What I’m getting at is hedonic adjustment in economic terms. The BLS specifically tries to factor out the effect of increased quality of goods. They don’t just look at what’s typical at any given time, they specifically and explicitly want CPI to show the underlying change of goods in relation to the money supply. If overnight, the quality of all goods doubled but the price also doubled, the CPI rate for that change would be 0%. CPI says that you’re now effectively buying twice as much stuff for twice as much money, so no real inflation has occurred.
This is the primary cause of the disconnect people experience between the figures they see on the news. Kamala tried to run on, “real wages have never been higher!” She was comparing wages measured in CPI inflation. People then looked at their actual lived experience, the actual price of actual goods and services they purchase, and concluded she was lying. Yes, if you’re just talking commodities, an hour of work today buy more of basic commodities than at any time before. For ascetic monks who wander the Earth and never buy anything other than bulk rice and beans, there’s never been a better time than now. But for people just trying to live a life of some basic dignity and comfort, they find that the only options available in category after category are things that would have been considered luxury versions of products generations past.
The ultimate cause of a lot of this is corporate consolidation. The entire economy is owned by a handful of major investment funds, and most goods have only a handful of suppliers. And the consultant/MBA class at the top all copy each others’ homework. They ultimately have very few ideas. In a free economy, some companies in a sector could try to offer discount goods, like many industrialists have done in the past. But it’s currently fashionable in the oligarch class to pursue a strategy of maximum profit per minimum unit, rather than trying to make modest profits per unit and make big profits through huge sales. And since the same small club of people effectively controls every publicly traded company, they all end up following the same strategies. All of them are following the strategy of “turn my market into a luxury good, as that has a superior profit margin per unit sold.” What we’re seeing is a direct result of the cult maximizing shareholder rate of return. If you want to maximize profit while absolutely minimizing capital investment, then you have to pursue a luxury brand strategy.
What I’m getting at is hedonic adjustment in economic terms. The BLS specifically tries to factor out the effect of increased quality of goods. They don’t just look at what’s typical at any given time, they specifically and explicitly want CPI to show the underlying change of goods in relation to the money supply. If overnight, the quality of all goods doubled but the price also doubled, the CPI rate for that change would be 0%. CPI says that you’re now effectively buying twice as much stuff for twice as much money, so no real inflation has occurred.
This is the primary cause of the disconnect people experience between the figures they see on the news. Kamala tried to run on, “real wages have never been higher!” She was comparing wages measured in CPI inflation. People then looked at their actual lived experience, the actual price of actual goods and services they purchase, and concluded she was lying. Yes, if you’re just talking commodities, an hour of work today buy more of basic commodities than at any time before. For ascetic monks who wander the Earth and never buy anything other than bulk rice and beans, there’s never been a better time than now. But for people just trying to live a life of some basic dignity and comfort, they find that the only options available in category after category are things that would have been considered luxury versions of products generations past.
The ultimate cause of a lot of this is corporate consolidation. The entire economy is owned by a handful of major investment funds, and most goods have only a handful of suppliers. And the consultant/MBA class at the top all copy each others’ homework. They ultimately have very few ideas. In a free economy, some companies in a sector could try to offer discount goods, like many industrialists have done in the past. But it’s currently fashionable in the oligarch class to pursue a strategy of maximum profit per minimum unit, rather than trying to make modest profits per unit and make big profits through huge sales. And since the same small club of people effectively controls every publicly traded company, they all end up following the same strategies. All of them are following the strategy of “turn my market into a luxury good, as that has a superior profit margin per unit sold.” What we’re seeing is a direct result of the cult maximizing shareholder rate of return. If you want to maximize profit while absolutely minimizing capital investment, then you have to pursue a luxury brand strategy.
Today I learned. Thanks.