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Our Word of the Year choice serves as a symbol of each year’s most meaningful events and lookup trends.It is an opportunity for us to reflect on the language and ideas that represented each year.Everywhere we see businesses protected from competition, especially highly regulated businesses, we see the cost disease spreading.And it spreads largely by forcing companies to hire loads of useless people. Productivity depends as much on the functioning of large organizations, and the overall legal and regulatory system in which they operate, as it does on gadgets. Like our ancestors peer at the buildings, aqueducts, dams, roads, and bridges put up by our ancestors, whether Roman or American, and wonder just how they did it.He gets a huge 50% raise, to ,000/year, and suddenly has extra money to spend — his disposable income probably tripled or quadrupled. Americans as a whole got really rich in the 1940s and 1950s, and needed someplace to start spending their newfound wealth. Entertainment is now pretty cheap, and there are only so many nights a week you see a movie, and only so many /month MMORPGs you’re going to pay for.Before the hedonic treadmill kicks in, and he decides to waste all the money on higher rent and nicer cars, he changes his diet. You aren’t going to pay 5 times as much for a slightly better video game or movie — and although you might pay double for 3D-Imax, there’s not much room for growth in that 5%.

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Why spend less, if education is the most superior good around?I think it’s obvious why; they supply isn’t very limited.And the marginal impact of two teachers versus one, or a team of doctors versus one, isn’t huge.The ratio of teachers to students hasn’t gone down a lot — but the ratio of administrators to students has shot up.Most large public school systems spend more than half their budget on administrators.Similarly, class sizes at most colleges and universities haven’t changed that much — but administrative staff have exploded.

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