Inflation ate free lunch, but you're still better off
By Allison Schrager / Bloomberg Opinion
Believe it or not, we live in the best of times. It’s been a crazy few decades, with a pandemic, rising inequality, slowing growth and productivity, and major changes in the economy. But generally, most people experienced huge gains in living standards. We shudder to think what life was like in the 1980s or ’90s, when air-conditioning was still a luxury, as were dishwashers; people had to defrost their freezers, we were tied to landlines, and homes had only one or two televisions; and they weren’t even flatscreens. The smartphone may not be the game changer that indoor plumbing was, but just stop and count all the ways it’s smoothed out the kinks in your daily life.
In the same way the first waves of industrialization made consumer goods (clothing, housewares) cheaper and more accessible, the tech boom made services that were once luxuries (car services, delivery, handymen, digital butlers) widely available and contributed to rising prosperity. It’s indisputable that our standards of living are remarkably higher than they used to be.
Here’s the bad news: We’ve basically been living a free lunch and now it’s about to end. And that means a drop in our living standards, at least for the next few years.
The Atlantic’s Derek Thompson recently wrote that we have been under-paying for many services we now take for granted. That $10 Uber ride never really made sense when you thought about the cost of fuel and labor. The same is true for food delivery and other app-services that became a way of life for many urban dwellers. Many of the tech firms that supplied these services lost money to keep prices down, gain customers and dominate their markets.
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