?

You don't think that the root problem there might be "money", rather than "time".

 

[El_Machinae]

Money is shorthand for 'ownership'. We don't own our TV until it's old and a little bit worse for wear. We don't own our house for 25 years. We don't own our cars.

Wealth is trickling upwards, even while prices are falling. So, while your ability to purchase many amazing goods that have gone amazing depreciation has increased, the ability to afford the essentials has stagnated or risen. Part of it is absolutely shifting expectations, where we're sad we have to own cars that are amazing from a 1950s perspective. But the ability to own things has decreased, since so much of our wages goes upwards.