As per the nature of time preferences, longer production processes must be more productive if they are to justify a diminution of immediate enjoyments.

A computer 1 year from now to 5 years from now is inferior to a computer, printer, and monitor 1 year from now to 5 years from now, achieved at the expense of denying oneself the computer from now till 1 year from now.

Therefore, Walter Block is right in saying that in regard to wages, it is DMVPs of workers in different stages of the production structure that are equalized. A worker both in a short process and in a long process gets $100 in the state of equilibrium, but the long process also faces higher interest expenses and must be more productive in order to be invested into in the first place. The worker receives $100 but produces $105 worth of goods.


0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *