| Other price declines are hard to measure as well. For example, how do you compare the average cost of a book in 1980 to the more than 10 million that are free to download today from Google's digital library? Nobody thinks about the cost of a long-distance phone call today. But growing up, I did. In college, I could only afford to call from my school in South Carolina to my home in Virginia at night when AT&T offered lower rates. Today, I routinely have FaceTime calls with friends overseas at no cost. Over the last 50 years, music listeners have gone from vinyl records to 8-track tapes to cassettes to CDs to MP3 files to streaming. Today you can listen to almost any song, anywhere, at any time for next to free. Other products are not free but considerably more affordable when measured in hours worked. In 1971, a pair of soft contact lenses cost $65, and a fitting by an eye doctor ran about $550, putting the total cost at $615. Unskilled workers earned about $2 an hour. Today an eye exam is around $120, and lenses start at $200, putting the cost at $320. Unskilled workers earn around $16.51. In other words, the time price has declined 84%. In 1970, the price for a roundtrip airline ticket from New York to London was $550. Blue-collar workers earned $3.93 an hour at the time. (In my family, the folks who spent so lavishly were viewed as members of the "jet set.") Today, the same flight has dropped to about $467 and blue-collar workers earn about $36.15. The time price has decreased 91%. In 1972, you could book a seven-day cruise from Miami to the Caribbean for $240. Blue-collar workers earned about $4.59 an hour at the time. Today, you can book a seven-day cruise out of Port Canaveral for $549. For blue-collar workers who earn $36.15 an hour, the price has dropped more than 70%. Apple introduced the Macintosh in 1984 at a retail price of $2,495. Unskilled workers earned about $5 an hour at the time. Today a new iMac sells for $1,299 and unskilled workers earn about $16.51 an hour. The time price has decreased by 84.2%. And the difference between a 2025 Mac and the 1984 Mac is like comparing a Lamborghini with a skateboard. That's time price abundance. Not all categories saw time price declines. Healthcare, college tuition, and childcare - heavily regulated, heavily subsidized, and labor-intensive - have outpaced inflation. These markets don't benefit from the "economics of knowledge," where producing multiple copies of a prototype costs less and less. But even in those areas, alternatives are emerging: - Online education is dramatically cheaper and more flexible than traditional degrees.
- AI in healthcare is improving diagnostics, streamlining care, and lowering costs.
- Many elective procedures (Lasik, cosmetic surgery, dental implants) have dropped in price significantly - because they're outside the insurance system and thus more exposed to market forces.
In my new book, I detail how things are likely to become even more affordable in the years ahead, as I'll discuss in my next column. Get ready to adjust your investment plan accordingly. Good investing, Alex P.S. Many of you have written to say that my new book is the perfect gift for someone who needs a bit of Christmas cheer. To learn more about The American Dream: Why It's Still Alive... and How to Achieve It, click here. | 
No comments:
Post a Comment