Why Do Things Cost So Much?

Why Do Things Cost So Much?

Megan McCardle has a thread going about trade barriers and the impact on the cost of goods and the standard of living. I liked this comment about the difficulty of comparing standards of living today against those of 50-60 years ago, when U.S. manufacturing looked very different from today:

Well, if you give me 50's housing and 50's health care, I can probably live pretty cheaply. Part of what drives those prices up is the fact that we consume much more. And if you give me 50's school kids coming from intact 2-parent 50's families and attending 50's churches every Sunday, and 50's school teachers who are either unmarried single women or married and more or less supported by their husbands, I can doubtless cut your education costs (and local taxes), too.