Monday, January 4, 2016

The Plenkton Effect: When increasing productivity is accompanied by decreasing affordability, due to regulation and efficiency changes.

* The Plenkton Effect: When a consumer product's affordability: a. increases while the consumer's productivity decreases (or stays constant), or b. decreases while the consumer's productivity increases (or stays constant) ...because of changes in efficiency or regulation, where regulation includes safety/quality, but not subsidies/tariffs. Affordability changes due to efficiency changes may be caused by: -economies/diseconomies of scale. When a product's sales decline/increase, affordability decreases/increases. Example: When auto parts for old vehicles are no longer being manufactured en masse, the small scale manufacture of such parts happens on a smaller, more expensive scale, per unit. -costs of production. When production costs increase/decrease, affordability decreases/increases. Example: When ivory became rarer and harder to acquire, the price of pianos with ivory keys increased. Affordability changes due to regulation include: -safety. When product safety increases/decreases, affordability decreases/increases. Example: When airbags were made mandatory in vehicles, the functionality of a vehicle was the same, but airbags increased the cost. -quality. when product quality increases/decreases, affordability decreases/increases. Example: When milk regulations prohibit rBST from being used in milk production, the consumption of milk is incurred at a higher cost. -allowed housing development. When cities restrict the type/size/location of house-building, the utility of housing is incurred at a higher cost. Affordability increases (for a consumer with a static or increasing productivity) is expected and understood, decreases in affordability is strange. Decreased affordability caused by efficiency may happen naturally. Affordability decreases (for a consumer with a static or increasing productivity) seems counter-intuitive. This phenomena is caused by regulatory and efficiency changes. While efficiency changes are natural and uncontrollable, regulatory changes are unnatural and controllable. They decrease a consumer's ability to avoid decreases in standard of living. They are anti-human because they prevent consumers from determining the quality/safety of the products they purchase.

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