To Improve Living Standards, Improve Housing And Transportation Policy
Something people sometimes miss is that for technological improvements to boost overall living standards, the improvements need to come in sectors that constitute a large share of spending. So while the invention of the telescope and related improvements in lens-making in the 17th century were interesting episodes in the history of science, nothing of economic importance really happens until the Industrial Revolution started generating huge productivity improvements in textile manufacturing. The lens sector just lacked economic significance.
In that spirit, Karl Smith gives us the median household’s spending pattern:
The biggest ones on the list are shelter and transportation, so these are the areas in which relatively small improvements would create big gains in living standards. Part of what’s interesting here is that housing and transportation tend to be offsetting. My daily commute takes about 15-20 minutes and costs $0 because I live 0.7 miles from work and walk. But land that’s located near central business districts tends to be very expensive. That could simply mean very tall buildings, but we have a lot of regulatory restrictions on density so instead it means expensive homes. But the “technology” of better public policy could create large improvements here.