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View Full Version : The illusion of modern efficiency?


Michael
Feb 19th 2009, 12:34 PM
This is just idle musing, but I wonder why this bridge costs so much? The original structure cost $2.3 million, which comes to about $36 million in today's dollars. In real terms, then, the bridge costs ten times as much today as it did in 1932.

Why? Labor costs are proportionately higher today, of course. The old bridge has to be built around and then demolished. LA is built up and we can't just build a cement factory on site, the way we did 75 years ago. Earthquake standards and general permitting requirements are more stringent.

On the other hand, we also have 75 years of technology progression. Labor costs may be higher, but we use less total labor and more machinery these days. And computers help with most of the design work.

Like I said, just idle musing. But it sure seems odd that after 75 years of fantastic technological progress, it not only costs more to build a bridge than it used to, but it costs ten times more.
Source (http://www.motherjones.com/kevin-drum/2009/02/6th-street-viaduct)

This is a phenomena that I've observed in several product categories as well. Seems that all of our wonderful technology and labor saving ways just tends to make everything massively more expensive.

House construction appears to fall into the same category. On a per square foot construction cost basis, houses seem to be massively more expensive to build now than they were 30 or 40 or 50 years ago. And it is generally observed that modern built houses are built much less solidly (wallboard walls instead of plaster for example).

Strange phenomena. Anyone have ideas or thoughts about this?

Americano
Feb 19th 2009, 11:11 PM
As you well know inflation is a requirement for capitalism to function. Without inflation production of value-added goods/services would have no gain for capital investment. We've been using funny money and leverage for so long (in such a brief period of time) we thought there was no end to demand affording supply. $1.2 quadrillion in financially engineered investments could well be over the top.