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> $500 smartphone today would have cost tens of thousands of dollars only a few years ago, if it were even possible to manufacture then

Would you have spent ten thousand dollars on such a phone a few years ago? I wouldn't have. I'd have put that money towards renting a nice place to live.

Are you spending, today, ten thousand dollars to buy pre-production builds of next year's smartphone? Is it worth it to you?

The reason people buy smartphones today is because they're a few hundred dollars. That's the point where the cost of the thing falls far enough below the value it delivers to make it worth buying. You can buy one and use it to access your bank account and stress about how to pay back your credit bill next month. So even if that phone would have cost a million dollars decades ago, you don't feel like a millionaire because you aren't one. If you were a millionaire in the 1990s, you'd probably have a house with a swimming pool. If you were poor in the 1990s, you would be stressed about your credit card bill, but maybe doing it on paper.

If someone gave a million dollars to a poor person in the 1990s, they'd probably have spent it to pay off debt, get a roof over their head and feed their family, not blow it all on a prototype palm pilot, a portable TV, and a Cray. In other words, they wouldn't have spent $1,000,000 on smartphone-equivalent functionality, because that functionality would still only have been worth about $500 to them.

The technological deflation gave you a $500 phone, it didn't give you a million dollars of value.

> A $500 smartphone today would have cost tens of thousands of dollars only a few years ago, if it were even possible to manufacture then.

People love smartphones in inflation discussions. Look at all them new features!

I remember a time when no one had them and no one needed them to be a high-functioning, successful adult. So, they're a modern tax at any price point.

By that logic, 200 years ago we didn’t need cars or trains or modern medicine to be a high-functioning, successful adult. 1000 years ago most people didn’t need any formal schooling to be a high-functioning, successful adult. 50,000 years ago we didn’t need buildings or agriculture or anything at all from modern society to be a high-functioning, successful adult. So any costs associated with a post-hunter/gatherer society are a modern tax at any price point.

This isn’t entirely accurate. A hunter-gatherer society is not a civilization, and life-expectancy was low. We can also assume that due to injury, disease, and periodic starvation that the hunter-gatherer society didn’t have a surplus of adults, much less high-functioning ones. This is precisely why, over time, the hunter-gatherers of the Earth voluntarily chose to settle, to farm, and to organize into civilizations. The car or the horse is, generally speaking, not a tax on the individual as these allow higher rates of productivity than an individual would otherwise have. The smart phone, however, does not offer sizable gains in productivity, and conversely actually steals attention from the individual and therefore is a net tax on the individual.

Some indigenous tribes (not necessarily hunter-gatherer, but no civilization either) are among the healthiest populations ever observed, eg https://en.m.wikipedia.org/wiki/Tsimané

Whereas the ancient Egyptians, a civilization, documented Type 2 Diabetes and coronary disease / heart failure. Settling down and forming civilizations had advantages, but improved health probably wasn’t one.

In hunter-gatherer groups, life was, and is, undeniably hard, but their lifespan was not as short as the numbers press us to think. If you were a hunter-gatherer and you made it to adolescence, there was a strong likelihood that you would live a long and healthy life – not so different from modern humans.

[...]

Modern life does have many benefits, but when it persuades us to use transport, sit in a chair at work, or watch TV for extended periods, we increasingly have to turn to medicine for solutions because these habits are killing hundreds of millions of us each year.

https://theconversation.com/hunter-gatherers-live-nearly-as-...

Maybe.

I think the advances you mentioned are indeed advances.

Smartphones I am not so convinced about. They suppress computer literacy and are essentially Sackler-brand walkie-talkies.

They save people time!

You can check your bank account and credit statements anywhere and any time. Even cashing checks. No more walking (or driving if you could afford it) to the nearest location. That’s value.

You can check the news anywhere. You can make sure your mom hasn’t fallen and hurt herself, that’s stress relief. You can educate yourself (and many people do) in very nuanced topics from the bus stop. You don’t need a second TV/computer for the kids to keep everyone in the home happy. You can quickly find great recipes from your kitchen to cook more healthy. Even just looking up stuff like “calories in salmon” have made me healthier. Yea some of this could have been on my computer, but that would take more time.

These are value!

>Similarly, a new $40,000 Honda Accord is superior in every way (power, amenities, ride quality, etc.) to a $200,000 Rolls Royce from the 90s.

To be pendantic, the ride quality of the Rolls Royce is still superior. We've had hydropneumatic suspension since the 50s, and that's not a feature anyone thought to include in an economy car. They don't compare to the electronic dampening we have today, but even vintage Rolls Royces are incredibly smooth and quiet.

The adaptive damping suspension available in modern Accords provides a pretty dang smooth ride. I’d love to see someone compare its ride quality head-to-head with a 90s Rolls. I think it would be much closer than you’d think.

I'd watch this - seems like solid YouTube content

Just curious(and don't mean to be smug in any way here): have you driven a 90s RR vs a Honda Accord or a similar competition?

Citroën used their fantastic hydractive suspension in their saloon cars - my first two Citroën C5 cars had it, and it was absolutely fantastic. I loved it, but sadly they've now dropped its use.

On the other hand in 1990 the smartphone was no necessity to take part in normal society, so the 500$ and monthly data fee is an additional cost weighing on people, if wages and the price for a bag of potatoes remained equal. It's complicated. (Predictably the bias is to downplay inflation, to allow "printing" more money.)

>On the other hand in 1990 the smartphone was no necessity to take part in normal society, so the 500$ and monthly data fee is an additional cost weighing on people

That's only if you don't consider the cost savings from that. Today you would use your smartphone to handle your online banking. In the 90s you would do what? Drive to the bank and talk to the teller? That costs a non-negligible amount of time, and money for the bank which presumably gets passed on to you.

Also, there's no reason you need to spend $500 on a phone, if all you need is "take part in normal society". That can be done with a $200 android phone, or a $180 iphone SE[1]. I would wager that even with the purchase cost + monthly fee (of a reasonable plan), you'd still be coming out ahead in terms of time savings.

[1] https://slickdeals.net/f/15272707-cricket-64gb-apple-iphone-...

You're looking at this entirely wrong. People are concerned with the price of a phone they can purchase today, not at the what it would have taken to purchase that phone 10 years ago.

For example, a new iphone costs a little more than last year's model cost. You can claim the exact same goods weren't involved, but the available goods have increased in price year over year.

The increase in the quality of available goods often greatly outpaces the increase in price (the opposite of shrinkflation). People don’t mind this because they are ultimately concerned about their overall quality-of-life. Take cars as an example. Both build quality and available features have dramatically outpaced the increase in prices over the years. If there were a significant demand for crappy cars with 90s-era quality (and commensurately low pricing), they would be available for sale. The fact that they’re not means nobody wants to buy them. It would be extremely cheap to manufacture a basic car with few features (thus requiring fewer overall parts) and low build quality (thus requiring a less sophisticated factory), but nobody wants a new car with no air conditioning, minimal sound deadening, low horsepower, crude construction, and 5 digit odometer reliability.

90s era cars aren’t close to meeting current requirements. The new requirements may in fact explain all of the price increases. I imagine there would be a market for a “new 2005” civic at say 7k$, because one exists for the old ones at 2k.

New safety and emissions standards are part of it, but don’t explain everything. Engines have gotten more powerful and more efficient, and the extra power isn’t just to keep up with additional weight due to all the new required safety features (which are a good thing, BTW!). Compare 0-60 times and handling between old and new cars. A new Accord Sport does 0-60 in 5.5 seconds, which was firmly in serious sports car territory in the 90s, and was borderline supercar territory in the 80s.

Materials and fit and finish of new cars are also way better than they used to be. Reliability has greatly improved too over the last few decades, though that’s plateaued somewhat in the last decade or two, likely due to increased complexity. Remember, in the 80s and even into the mid-90s, cars often came with 5 digit odometers because they weren’t expected to last more than 100,000 miles.

If there were a robust market for brand new 2005 Civics, automakers would capitalize on it. The Mitsubishi Mirage[0] is the closest thing on the market I can think of to this. It has the feel of an economy car from around 2005, and sells brand new for $14,000, which coincidentally is almost exactly the non-inflation adjusted MSRP of a 2005 Civic. It sells poorly. Most people don’t want to buy a new car that feels like it’s 15 years out of date.

[0] https://www.youtube.com/watch?v=5aCsNs3eYTE

In my backwards East European country, most people outside of cities use cars for utility purposes. As such, they keep very old cars, and if they need to change, they buy some second-hand ones from Germany and so on. With the new environmental regulations, they are no longer allowed to do that, so they are forced to buy better (for the environment, also maybe features and finishes) second hand cars.

It doesn't really feel like a choice driven by the desire for new features, moreso a choice majorly pushed by new safety and emission standards.

It's odd that you are even creating these arguments that prices don't increase.

Not everyone cares about Price/component cost/feature set/quality. The truth is that the actual real-world cost for what people view as the same item, in this case an iphone, has increased year-over-year.

> People don’t mind this because they are ultimately concerned about their overall quality-of-life.

Of course people mind paying more and more each year.

> nobody wants a new car with no air conditioning, minimal sound deadening, low horsepower, crude construction, and 5 digit odometer reliability.

Those portions essentially cost nothing in the overall build cost of a car. Every car has had A/C for years. An odometer, seriously? Again, the truth for buyers is that the cost of a car goes up year over year. If we set your hyperbole to the side, people do purchase entry-level vehicles when they are introduced to the market. Many times the demand outstrips the supply, because of price.

>Some people estimate that a smartphone’s total computing power would have been worth several million dollars in the 1990s[2]. Yet someone with a $500 smartphone today doesn’t consider themselves a millionaire relative to someone from the 90s; we simply cannot quantify the monetary effect of having millions of dollars of 1990s computing power in our pockets[*].

The thing is that if you have millions of dollars of computing power in the 1990s, you have something extremely scarce, so you can trade it for an abundant supply of other things you need. If you have computing power today, it's abundant, while the other things you need are much more scarce. Dollar values here are just illusions hiding the disparity in productivity improvements between industries, as well as the disparities in market concentration, regulatory capture, etc.

Regarding the notion of inflation not capturing improvements to goods, I think the following is interesting. https://www.lesswrong.com/posts/FcRt3xAF4ynojfj6G/what-do-gd...

The problem is that you cannot "deflate" land. You need to talk with the existing land owners and they don't want to share. It's like a completely different economic problem.

Like, economists have spent centuries figuring out how to solve the "scarcity problem of reproducible goods" but they haven't spent a second figuring out how to solve the "scarcity problem of non reproducible goods". The suburban sprawl nonsense only exists because we can't figure out how to redevelop existing plots within the city in an equitable way. Yes we have to kick the old residents out, there is no other way but we also build more housing than the numbers of people that were kicked out so if this were done at scale you wouldn't have to worry about leaving the city, just the block you are living in.

If I'm interpreting [0] correctly, it's saying that wage growth has outstripped the growth in housing prices?

The chart is misleading because it plots nominal wages[0] against CPI-adjusted cost of goods. So really, the baseline is at 0%, not the line they denote “average hourly wages.”

(The chart is still valuable for contrasting inflation adjusted costs, but its deceptive inclusion of nominal wages alongside adjusted costs clearly belies the AEI’s agenda. FWIW, the chart used to not include that line.)

[0] taken from https://fred.stlouisfed.org/series/AHETPI

> but still only something that the extremely wealthy could afford.

Something only the extremely wealthy could afford, but also something the extremely wealthy never bothered with.

If you think a modern, middle class lifestyle is in any way comparable to the rich in the past 60, 70 years then you have no clue what it means to be rich. It isn't the gadgets they can buy, its the people they buy that completely removes the need to even think about all those things you listed.

The rich don't do self service. This is why the whole discussion makes no sense.

You could have leased time on a ten million dollar supercomputer in 1990. It was serious capital. Try leasing time on your iPhone.