Of course, there’s an upper limit on just how far Moore’s law will get us, but while not visible as deflation, it seems like “getting more for the same cost” might be functionally equivalent to “falling cost of living”.
Yea….to tell you the truth…..I hate that notion. I think it’s used as a cop out to mask the very economic problems that are afflicting the consumer that this thread is discussing.
The old 8080 computer I had back in the early 80’s served exactly the same purpose then as my wicked-fast eight-way Intel multiprocessor laptop does today. It connected me to public communications (then, bulletin boards and USENET), did word processing, spreadsheets, presentations, and helped me analyze data. The fact that it’s a gazillion times faster is largely irrelevant — — it serves the same function. If you try to tell me that having all that chip speed means my standard of living has improved……wrong.
I’m not sure if there’s been any economic study on this particular feature of technological progress, and how you would quantify that into numbers that could be analyzed, but it seems like an interesting heresy to investigate :)
Well, it’s discussed and used in some calculations, because it makes the economic problems faced by the consumer less marked (on paper).
It’s kind of like the substitution problem in the “basket of goods” concept. If you’re measuring food inflation between the 60’s and today, do you keep in the three days that beef was eaten on average back then, or do you substitute two of those beef days out with chicken? If you substitute, which makes perfect sense because the consumer is substituting, food inflation is suddenly much lower (on paper) than it would be had you keep the beef in.
It’s not easy. In the case of beef and chicken, I don’t think that many would argue that the substitution represents a decrease in living standards. But substitutions in other areas DO represent a decrease in living standards. If the average american lives in 1000 sq ft in 2017 and pays $500 for that living space, and we find in 2027 that the average american is still paying $500 (real dollars) but their living space has decreased to 800 sq ft………well, you can book that as 0% living inflation if you want to……but that’s really not correct.
Sorry for the ramble, hope that helps.