In the last article, [Why Things Do Not Crash: Gross Domestic Product](https://inleo.io/@taskmaster4450le/why-things-do-not-crash-gross-domestic-product), we discussed how GDP is an outdated metric because it vastly underestimates the amount of [economic](https://inleo.io/@leoglossary/leoglossary-economic) activity.


I gave a number of examples of areas we see this.  


With this article, we are going to discuss the major component often overlooked by the masses.  It is not surprising since they call [inflation](https://inleo.io/@leoglossary/leoglossary-inflation) a "silent tax".  The meaning here is that most people do not usually see it.


The same could be said in the reverse.


# Technological Deflation Is Why Things Do Not Crash As Many Proclaim


If things are so bad, how come the standards of living keep rising?


Did you ever think about that?  We hear a lot about how awful things are yet it is usually from people posting on the [Internet](https://inleo.io/@leoglossary/leoglossary-internet).  Do these people realize how much [money](https://inleo.io/@leoglossary/leoglossary-money) it would have taken in 1985 to reach thousands of people, let alone millions?


The answer is pretty clear considering how people approach the subject.


I have written about how we are in the information [economy](https://inleo.io/@leoglossary/leoglossary-economy).  This is the basis for tens of trillions in global GDP (in spite of it being underestimated).  Do you know how easy it is to access that today compared to decades ago?


The problem, much like inflation, this is silent.  Few people realize they no longer has a long distance phone bill.  They also discount the fact that they do not have to [buy](https://inleo.io/@leoglossary/leoglossary-buy) [gaming](https://inleo.io/@leoglossary/leoglossary-gaming) cassette tapes and that most online games, at least in the basic form, are free to [play](https://inleo.io/@leoglossary/leoglossary-play-theater).


Even the concept of an [energy](https://inleo.io/@leoglossary/leoglossary-energy-industry) efficient air conditioner or appliance is overlooked.  [Home](https://inleo.io/@leoglossary/leoglossary-home) can now be cooled with smaller units as compared to the ones decades ago, due to advancements in [technology](https://inleo.io/@leoglossary/leoglossary-technology).  We see an assortment of products that have more [power](https://inleo.io/@leoglossary/leoglossary-power) output with less [energy](https://inleo.io/@leoglossary/leoglossary-energy) input (cars for example).


All of this feeds into the standard of living.


While it might have been silent, that is not likely to be the case over the next decade.  The pace of technology is such that even most anyone is going to see it.


## Massive Deflation


To illustrate what is happening, let us take a look at the writing of articles.


This is something that, historically, was paid for by different [media](https://inleo.io/@leoglossary/leoglossary-media) outlets.  Whether it was [newspapers](https://inleo.io/@leoglossary/leoglossary-newspaper) or [magazines](https://inleo.io/@leoglossary/leoglossary-magazine) (even online), people were compensated to write [stories](https://inleo.io/@leoglossary/leoglossary-story).  There was a [cost](https://inleo.io/@leoglossary/leoglossary-cost) to the outlet, or [website](https://inleo.io/@leoglossary/leoglossary-website), for each article.


For the sake of discussion, let us use $50 as an example.  


How does this compare to what a [chatbot](https://inleo.io/@leoglossary/leoglossary-chatbot) produces in [terms](https://inleo.io/@leoglossary/leoglossary-terms) of cost?  We all know that the technology is such as a chatbot can produce a quality article in a few seconds with the proper prompts.  While it might not rival the [human](https://inleo.io/@leoglossary/leoglossary-human) written one, something that is likely temporary, the [economics](https://inleo.io/@leoglossary/leoglossary-economics-social-science) are overwhelming.


We basically saw the cost of something go from $50 to a few cents.  


If we consider how many articles are generated each day around the [world](https://inleo.io/@leoglossary/leoglossary-world) by professional [writers](https://inleo.io/@leoglossary/leoglossary-writer), that is a fair bit of GDP.  Yet, with a chatbot, it is essentially free.


This is just one example of what is going to take place. 


The point being that society still have the benefit of all the articles written and the sharing of information.  In fact, there is far more being created than ever before.


Yet, over time, the contribution to GDP is going to be almost zero.


Free does not fit into these models very well.


## Massive Computation


There is no doubt, the most recent "revolution" was based upon the transformation to [digital](https://inleo.io/@leoglossary/leoglossary-digital).  This altered every facet of society.  Even the developing world is involved.


Consider what someone can do with a $20 [smartphone](https://inleo.io/@leoglossary/leoglossary-smartphone).  This is a [computer](https://inleo.io/@leoglossary/leoglossary-computer) that is more powerful than anything that existed in the 1980s.  Heck, it probably tops most of what was used in the 1990s.


These devices are all over developing nations.  In these areas, the laptop/PC era was skipped.  They also didn't deal with wired Internet.  Some are going to end up using [satellite](https://inleo.io/@leoglossary/leoglossary-satellite-telecommunications) as their first connection.


It is a long way from dial-up.


Then we have [automobiles](https://inleo.io/@leoglossary/leoglossary-automobile-car).  This is another area where we see massive technological progress yet doesn't get much attention.


What happens when a car goes twice as far as once from 40 years ago.  Many who are old enough will remember the days when you had to unload a car at roughly 50K miles because it would depreciate quickly after that.  Many were dead by 100K-125K.


Today, even a low end Kia will go 200K without breathing hard.


Certainly, we do not have to go through all the features that are includes that weren't even part of [science fiction](https://inleo.io/@leoglossary/leoglossary-science-fiction-scifi) half a century ago.  


Do you remember the Jetsons?  What did George's flying [space](https://inleo.io/@leoglossary/leoglossary-space) craft have in it?  Nothing compared to what is in a basic [automobile](https://inleo.io/@leoglossary/leoglossary-automobile-car) today.


Computation is most evident in the smartphone.  Look at just a sampling of what this technology replaced:


 https://i.imgur.com/tBH7cqO.png 


Of course, this doesn't even include all those [industries](https://inleo.io/@leoglossary/leoglossary-industry) that were affected by what the smartphone can access.


## Bigger Homes


One final piece if the size of the average [home](https://inleo.io/@leoglossary/leoglossary-home) in the United States.


Year |	Average 
|---| ---- |
1980 |	1,595
1990 |	1,773
2000|	2,100
2010	|2,477
2018 |	2,386


Since 1990, that is a 35% jump.  Ironic since [families](https://inleo.io/@leoglossary/leoglossary-family) are having less [children](https://inleo.io/@leoglossary/leoglossary-children).


While the [prices](https://inleo.io/@leoglossary/leoglossary-price) have gone up, due to population growth and urbanization mostly, we see that size is also a factor.  Of course, this is not often discussed.


One thing to keep in mind, [construction](https://inleo.io/@leoglossary/leoglossary-construction-industry) is one area where, for the most part, technology has not greatly affected.  We can expect changes from [robotics](https://inleo.io/@leoglossary/leoglosary-robotics-robots) and, perhaps, 3-D printing to really alter this.


The [bottom line](https://inleo.io/@leoglossary/leoglossary-bottom-line) is we keep getting more at a pace greater than we see GDP rising.  This is something that is only going to accelerate.


Just think about the fact that, using most any chatbot, we can access any knowledge from the world's [database](https://inleo.io/@leoglossary/leoglossary-database).  In a matter of seconds, we can have the [data](https://inleo.io/@leoglossary/leoglossary-data) along with a chart for free.  


How much would it have cost [IBM](https://inleo.io/@leoglossary/leoglossary-international-business-machines-corp) or General Motors to produce something like that 40 years ago?


In summary, the distortion of the economy due to our metrics are causing a misread on what is taking place.


Society keeps marching forward in spite of calls that it isn't.  


____


<center> [What Is Hive](https://inleo.io/@leoglossary/leoglossary-what-is-hive) </center>


Posted Using [InLeo Alpha](https://inleo.io/@taskmaster4450le/why-things-do-not-crash-technological-deflation)