Price of nails as indicator of improved quality of life – imagine spending as much on nails as we do home computers today.
Nails haven’t always been so cheap as to be priced as an inconsequential part of any project.
Post by Timothy Taylor at Conversable Economist discusses The Price of Nails.
Some research from the Federal Reserve indicates the price of nails in constant dollars has dropped by a factor of 15 from the peak in mid-1700s to about 1950.
Primary driver? Radically increased productivity. Just like every other dramatic change in output I see.
From the Fed’s report:
“[T]oday, a nail-making machine with a footprint of about three feet square [can] produce 300 to 450 nails per minute. If we assume that one worker can operate 4 machines at once and that each machine produces 350 nails a minute, then labor productivity of nail production has increased by a factor of 1400 times since the era of hand-forged nails when it took a worker about a minute to produce a nail. With most of this change occurring over the period from 1790 to 1940, the annual rate of increase in labor productivity was nearly 5 percent a year ..
5% a year. Wow.
Check out this comment. In 1810 the percent of GDP spent nails was the same percent we spend today on household PCs:
“[T]his paper also reports domestic absorption of nails, going back to 1810. At that time—more than 20 years after the Maryland State Capitol was completed—nails are estimated to have amounted to about 0.4 percent of nominal GNP. In today’s terms, this share is similar to that of household purchases of personal computers and peripherals or of airfares.
Ponder that – the same portion of our national income spent on home PCs or common nails.
Would it even occur to you today to burn down and old barn to recover the nails? Neither would I. And yet….
“The high value of nails during the 1700s is highlighted by the practice of burning down abandoned buildings to facilitate recovery of the nails …”
Hat tip – Mark Perry at Carpe Diem. You really should add him to your RSS feed.