September 26, 2007

The Joys of Economy

SO I RECENTLY GOT a nice surprise from my hosting provider -- the good people at Verve Hosting, based in my home state of Michigan. Apparently, they went ahead and changed my hosting package -- giving me 20 GB worth of bandwidth per month, compared to my old 15 GB, and more storage space on their servers. Nice, eh? Did I mention they also cut the monthly price by 33 pc? Advances in technology rule -- particularly when you're a late adopter like me, and have no need for pricey electronic gadgetry.

Along those lines, I have to admit I was a bit stunned when I walked through the aisles of my local electronics store recently and saw how cheap everything had become in just a couple of years. For instance, when I bought my 26" color television some three years ago, it cost me about $300. It is nothing fancy but it is nice and it does the job. At the time, a similarly-sized flat-panel television would have cost well over $1,000, and perhaps $2,000. But I found that such televisions could be bought for as little as $500 or so for an off-brand and about $700 or so from a quality brand.

Similarly, I was surprised to find how inexpensive many modern appliances were. A decent refrigerator -- again, nothing fancy -- could be had for about $400 or so, although there were some models that cost significantly more than that. But even the cheapo models were frost-free designs and had features that made my own refrigerator (or, more correctly, my landlord's) seem obsolete. Also, the washers and dryers seemed cheap too, with basic models starting at just $300 or so.

I must admit that as a bachelor and a renter, I don't really know how these prices compare to how things were in the past, although simple economics dictates that as supply of a product increases the price falls accordingly.

I recall my father talking about when his family bought their first television back in the 1950s -- it was described to him as a "radio with pictures," something he found understandably amazing at the time. Now, a $300 black-and-white television back in 1952 cost the equivalent of about $2,200 today, while the amazing invention of color television cost the equivalent of about $10,000 today. As it happens, an "automatic washing machine" also cost about $300 in 1952, and was undoubtedly about as basic as one could get. So we can see that with time, prices generally fall sharply* -- and this process is seemingly accelerating. Why, the iPhone was only on the market for two months before its price was chopped considerably.

So again, we have a good object lesson in the virtue of patience when it comes to buying expensive goods, particularly electronics. And sometimes, the price gets chopped for you!

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* But not always, as we can see from this example using 1953 price data:

This helpful salve
cost $0.35
inflation's kept
the price alive

Burma-Shave

(Thirty-five cents back in the day was worth the equivalent of $2.64 today -- and a good-quality jar of shaving cream will run about $2.79. Sadly, it won't be Burma-Shave shaving cream, as it was discontinued in 1966.)

Posted by Benjamin Kepple at September 26, 2007 11:07 PM | TrackBack
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