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April 9, 2018

Why new technology should never be used to measure inflation

The UK government is cheating with inflation figures. For a while, camcorders were on the list of items in which prices were compared to overall inflation. Now, action cameras are.

Why do I call this cheating? New tech always starts off expensive and drops in price. The initial price is what funds development. Then, after ten or twenty years, the patents run out and the tech drops even more.

Camcorders have had their patent day. Now, they are a useful measure of inflation. But, they are no longer used. Action cameras, which are still hot but have stopped increasing in price to fund more development, are replacing them. This will help lower the average, allowing the government to cheat on inflation.

A VCR cost 1000 dollars in the 1980s. After the patents ran out, it dropped to less than 30 for a basic DVD player (which is more complicated technically.)

A radio cost over 100 dollars in the early 1920s, when that was an annual salary for some people. This was for a ham radio that you had to assemble yourself. It soon dropped in price to five dollars, for a fully assembled piece of kit.

Action cameras are set to drop in price soon, as development costs have been largely paid off, and as some of the early patents are soon to expire. Then, the government will claim dishonestly low inflation figures.

 

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