Productivity and inflation are big subjects.

Just to touch on one important problem for which one must account:

Productivity over time is how much stuff you get out vs what you put in, from one time period to the next. Inflation is what the stuff costs over time.

But what do you do with stuff you used to make that you don't make now?

And the opposite: what do you do with stuff you make now that you didn't used to make?

If you look only at the the things that are almost exactly the same from one period to another, usually you find that the intuitions hold: food used to take 10% of our hours, now it takes .6%, etc. etc.

If you dig into the details of CPI and PPI, you'll quickly say, "waiiiiiit a second, can you really just do that?"

For example: they'll say that your tv or car now is "more stuff" because of "features." But if you had to make the old car now, you might be able to make way more of them for the same inputs.

> For example: they'll say that your tv or car now is "more stuff" because of "features." But if you had to make the old car now, you might be able to make way more of them for the same inputs.

We're not allowed to do that. Environmental regulations, crash safety, the operating environment has changed dramatically.

Even worse when you look at things like "imputed rent" adding 10% to GDP.

the world operates a lot more like Massdrop than people think. it's just that for a lot of things they do not need to check for demand. But operationally, its still large batches of product sold at a good price while the batch lasts. this includes our own labor!

if you had to make an old car now, it would cost you way more unless you do intend to make and sell way more of them. you could make more of them now then you made then for the same inputs, but you couldnt make more of the old cars now than we make of the new cars now for those inputs. This is much more relevant to farming. they dont own the seeds because they can get much more product out of buying the new seeds than using 'old style' seeds.

but overall i like the point you bring up, and inflation and productivity are fundamentally hard to compare. we know that borrowing from the future increases the cost of money in hte future which yields inflation. but the money is the benchmark for things so its like trying to measure the expansion of the universe with rulers that are expanding with the universe

I bring up massdrop because it has helped me realize that for an individual it is best to keep an eye on what is actually being produced right now that may not have the same kind of demand in the future. A lack of demand does not necessarily mean the product isnt good, as it could mean everyone already bought what they needed and you missed the boat.

The past was able to think a lot less about it in this way because there was always large population growth happening creating demand for any good product because new people need their own copy. With that leveling off its going to pay a lot more to stay in the loop with timing buys with others, even though its not really coordinated.

> food used to take 10% of our hours, now it takes .6%, etc. etc.

on average, in the US, food consumes 13% of annual household expenses [0]

in our household it's higher than that, because in order to buy primarily healthy food, it costs a lot more than the average shopper spends, and it's more expensive than it used to be

[0] https://www.bls.gov/news.release/cesan.nr0.htm

You are repeating an argument a lot of people make so you're not alone in this.

> But if you had to make the old car now, you might be able to make way more of them for the same inputs

All these arguments miss that inflation is a proxy for the improvement of quality of living over time.

You don't make a 1998 Camry in 2026 because the 2026 Camry is a much better car for the end user than the 1998 Camry.

The 1998 Camry is easier to maintain and lasts a long time but if the end user doesn't keep a car longer than 7 years and they have to pay a mechanic to change their oil, they dont care about "easier to maintain and lasts a long time". They care about AirPlay, Remote Start, Parking Assist and ass warmers. No 1998 Camry has any of that.

You could chop wood for heat, grow your own vegetables and meat, living off a few hundred dollars a month if you wanted but most people won't do that because it's not very entertaining and a lot of hard manual labor.

Things cost more over time because people demand more over time. More things cost more, so people demand more money to get paid.