Posted on 12/14/2004 11:36:13 AM PST by nanak
CONSUMERS can be forgiven if they haven't noticed that today's clothes dryers offer more bang for the buck than they did a few years ago. They'll still dry your towels, but the government thinks you are enjoying the machines more. Same for refrigerators, as well as college textbooks, microwave ovens and audio equipment. In fact, over the next few years the government promises to keep track of hundreds of other everyday items to determine how technological changes — or, more often, just the elimination of older models — affects the price. But this isn't just some arcane project aimed at keeping government statisticians busy until they can gently slide into retirement. In fact, this is the Bureau of Labor Statistics' "hedonic quality adjustment" project and it is crucial to Washington's efforts to keep you and me from realizing just how much more we are paying for stuff. This all began ...
(Excerpt) Read more at nypost.com ...
OK John, so what about the Clinton cocaine story that is going to bring down his presidency... we have been waiting 6 years now.
Sure, we could have bought a cheaper washer that would do the job that the old one did, but there's no doubt the premium we paid for this one will come back to us many times over before we're done with it.
So, to the extent that the gov't is adjusting the CPI to reflect this, it's a good thing. Many public and private entities make use of the CPI for all sorts of reasons. It needs to be "right."
I don't want the government telling me how great a refrigerator, microwave or washing machine is. That's a waste of my tax dollars by employing stupid bureaucrats at bloated prices to perform no service whatsoever.
I want manufacturers and sellers competing for my dollar by telling me how great their product is. It's called free enterprise.
The reason they are adjusting the CPI makes perfect sense. The way the CPI measures stuff is that they take a basket of goods one year, and then they see how much that same basket of goods cost in a later year. The problem is that there are two pieces of information not covered by the CPI. One is substitution: If the price of a certain good rises a lot, people might buy a different product instead, so they are not really feeling the price hike that the CPI says they are. The second is quality. The quality of goods improves over time. In the example of washing machines, a washing machine might have cost you $400 in 1995, and $401 in 2004. However, the washing machine in 2004 is a better washing machine, so is it really accurate for the CPI to be showing the price of washing machines having gone up? In reality the price has gone down in temrs of bang for the buck. This is what they are trying to fix.
Exactly.
Agreed. The fact is, for $3000 today I can buy a powerful computer that is better in every respect by at least an order of magnitude than what $3,000 would buy in 1985. How can a measure of price not take into account when products change like this? Making some adjustment to accomodate this is common sense, not a massive conspiracy.
I doubt if this writer has ever replaced a heavy duty appliance.
We have lived in the same home for over 27 years.
During that time we have bought three new refrigerators, three dish washers, three washing machines/driers, replaced the central heating system and added a central air unit.
Every replacement cost less than the previous models did with the exception of the last refrigerator. If we had bought the same refrigerator it would have been less than the same basic model ten years ago. My wife wanted the side by side with water filter, ice dispenser and a whole bunch of stuff. Yet we paid $300 less than our Son and DIL did for the same unit 3 years ago. The warranties on each product are longer and extended warranties are less.
Three years ago we added an air conditioning unit to our relatively new central heating unit at several thousand less than it was quoted just a couple of years before when we replaced the original furnace unit. The furnace is better than the old one and cost less than the old did to the original owners.
Our newer washer/dryer units are far better than the older ones re use and electricity savings. Our new dishwasher is so quiet, we start it right after dinner even with guests. It cost less than the one we bought ten years ago, works better and is so quiet!
Good bread not the Wonder Bread type costs are down due to the low carb mania. Milk is more expensive thanks to the enviral whackos limiting dairies in N. California. Salmon and Chicken are up due to demand and pork and beef are down due to lack of demand. Good wine and micro beers are all ways on sale and are less expensive than before 9/11.
Wood costs are out sight thanks to the enviral whackos.
Last but not least, thanks to the Internet we can get great prices on Name brand products. For Christmas gifts we have bought two digital cameras priced at least $100 less per camera than local stores. Many of our grand children gifts came to our house, sales tax free, w/free delivery at 20 to 40% less than local stores.
Our federal taxes are down. The taxes on dividends are way down, and more companies, etfs and mutual funds are back to declaring excellent dividends. So we have more disposable income with no increases in wages, my social security or pension.
The problem is in taking this too far.
Is a car really "better" unless you arrive sooner? I don't see them inflating car prices due to road congestion. Nor do I see air travel being inflated to account for security delays.
If it only works in one direction, it probably is a scam.
Of course it is, if you can haul more stuff, get there in more comfort, with a better stereo, etc. If you don't think so, then you buy a high end Mercedes, I will by a low-end Hyundai. We will both drive somewhere and get there at the same time. Since my Hyundai is no better than the Mercedes, I will then trade you my Hyundai for your Merceds. OK? I'll be generous and even leave a few hundred dollars in the ash try of the Hyundai for you.
At any rate, I think many of us would agree that the author of the original story in this thread seems to be little more than an uninformed bloviator.
I would like to add, though, the reason that appliances are cheaper than before is that they are almost all made in Mexico these days.
The "guts" of your central air unit are made in China, even though the box it came in may have said "Made in USA".
You mentioned wood. If you are talking firewood, seasoned oak is about $150 per cord around here. Eat your heart out.
"The problem is that there are two pieces of information not covered by the CPI. One is substitution: If the price of a certain good rises a lot, people might buy a different product instead, so they are not really feeling the price hike that the CPI says they are."
That happens every day with smart shoppers. I like good micro brews. One week I can get a six pack of a good one on Sale for $5.00. The next week that six pack sells for $7.00 bucks, and I just buy another good one for $5.00. If beef is high today, I will buy some good pork or chicken on sale.
"The second is quality. The quality of goods improves over time. In the example of washing machines, a washing machine might have cost you $400 in 1995, and $401 in 2004. However, the washing machine in 2004 is a better washing machine, so is it really accurate for the CPI to be showing the price of washing machines having gone up? In reality the price has gone down in temrs of bang for the buck. This is what they are trying to fix."
See my reply #8 on this thread re appliances. Most appliances are not only better, they are less or the same that we paid years ago..
Our really old VCR died a few weeks ago. My Grand Daughter pushed me to buy a combo DVD/VCR. We got a great combo for $100 which is about two hundred less than I paid over a decade ago for the old vcr. It is so easy to program re time/date and etc, even my trophy bride who has problems with a remote control at times is able to program it.
Everytime I buy a new computer or printer, they are better, faster and cost less than the older models. Each one is easier to use and has less problems at a lower unit cost.
A perfect example. I used to buy beef 2 or 3 times per week for dinner. Now that prices are sky high I have been buying a lot more pork chops for grilling.
Of course the Mercedes is worth more. If it wasn't, people would not buy them.
But that is not the issue at hand: Is a new car "worth" more than a somehow comparable car made 10 years ago?
The government has too much vested interest in this calculation coming out a certain way (like, say, not having to bail out GM's pension fund), and, no doubt, imparts all kinds of benefits I could give two hoots about to my new car. Woooooo! Automatic dimming mirror! Woooooo! That's worth $200! Wheee, no inflation now!
That is a perfectly valid example: Costs less, does the same thing, plus throw in a few bucks for the added feature. Fine.
The problem is that a clothes dryer is a box that gets hot. If it gets more expensive, that's inflation.
Actually I'm talking about replacement redwood siding, oak floors and decking.
We put a new roof on about 5-6 years ago, and the new furnace eliminated the need for burning logs in a fireplace or our really efficient wood burning stove.
This year we had new windows with the Vinyl installed and they are incredible re insulation. We will probably remove the drapes around all of the new windows and doors.
Next Spring, when I remove the cover from our Bryant AC unit, I will check to see if it was made here or someplace else.
Regardless of where they are coming from, they are more reliable. One of our best friends has his owning heating and cooling repair business for the past 3 decades. He repairs central heat/AC, refrigerators and freezers. Everytime someone buys one of the new units, he loses a good regular or potential customer. He has gone from a 2-3 week waiting list a few years ago to the same day or next day due to old customers buying the new equipment and not needing the old stuff repaired and maintained. Fortunately his wife has some great years selling high end real estate. He hopes to last a couple of more years to retire and become her chauffer.
Interesting enough, steak and beef prices here in N California are coming down and some type of steak or good roast is on sale everytime we go in the store.
Our two/three year old Amana dryer does a lot more than just get hot like the old one did. There is a lot less need for ironing of many if not most items due to the new dryer and probably its companion the new washer.
Also, they use less energy to do the job, and we got rebates on both of them from PG&E. It is amazing how much clothes go into the washer and then the dryer than the older models.
someone tell the gov't to stop giving $3billion to the UN every year!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.