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Regulation Inflation
There’s basically no real inflation in the cost of technology — computers and that sort of stuff are actually getting cheaper. From the Bureau of Labor Statistics:
Have you bought a TV or computer recently? If so, you may have noticed their prices have steeply decreased over the years, while their quality continues to improve. From December 1997 to August 2015, the Consumer Price Index for personal computers and peripheral equipment declined 96 percent. Most of the decline in this index occurred between 1998 and 2003. The price index for TVs decreased 94 percent from December 1997 to August 2015. This decline was more gradual than the decline in the price index for personal computers.
Here’s a fun chart to ponder:
Notice, though, which lines are going up? Cable TV service, satellite service — all of the things, frankly, that are either already regulated or about to be.
Where there is the most cutthroat competition there are falling prices and rising quality.
Where there is the heavy hand of government regulation there are rising prices and lousy service.
Why is this so hard for the left to understand? This graph could be relabeled for education, food, transportation … you name it.
Published in Culture, Economics, Technology
I don’t necessarily think that the Left doesn’t understand the relationship between regulation and higher prices. They probably understand it perfectly well and are okay with it. I think they see it as an acceptable cost of having power over their inferiors.
I deal with Comcast (and other cable operators) on the corporate side, they being both a customer and a vendor to my company. I told them a while ago: “Do you know that your commercial customers despise you? Here’s why: you offer them the same old product at ever increasing prices, and offer horrible support.” The individual I was talking to seemed aware of the issue, but powerless to do anything about it.
The crazy thing is that there is competition in the TV service industry, albeit indirect (Amazon Video, Vudu, Netflix, Hulu Plus, YouTube, etc), and the prices are still going up among traditional providers.
Are regulations really the main factor in this case?
Then again, I wonder if those prices account for TV+Internet bundling.
Now, Rob, you slept through your grade school physical economics class. This is just a reflection of the Progressive First Law of Cost: Total Cost is everywhere and always preserved. As cost goes down, so must regulation go up so as to conserve increasing cost.
Eric Hines
I don’t believe that regulation is the main factor, though it certainly has something to do with it.
I think the real issue is that the competition for TV services is in it’s infancy. Prime, Netflix, and other streaming services are add-ons for people, not replacements. I think a time is coming, and may already be here, when they do replace cable. I’m certainly entertaining the idea.
It’s also been said that live sports are propping up traditional television service. That may be true.
The other thing to consider is that when you buy cable TV, you aren’t buying cable TV. You are buying programming. So while the infrastructure required to bring you that programming may be aging, it may not be that wonderfully technically complex, it may not be getting better, the TV shows you are watching should be, and maybe are. So perhaps (and I am just surmising here) that a part of the rising cost of television services is the fact that the programming is getting better.
The point may be valid, but I don’t think the chart proves it. You could also argue that prices are going down for devices, while they’re going up for services. There could be many reasons why it’s getting cheaper to make televisions and more expensive to deliver television programming.
Do we have data showing that heavily regulated manufactured goods are getting more expensive while less-regulated manufactured goods aren’t? I can believe that it’s true, but I just don’t know of an example.
Without regulation you lose valuable opportunities for graft and corruption. With regulation you create numerous opportunities to enrich progressives and liberal all in the name of reducing graft and corruption.
What’s not to love?
Seawriter
I have seen this graph with those items shown, and they are up and to the right.
Regulation freezes things in place, which also freezes innovation. It should be approached sparingly.
Is it the regulation part that’s making it so expensive, or is it the service part making it so expensive? It’s not like other service sectors… regulated or no…. are getting any cheaper either.
The problem is lack of competition too. And the fact that they bundle channels. We should be able to just pay for the channels we want, instead of 300 others we don’t want. When you are at the supermarket, they don’t tell you the only way you can buy milk is if you also buy bread, eggs, cereal and salad in the same bundle.
Maybe the dam is breaking, at least for some services. I have never had cable TV. I would like to have cable internet, but have never seen it offered by itself without a tv package. I just this last week signed up for cable internet alone for $20 a month, it is half what I am now paying for DSL. We will see how it works out.
My daughter and her family also have cable internet only. Their telecom is via their cell phones, and their TV comes from Netflix and one of the other streamers. They’re happy as clams, and the parents are fully in charge of what their toddler children watch on TV.
Only thing they don’t get that way is football. No loss to them; I failed as a parent: she doesn’t like football.
Eric Hines
Regulation hits video services in a couple of ways. Because it was originally seen as a utility, early cable had to be franchised by each municipality and township it served. That came with a bribe, er… franchise fee.
Must carry rules impact the bill, too. No big deal for local cable because they can pull signals off air. Satellite providers need to fiber local signals back to their transmission head. I know of at least one station that uses their feed to DirecTV as a back up to the microwave transmission from studio to tower.
Then there’s retrans consent. Cable and sat providers must pay fees to carry those local signals that are forced to put on their systems. Every four to five years somebody threatens to go dark during the Super Bowl. Stations actually tie the length of their retrans agreements to coincide with their affiliated networks coverage of the NFL championship.
I think this is a bit overstated. Yeah, prices have fallen and some quality improvements have been made, but it isn’t an apples-to-apples comparison. Plenty of folks would argue that the picture quality of (more expensive, now mostly defunct) plasmas is demonstrably superior to today’s best LEDs and/or that the audio of quality big tube tvs beats the pants off of flat screen speakers.
Anyway, all I really care about is when the heck the cable companies are going to offer boxes that provide 1080p or better. EJ, is there any word on networks upgrading to (or near) 4k?
That is the route that my husband and I, and many of our friends, have gone. Every few months we talk about switching to cable. Here’s how that conversation inevitably goes:
Me: Do you miss cable?
Husband: No, not really. You?
Me: No, not really.
If your daughter ever changes her mind about football, Sling TV offers ESPN and some other sports networks (including SEC!).
I’d like to see health care costs included in that graph.
I would hazard a guess that responsibility for the cable/satellite/etc. service price increases has a face — it’s not just some amorphous regulatory blancmange at work.
The face in question belongs to Ed Markey, who until recently was US Representative for the Massachusetts district where I was raised and presently live; Markey served in the US House for 36 years, and in a special election in 2013 managed to snag the US Senate seat that John Kerry vacated for his SoS role.
Put plainly, on ninety-nine percent of whatever issues are out there, Markey is a guaranteed nitwit, but on *one* issue (or more precisely, in one bailiwick) Markey for decades has been as shrewd a Capitol Hill rent-seeker as you can find: communications regulation (including telecommunications, broadcast, networking, etc.).
As either a subcommittee chair or ranking Democratic member, Markey has been a force of nature — for filling his campaign coffers and enriching the service providers.
The simple arrangement for years was that Markey would raise a hue and cry about predatory pricing in this or that communications services sub-industry, push forward with the “necessary” legislation/regulation, and voila — the service-provider majors would pretend to cave and would appear initially to cut prices, Markey would claim victory on behalf of the consumer, and then after a given interval the services donors (er, majors) would push their pricing to the very edge of the proverbial envelope and/or concoct packaged offerings exempt from limits.
Palaeologus – Save your money and buy a really good 1080 set. The entire television industry spent billions to upgrade to digital. Even the smallest station needed to spend $8-9 million just to get a 1080i signal on the air (new transmitter, master control switcher, etc.) from their affiliated network. No one is in the mood to do that again, especially with smaller audiences and lower revenues.
4K (also known as UltraHD) has twice the pixels of high def. That means twice the bandwidth or ultra compression.
When you go into a store and look at the picture be mindful that is coming off of 4K media. It looks fantastic but it will never look like that at home.
I should have been more specific in my previous post: It was education, healthcare, and housing that also had material inflation.
No promises, but I’ll see if I can track it down.
Prices have decreased, but quality has not necessarily. It is Power that has increased. Your new computer hardware lasts about as long as your old hardware did, sometimes not even as long-more things to fail. Your new computer or TV just does a lot more than your old one did for about the same price.
We have the complete cable package (VOIP phone, TV, Internet) from Comcast, and we are satisfied customers. About every six months, I get an email from them letting me know that my internet speed has been increased. A couple of weeks ago, our phone service went out. A 20-minute online and phone chat with Comcast Tech Support solved the problem. They are expensive, but we would not be able to receive TV without them, and we can well afford what we pay. I like being able to spend up to 1-1/2 hours on the AMU and not have to pay any extra!