Cheap, cheap & expensive

Being a long-term S.N.A.G. I have, since arriving back in Australia in 1988, happily offered my Thursday nights to do the family shopping to reduce the burden of duties on my much better-half, Mrs. Clarke. Moreover, I do this with a smile on my face - never a complaint.

Accordingly I have become an expert on prices - and on the check-out chicks - but that's another story. I know when things are cheap and when they are pricey. Not by studying the CPI data from ABS , mind you, but by pulling hard-earned $ bills from my back pocket at cash registers.

So what do I see. Since 1990 in Australia food, booze, vegetables, meat, fuel, health services and tobacco has got much more expensive. Appliances and equipment have got really cheap. A kilogram of rump steak a decade ago might have been $9-99 today it is $22-00. Apples 5 years ago were $2-00 a kilogram - they are $4-00+ today. Food, services and fuel have become much more expensive. But a 5.1 megapixel camera can be had at Tandy's for less than $100 compared to $1600 on their first release while a cordless scredriver can be had for $8-00 - a few years ago it was over $100.

Part of the reason for big price increases are resource constraints - fuel has shot up and food prices have risen strongly perhaps because of global warming. I've read that the price of a dozen eggs will rise 50 cents over the next few weeks because of the drought. Equipment, consumer durables, whitegoods, cars however have collapsed in price partly because of technological innovation and partly because of well vast stocks of surplus labour in China. Many of the the cheap things we buy come from China.

Of course these Chinese goods are cheap in terms of their private costs - in terms of social costs, defined inclusive of pollution and global warming, they are much more expensive. The Chinese are environmental grubs who damage the planet to keep their exports booming and Western consumers well-equipped with gadgetry!

So our living standards are suffering partly under the impact of pewhaps resource constraints and environmental pressures but our material living standards are being underpinned by technological change and the huge supplies of surplus labor in China who mess up the planet but who supply us with gadgetry at low private cost.

This can be checked out easily by going to the ABS website and examining price trends on categories of good 1990- 2006. Overall prices over this period rose 54% but:

• Tobacco prices rose 313% and, guess what, smoking as a habit has continued to disappear.
• Health costs rose 136%.
• Fuel prices rose 89% - mainly in the last few years.
• Booze prices rose 73%.
• Food prices overall rose 74% but veggies rose 124% and don't blame ust the bananas.
• Housing prices rose a modest 31% - is this an ABS artifact or does someone know why this seems so low?

But look at the gadget prices:

• Appliance costs rose a miserly 7%.
• Equipment prices fell a dramatic 74%. Yes, that's what the ABS says.

Thank goodness for the Chinese entrepreneurial spirit. Their low gadget prices have helped secure our living standards even if the poisons they emit into the atmosphere might kill us all eventually. Thank God for godless communism.

And thanks Louise for getting the ABS data.