Why is the cost of living going up when technology should allow humans to increase productivity while decreasing human workload?
In: Economics
I’m not sure it is. A refrigerator is much cheaper now than in the 1950s. Computers are dramatically cheaper than in the 1980s. It is only some things that are more expensive, like housing (which is a big one unfortunately).
But if you wanted to live like someone did in the 50s you could pretty easily do that. It’s just that no one is OK with that standard of living anymore.
The economy in western capitalist societies has been funneling resources into fewer and fewer whale companies at the top – this makes an environment where costs for everyday people and small business are inflated.
Getting to the point where technology relieves human suffering instead of amplifying it was, unfortunately, never in the plans of those creating the technology. As in all points of human history, the people suffering have to stand up and take it.
Because capitalism has a glass ceiling and we’re hitting it.
For a company to survive in capitalism they need to keep growing or investors leave.
Only way to keep growing profits when you’ve perfected your product and cornered the market is enshitification.
This is a real term for business practices these days… Look it up it’s fuckin hilarious
Technological progress should be a deflationary force. As we get better at making things and doing things those things should get cheaper. Instead our government (USA for me, but every country does it) has taken control over our money and instituted an inflationary monetary policy. They create this inflation by printing money for nothing. So instead of widgets getting cheaper every year they get more expensive. This has been going on all of our lives so it seems normal. Where does all that money go? Mostly to the uber rich and to make bombs, planes, and warships which we use to fight proxy wars all over the world. None of these things support the average joe’s standard of living.
Ever since COVID the money printing has gone into overdrive. It is increasing exponentially with no end in sight. The inflation that the government used to work hard to keep at 2% is spiraling upwards so much that average joe is starting to notice. The usual tricks of manipulating statistics and controlling the media are getting less and less effective. It won’t be long now before there is a reckoning. Exponential processes are like that. I hope you have savings because it’s gonna get real rough.
Greed is one of the simplest ways that buying power is reduced. Company 452 decides they want more profits this year, so they raise prices. Other companies that buy from 452 are now forced to raise their prices to keep the same profit line. Competitors of 452 will probably raise prices as well, because, hey, it’s free money and everybody is doing it. Then the workers of 452 (who, incidentally, didn’t get a pay rise) try to buy things from other companies and find out their money is worth less, so they complain and maybe 452 (or, more likely, the government) instigates mandatory pay rises. These pay rises force 452 to raise prices a bit again, since they want those sweet sweet profits, which makes this whole thing a bit cyclic until all parties are happy enough to maintain the status quo, until some other company gets greedy.
The less you earn + the more stuff costs + the cheaper it is to make = the bigger the profit. And profit has no upper limit, so companies have optimized for maximum profit over the years. It’s a game we all play called capitalism.
because returns on capital are better than the rate of growth of labor.
[https://en.wikipedia.org/wiki/Labor_share](https://en.wikipedia.org/wiki/Labor_share)
I am begging people to learn about real wages. So many macroecon misconceptions would be solved if people just learned about real wages. Real wages account for inflation.
Real wages are at near all-time highs for the United States [[Source](https://fred.stlouisfed.org/series/LES1252881600Q)].
I’m not sure what the picture is like in the rest of the world, but I’m very, very sure that real wages are not consistently declining across the world.
Technology HAS caused giant gains in productivity. With fewer resources, energy, and hours of labor, we produce more food, commodities, and goods than at any point in history. Computers are cheaper. Education is cheaper. Healthcare is improving at lower cost around the world – cheaper diagnostic tests, cheap water filtration, vaccinations that costs pennies.
Here’s the flipside of all those improvements. In 1990 the global percentage of people living at or near extreme poverty was 38%. Now it’s down to 10%. A billion people joined the global middle class. Now they all own cell phones, dine out for leisure, buy clothes, have discretionary income, etc.
We may be producing things in abundance, but demand has never been higher.
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