CD Player Dropped From Inflation Data, Phonograph Next?

from the neverending-treadmill dept

In the UK, the Office of National Statistics has decided to remove the personal CD player from the basket of goods which make up the RPI, the equivalent of our CPI, a measure of inflation. Nobody buys them anymore, the thinking goes, so the more popular and expensive mp3 player has replaced it. In the US, the Bureau of Labor Statistics, often make similar decisions. But does this make sense? Measures of inflation, when placed against wage measures, are supposed to indicate whether consumers are getting ahead. If prices go up, while wages stagnate, then that's a sign of trouble. Now, the reason that consumers buy mp3 players, and not CD players, is that they're better quality and a better deal. Or, put another way, consumers could still buy a high-quality CD player, and save a lot of cash for later. Either way they benefit. But, inflation data doesn't reflect this, it only notes that mp3 players are more expensive and thus the basket of consumer goods doesn't seem to go down in price. It seems that intellectual property isn't the only area in which the government has failed to adapt to new technology. Economic measurements need to show that consumers benefit from the rapid obsolescence and constant price deflation that marks the high-tech world.

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  1. identicon
    chinadoll, 22 Jan 2009 @ 9:26am

    Re: Re: I don't get inflation period?

    As a business owner you actually don't have to raise your prices for your consumer if you give a raise to your employees. Most employees receive wage increases due to their performance for the company. If they perform well, bring in a certain revenue or some kind of profitability to the company, they are rewarded for their hard work. So, in effect, that employee helped the company bring in more revenue, so the company already has more money. They don't need to raise prices.

    Inflation happens because of the printing of money by the Federal Reserve with no backing whatsoever. Every dollar they print reduces the value of the dollar in your pocket. And they are printing billions of dollars, just out of thin air. Inflation is pretty much the thievery of the money we already have. People need to be more concerned about their purchasing power rather than the number of dollars in their bank account since the dollar can apparently be printed on the Federal Reserve's whim. Businesses raise prices because the dollar is worth less so in order to get the same value, they need more dollars. The more dollars that get pumped into the system will only lead to more inflated prices because companies will continue to raise their prices in order to get the same value.

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