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Please put the "The post appeared first on Econlib" at the beginning instead of the end of the post. It would also be better to add "on [date]" to the end of it. Thanks for considering.

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Michael Hermens's avatar

It seems that this is a big deal, but it isn't. There are many examples of this phenomenon. Example: when one contracts with a builder to build residential housing, when is the builder paid? When he finishes. I cannot think of a case where the builder is paid each day he work on the house (not the employees of the builder who are wage earners, but the builder himself). He is usually either paid when the house is completed. How much is 2/3 of a house worth? Not that much. The same is true with work in process inventory in a manufacturing plant. How much would a retail car customer pay for 64% of a car, with no transmission? They don't. There isn't a retail market for WIP. How many of us would pay for and who would sell 40% of one of Dr. Caplan's books? They don't. (I have all of them).

The question that the educational establishment is trying to answer is fair: when is someone done with something as ethereal as education, skills or competencies? Like every product or service ever devised, retail buyers have to know how to differentiate between WIP and a finished good or service.

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