Arnold Kling asks,
I've been away, mostly in Prague (where the big economic question is why so many older buildings have so many fancy details. My answer is that there must have been a very unequal distribution of wealth, so that rich folks could afford to hire a lot of labor for building)[?]
I don't know specifically about Prague, but I do get this question a lot in the form of allegations that product quality has deteriorated through time. People making this allegation usually blame free market capitalism. It comes in the form of, "Houses built 100 years ago were better built and of higher quality relative to homes built today." As if laissez-faire capitalism was less prevalent 100 years ago than it is today.
Hogwash!
First, it is primarily only the best homes built 100 years ago that are still standing and that we deem of superior quality. Most of the poorer quality homes built then have long since been destroyed and replaced with newer homes or commercial buildings or parks, etc. We call it urban renewal or rural rejuvenation, and it happens everywhere. You cannot compare the top quality homes of yore with the median home built today and make any judgement about relative quality. (This same applies to art.)
Second, increased economic growth (which relates somewhat to Arnold's point) creates greater opportunities for labor, which raises the cost of labor engaging in any specific craft or occupation, including homebuilding and woodworking. So a house built 100 years ago may indeed have been built with hand-carved newell posts and rails, handmade cabinets, handmade six panel doors, etc., while homes built today have not. But this says nothing about the overall quality of older homes, and we can reject outright that these features are preferred today. Such amenities have romantic appeal to them, but they are not something for which people today are willing to pay.
Let's say labor can be segmented into ten groups based on their human capital, with those ranked as one having the most menial talents and those at the top the most skilled and capable. One hundred years ago, those in the upper ranks were the highest skilled and likely became craftsmen most proficient at carving posts and rails and other fine wood products. Today, people in the top ranks in terms of of human capital are employed in activities deemed at the margin more valuable to society. These people are employed as programmers, engineers, administrators, oh, and economists.
Additionally, we did not have the close substitutes for such products one hundred years ago that we have today, mostly in the form of machines that can now produce beautiful newel posts, rails, cabinets, doors, etc. If you did not hire the skilled craftsmen to hand carve newels and rails, produce your doors, etc., you had to substitute with 2x4s nailed along the stairs, or plywood hanging from the jambs as doors for your home. The marginal change from those features to having hand carved newel posts and rails and doors etc. was a significant improvement, and the relative opportunity cost of labor skilled at producing such features was much lower than it is today. Therefore, such features were more in demand for many homes one hundred years ago, at least in the more expensive homes.
Today we don't demand the hand-made products like newel posts, rails, doors, cabinets, and the like, that require higher skilled labor. There are indeed people today skilled and able to do such work, just not in the percentage of the labor force that was prevalent at the turn of the twentieth century. If more people demanded such amenities, plenty of people could be attracted to the wood carving profession to provide such products, but only at significantly higher social opportunity cost, and therefore at significantly higher wages. We are obviously not willing to pay those higher wages sufficient to attract programmers, engineers, administrators, oh, and economists, from their chosen profession to become craftsmen with the skills required to give us hand carved newel posts, rails, doors, cabinets, etc. Given the increased opportunity cost of skilled labor, as well as the availability of close substitutes (machine turned posts and newels, etc.), our money spent on housing is better allocated to other things such as better insulation, more efficient and decorative windows and doors, granite countertops, media rooms, gourmet kitchens, elegant bathrooms (not to mention indoor plumbing), better landscaping, additional space and rooms, and two and three-car garages.
Homes today are better built when compared at the various relative price points. There are simply more opportunities for labor that at the margin we obviously deem more desirable (hence the greater pay). As consumers we therefore have more ways to allocate expenditures on housing, of which hand carved amenities are not at the top.
Have you looked at the flat panel doors here?
Posted by: Felix Chesterfield | August 19, 2009 at 10:35 AM