There’s a fascinating post at NBER by Lauri Scherer recapping a paper on the real price of nails since 1695. You can see what has happened in the graph above. After a lengthy period of slow declines during the pre-industrial period, the real price of nails declined sharply in the 19th century. Here’s the author’s summary:
The share of nails in GDP dropped from 0.4 percent in 1810 — comparable to today’s share of household purchases of personal computers — to a trivial share today. The decline in nail prices had important effects on downstream industries, most notably construction. In addition, Sichel highlights the changing “place†of nails in the public mind as nails shifted from being precious to being a throw-away item.
My question is why have real prices shot up over the last 20 years? That’s certainly counter-intuitive. My guess is that they’re talking about different nails.
Dave Schuler: My question is why have real prices shot up over the last 20 years?
And you would be right! You came upon the graph sideways, but it originally comes from a study by Daniel E. Sichel publish in NBER: “real nail prices have increased since the mid 20th century, reflecting in part an upturn in materials prices and a shift toward specialty nails in the wake of import competition”.
https://www.nber.org/system/files/working_papers/w29617/w29617.pdf
Now imagine the government set up the Dept of Nails to regulate the development, quality and price of nails. No doubt staffed by lawyers, poly sci grads and economists.
https://www.lowes.com/n/buying-guide/choose-nails-for-your-project
And we wonder why we get so little for our tax dollars.
Is anyone, even Bernie Sanders, suggesting that the US govt should go into retail? Nice rant though.
Steve