I wonder if profit margins are the same on those items etc. ?
Increased efficiency in production over time should increase profits and lower prices. Instead we have higher prices.
This is where it gets tricky. You also have to factor in market demand and regulations.
For example, a modern car might cost about the same as one from the '80s at 3% inflation, but it is likely equally fuel efficient while being massively heavier, less polluting, safer(0 air bags vs a dozen or more), trading the radio for a multimedia entertainment system that can play DVDs or even stream videos, and has things like "adaptive cruise control" that lets you not just set a speed, but have it follow the car in front, maintaining a safe separation.
A TV from the '80s is probably under 2 feet, a unit today with 3% inflation pricing factored in would cover most of a wall these days.
Steak, we've gone from "choice" and "select" to "organic grass fed Angus". There's lots of background controls to prevent things like mad cow transmission. Indeed, can you identify any extreme examples of cost savings when it comes to beef? Also, the selection of prepared frozen food has substantially changed since I was a child to today. Much healthier, fancier, etc...
Some things we've massively improved processes on, yes. In some things they're actually
worse efficiency wise because demands/requirements have increased.
Obviously the 1980’s formula was terrible. Even 10% inflation would create havoc. It’s scary that as recently as the ‘80s our government was formulating policy on statistical analysis that was so disconnected from reality.
Actually, I'd argue that 10% inflation wouldn't create havoc. What would create havoc is inflation rates going to 10% overnight after staying at around 3% for decades. As long as the number isn't ridiculously high,
stability is more important than the actual number. Businesses would prefer a flat 10% a year over a rate that amounts to a roll of a 10 sided die every year, even if the latter case averages out to only 5.5% inflation.
And yes, we've learned a lot about economics in the last 30 years. Still have more to learn, of course.
The government doesn’t use simple formulas like that though, they use some other method that conveniently under reports real inflation.
"conveniently" might be a problem, but the government does actually use simple formulas like that. The problem comes in that the relative value of different goods is indeed going to shift over time, depending upon shifting demand, availability, technology, etc... Adding up the entire economy is rather difficult to good, so about the best they can do is create a standard list of goods and use that. Some goods aren't good because they shift in value too much on an almost random basis, you want goods that will still be around in the same form decades down the road, where demand is more or less stable, etc...
It's a point where it is an initially simple problem, but when you want to create a long lasting, actually good continuing metric, the design becomes complicated because you are attempting to peer into the future.
A meter is a meter is a meter (until we figure out how to warp space, at least). The price of a good (including currency) depends on many variable factors, unlike length, mass, and volume.
Funny thing is, we redefined the kilogram in 2018. The meter was redefined in 1983. Though the number of digits until you'd see a change was rather large... (IE weight of earth under old and new kg would still be the same down to the gram).
You have a point though. The way I look at it, back during the gold standard if you added up all the types of goods for sale, including precursors, industrial goods, etc... and compared it to the amount of gold available, you'd have a ratio of like 100k:1. Today? It's like 100M:1. Gold/Silver just isn't a large enough proportion of the economy anymore to act as the lubricant for the industrial economy anymore. The economy has just expanded too much.
Remember, a lot of the push for gold standard is from people who have been buying gold. Who'd see massive gains if we did go to a gold standard and the government was attempting to buy enough. So I think they're a bit biased. It's no different than, say, buying the company that makes epipens then lobbying the government to require an epipen in the safety kit next to the AED in all government(and many commercial) buildings. Of which there are roughly 361k in the USA... So assuming a 3 year lifespan, that's 120k epipens a year. Doing a quick google, it's roughly a 10% increase in sales... Who, obviously, all pay full price.
Back to the gold standard - the government could, of course, set it at $1 = nanogram or so of gold, where the "real" value of the gold you can exchange a dollar for is so much below market that nobody ever takes the deal, and because not even the government will actually
buy any gold at that price(it just answers that it has enough already, thank you), it's effectively not an efficient control anyways, and life goes on as normal. Governments have managed to hyperinflate their currencies even while on the gold standard, after all.
Today, the value of the dollar is the measure of all the millions of things you could spend the dollar purchasing. That's its strength. Sure, it may have no real value otherwise, while a gold standard dollar would get you a few motes of gold if you divide the amount of gold that could readily be obtained by the USA by the number of dollars out there.
