A common complaint in the US today, at least past about the 60th percentile of household income, is that in the last few years service has gotten much worse at restaurants, while prices have gone up. It's a ripoff—at least compared to what it used to be.

The price part is verifiable by looking at the data, and the service quality part is at least anecdotally true. From the consumer's perspective, this is of course a bad thing: they’re getting less and paying more. But that ends up balanced out in a healthy way on the wage side, because the people who wait on tables have a higher marginal utility of money than the people getting waited on.¹

This broad pattern is a fact of life, and is, in fact, a very good sign. The right way to think about it is to invert it. There's a story I've encountered in a few books about foreigners visiting China in the 80s, which goes like this: a business traveler visiting a Chinese hotel is getting ready for bed, and notices that one of his socks has a hole in it. Naturally, he tosses it in the trash. The next night, when he gets back to the hotel again, there's a newly-darned, freshly-laundered sock waiting for him. This, he thinks, is truly a foreign country.

But it's also the developed world's distant past! In Renaissance Italy, whose real GDP per capita was, as far as we can tell, multiples higher than China's in the 1980s, wills would enumerate people's wardrobes, and hospitals had to guard the bodies of deceased patients so their clothes wouldn't be stolen after they died. A world where physical goods like clothes are valuable is a world where time (and even lives) are cheap.

In other words, that's poverty. Setting aside money, poverty is when you walk because you don't have a car and an Uber isn't worth it, when you cook at home even though you're tired because another restaurant meal isn't in the budget, when you fix what breaks because you're not getting a new one any time soon, when you tolerate the ads because that's better than paying. It's the continuous, desperate effort to turn time into money, even very inefficiently.

Which, of course, means that wealth is the opposite: it's throwing something out and buying a replacement because it's not worth overthinking these things, taking the Uber not because it's a long walk, but because it's hot out and you can answer a few emails in the car, ordering a coffee you don't particularly need at Starbucks because you feel guilty about taking up a table.

But even this kind of consumption happens at the border of trading time for money and trading money for time: the cost of that table at Starbucks is a function of their own income per square foot, which itself gets compressed when more people have better things to do with their time and energy than working from a Starbucks. Services tend to get pricier as countries get richer, even if their variety goes up—most people can't afford a full-time housekeeper or a professional chef, but you can hire a professional organizer for a few hours to deal with all the stuff you've accumulated.

Where you see true abundance and real post-scarcity is in mass-produced physical goods. Every new iPhone is, given the historical cost of such equipment, a miracle, and even more prosaic goods—clothes, furniture, appliances, toys—have gotten cheaper. That cheapness means that it's easy to buy more of them than we really need, especially since all of us grew up in a world of relatively fewer cheap material goods.

It's perfectly reasonable to find this process unfortunate. There's a lot of value that we lose when we automate what used to be a craft product, and when we mass-produce what was once N-of-1. But that's really the only way these products will be enjoyed by more than a handful of people; the decorative objects you might see in a museum today weren't sold to the historical equivalent of the museum-going demographic, but to the name-on-a-wing-of-the-museum demo instead. So any time you're trying to replace some $50 thing that lasted you a decade-plus, and find that the modern version costs $5 but breaks in a few years, take comfort in knowing that whoever painstakingly built the first one has now achieved a level of prosperity that gives them better uses for their time.

Read More in The Diff

The development cycle, and its impact on the goods/time tradeoff, has been a running theme in The Diff for a long time. For example:

• Modern Financial History Begins in 1998 ($) examines the financial consequences of the export model.

• We’ve also looked at China after growth stops ($).

• More broadly, we’ve written about the East Asian economic miracle and how its model applies to other domains.

• And, just last week, how globalization ties into companies focusing on their highest-margin activities ($).

1. Even the service quality is, in a sense, redistributive: every job is a mix of work and leisure, with white-collar jobs often skewing more towards the leisure side since it's so much easier to mess around and they typically involve spending all day face-to-face with the temptations of the Internet. But every job presents at least some choices between working hard and slacking off, and at least in the short term these hours get paid equally well. In this case it's a negative-sum redistribution, where one side gets worse service and the other side gets some fairly low-quality slacking time; in an optimal world they'd work shorter shifts but would really be working the whole time.

Join the discussion!