I think we’re seeing large scale price gouging.

https://www.npr.org/2023/03/03/1160849446/why-price-gouging-can-seem-obvious-to-consumers-but-hard-for-economists-to-ident

I find it funny that the four major categories of spending you chose are: housing, computer parts, food, and tws earbuds.

Prices don’t make sense because you, as a regular person, don’t see the overwhelming majority of what contributes to them.

For instance, I figure you aren’t particularly familiar with the output quantity of various semiconductor factories around the world, the overall percentage that are good enough for high end computers, and how many different companies around the world need them for their products, and in what quantity. Or even on the consumer end, how different use cases effect demand, along with how the various brands stack up against each other in their current offerings.

Put the cost of things into terms of hours you would need to work to cover its cost. On an individual basis, you know very well how to gauge an hour of your working time, and inflationary effects will become apparent when there is something you used to buy routinely and suddenly find you have to work two or three hours to cover its cost.

If you’re looking for a rule of thumb to decide if something is worth the price, I have a basic method that helps me:

Don’t think about the thing itself, think about what it provides to you. Say you are thinking about buying a GPU to play games on your computer. The one that seems like the best fit costs $400.

What will that GPU provide you? You will get to play the games you want for about 5 years on average before the card starts to become too old to give you solid performance anymore. Or maybe you’re not too picky on framerates and settings, so it will last you 7-10 years before your next upgrade.

Consider how many hours of enjoyment you will get by playing games for the next 5, 7, 10 years. 5 hours of gaming a week, 52 weeks a year, 5 years gives you 1,300 hours of enjoyment. Now divide the original cost by that number. In our example, that’s roughly $0.30 per hour of enjoyment.

Does that feel like a good price for fun to you? If you could go to a magic vending machine, pay 30 cents, and feel enjoyment for an hour, would you?

That’s how I think about purchases, and it helps me quantify the value better and make purchases that are likely to be a good value to me. It also encourages me to use things a lot for a long time to get an even better amount of value out of them, which in turn is more environmentally friendly and helps me avoid the traps of rampant consumerism. Win win win.

Hope that helps!

Product pricing actually has very little to do with what the actual product costs to make, other than to determine whether it is financially viable to produce.

Rather, the aim of a seller is to maximize their profit by choosing the most efficient selling price for a specific demand. For a house, demand has greatly outstripped supply, and a buyer requires a place to live, so prices are high. Similarly, during the pandemic, the utility of computer parts was high and demand was high since many had to work from home, so prices went high.

It certainly gets more complicated than my (ECON 101 level) explanation here, but companies have just been taking advantage of a high demand for things and for people’s needs (e.g. housing and food) there is little to no pressure to reduce costs as demand is poorly correlated with price (inelastic).

There is no inherent value to money. We used to tie the value of money to the value of gold, but what good is a bar of gold when you’re hungry in a famine? It’s all arbitrary valuation so we don’t need to go through the hassle of bartering anymore.

Luxury goods that can be mass produced by mass mechanisation can reduce the price of something that would take one individual hours to build down to a few cents. Give me a plastic mold and some base material and I can probably crank out a few light switches in an hour, but a machine can do hundreds. This stuff is especially cheap if you put them in low wage countries like China or India.

On the other hand, basic needs such as food and water can’t be mass produced. Plants and animals need time to grow, and many foods can’t be harvested entirely automatically. Most good production involves leaving a bit of land unused for anything but waiting for food to happen. Land and the infrastructure around it is a finite resource worth a whole lot of money.

Water is especially difficult, since desalination is still prohibitively expensive and rain is unpredictable. Many nations are draining their aquifers which still hold some ground water, but that too is a finite resource. Eventually, the water runs out and land will go dry. Those with access to land close to ample water will be able to charge whatever they want for access to it.

One: High demand, low supply, lack of regulation. Prices can rise arbitrarily and since there’s always some richer guy than you who will pay that price, the price goes up. It can’t come down either, because the house the previous owners are moving to is even more expensive, so they need the money. The only exception is dead people’s houses, but those can get inherited and sold off for greed. After all, if you’ve run into a million dollar home, why would you sell it for 100k?

Two: Innovation is slowing down. Computer parts have been incredibly fucking cheap for a decade and a half, but prices are rising again. You used to spend the equivalent of 4000-5000 dollars on a normal computer, that steeply dropped around the dot com bubble, and prices are now climbing again because computers don’t become twice as fast every year anymore. From the start of the 2000s computers and chip production capacity advances at break-neck speed.

I don’t think computer parts are even that expensive. You don’t need 24GB of VRAM or a 13900k or a 4TB SSD. Get yourself a 500 dollar computer and you can do much more than any 1000 dollar computer could do for the past three decades. It’s only the top of the line stuff like Macbooks and extreme gamer graphics cards that have gotten more expensive. That said, consoles did rise in price, but that’s because modern consoles aren’t the underpowered messes that they used to be back when they were cheap. The Switch is still console priced, but the PS5 is basically an expensive gaming PC stuffed into a small box. I doubt Sony or Microsoft are making any money on selling the hardware itself, especially on the newer models.

Oh, and another reason for the computer situation: you need extremely complex industrial tooling to produce chips. There are only a handful of companies in the world with the know-how and tooling to do so. If China were to nuke Taiwan and Hamas would wipe Israel off the map, we’d lose smart phones computers, consoles, smart cars, everything; our ability to produce the chips and the knowledge to build the necessary machinery for all of the tech we’ve come to rely on has been concentrated into a select few locations.

For one part of the chip production process at 3-7 nanometer levels, you need a certain laser system. There is one single country in the world (ASML) that can build that technology. Other companies have gone bankrupts, have been bought out, or are decades behind. Other parts of the chip production process have similar bottlenecks.

So, when COVID hit and imports/exports to and from Taiwan froze, everything went to shit. We didn’t notice for the first few months because of transport delays, but cracks started to appear across the global production chain and there simply wasn’t enough capacity to build enough chips. Combine that with an unfortunate drought (chip production consumes a lot of fresh water) and a factory plant burning down after it’s been running longer and faster than it was ever designed to, and you’ve got yourself a situation where Ford’s infotainment system is competing for chip production capacity with the PS5 and heart rate monitors.

Lastly, floods and fires in low wage countries producing technologies such as hard drives, RAM, and flash storage have done a number on computer part prices a few years before COVID.

Three: Mass produced electronics with little quality control. Sometimes you’ll get a dud, but there’s no brand to damage and the quality requirements aren’t that high. Mass produced shit imported from China doesn’t need to be expensive, especially if you’re targeting sales quantity over quality and features.

Four: Rent and fuel prices to up, so prices of products and services go up, or the business would be making a loss. If you think your rent is high, try renting a restaurant building anywhere downtown, you’ll find out you’re actually getting a bargain on your $1500 broom closet. Normally wages would also go up, but that’s not something that’s happening everywhere.

All of these prices can be affected by government policy. You can set a cap on what a square meter of land or building can be sold or rented out for. You can set an import tax to prevent the continuous stream of mass produced plastic trash from being so cheap. You can set maximum prices for consumer goods, especially the luxury ones.

However, aggressive price control can make it unfeasible to sell products within your country, and cause shortages. Businesses also don’t tend to like being told to lower their prices, and a significant amount of voters work for businesses and get more money if their company does well.

Shortages have driven up the price and prices don’t tend to come down naturally unless consumers exert pressure on businesses. With big chains having wiped out most of their competition with extremely low prices, there’s little pressure you can exert ad a consumer these days. Your local grocery store couldn’t compete with Walmart in 2005 do now Walmart can ask whatever prices it wants, it’s not like you can go anywhere else. You’d think anti monopoly laws would do something about this, but in many areas the people voted into power don’t really care about fixing this problem.

No doubt there is no value to buying a home in a lot of areas rn.

I rent a 2 br townhouse for 1800/mo. I have a detached garage. I have a basement with washer and dryer. I have about about 1200 sqft plus the basement which is unfinished. Utilities combined is 200/mo. Heat is included.

A similar unit would be about $300k. I’d get probably 8% interest with a 750 credit score. I’d have basically the same mortgage as I have for rent. Plus I’d be responsible for stuff I’m not right now, like heat, water, sewer, trash, recycling, lawn care, and literally any maintenance.

It’s a way, way better deal to be renting right now I many areas.

Somewhat related, you can still get SSDs pretty cheap due to the oversupply of NAND flash (supply greater than demand = prices go down). That’ll clear up in the next few months though, with manufacturers like Samsung reducing production and increasing prices of NAND flash.

well if you want a basic idea of how prices work, then study some economics, as that’s a big part of the fundamentals economists learn. Essentially a bunch of funny curve shapes that try to guess how much people will want to pay for something. Those curves change shape based on interest rates, how necessary an item is, how easy or cheap it is to make a lot instead of a little, and so on and so forth. We can use them to predict stuff but so much of economics is ultimately unpredictable because it relies on human factors.

In terms of how you behave, there’s a few elements to it. With events, the window of opportunity is limited, while you can put off a new device purchase, you can’t postpone the concert as an attendee, so you can’t wait for a sale and FOMO is strong. Many things where you tend to impulse buy are presented as an offer you “can’t put off til later”, so you have to step back to see if you really need it now. Best way to try to even it out is to budget before you start checking current prices and see how they compare.

It’s a combination of people taking advantage of things, peoples’ hands being forced, and trying to make sure only certain people get the stuff.

I remember there was enormous backlash because people keep raising the prices on medical supplies such as insulin and inhalers. One day I discovered there was actually one place a friend of mine could get medical supplies for a reasonable price, but alas, people who didn’t even have the medical condition would buy it all in bulk… all before selling it at a separate location for the normal insane price.

It’s clear that you cannot totally follow both prosperity and freedom.

1. Some people know people will buy what they have to offer, so they ask for more in return. I will say what I object to is people killing the competition, for example the same YouTube we currently know was responsible for the Tiktok gossip.

2. If money is a priority, you take your mind off a lot of subtleties. Going back to the topic of medicine, the mafia tried selling insulin cheap in some places, at least before they ran out and started selling unassuming random assortments in it. This trend, which you can actually blame Reddit for, didn’t last.

3. The biggest thing to remember is this thing we call currency is regulated and is dependent on uniqueness. It must be balanced with things like population and conflict. And note a part of this implies how non-automatic its existence is. If I began a civilization somewhere, the closest I’d do is go commodity, possibly with a services system, which I can already hear people bringing up my currently-faulty subreddit in response to (needs a few systemic fixes, I know).

No matter what country anyone mentions here, there’s a 100% chance it has a system that doesn’t work. If it’s not equal opportunity, it’s an unequal opportunity, and if it’s not flexible/independent, what you describe is inevitable, and things snap in two or get dragged down.

Well, a lot of labor goes in to making things like electronics. The supply chain and regulatory compliance are very complicated, and the margins are very thin (highest I’ve seen is 15%, maybe exceeded by some exceptions like Apple but usually it is less).

So small changes to the hard costs, distribution, tax status, labor costs, shipping costs, duties, or regulatory burdens would affect the end price. For electronics at least, it’s a pretty complex equation.

Anyway, I’ve got good news! You’ve got it relatively easy. Here in Vietnam, land prices are much higher. Want a reasonably modern house 90 minute drive from HCMC? If you are university educated, and so is your partner, and you have no kids, and no luxury expenses… I worked out you could afford it, if you save for about 40 years and prices don’t go up. No yard or anything – just a 100 square meter plot fileld to the brim with a concrete house.

Food is cheap here, at least! You would be shocked at land prices in Asia though.

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Your title may be the one time this year we could’ve seen proper application of the phrase “begging the question”.

Curious if OP keeps a budget, log of his spending.