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August 14, 2014 / paulio10

Secret Inflation

When a company lowers quality to lower the cost of manufacturing a product, sometimes they release that product as the “new model” at the lowest price of their line of products – and raise the price of the other products.  They can let inflation raise the prices of all their products, and at the same time introduce the new product at the lowest price-point that they’ve had all along. This causes their unsuspecting customers to think nothing much has changed – there’s still a product at the same bottom-line price, and there’s still higher priced models; things are the same, right?

No they’re not the same. The quality has changed.  The lowest item is now lower quality than it used to be; and each item at each tier is lower quality than it used to be. Yes you can pay the same amount of money, and get a similar-looking product, but it’s not as good. Cheaper parts; things don’t fit as well as with the old product; lower quality control; fewer features; shorter life-span; one or more of these things are wrong with it, that didn’t used to be wrong with the low-end product in the past.

If quality is important to you, or at least, if you want to buy a product at the same quality level that you bought your old one 10-20 years ago, you have to PAY MORE by buying a higher-end product, maybe a middle-of-the-line product now, so that the quality matches that of the low-end model from the olden days.  If you used to buy the middle-of-the-line model, now you have to buy the upper-level model and pay a lot more, just to get the same quality level.

This is a non-obvious form of inflation – it tricks the population into slowly becoming lower-and-lower class, poorer-and-poorer, without realizing it. Has anybody else discovered this happening besides me?

An Example

If a fast food outlet has a low-cost hamburger for $3, and they figure out a way to manufacture cheaper hamburgers, they make the new cheaper one $3, and raise their old $3 hamburger to $4, and their old $4 hamburger to $5.

You visit the restaurant. You see there is still a $3 hamburger, so you order it.  And it tastes awful. “This isn’t like the old days! Hamburgers used to taste better in the old days!” you shout, not entirely sure what is wrong with our society. People look at you weird, you’re that old guy complaining that the olden days were so much better… they don’t understand.

You think you are at the same level in society today, but you’re not. You’re poorer. Your income didn’t go up that much in the past few years, did it; and when you buy a $3 hamburger, you’re paying the same price you used to, but you got a lower-quality product. Congratulations, you are living a poorer life. You’ve been duped.

Inflation comes in many forms. One of them is lowering product quality in the low-end products.  To keep your same level of quality of life, you have to pay more money – sometimes a lot more – for the higher-end products, just to “tread water” – to keep the same quality-level of products you are used to. And there’s no clear way to know how to do that. Companies make sure of it.

So NOW how much inflation is there in our society? We already know that inflation is hitting us hard and will for the next few years; and some of us suspect the government is fudging the numbers that they publish a bit. But this, this adds to that even more.  How do we adjust inflation numbers to take this into consideration?  How do we numerify (if I may invent a new word) the concept of “inflation caused by companies lowering the quality and adjusting all prices upwards” ?

I’m sure that our inflation is higher than what’s being reported.

 

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