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Speaker 1: Hello, and welcome to another episode of the All Thoughts podcast.

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Speaker 1: I'm Tracy Allaway and I'm Joe. WI wasn't all so Joe.

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Speaker 1: We have been recording a lot of supply chain episodes,

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Speaker 1: and I know we kind of joke about this about

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Speaker 1: going as granular as possible into the supply chain. But

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Speaker 1: I think I finally found basically as micro as we

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Speaker 1: might possibly go. This is what I love. I there's

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Speaker 1: always more micro. Every little part has a subpart or

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Speaker 1: a sub factor. But yes, I believe our conversation today

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Speaker 1: is going to get very microL But is it like

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Speaker 1: a supply chain episode for real? Yeah? I think it

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Speaker 1: kind of is. I mean, this is a component that

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Speaker 1: feeds into lots of different things. And also you say

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Speaker 1: that things can always get more micro and there must

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Speaker 1: be a limit somewhere unless we get into like sub

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Speaker 1: atomic particles or something like that. I really feel like,

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Speaker 1: in terms of components that feed into a lot of

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Speaker 1: other things, this is maybe as micro as we're going

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Speaker 1: to get. We are going to be talking about nails today,

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Speaker 1: like nails that you hammer and that go into things

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Speaker 1: like housing and construction. There's no a nail, is it

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Speaker 1: contained one part? There's no like you know, you know,

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Speaker 1: obviously there are elements to build, you know, there's the

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Speaker 1: raw metal and the labor, but yeah, a nail is

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Speaker 1: about as simple as simple as a part you can get. Yeah, well,

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Speaker 1: I'm glad you mentioned that because this is something that

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Speaker 1: is kind of unique to nails. So nails are something

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Speaker 1: that have existed for a very very long time, although

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Speaker 1: in different forms, but that means that they're very very

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Speaker 1: interesting to study from an economic perspective, and you can

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Speaker 1: learn a lot about how the economy has changed over

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Speaker 1: time by looking at nails. And so we're going to

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Speaker 1: be speaking with someone who has done exactly that, someone

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Speaker 1: who actually wrote a paper basically constructing a price index

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Speaker 1: of nails from I think it was two modern times

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Speaker 1: and trying to learn what price changes in nails actually

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Speaker 1: says about the transformation of the economy. So very interesting stuff,

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Speaker 1: very micro stuff. So let's get right to it. But

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Speaker 1: I just want to say, I hope one thing that

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Speaker 1: you know, we've had this inflation lately, and I wouldn't

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Speaker 1: be surprised if nails are gotten more expensive, but I

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Speaker 1: really hope that it is a society we're paying less

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Speaker 1: for nails on a sort of like you know, purchasing

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Speaker 1: power adjusted or dollar adjusted average than we were in

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Speaker 1: I hope we've seen some efficiency gains even with the inflation.

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Speaker 1: I guess we're about to find out. But that is

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Speaker 1: my one. I'll be really sad if we're we've said

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Speaker 1: we're back, we're so that we were like over three

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Speaker 1: years ago. You're gonna go back to forging your own

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Speaker 1: nails or something in protests exactly right, All right, Well

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Speaker 1: we're about to find out. We're going to be speaking

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Speaker 1: with Dan Sickle. He's a professor of economics at Wellesley College.

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Speaker 1: Also used to be on the Federal Reserve Board in

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Speaker 1: d C. And also at the Treasury Department. So very

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Speaker 1: interesting background. Dan, Thank you so much for coming on

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Speaker 1: the show. Very happy to be with you. Delighted to

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Speaker 1: get a chance to talk nails. Excellent. Um. I want

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Speaker 1: to start out with a very important question, when should

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Speaker 1: you use nails and when should you use screws? Great question.

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Speaker 1: So nails are a lot easier and quicker to install

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Speaker 1: than a than a screw. So if you're just putting

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Speaker 1: two pieces of wit together, and nail might be a

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Speaker 1: good way to do it. But Screws have a lot

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Speaker 1: more holding power, that is, their resistance to the pieces

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Speaker 1: you put together being pulled apart, and screws work in

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Speaker 1: a much wider range of materials than nails do. I'm

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Speaker 1: trying to work in like a if all you have

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Speaker 1: is a hammer, joke, everything looks like a nail. I

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Speaker 1: haven't come up with it yet. My goal, though, is

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Speaker 1: by the end of the episode. So before we actually

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Speaker 1: talk about the study of nails, why don't we just

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Speaker 1: zoom out a bit? What is it that your work

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Speaker 1: has focused on more broadly, such that trying to construct

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Speaker 1: the price history of nails was a endeavor that you

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Speaker 1: wanted to do. So I'm a macro economist and as

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Speaker 1: as as Tracy mentioned, spent many years working at the

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Speaker 1: Federals at Board doing economic forecasting, and that led me

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Speaker 1: into a sub field of economics called economic measurement that

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Speaker 1: looks at uh the methodologies we use for measuring things

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Speaker 1: like inflation or gross domestic product. So that that's the

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Speaker 1: background I brought to this, And I'm also when I'm

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Speaker 1: not doing economics, I'm a woodworker. So one day I

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Speaker 1: was looking through a woodworking catalog and saw a listing

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Speaker 1: for old fashioned cut nails, and that got me thinking, huh,

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Speaker 1: I wonder what's happened to the price of nails since

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Speaker 1: back in the day when cut nails were the thing

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Speaker 1: that everyone was using. So you actually mentioned this in

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Speaker 1: your paper, and I tease this in the intro, but

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Speaker 1: you kind of set out that nails are a perfect

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Speaker 1: component through which to study economic changes because they've been

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Speaker 1: with us for for a long time, and because you

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Speaker 1: can actually look at them over the course of centuries.

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Speaker 1: So what is it about nails that makes them unique

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Speaker 1: or that lends themselves to this kind of economic analysis?

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Speaker 1: So nails are an incredibly interesting product to look at.

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Speaker 1: They're they're very easy to dismiss because they seem so

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Speaker 1: pedestrian and every day, but they have a couple of

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Speaker 1: virtues that make them ideal for a study like this one.

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Speaker 1: As you mentioned, nails have been around for a very

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Speaker 1: long time. We could easily go back to Roman times

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Speaker 1: and find a nail and it would still be recognizable

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Speaker 1: as a nail. So the actual form of nails hasn't

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Speaker 1: changed so much, but the process for making them has

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Speaker 1: really changed a lot. It's changed dramatically, so it really

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Speaker 1: gives us a nice window into centuries of changes in

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Speaker 1: manufacturing processes, as as the way of making nails shifted

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Speaker 1: from a blacksmith or a nail smith pounding it out

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Speaker 1: from a piece of iron one at a time. Too.

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Speaker 1: Now machines that can spew out hundreds or even thousands

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Speaker 1: of nails a minute um at just at just an

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Speaker 1: incredible rate. That the idea of nails not having changed

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Speaker 1: so much themselves, but the production process changing so much

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Speaker 1: makes them a really interesting thing to, uh, to look at.

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Speaker 1: So it's almost it's almost a pure way to measure productivity,

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Speaker 1: at least in one sector. What are the numbers, like,

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Speaker 1: is there an equivalent to like how much of six

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Speaker 1: nail would cost today? Or maybe a better way to

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Speaker 1: put it is, if it's they wanted to have as

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Speaker 1: many nails in a house, like how many in a

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Speaker 1: typical house? How many uh blacksmith hours would that have

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Speaker 1: required them? Yeah, so great question. Back in it would

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Speaker 1: have taken a blacksmith about a minute to make a

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Speaker 1: single nail. So let's let's use that as a starting

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Speaker 1: point today. Today, if we think about a modern manufacturing

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Speaker 1: facility making nails, that one worker would now probably be

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Speaker 1: handling about seven nail machines, and those nail machines might

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Speaker 1: be making on average maybe five hundred nails a minute,

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Speaker 1: So each of seven machines making five hundred nails a minute.

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Speaker 1: The latest machines might be made as many as two

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Speaker 1: thousand nails a minute. More typical machines maybe around three

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Speaker 1: hundred and fifty or something. So I think now that

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Speaker 1: one worker running seven machines each making five hundred nails

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Speaker 1: a minute, well that's thirty five nails a minute that

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Speaker 1: that one worker is making compared to making one nail

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Speaker 1: in that minute back in six This is something that

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Speaker 1: is really fascinating to me. But how do you actually

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Speaker 1: go back to construct this price index? And at some

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Speaker 1: point we should say what the price index actually shows,

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Speaker 1: But how do you go back three hundred years to

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Speaker 1: actually look at how much nails cost and how long

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Speaker 1: it took a blacksmith to forge a nail in the

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Speaker 1: early seventeen hundreds, so on the price piece. Economic historians

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Speaker 1: have actually already done a lot of the groundwork for

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Speaker 1: me and pulling price records from really interesting places. So

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Speaker 1: the earliest prices back which are actually covering prices in

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Speaker 1: the United Kingdom came from an economic historian who looked

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Speaker 1: through a log books from schools, hospitals, prisons, and other

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Speaker 1: kinds of public institutions. And so the nail prices that

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Speaker 1: I'm using from that period came from Greenwich Hospital in

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Speaker 1: the UK. And this hospital had a log book where

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Speaker 1: every time they bought something, somebody wrote down how much

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Speaker 1: they paid and how much what was the quantity of

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Speaker 1: the stuff that they bought. So every time this hospital

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Speaker 1: bought nails, there was an entry in the log book,

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Speaker 1: and there was a prior economic historian who went back

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Speaker 1: went through that log book and translated all of that

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Speaker 1: into price indexes for a wide range of commonly purchased

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Speaker 1: um commodities. Coming to the United States eight late eighteenth century,

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Speaker 1: there were ads and newspapers other kinds of circulars, and

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Speaker 1: again economic historians have gone back and extracted those data

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Speaker 1: from say, newspaper ads for how much did nails cost

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Speaker 1: in that earlier period. So the thing that I've done

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Speaker 1: is to gather all of these disparate nail price indexes

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Speaker 1: covering different spans of time, and putting them all together

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Speaker 1: to get one consistent price series going all the way

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Speaker 1: back to so beyond just the fact that we're incredibly

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Speaker 1: more um and I want to get more into the

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Speaker 1: sort of like details of what happened between six and now,

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Speaker 1: but beyond just the fact that we're incredibly more efficient

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Speaker 1: at making nails today, and I would obviously really hope

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Speaker 1: that we would be and you know, times more efficient

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Speaker 1: and sounds seems pretty good. What are some of the

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Speaker 1: other takeaways from this that you've learned about how productivity happened,

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Speaker 1: or how how everyday items become cheaper over time. So

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Speaker 1: the price of nails, if we tramp look at that

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Speaker 1: big productivity increase and think about the implications of that

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Speaker 1: for prices, is ultimately what people in the economy experience.

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Speaker 1: From about through the mid twentieth century, the price of

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Speaker 1: nails relative to the price of all other consumer goods,

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Speaker 1: so what economists were referred to as the real price

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Speaker 1: of nails fell by about ten times. So that's that

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Speaker 1: productivity advance showing through to the price of nails. Um.

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Speaker 1: It came in a variety of ways. It came partly

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Speaker 1: because the materials used for nails iron in the earlier

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Speaker 1: period steal more recently became less expensive. It came partly

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Speaker 1: because the energy source used for producing nails changed from

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Speaker 1: hand power to water power to steam to electricity. It

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Speaker 1: came partly because the machinery, as we already talked about,

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Speaker 1: the machinery used for producing nails got more efficient and

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Speaker 1: could produce more nails from a given amount of time

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Speaker 1: as automation to cold. It also, prices also came to

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Speaker 1: out because people just got better at organizing production. So

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Speaker 1: when electricity became available, you could organize a shop floor

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Speaker 1: for making nails in a different way than you would

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Speaker 1: if people were using steam power or water power coming

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Speaker 1: from a single either water wheel or a single steam engine.

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Speaker 1: And so also a lot of just thoughtful changes in

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Speaker 1: the way we organized material handling and production that also

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Speaker 1: played a very important role in bringing those prices down. Now,

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Speaker 1: you mentioned that prices fell from six to sort of

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Speaker 1: the nineteen thirties, but what happened after that? And I

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Speaker 1: know Joe started this conversation saying that you hope that

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Speaker 1: the price of nails had come down over time, and

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Speaker 1: you know that's true relative to but it hasn't been

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Speaker 1: a straight line. And as you found, prices have actually

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Speaker 1: been rising since around the nineteen thirties, that's right. And

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Speaker 1: when I first the first looked at these numbers, I

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Speaker 1: was really surprised by the more recent price increases, thinking

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Speaker 1: that the productivity advance would have shown through to prices.

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Speaker 1: But there are other factors that came into play that

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Speaker 1: led to those more recent um the more recent in

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Speaker 1: the sense of since the mid twentieth century price increases.

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Speaker 1: But to Joe's point, nails today are still less expensive

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Speaker 1: than in the late eighteenth century. So there has been

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Speaker 1: this increase since the mid twentieth century, but it hasn't

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Speaker 1: come up to anywhere near where it was in terms

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Speaker 1: of the price of nails back in the late late

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Speaker 1: seventeenth century and so on. But some of the factors

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Speaker 1: contributing to that price increase. One, since mid twentieth century,

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Speaker 1: for prices of basic commodities, including importantly steel, had the

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Speaker 1: relative price of those things has risen, So that's one

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Speaker 1: factor contributing to that. There's also this really interesting and

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Speaker 1: this gets a bit deep into the weeds of price measurement,

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Speaker 1: but this other really interesting development which again illustrates how

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Speaker 1: nails touch so many different types of economic phenomena. But

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Speaker 1: starting in the nineteen fifties, common simple basic nails started

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Speaker 1: to be imported from other countries rather than just produced

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Speaker 1: in the US, and so there's been a big shift

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Speaker 1: since then towards most of the really basic nails you'd

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Speaker 1: get it say, at home depot, being produced outside the

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Speaker 1: US rather than being produced in the US. So there's

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Speaker 1: been this shift in nail manufacturing in the US from

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Speaker 1: making really basic nails to the handful of companies still

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Speaker 1: make nails in the US now tend to make special

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Speaker 1: nails uh used with particular materials or with special coatings

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Speaker 1: or special shapes that are used in very specialized applications.

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Speaker 1: And that creates some challenges for the folks at the

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Speaker 1: Bureau of Wavorge Statistics who track prices over time in

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Speaker 1: the modern era, because the regular world two inchinail you

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Speaker 1: might buy at home depot, well, those aren't produced domestically

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Speaker 1: very much anymore, so it's hard for them to track prices,

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Speaker 1: and so that leads to some really interesting and complicated

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Speaker 1: issues that as the type of nails produced in the

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Speaker 1: US shifts to specialty nails, has likely led to an

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Speaker 1: increased in measured prices, perhaps a little more intensively than

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Speaker 1: what really might be happening. For just the really basic,

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Speaker 1: simple two echinail you'd buy at home depot. This is

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Speaker 1: like the kind of debate that gets people really they're

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Speaker 1: blood boiling about the FED and the CPI and measurement

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Speaker 1: and everything because you have like, oh, yeah, the price

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Speaker 1: is going up, and then someone else's yeah, but it's

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Speaker 1: we're starting to measure specialty nails, but you've got so

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Speaker 1: much more. Yeah, it's a better nail. It's like, and

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Speaker 1: I don't want a better nail. I just want a

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Speaker 1: regular old nail. And I so like the hedonic adjustment.

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Speaker 1: I guess I don't know if that's technically what's going

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Speaker 1: on here, but the quality adjustment of a nail is

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Speaker 1: not something you would think about, like say with a

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Speaker 1: computer screen or an iPhone, But I guess it sort

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Speaker 1: of has to be factored in when we're thinking about

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Speaker 1: trying to create a single chart that goes back hundreds

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Speaker 1: of years. Yeah. So the hedonic adjustment is a technique

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Speaker 1: used by statisticians economists doing price measurement to try to

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Speaker 1: adjust for quality change and the issue and and for nails. Uh,

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Speaker 1: there isn't hedonic adjustment going on. It would be a

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Speaker 1: really interesting thing to do, but that that isn't. That

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Speaker 1: isn't the way that they're measure the prices. The challenge,

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Speaker 1: the challenges the shift in the composition of the product

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Speaker 1: in that ideally you don't want to track the same

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Speaker 1: product over times. You're always doing a like to like comparison,

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Speaker 1: and as the product the product makes shifts to higher price,

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Speaker 1: more specialty products, it becomes increasingly difficult to do that,

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Speaker 1: And so that could lead to a situation where these

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Speaker 1: specialty products see faster price increases than maybe the really

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Speaker 1: basic products do. And then since you're measuring this broader

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Speaker 1: category because you can't measure the narrower category, you end

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Speaker 1: up seeing in the official statistics faster price increases. Do

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Speaker 1: shipping costs factor into prices at all? I know we're

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Speaker 1: mostly focused on I guess domestically produced nails, but you know,

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Speaker 1: even in the US, shipping costs have gone up quite

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Speaker 1: a lot recently. So with something like that actually show

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Speaker 1: up in the price inducts or an inflation statistics, yeah, absolutely,

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Speaker 1: And and a lot of the supply chain issues that

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Speaker 1: we hear about so much today are quite quite present

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Speaker 1: for nails. For nails too, if you want to look

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Speaker 1: at the numbers over the last year. Uh, this would

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Speaker 1: be the producer price index for the narrowist category that

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Speaker 1: includes nails. Prices are up about forty per cent of

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Speaker 1: since since a year ago, so that is partly materials prices.

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Speaker 1: Steel prices are up a lot, and remember there have

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Speaker 1: been terrorists on steel that have pushed up steel prices.

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Speaker 1: Shipping costs are far higher, whether it's shipping to bring

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Speaker 1: in products from overseas or if it's or if it's

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Speaker 1: just domestic shipping, all of that has gotten a lot

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Speaker 1: more expensive. And so there's been almost in the last

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Speaker 1: year with which the last year's numbers aren't in the

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Speaker 1: paper because that happened since I got the paper written

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Speaker 1: it out. But in the last year there's been almost

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Speaker 1: a perfect storm of factors pushing up nail prices. It's

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Speaker 1: funny how many different things the so many perfect storms.

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Speaker 1: I believe we've had a perfect storm of coffee prices.

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Speaker 1: I believe we've had a perfect storm of supply chain

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Speaker 1: issues for housing and diminishing housing inventory. And now to

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Speaker 1: discover that there is a perfect storm pushing up the

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Speaker 1: price of nails, I guess I'm not surprised. Had there

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Speaker 1: been any issues for um construction sites or builders like,

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Speaker 1: is there ample supply of nails or have other issues

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Speaker 1: with actually like job sites flowing down due to uh,

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Speaker 1: inability to source nails. So I could report one one

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Speaker 1: interesting anecdote. So I got talking to somebody who's in

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Speaker 1: the nail business in the US who saw the paper

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Speaker 1: and reached out to me and had a chance to

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Speaker 1: talk with him. And so he's in the business and

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Speaker 1: he reports that shortages of nails are holding up construction projects. Uh.

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Speaker 1: You know, So one one story from one person in

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Speaker 1: the business, this who said that this perfect storm affecting

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Speaker 1: nails as well as a whole lot of other manufactured goods,

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Speaker 1: is actually limiting construction activity. How easy is it to

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Speaker 1: recycle nails or to source I guess second hand nails

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Speaker 1: from older projects, or tear down buildings or something like that.

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Speaker 1: That question leads to both answer for today and an

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Speaker 1: answer historically. So let's let's let's go back historically. So,

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Speaker 1: once upon a time, nails were absolutely recycled, and indeed,

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Speaker 1: in the period in the eighteenth century, if there was

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Speaker 1: an abandoned building, it would typically be burned, and it

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Speaker 1: would often be burned down in order to recover the nails.

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Speaker 1: Nails were sufficiently expensive in that earlier period that it

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Speaker 1: was worth burning down the abandoned building picking through the

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Speaker 1: burned remains to pick out the nails, because it took

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Speaker 1: somebody a minute to each nail. So nails were very,

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Speaker 1: very precious in that earlier period. Today that really isn't

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Speaker 1: done so much. Nails have even with the recent price increases,

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Speaker 1: Nails are still viewed largely as a throwaway project, so

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Speaker 1: it would be unusual for a builder to try to

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Speaker 1: recycle older nails. Although there is this interesting anecdote I

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Speaker 1: came across that Donald Trump's father, who was a builder, Ashley,

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Speaker 1: was one who would walk through his construction sites and

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Speaker 1: pick up the loose nails that had been dropped to

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Speaker 1: return them to carpenters to use again. But in his

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Speaker 1: New York Times obituary, that was viewed as a sign

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Speaker 1: of extreme frugality rather than just kind of the typical

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Speaker 1: thing that builders would be doing. Well, I respect that.

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Speaker 1: That's you know, no waste, uh leave nothing the way

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Speaker 1: you know. I joked at the beginning, I was like, Oh,

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Speaker 1: we're gonna like be able to speak for an hour nails,

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Speaker 1: But we really could probably speak for like three hours

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Speaker 1: on nails because there's utterly fascinating. I want to go

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Speaker 1: back again to the zoom out um the long term

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Speaker 1: trajectory of nails, and of course like okay, so at

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Speaker 1: one point when it was a blacksmith making one nail

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Speaker 1: a minute, that was like a trade and that was

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Speaker 1: a trades person and you know, a high skill high

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Speaker 1: skill work or what people would call high school work.

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Speaker 1: Was their tension over time as that got more and

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Speaker 1: more automated such that it was one person running a

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Speaker 1: machine that could do hundreds, or their fights over the

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Speaker 1: trajectory of the nail industry and the loss of this

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Speaker 1: the blacksmith role and created one nail a minute. So

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Speaker 1: I'm not aware of any specific stories of fights over

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Speaker 1: that um as as would be the case would say

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Speaker 1: a lot of its damaging looms and uh in a

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Speaker 1: in an earlier period. But I think nails in Um

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Speaker 1: illustrate the changes in manufacturing and the change in the

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Speaker 1: relationship between employees and factory owners as work shifted from

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Speaker 1: being artisanal with a blacksmith doing nails in their own

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Speaker 1: blacksmith shop, to the beginnings of factory production and then

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Speaker 1: ultimately to very automated factory production. So I think much

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Speaker 1: of the history of the labor movement and much of

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Speaker 1: the history of relations between business and labor um would

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Speaker 1: be reflected in what happens and nails. And maybe with

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Speaker 1: a bit more digging one could find some particular some

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Speaker 1: particular stories about nails, But I think more generally, if

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Speaker 1: you think about the nineteenth century and changing power dynamic

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Speaker 1: between workers and business owners, that all would have played

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Speaker 1: out in the realm of nail manufacturing as well as

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Speaker 1: in any other type of manufacturing, because again, the production

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Speaker 1: shifted from artisanal, small shop, one person making nails to

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Speaker 1: now almost entirely automated nail manufacturing. Well, can you talk

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Speaker 1: a little bit about what happened to wages over the

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Speaker 1: course of that period as they relate to nails. So,

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Speaker 1: presumably as manufacturing gets more efficient and nails start getting

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Speaker 1: churned out a lot faster, presumably the wage component that's

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Speaker 1: going into the price of nails and ultimately into your

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Speaker 1: price index for nails that starts to come down. Yeah,

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Speaker 1: So to two ways, two ways to think about this.

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Speaker 1: One in terms of wage numbers that I'm using for

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Speaker 1: the numbers in the paper I'm using wage changes for

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Speaker 1: a typical average worker. There just isn't enough detail to

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Speaker 1: get wages specifically for somebody making nails. It would be

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Speaker 1: wonderful if there were that kind of data. It would

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Speaker 1: require immense digging through business accounts from many different companies

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Speaker 1: in the eighteenth and nineteenth century and so far that

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Speaker 1: that just isn't work that I've done or or seen

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Speaker 1: and can do. So I'm using an average wage. That

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Speaker 1: being said, typical pattern for manufacturing would be that as

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Speaker 1: production shifted from artisanal to factory work. As Joe mentioned

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Speaker 1: that that that blacksmith that was a trade that was

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Speaker 1: a highly skilled task that people spent years as apprentices

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Speaker 1: to learn how to do that trade. And as production

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Speaker 1: shifted to a factory basis, the skill level needed to

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00:25:36,400 --> 00:25:39,160
Speaker 1: run a machine in a factory was much lower than

402
00:25:39,200 --> 00:25:42,440
Speaker 1: the skill level needed to blacksmith. And so there's certainly

403
00:25:42,480 --> 00:25:45,679
Speaker 1: was a period in the nineteenth century when wages for

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00:25:45,760 --> 00:25:49,400
Speaker 1: people making nails would have been moving down um. And

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Speaker 1: then later as uh, productivity increases in general increases and

406
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Speaker 1: wages manufacturing wages rising um as as you know, we'd

407
00:25:59,560 --> 00:26:02,800
Speaker 1: be more for familiar with in the twentieth century. So

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00:26:03,520 --> 00:26:07,160
Speaker 1: these days, uh, in you know, the political debate about inflation,

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Speaker 1: some people are talking about the role of competition policy

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Speaker 1: and whether, I don't know in the short term, but

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Speaker 1: at least in the medium term, whether superior competitive environments

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Speaker 1: could help alleviate price pressure. And when I was looking

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Speaker 1: at your nail paper originally someone pointed out to me

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Speaker 1: that in the late eighteen hundreds there was something called

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Speaker 1: the Wire Nail Association, and that seemed to try to

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Speaker 1: exert some I don't know, coordinating or pricing power. Did

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Speaker 1: you encounter sort of periods in which the manufacturers of

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Speaker 1: nails attempted to, I guess, make the industry less competitive,

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00:26:45,760 --> 00:26:49,359
Speaker 1: to build pricing power. So I think the story that

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Speaker 1: you're telling tracks kind of the broad history, the broad

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Speaker 1: swing of history of kind of business, and then t

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Speaker 1: trust power and the rise in the in the late

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00:27:03,440 --> 00:27:08,959
Speaker 1: nineteenth century of trusts and consolidation in many many businesses,

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00:27:09,440 --> 00:27:13,359
Speaker 1: and some exploitation of that of that market power. I

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00:27:13,400 --> 00:27:17,440
Speaker 1: didn't focus deeply on that piece of the history of nails.

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Speaker 1: I think it's going to attrack the general story that

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Speaker 1: we would have seen for other types of other types

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Speaker 1: of manufacturing. One thing that maybe is different about nails

429
00:27:27,359 --> 00:27:31,680
Speaker 1: is that, in contrast to steal or railroads or meat packing,

430
00:27:32,080 --> 00:27:34,480
Speaker 1: it can be done on a smaller scale, so it

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00:27:34,600 --> 00:27:38,480
Speaker 1: is harder to consolidate the production than it would be

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Speaker 1: for some of these other types of things where the

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00:27:40,200 --> 00:27:43,639
Speaker 1: capital costs are so are so massive. So I think again,

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Speaker 1: it would have kind of generally followed the broad swings

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00:27:48,119 --> 00:27:52,040
Speaker 1: and industrial history, perhaps a little less intensively for nails

436
00:27:52,040 --> 00:27:55,760
Speaker 1: than for some other products. So I know we were

437
00:27:55,880 --> 00:27:59,280
Speaker 1: kind of referring to hedonic adjustments earlier, or you know

438
00:27:59,359 --> 00:28:01,840
Speaker 1: people who make fun of hedonic adjustments and the idea

439
00:28:01,960 --> 00:28:04,600
Speaker 1: that everything's changed, and you know, the quality of a

440
00:28:04,680 --> 00:28:08,000
Speaker 1: nail has gone up so much that it offsets the

441
00:28:08,040 --> 00:28:12,840
Speaker 1: price increases. But there has been one development in the

442
00:28:12,880 --> 00:28:15,639
Speaker 1: world of nails, and you talk about it in the paper,

443
00:28:16,240 --> 00:28:21,879
Speaker 1: But the invention of the nail gun arguably changed a

444
00:28:21,920 --> 00:28:25,800
Speaker 1: lot of the dynamics or changed the nature of what

445
00:28:25,920 --> 00:28:28,760
Speaker 1: nails actually do or how easy it is to use them.

446
00:28:28,920 --> 00:28:32,359
Speaker 1: Can you talk a little bit about how, first of

447
00:28:32,400 --> 00:28:36,360
Speaker 1: all that changed nails and secondly, how you incorporate that

448
00:28:36,680 --> 00:28:40,480
Speaker 1: into thinking about something like price. Yeah, so nail guns

449
00:28:40,520 --> 00:28:44,160
Speaker 1: are really interesting for thinking about nails. And it highlights

450
00:28:44,560 --> 00:28:49,280
Speaker 1: the importance of just being broad and thinking about what

451
00:28:49,280 --> 00:28:52,600
Speaker 1: what what is the product is price we're trying to track.

452
00:28:53,400 --> 00:28:57,200
Speaker 1: So from a builder's perspective, the builder cares about an

453
00:28:57,200 --> 00:29:01,080
Speaker 1: installed nail, doesn't care about the nail per se, But

454
00:29:01,240 --> 00:29:03,480
Speaker 1: how much does it cost to get a nail into

455
00:29:03,520 --> 00:29:06,080
Speaker 1: a piece of wood to hold a building, to hold

456
00:29:06,080 --> 00:29:09,840
Speaker 1: a building up. So nail guns, which appeared in the nies,

457
00:29:10,480 --> 00:29:15,240
Speaker 1: are a really big deal because a construction worker using

458
00:29:15,240 --> 00:29:18,640
Speaker 1: a nail gun can install a lot more nails, much

459
00:29:18,640 --> 00:29:23,840
Speaker 1: more rapidly than can a constructor worker worker using an

460
00:29:23,840 --> 00:29:27,480
Speaker 1: old fashioned hammer. If you run the numbers, and you

461
00:29:27,600 --> 00:29:30,400
Speaker 1: do kind of for illustrative purposes some back of the

462
00:29:30,520 --> 00:29:33,480
Speaker 1: envelope calculations to think about how big a deal is it.

463
00:29:33,960 --> 00:29:37,440
Speaker 1: Nail gun probably drops the price of an installed nail

464
00:29:37,480 --> 00:29:42,000
Speaker 1: by about half. So one thing that has offset part

465
00:29:42,080 --> 00:29:45,440
Speaker 1: of that increase in prices in nail prices that we've

466
00:29:45,480 --> 00:29:48,840
Speaker 1: seen since the mid twentieth century is the advent of

467
00:29:48,880 --> 00:29:52,200
Speaker 1: nail guns. Because from the point of view of from

468
00:29:52,200 --> 00:29:55,320
Speaker 1: the point of view of a builder, yeah, nail prices

469
00:29:55,320 --> 00:29:59,080
Speaker 1: have gone up, but nail guns have helped to offset

470
00:29:59,160 --> 00:30:02,200
Speaker 1: part of that Increa by bringing down the cost of

471
00:30:02,240 --> 00:30:06,000
Speaker 1: an installed nail. So a great example of how complete

472
00:30:06,040 --> 00:30:09,560
Speaker 1: to use the economist term complimentary capital can play such

473
00:30:09,600 --> 00:30:13,200
Speaker 1: an important role in what is it actually cost to

474
00:30:14,040 --> 00:30:17,160
Speaker 1: get something done or what is the all in price

475
00:30:17,320 --> 00:30:36,240
Speaker 1: of a particular product, as the number of nails in

476
00:30:36,440 --> 00:30:39,880
Speaker 1: say a typical house gone up, and like if you

477
00:30:39,920 --> 00:30:42,400
Speaker 1: can install nails a lot faster because you have a

478
00:30:42,480 --> 00:30:45,640
Speaker 1: nail gun as opposed to like hammering, would you be

479
00:30:45,720 --> 00:30:47,840
Speaker 1: would there be times where you would use two nails

480
00:30:48,320 --> 00:30:51,120
Speaker 1: to make it even stronger than one, just because the

481
00:30:51,320 --> 00:30:54,959
Speaker 1: doubling is not a particularly not particularly taxing for the builder.

482
00:30:56,640 --> 00:31:00,200
Speaker 1: So the time when that phenomena was really a big

483
00:31:00,240 --> 00:31:03,080
Speaker 1: deal was in the mid nineteenth century. So we had

484
00:31:03,120 --> 00:31:05,840
Speaker 1: talked about how back in the eighteenth century nails are

485
00:31:05,880 --> 00:31:08,480
Speaker 1: so expensive that people would burn down abandoned buildings to

486
00:31:08,520 --> 00:31:12,000
Speaker 1: recover nails. Well, nail prices started to fall in the

487
00:31:12,480 --> 00:31:16,280
Speaker 1: really early in the eighteen hundreds as automation came in,

488
00:31:16,520 --> 00:31:20,120
Speaker 1: as nails came to be cut, nails came to be

489
00:31:20,200 --> 00:31:23,440
Speaker 1: made in factories rather than the blacksmiths making them one

490
00:31:23,440 --> 00:31:26,160
Speaker 1: at a time, and by the mid nineteenth century prices

491
00:31:26,200 --> 00:31:28,840
Speaker 1: had already come down quite a bit, and that was

492
00:31:28,880 --> 00:31:33,520
Speaker 1: an important development that allowed the rise of what typically

493
00:31:33,640 --> 00:31:37,720
Speaker 1: is called balloon frame construction, and balloon frame construction being

494
00:31:38,080 --> 00:31:40,520
Speaker 1: the typical kind of way we build houses today, where

495
00:31:40,840 --> 00:31:44,200
Speaker 1: two by four dimensional number studs hold up the hold

496
00:31:44,280 --> 00:31:47,720
Speaker 1: up the house. That style of construction takes a lot

497
00:31:47,760 --> 00:31:52,160
Speaker 1: of nails. Prior to that, the typical style of construction

498
00:31:52,200 --> 00:31:54,360
Speaker 1: for building a house would have been post and being

499
00:31:54,960 --> 00:31:59,160
Speaker 1: where timbers were put together with mortis and tenant joints

500
00:31:59,160 --> 00:32:02,000
Speaker 1: and these kind of tragical woodworking joints, and that would

501
00:32:02,040 --> 00:32:04,360
Speaker 1: have made sense in the time when nails were very expensive.

502
00:32:04,800 --> 00:32:09,560
Speaker 1: But once nail prices had fallen enough, then it made

503
00:32:09,640 --> 00:32:13,600
Speaker 1: economic sense to go to this other in a way

504
00:32:13,720 --> 00:32:18,160
Speaker 1: simpler to build two takes less skill to build a

505
00:32:18,240 --> 00:32:21,000
Speaker 1: balloon frame house than it does to build a post

506
00:32:21,040 --> 00:32:23,320
Speaker 1: and beam house, but you can't do that in less

507
00:32:23,400 --> 00:32:26,040
Speaker 1: nail prices have come down enough. So that's a great

508
00:32:26,080 --> 00:32:29,960
Speaker 1: illustration of how the decline in prices in this incredibly

509
00:32:30,040 --> 00:32:35,880
Speaker 1: simple product have big downstream implications. UM, I have a

510
00:32:35,880 --> 00:32:38,880
Speaker 1: weird question, or I guess I'm thinking about how to

511
00:32:39,040 --> 00:32:41,960
Speaker 1: how to phrase this, But we talked about gains in

512
00:32:42,120 --> 00:32:47,920
Speaker 1: productivity in nail manufacturing. Now that nail manufacturing is so

513
00:32:48,040 --> 00:32:53,520
Speaker 1: streamlined and efficient, is it harder to ring additional productivity

514
00:32:53,880 --> 00:32:58,360
Speaker 1: gains out of that particular item, or I guess, how

515
00:32:58,400 --> 00:33:02,040
Speaker 1: can nails be improved moved upon at this point in time?

516
00:33:02,680 --> 00:33:05,600
Speaker 1: And you know, is the next big development something along

517
00:33:05,640 --> 00:33:08,280
Speaker 1: the lines of the nail gun where I don't know,

518
00:33:08,320 --> 00:33:11,760
Speaker 1: maybe it's robot workers who are suddenly able to run

519
00:33:11,800 --> 00:33:16,280
Speaker 1: around with with hammers or nailguns and just um automatically

520
00:33:16,320 --> 00:33:19,200
Speaker 1: in certain nails into houses. Like is that kind of

521
00:33:19,240 --> 00:33:22,960
Speaker 1: the next big thing? Or does it become progressively harder

522
00:33:23,480 --> 00:33:26,760
Speaker 1: to get these kind of big improvements that lead to

523
00:33:27,480 --> 00:33:31,720
Speaker 1: price falls and mass production. So I think the golden

524
00:33:31,760 --> 00:33:35,480
Speaker 1: age of nail production surely was that period from the

525
00:33:35,560 --> 00:33:39,000
Speaker 1: nineteenth century through the mid twentieth century, and I think

526
00:33:39,040 --> 00:33:42,880
Speaker 1: the advances have slowed since that have slowed since that time.

527
00:33:43,440 --> 00:33:45,880
Speaker 1: That doesn't mean there aren't any advances, that there aren't

528
00:33:45,880 --> 00:33:50,720
Speaker 1: possibilities of further automation in the production of nails, but

529
00:33:51,400 --> 00:33:53,680
Speaker 1: I think it is does get harder in the sense

530
00:33:53,680 --> 00:33:56,720
Speaker 1: of a basic nail and how much can you speed

531
00:33:56,800 --> 00:34:00,960
Speaker 1: up the production of that really basic product um and

532
00:34:01,120 --> 00:34:04,440
Speaker 1: That's a pattern that would not be unusual for other

533
00:34:04,520 --> 00:34:08,920
Speaker 1: manufactured goods, where there's a period of rapid advance and

534
00:34:08,920 --> 00:34:12,520
Speaker 1: then kind of a stabilization as the product matures, and

535
00:34:12,560 --> 00:34:16,480
Speaker 1: there are fewer easy opportunities for advances, either in the

536
00:34:16,480 --> 00:34:21,040
Speaker 1: product itself or in the process for manufacturing that that

537
00:34:21,160 --> 00:34:24,279
Speaker 1: I think, does Tracy take this in the direction that

538
00:34:24,360 --> 00:34:29,600
Speaker 1: you suggested, uh complimentary capital like the nail gun, or

539
00:34:29,800 --> 00:34:35,080
Speaker 1: maybe something that we haven't really envisioned yet with more

540
00:34:35,120 --> 00:34:39,239
Speaker 1: automated kind of whether it's robotics or what have you,

541
00:34:39,280 --> 00:34:43,120
Speaker 1: that automate more of the construction process. And it does

542
00:34:43,160 --> 00:34:46,239
Speaker 1: seem like that's the direction that things would be would

543
00:34:46,280 --> 00:34:49,799
Speaker 1: be going. I'm sure there's still scope for someone to

544
00:34:49,840 --> 00:34:54,160
Speaker 1: develop a machine that produces nails even more even more quickly,

545
00:34:54,680 --> 00:34:57,040
Speaker 1: but I think the big productivity gains, if we think

546
00:34:57,080 --> 00:34:59,360
Speaker 1: about it from a construction point of view, would likely

547
00:34:59,400 --> 00:35:03,320
Speaker 1: be coming from the direction that you pointed to. In general,

548
00:35:04,040 --> 00:35:06,960
Speaker 1: it feels like the bigger the big chip, Like if

549
00:35:07,000 --> 00:35:09,800
Speaker 1: I think, like, okay, setting aside right now the current

550
00:35:10,280 --> 00:35:14,040
Speaker 1: labor stress long term or medium term, it feels like

551
00:35:14,400 --> 00:35:19,600
Speaker 1: the big challenge opportunity has to come from productivity gains

552
00:35:19,800 --> 00:35:23,600
Speaker 1: in some of these highly labor intensive sectors. Uh, some

553
00:35:23,760 --> 00:35:27,359
Speaker 1: of which would be something like construction, like building a house,

554
00:35:27,600 --> 00:35:30,239
Speaker 1: but some of it might be in the care work. Obviously,

555
00:35:30,280 --> 00:35:33,799
Speaker 1: we've seen the stress that's been placed on elder care

556
00:35:33,920 --> 00:35:37,520
Speaker 1: childcare lately. How much in your view, like just even

557
00:35:37,600 --> 00:35:41,280
Speaker 1: like the building of a house. Setting aside the nails question,

558
00:35:41,880 --> 00:35:46,720
Speaker 1: has that been an area of significant productivity gains or

559
00:35:46,920 --> 00:35:49,719
Speaker 1: are we really waiting for like the robot that can

560
00:35:49,840 --> 00:35:52,040
Speaker 1: climb up a bunch of the stuff on its own

561
00:35:52,160 --> 00:35:54,960
Speaker 1: and nail and nail in a bunch of you know,

562
00:35:55,600 --> 00:35:57,960
Speaker 1: attach a bunch of stuff without a human having to

563
00:35:58,000 --> 00:36:03,120
Speaker 1: do it. So can Struction is a really challenging area

564
00:36:03,360 --> 00:36:07,640
Speaker 1: for measuring and thinking about productivity advance if one looks

565
00:36:07,640 --> 00:36:09,719
Speaker 1: at the and this is another area that you said,

566
00:36:09,760 --> 00:36:11,520
Speaker 1: this is one of these things that just kind of

567
00:36:11,640 --> 00:36:14,680
Speaker 1: drives people crazy. If you look, if you look at

568
00:36:14,719 --> 00:36:19,640
Speaker 1: official statistics on construction over recent decades, the productivity numbers

569
00:36:19,680 --> 00:36:22,680
Speaker 1: don't look don't look good. They look quite bad. If

570
00:36:22,719 --> 00:36:25,719
Speaker 1: you talk to builders, they will tell you about all

571
00:36:25,719 --> 00:36:28,200
Speaker 1: of the ways that they've improved of the past couple

572
00:36:28,200 --> 00:36:31,000
Speaker 1: of decades in how they how they do things. So

573
00:36:31,080 --> 00:36:32,920
Speaker 1: there does seem to be a bit of a disconnect

574
00:36:33,040 --> 00:36:36,839
Speaker 1: between the experience of people in the field and what's

575
00:36:36,840 --> 00:36:39,840
Speaker 1: showing up in the official numbers, and that you know

576
00:36:39,880 --> 00:36:44,200
Speaker 1: that highlights highlights a interesting and challenging set of measurement issues.

577
00:36:44,480 --> 00:36:48,040
Speaker 1: I think, more broadly though, that that Joe, just as

578
00:36:48,040 --> 00:36:52,719
Speaker 1: you're saying, the productivity advances looking forward, both in construction

579
00:36:52,840 --> 00:36:55,759
Speaker 1: and in other sectors, do need to come from these

580
00:36:55,840 --> 00:36:59,879
Speaker 1: labor intensive areas, and the hope would be that better

581
00:37:00,000 --> 00:37:06,160
Speaker 1: information technology, bit of artificial intelligence, bit of automation UH

582
00:37:06,360 --> 00:37:10,799
Speaker 1: could lead to improvements in many of these many of

583
00:37:10,840 --> 00:37:14,520
Speaker 1: these areas, whether it's construction or healthcare or some of

584
00:37:14,560 --> 00:37:19,200
Speaker 1: the other care sectors. On that note, I mean, looking

585
00:37:19,239 --> 00:37:24,520
Speaker 1: at your very intense research into NAILS, what would you

586
00:37:24,560 --> 00:37:28,920
Speaker 1: say is your big takeaway or the big lesson you've

587
00:37:29,000 --> 00:37:35,520
Speaker 1: learned about price or productivity statistics slash measurements in general, Like,

588
00:37:35,600 --> 00:37:38,919
Speaker 1: what's the big thing that you can extrapolate to other

589
00:37:39,040 --> 00:37:43,520
Speaker 1: statistics um. More broadly, Yeah, so I'd come back to

590
00:37:43,680 --> 00:37:47,279
Speaker 1: the importance of in the setup that you had of

591
00:37:47,520 --> 00:37:52,360
Speaker 1: looking at basic micro products to understand what's happening with

592
00:37:52,440 --> 00:37:55,480
Speaker 1: productivity to get to get a full picture. So it's

593
00:37:55,520 --> 00:38:02,160
Speaker 1: easy to think about technological advance in things like computers, UM,

594
00:38:02,280 --> 00:38:05,799
Speaker 1: where we've seen these incredible changes, but it's also very

595
00:38:05,840 --> 00:38:11,359
Speaker 1: important to think about UH technological advance in this case

596
00:38:11,400 --> 00:38:15,720
Speaker 1: in the production of simple products like nails, and the

597
00:38:15,840 --> 00:38:18,800
Speaker 1: changes the big drops in the relative price of nails

598
00:38:18,840 --> 00:38:22,840
Speaker 1: since again late UH late seventeenth century to mid twentieth

599
00:38:22,880 --> 00:38:27,960
Speaker 1: century had really important downstream implications, as we talked about

600
00:38:28,080 --> 00:38:33,040
Speaker 1: for construction and for a whole set of just how

601
00:38:33,280 --> 00:38:37,799
Speaker 1: nails are used in are built environment. Big productivity advances

602
00:38:37,920 --> 00:38:45,640
Speaker 1: absolutely for computing and electronic electronic information technology products, but

603
00:38:45,800 --> 00:38:52,600
Speaker 1: also really important changes in the most basic manufactured manufactured product.

604
00:38:53,480 --> 00:38:57,920
Speaker 1: Interesting to write that the kind of place of nails

605
00:38:58,400 --> 00:39:01,840
Speaker 1: in the economy has shifted a lot over that period.

606
00:39:02,480 --> 00:39:05,680
Speaker 1: In the sense of again, nails are very precious back

607
00:39:05,719 --> 00:39:09,680
Speaker 1: in the late seventeenth century, and they were so precious

608
00:39:09,760 --> 00:39:12,560
Speaker 1: that if you think about nails as a share of

609
00:39:12,600 --> 00:39:16,120
Speaker 1: the economy, the earliest I could go back on this

610
00:39:16,239 --> 00:39:19,400
Speaker 1: was back to eighteen ten. But in eighteen ten, nails

611
00:39:19,480 --> 00:39:22,719
Speaker 1: the use of nails, production, imports, and so on, the

612
00:39:22,960 --> 00:39:25,759
Speaker 1: total use of nails in the economy represented about half

613
00:39:25,800 --> 00:39:29,040
Speaker 1: a percentage GDP, which on the one on the one hand,

614
00:39:29,200 --> 00:39:31,080
Speaker 1: sounds like kind of a small number, but half a

615
00:39:31,080 --> 00:39:34,600
Speaker 1: percentage GDP is a really big deal. You know, today

616
00:39:34,840 --> 00:39:38,080
Speaker 1: household purchases of personal computers are a little less than

617
00:39:38,120 --> 00:39:42,040
Speaker 1: half a percentage GDP, or household purchases of air travel

618
00:39:42,080 --> 00:39:44,960
Speaker 1: a little less than half a percentage GDP. So nails

619
00:39:45,120 --> 00:39:49,560
Speaker 1: in an earlier period played a very important role in

620
00:39:49,600 --> 00:39:53,520
Speaker 1: the economy and had a really important place and kind

621
00:39:53,520 --> 00:39:56,920
Speaker 1: of popular accounts. We talked about people burning down buildings

622
00:39:56,920 --> 00:39:59,439
Speaker 1: to recover le nails. Nobody would do that. Nobody would

623
00:39:59,440 --> 00:40:02,200
Speaker 1: do that today. So we also get this window into

624
00:40:02,320 --> 00:40:06,920
Speaker 1: how different products can that now seem like their everyday

625
00:40:06,920 --> 00:40:11,880
Speaker 1: pedestrian products in an earlier period where really important products.

626
00:40:11,880 --> 00:40:16,520
Speaker 1: And so we get this really interesting perspective on changes

627
00:40:16,520 --> 00:40:20,719
Speaker 1: in people's lives and living standards over many, many centuries.

628
00:40:22,080 --> 00:40:24,800
Speaker 1: So before I go, I want to ask one question

629
00:40:24,880 --> 00:40:29,560
Speaker 1: that's sort of like I think it's super controversial among economists,

630
00:40:29,600 --> 00:40:32,719
Speaker 1: and I'm very curious like your take, But when it

631
00:40:32,719 --> 00:40:36,040
Speaker 1: comes to productivity gains, there seem to be different theories

632
00:40:36,080 --> 00:40:39,640
Speaker 1: about where productivity comes from or why it happens at

633
00:40:39,680 --> 00:40:43,040
Speaker 1: certain times, And sometimes I think people associated with some

634
00:40:43,280 --> 00:40:47,200
Speaker 1: technological breakthrough. So maybe someone finds, you know, someone suddenly

635
00:40:47,239 --> 00:40:49,400
Speaker 1: discovers the internet or is able to build it. We

636
00:40:49,440 --> 00:40:53,319
Speaker 1: get more efficient, and others associate productivity with sort of

637
00:40:53,360 --> 00:40:56,920
Speaker 1: like the high pressure economy. In a period of high growth,

638
00:40:57,480 --> 00:41:01,280
Speaker 1: low slack, shortage of labor, companies are forced to invest

639
00:41:01,920 --> 00:41:04,840
Speaker 1: and they forced to you know, maybe build a maybe

640
00:41:04,920 --> 00:41:08,200
Speaker 1: develop the robot that can build a house. I'm curious, like,

641
00:41:08,360 --> 00:41:10,880
Speaker 1: what is your view and when you look at you know,

642
00:41:10,880 --> 00:41:13,720
Speaker 1: you're talking about the perfect storm and the shortage of nails,

643
00:41:13,760 --> 00:41:17,440
Speaker 1: and we all know about other tensions in the construction

644
00:41:17,560 --> 00:41:21,120
Speaker 1: market right now. Could this be a period right now

645
00:41:21,400 --> 00:41:26,960
Speaker 1: where we see meaningful step ups in productivity, particularly around

646
00:41:27,000 --> 00:41:32,640
Speaker 1: these uh intense labor intensive sectors. So you mentioned a

647
00:41:32,680 --> 00:41:36,920
Speaker 1: couple really interesting elements of where productivity comes from. Whether

648
00:41:36,960 --> 00:41:39,200
Speaker 1: it's big ideas like the Internet that's kind of a

649
00:41:39,239 --> 00:41:42,839
Speaker 1: whole new way of thinking about how we exchange information,

650
00:41:43,360 --> 00:41:46,520
Speaker 1: or in the high pressure economy, whether it's process improvements

651
00:41:46,960 --> 00:41:50,600
Speaker 1: with increasing automation and so on. So if we think

652
00:41:50,680 --> 00:41:53,439
Speaker 1: about not so much nails, but just more generally where

653
00:41:53,440 --> 00:41:57,280
Speaker 1: we are today, it seems like that high pressure economy

654
00:41:57,440 --> 00:42:01,759
Speaker 1: is going to lead to additional automation. As with labor shortages,

655
00:42:01,840 --> 00:42:05,239
Speaker 1: high pressure economy businesses are going to see it in

656
00:42:05,280 --> 00:42:10,879
Speaker 1: their interests increasingly automated processes. That now makes economic sense

657
00:42:10,960 --> 00:42:13,600
Speaker 1: to do that with labor shortages, whereas maybe it didn't

658
00:42:13,960 --> 00:42:17,319
Speaker 1: didn't in the past. The other big element that could

659
00:42:17,400 --> 00:42:21,360
Speaker 1: well contribute to a jump in labor productivity more recently

660
00:42:21,560 --> 00:42:25,160
Speaker 1: is with the pandemic, and all of the new tools

661
00:42:25,200 --> 00:42:29,520
Speaker 1: that we've developed, like being able to zoom for this interview,

662
00:42:30,040 --> 00:42:32,719
Speaker 1: suddenly make a whole lot of things possible at much

663
00:42:32,800 --> 00:42:35,880
Speaker 1: lower cost and much lower resource use than would have

664
00:42:35,920 --> 00:42:38,279
Speaker 1: been the case in the past. So all of those

665
00:42:38,320 --> 00:42:42,839
Speaker 1: things together I think could well be contributors to productivity

666
00:42:42,840 --> 00:42:44,800
Speaker 1: growth if we look ahead over the next five years.

667
00:42:46,239 --> 00:42:50,880
Speaker 1: All right, Well, Dan, that was an absolutely fascinating conversation,

668
00:42:51,120 --> 00:42:53,719
Speaker 1: and it's so great that you know this kind of

669
00:42:53,760 --> 00:42:57,280
Speaker 1: micro research exists. So thank you so much. Yeah, well,

670
00:42:57,320 --> 00:43:01,280
Speaker 1: thanks very much for having me on. Yeah, that fantastic.

671
00:43:01,280 --> 00:43:02,759
Speaker 1: I want to see, I'm just here, what kind of

672
00:43:02,760 --> 00:43:07,880
Speaker 1: woodwork would work do you do? So doing furniture done,

673
00:43:07,920 --> 00:43:12,920
Speaker 1: some federal period early eighteenth century pieces done, some craftsmen,

674
00:43:13,200 --> 00:43:16,759
Speaker 1: arts and crafts kind of early twentieth century pieces UM.

675
00:43:16,800 --> 00:43:20,960
Speaker 1: And I'm actually I'm just about to uh just starting

676
00:43:20,960 --> 00:43:24,839
Speaker 1: a project on the economics of furniture to sort of

677
00:43:24,880 --> 00:43:28,520
Speaker 1: do the nails treatment UM for you know, much broader

678
00:43:28,560 --> 00:43:31,040
Speaker 1: or harder to get a handle on category of furniture.

679
00:43:31,480 --> 00:43:34,680
Speaker 1: So having this, having this great opportunity to kind of

680
00:43:34,760 --> 00:43:39,480
Speaker 1: mix um economics and interest in furniture and woodworking. I

681
00:43:39,520 --> 00:43:41,400
Speaker 1: love it. Well, we'll have you on next year to

682
00:43:41,640 --> 00:43:44,520
Speaker 1: UH to talk about your findings for furniture. I'll let

683
00:43:44,520 --> 00:43:46,600
Speaker 1: you know what I come up with. All right, take

684
00:43:46,600 --> 00:43:58,040
Speaker 1: care of it. Thanks so much so, Joe. I know

685
00:43:58,080 --> 00:44:00,640
Speaker 1: we mentioned this in our conversation with but it is

686
00:44:00,680 --> 00:44:05,040
Speaker 1: remarkable the number of things that have had this perfect

687
00:44:05,080 --> 00:44:10,480
Speaker 1: storm that has lent themselves to price increases. And you know,

688
00:44:10,600 --> 00:44:13,160
Speaker 1: I suspect this was something Matt King from City Group

689
00:44:13,360 --> 00:44:16,120
Speaker 1: mentioned when he was on All Lots late last year.

690
00:44:16,200 --> 00:44:18,319
Speaker 1: But I think this is probably one of the things

691
00:44:18,360 --> 00:44:20,480
Speaker 1: that makes a lot of people suspicious that this is

692
00:44:20,520 --> 00:44:25,840
Speaker 1: actually about supply chain issues and micro problems versus something

693
00:44:26,160 --> 00:44:30,400
Speaker 1: more broad with an increase in monetary supply or overly

694
00:44:30,440 --> 00:44:34,160
Speaker 1: loose monetary policy, that sort of thing. Yeah, that was

695
00:44:34,200 --> 00:44:38,400
Speaker 1: a great conversation, and I can't think of another time

696
00:44:39,120 --> 00:44:41,560
Speaker 1: in which we've had someone on who is able to

697
00:44:41,600 --> 00:44:45,080
Speaker 1: talk so long term like this sort of like deep

698
00:44:45,160 --> 00:44:49,160
Speaker 1: like economic history, but also make it like pretty relevant

699
00:44:49,200 --> 00:44:52,760
Speaker 1: to right now, very relevant, very relevant to right now,

700
00:44:52,920 --> 00:44:56,480
Speaker 1: and thinking about like well, what causes innovation over time

701
00:44:56,520 --> 00:44:58,560
Speaker 1: and how do you measure it? And will we see

702
00:44:58,680 --> 00:45:01,520
Speaker 1: more innovation or product the games. I thought that was

703
00:45:02,000 --> 00:45:05,200
Speaker 1: very unique, and Dan was extremely clear about it about

704
00:45:05,239 --> 00:45:09,239
Speaker 1: all this, So I love that chat totally and it

705
00:45:09,360 --> 00:45:12,520
Speaker 1: makes me more determined to do that trust Plate episode

706
00:45:12,680 --> 00:45:16,040
Speaker 1: as well, although I think that's slightly larger than Nails,

707
00:45:16,080 --> 00:45:18,839
Speaker 1: but we should still do it. But actually we need

708
00:45:18,920 --> 00:45:21,920
Speaker 1: to do more reporting on this now if like the

709
00:45:22,040 --> 00:45:24,719
Speaker 1: degree to which you know, some of the people that

710
00:45:24,800 --> 00:45:27,799
Speaker 1: we've had on, like Ellie Wolf, you know, she publishes

711
00:45:27,920 --> 00:45:30,600
Speaker 1: regular surveys, and I've seen that like all of the

712
00:45:30,640 --> 00:45:34,160
Speaker 1: home builder supply chain stress, it's only gotten worse in

713
00:45:35,000 --> 00:45:37,840
Speaker 1: two Like they're short, they're short of everything. But it

714
00:45:37,880 --> 00:45:40,120
Speaker 1: would be fascinating to like get a little bit more

715
00:45:40,160 --> 00:45:43,080
Speaker 1: insight on like literally home builders having to slow down

716
00:45:43,080 --> 00:45:45,680
Speaker 1: projects because they can't get nails like and just sort

717
00:45:45,680 --> 00:45:48,160
Speaker 1: of think of like nails is an endless supply of

718
00:45:48,200 --> 00:45:49,880
Speaker 1: them in a bucket at a home depot. But if

719
00:45:49,880 --> 00:45:52,600
Speaker 1: there's really a shortage of nails slowing down the construction

720
00:45:52,600 --> 00:45:56,120
Speaker 1: of a new home, it's a pretty big problem. Yeah, apparently,

721
00:45:56,120 --> 00:45:58,879
Speaker 1: so all right, well should we leave it there? Let's

722
00:45:58,920 --> 00:46:01,680
Speaker 1: leave it there? All right. This has been another episode

723
00:46:01,719 --> 00:46:04,399
Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can

724
00:46:04,400 --> 00:46:07,560
Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe

725
00:46:07,640 --> 00:46:10,239
Speaker 1: wi Isn't All. You could follow me on Twitter at

726
00:46:10,239 --> 00:46:13,479
Speaker 1: the Stalwart. Follow our guest Dan Sickle. He is at

727
00:46:13,680 --> 00:46:18,320
Speaker 1: Dan Sickle one on Twitter. Follow our producer Laura Carlson

728
00:46:18,520 --> 00:46:21,840
Speaker 1: at Laura M. Carlson. Follow the Bloomberg head of podcast,

729
00:46:21,920 --> 00:46:25,640
Speaker 1: Francesca Levie at Francesca Today, and check out all of

730
00:46:25,640 --> 00:46:29,880
Speaker 1: our podcast at Bloomberg onto the handle at podcasts. Thanks

731
00:46:29,920 --> 00:47:01,040
Speaker 1: for listening. Te