From Arnold Kling:

So, when you overbuild houses in Nevada or condos in Florida, you cannot lure very many people with lower prices. Most unoccupied houses have close to zero marginal value to the vast majority of consumers, just as most unemployed workers have zero marginal product to the vast majority of firms.

He was responding to the question of why there are still so many housing vacancies. While I’d like to excoriate policy (and I can) I find this very compelling – and it raises the question of why this recalculation story is not applied more broadly. Maybe it is, maybe everything is cast in a transactions cost framework. Thus, if you offered me the opportunity to “buy” my exact home in, say, Pittsfield, Massachusetts, for zero dollars, I would say no. But the same is true for lots of other goods and services. Perhaps sadly for me, the provision of an economics education is not one of those services!