Inflation And The Sony Walkman

The 1979 Sony Walkman cost $150; that's $530 in 2019 dollars - but what does that even mean? One way to see this is a 254% cumulative rate of inflation, but more meaningful is the ridiculousness of 10 songs in your pocket today. Few would pay anything for that - you get more value with any mobile phone.

Depending on where you get your news, it may seem like everything is bad - that's not the story. We do make progress on things that we choose. The changes are more visible when you zoom out 40 years.

Standard of living improvements outpace inflation.

For example, there were only 4 TV channels in 1979. Living-space per person was 50% smaller, and energy efficiency was 50% worse. Long-distance calls were insane expensive. Cameras took 36 pictures. People lived shorter and less healthy lives. There was no internet.

Progress is happening everywhere - air-travel is up 170%, cancer is down 20%, food production is up 50%. Computers are improving 40% every year. Forty years from today, maybe we should expect free clean energy, and a life expectancy over 100 years.

Ok, coal consumption is up 200% worldwide - so let's work on that one.

Where we spend are decisions about where in the fantasy future we want to live.

We want an inflation number to plug into planning, but the truth is prices trend towards zero. Remember DVD players - they cost $9 now. Stone tools are free. The important numbers are lifestyle inflation, debt, and savings - which are related to standard of living improvements. For many of us, expectation-inflation is a self-fulfilling prophecy. 

At the same time as efficiencies have improved, consumption has increased and savings has declined. You may decide to get a more enormous flat-screen. You may decide to install a powerful robot heart. It's not that you have to upgrade, it's that you naturally want to follow the same upgrade-curve into retirement you've been doing your whole life. 

But all that old stuff is still here too.

Companies are competing to build the future. Very cool bleeding-edge goods and services will come to market every year, pushing boundaries and bank accounts. We hype for next year even before we've paid for this year.

But all that old stuff is still here too - store clearance, thrift stores and garage/estate sales. So much surplus stuff that it's kind of a problem. Pat yourself on the back if you can park in your garage (I can't). Houses are overflowing into storage units.

Not everybody is choosing the future with every purchase, a few are banking that cash.

Celebrate our ancestors by living more like they did.

There are people living on homesteads, traveling in vans, and building tiny houses. There's one guy living in 1940s. Maybe folks are taking a breather. It's great to see people being picky - not just consuming every new thing.

Business deliver the future we pay for, not necessarily the future we need. As we invest moving into the future, every dollar is a vote. This includes governments and globalization - which increasingly means China and India. So choose Local and the Right to Repair where possible.

Savings should outpace inflation.

It would suck to get stuck in time forever. We can freeze our plans in tight times and expand in prosperous times. But the government says, "target inflation should be 2% and please everybody keep spending" - because if we stop then inflation won't be 2%.

The truth is we have a ton of control - through spending and saving.