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Entropy, Economics, & Technological Development

07/02/2007 12:54 PM

When in the context of an economic system, technological developments are created, and initially paid for, should the cost of that technology not ideally drop over time, based on continuous improvement in; material sciences, automation and production technologies, rising demand, improved delivery, and increased material volume discounting?

Why then, does everything always cost more; is this greed at work in our society? Is this simply a function of economic inflation? Why would there be economic inflation in a time of technological growth? (Is it because inflation is arbitrary, and controlled by the central banking systems?)

I know that when systems are left to run, that the system will eventually run down and fail, and that continuous maintenance is required to sustain its operation. This is entropy of systems right? But if technological development increases in an economic climate of no inflation, should not the production cost of that technology drop? This was the dream of automation and robotics in the '80's, that we should all be able to live more cheaply, as a result of the products of automation...and where are we now?

My point is... what evil is afoot, that has robbed us all of these fruits of our labours? I know that the cost of silicon technologies has dropped as it should have, and increased incredibly in performance... but what about food, shelter, clothing, transportation.. these things appear to have only increased tremendously in price, and not proportionally in technological development, as in the case of electronics...

Chris

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Guru
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#1

Re: Entropy, Economics, & Technological Development

07/02/2007 2:20 PM

food, shelter, clothing, transportation -

food - proportional to fuel, which is a limited commodity, so the price goes up.

shelter - highly labor intensive, wages go up to pay for food, plus who wants a house without granite countertops anymore?

clothing - it is cheaper, just shop at Wal*Mart

transportation - fuel cost, plus continued engineering costs to make a new model every year. Mechanical items that don't need to be redesigned every year do get cheaper - weed whackers, for instance.

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Commentator

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#2

Re: Entropy, Economics, & Technological Development

07/02/2007 9:41 PM

Ahh the vicious technology life cycle - and how we are all sucked into it.

Imagin if we were still using floppy disks as a medium of storage - i would imagine that by now, they would probably be as cheap as toilet paper. But because of our thirst of more storage space, a newer technology has to fill this need - and this new technology needs money to grow.

In a world where technology changes so quickly, shouldnt a prudent engineer/inventor/businessman ensure that his/her investment be recovered faster (before the next technology comes along). And to recover faster - need more profit - thus higher selling price.

I guess if our needs & desires remained the same, we would be indeed living in a cheaper world.

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#3

Re: Entropy, Economics, & Technological Development

07/03/2007 12:40 AM

What an interesting issue, and what a brilliant post!

I Agree with each and every word, which makes any further comment on my part, simply redundant....

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Guru

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#4

Re: Entropy, Economics, & Technological Development

07/03/2007 12:40 AM

If I may, you're talking apples and oranges...

Silicon and high-technology gets cheaper because at first yields are low and prices are high. As production improves these companies reach a state where their products are so commoditized that they can't make enough to make a profit. Typically, the salvation of these companies is the "next generation" device. This is the chip-cycle.

However, when it comes to fuel, groceries, etc., there is no increase in production because demand is usually very constant. You can raise prices by limiting production, but that gets into a whole different field of subsidies and what they're for.

Inflation occurs when more people have more money and compete for the same goods. This drives the price of staples (corn, wheat, milk...) up, and makes your money worth less in terms of real goods. Unless you're a silicon-based life form and can live on memory chips.

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#5

Re: Entropy, Economics, & Technological Development

07/05/2007 12:16 PM

You have to eliminate the effect of inflation in the equation. If you look at the cost of goods as a percentage of a person's income, food, shelter, clothing, and transportation have all decreased. I think that the only thing that has gone up is the portion of ones income that goes to taxes. With all the technology improvements, shouldn't government become more efficient and less costly?

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Guru

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#6
In reply to #5

Re: Entropy, Economics, & Technological Development

07/05/2007 11:00 PM

Sure, they can become very efficient according to recent studies. However, it'll cost ya.

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