We Should Measure Prices in Time

The consumer-price index tells us nothing about changes in affordability. We need another measure.

By George Gilder and Gale Pooley. Excerpts:

"“learning curves” across a range of industries, from mining to microchips. These curves, which track performance improvements over time, demonstrate that real prices of goods and services tend to drop between 20% and 30% with every doubling of units sold."

"Going beyond economies of scale and efficiency, learning curves feed on growth of entrepreneurial knowledge, springing from improvements in every facet of production, design, marketing and management. Crucially, the curve extends to customers, who learn how to use a product better and multiply applications for it as it drops in price."

"The original proponent of time prices was Yale economist and Nobel laureate William Nordhaus, who in the 1990s produced a paper showing that traditional economic data have understated progress in lighting technologies—from whale oil to light-emitting diodes—by a factor of thousands."

"The Industrial Revolution also brought about a tenfold rise in the global population and an explosion in new knowledge."

"According to the Bureau of Labor Statistics, between 2000 and 2024, the CPI increased by 82.2%, while hourly earnings for production and nonsupervisory employees (blue-collar workers) increased by 115.1%. Hourly compensation thus increased 40% faster than CPI."

"One hour of time worked in 2024 would buy 18.1% more from the CPI basket of goods and services than in 2000."