Why is the cost of living going up when technology should allow humans to increase productivity while decreasing human workload?
In: Economics
Because I, the business owner, don’t give a shit if it costs me less to make something. I’m going to charge what people are willing to pay for it and pocket the difference.
If it used to cost me $100 to make something that I sell for $250, just because it now costs me $10 to make it doesn’t mean I’m going to start charging $25. Or even $160. I’m going to charge you $250 still because that’s what you’re willing to buy it at and I know that because you’ve done it already.
Hell I might even charge you more, because I know you want what I sell.
Depends on where you are. In the US at least, median wages have outpaced inflation for basically ever, including during this high inflation period.
Infinite growth with finite resources leads to necessary exploitation and decrease of purchasing power. Poverty is a facet of this system , not an unwanted result
1. A lot of money was injected into the system during covid, by multiple governments around the world. If you increase the money supply, inflation follows. Those effects are still lingering.
2. There is a major war going on in Eastern Europe that is causing a major disruption on global food prices.
3. The conflict in the middle east is causing merchant ships to avoid sailing through the Suez Canal and the Red Sea, which significantly drives up cost.
4. [There is growing protectionism worldwide](https://www.bbc.com/news/business-45899310), from the US to Europe and Latin America. That is also driving inflation.
5. The shutdown during COVID caused a lot of businesses to review their “just in time” inventory policies. Keeping larger inventories on hand drive up costs.
6. The semiconductor shortage is still ongoing, both for trailing edge an cutting edge chips. This affect prices of everything, including cars, washing machines, elevators and pretty much anything that has a chip on it, be it trailing edge or cutting edge. Semiconductor manufacturing expansion is being hampered by shortage of skilled workers and political uncertainty. Also, the fact that cutting edge chips for AI are so profitable right now that the suck up all the investment, limiting the expansion of manufacturing of trailing edge chips for day to day use.
7. Over the past 30 years, [hundreds of millions of people from the developing world pulled themselves out of poverty and entered the middle class for the first time](https://www.brookings.edu/articles/a-global-tipping-point-half-the-world-is-now-middle-class-or-wealthier/). They now travel abroad on vacation and consume coffee, chocolate, meat, ice cream, cars, consumer electronics, etc…There is only so much oil, iron, rare earths, coffee, chocolate, dairy and meat to go around, and the middle class of developed countries now have to outbid the emerging middle class for those things.
Money is losing value because there is too much of it in circulation and a diminishing number of assets worth owning.
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