Denying Inflation: Who, Why, and How

• 2x4 dimensional lumber is no longer 2x4, but 15-20% smaller in cross-section, and of lower grade stock
• salmon is no longer wild, but farm raised in unsanitary conditions, and dyed pink (ugh)
• "wooden" furniture is now mostly particle-board
• "wooden" doors are now mostly hollow
• new houses have remote locations, far from desired destinations
• ice cream is now filled out with seaweed products
• the steel in autos is eked out with fiberglass, plastic, and other ersatz that crumbles in minor collisions
• airline travel is no longer a delight but a series of insults and abuses
• gasoline used to come with free services: pumping the gas, checking tire pressure and supplying free air, checking oil and water, cleaning glass, free maps, rest rooms (often clean), mechanic on duty, friendly attitudes and travel directions. They served you before you paid. Stations were easy to find, to enter and exit. Competing firms wanted your business: now most of them have merged.
• cold fresh milk was delivered to your door
• clerks in grocery and other stores brought your orders to the counter; now, many clerks, if you can find one, can hardly direct you to the right aisle
• Suits came with two pairs of pants and a vest, and they fitted the cuffs free. Waists came in half-sizes
• socks came in a full range of sizes
• shoes came in a full range of widths; the clerk patiently fitted the fussiest of customers
• the post office delivered mail and parcels to your door or RFD, often twice a day
• Public telephones were everywhere, not just in airport lobbies. Information was free; live operators actually conversed with you, and often gave you street addresses
• public transit service was frequent, and served many routes now abandoned
• live people, living in America, used to answer commercial telephones, with no telephone tree to climb, and tell you what you actually wanted to know
• Autos used to buy "freedom of the road"; now they buy long commutes at low speeds and rage-inducing delays. One must now travel farther and buck more traffic to reach the same number of destinations. Boskin et al. dwell on higher performance of cars, and the bells and whistles, but rule out taking note of the cost-push of urban sprawl.
• Classes keep getting larger, with less access to teachers and top professors, and more use of mind-numbing "scantron" testing.
• Before World War II, an Ivy-league college student lodged in a roomy dorm with maid service and dined in a student union with table service, and a nutritionist planning healthy meals. All that, plus tuition and incidentals, cost under $1,000 a year. Now, to maintain your children's place and status in the rat race, you'd put out $40,000 a year for a claustrophobic dorm and junk food. On top of that, a B.A. no longer has the former value and cachet. Now you need time in graduate and professional schools to achieve the same status. Many students emerge with huge student loan balances to pay off over life, with compound interest.
• Warranties on major appliances cost extra, aren't promptly honored, and expire too soon. Repair services and fix-it shops used to abound to maintain smaller appliances. Now, most of them are throwaway.
• replacement parts for autos are hard to find, exploitively overpriced, and are often ersatz or recycled aftermarket parts
• musical instruments are mass-produced and tinny instead of hand-crafted and signed
• piano keys were ivory; now plastic
• many new "wonder drugs", if you can afford them, have bad side-effects, while old aspirin still gets the highest marks
• A rising array of taxes and other payroll deductions stand between one's nominal income and consumer goods it might buy. Income and social security taxes are not counted as part of the CPI.
• Medical doctors once made house calls, in the dim mists of history. Since then, access has become progressively more difficult, until today ... well you know, you've been there. In many small towns there is no doctor at all.
• In 1998 the BLS dropped auto finance charges from the CPI. I do not find the cost of other consumer credit in the CPI (although I stand subject to correction). Certainly the largest cost of consumer credit, mortgage interest, has been removed by use of the "rental equivalent" substitute, with never a squawk from Boskin.
• In 1995 the BLS eliminated an "upward drift" in the "rental equivalent" index, with no explanation. It is probably relevant that Congressman Newt Gingrich was in the saddle.

One could go on, but the point is that Boskin et al. seem not to have considered counterexamples to their foregone conclusions. If they did this where we can observe them, what else did they do under cover of black box models? The BLS, succumbing to the political pressure, keeps modifying the CPI to show less inflation, even while our daily experiences and shrinking savings tell us there is more. A 1999 study of the changes in the 20 years between 1978 and 1998 showed the cumulative effect of many changes had been to lower the CPI substantially (Monthly Labor Review, 6-99, p.29).

George warned that landowners might take most of the fruits of progress, leaving labor barely enough to survive. Critics then and now have urged us, instead, to don rose-colored glasses. The rosiest of these is the CPI as manipulated to screen out bad news, especially news about soaring land prices. Let us be aware of who is manipulating the news, why, and how.

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