I guess this is where perpetual growth is made possible: As people continuously chase new kinds of products or product improvements, low-price products lose quality and make ground for new and more expensive products. As people stop buying the old products and start buying the new products, keeping them as separate items on CPI measurements, we see economic growth without inflation, even though life doesn't improve.
A good example is food. Much food today is basically crap. Few nutritions, lots of fat etc., sometimes even stuff to make people eat more. Eating more means overweight or even obesity, it means health problems, and thus economic growth, which is good, right? Maybe you can one day buy anti-fat-cell drugs to prevent overweight. Maybe it will even be built into some kinds of food. It may have side effects and interactions, requiring other drugs to help out. So instead of eating healthy and nice food, having a good time, you eat increasingly worse food, increase your drug intake and health care spending, and it's all providing economic growth.
If you know how to stay out of this, your costs will not increase in the same way, and your perceived CPI will be totally different.
However, a CPI is not more a lie than any other kind of statistics. A number is lying if it has been calculated in a different way than specified. |
