Yes. There are many pieces and it is hard to grasp.
Take the car mentioned. If we look at the sticker price (price paid), then we see prices went up. How can this be if technology is involved?
To me, this premise starts with the fact we are not dealing with the same thing. A car in the 1970s, like a Chrysler Cordoba got around 15 miles per gallon. What do cars get today? 30? 35? 40?
Then we have the safety features. There is no way to compare shatterproof windshields, abs braking systems and collapsable fender, all which save lives.
Next we have the features. These cars do not even compare to the older vehicles.
Finally we have the life of a car. I am old enough to remember when you sold a car at 50K because the value would drop like a rock as you got near 100K. This is because they would be dead by 125K or 150K. Today, an entry level Kia will go 200K without breathing hard.
So there is more on the car than basic transportation. We also have a host of other non-technological factors in automobile production. Companies are not digital entities. They have other costs that do not follow the technology curve. This is where things start to get messy.
But when we isolate technology products, or services that became digitized, we see this full force. I will write an article about an industry that most of us are familiar with some pricing estimates over the last 100 years. It really exemplifies how things went.
Can robotics cause overall deflation if other factors are too inflationary? I guess the real question is... will robotics positively impact my life?
Two questions there.
The latter is depends in part due to the speed of entry. We have no idea until these become mainstream. What we can say is it will generate abundance in many areas, forcing downward pricing. If this happens at the pace I think, this will come at the expense of jobs, something that is highly contested and, also my view, we as society are not prepared for.
Robotics is likely going to be outpaced by AI. This means the white collar jobs are likely at risk first. Dexterity, spatial recognition, and other factors are difficult to master.
So a lot of this depends upon time. If we are looking at a 30 years window, then less impact. On the other hand, will it happen over the next 10? That is also up for debate.
The other factor is how widespread it becomes. If we see robotics entering the entire supply chain, then most of the inflationary forces are diminished. There could be some supply/demand in balances of course, but those will be isolated.
Another factor in robotics is localization. This can remove many expenses such as transportation due to making the product locally.
And to throw another technology monkey wrench in, do not overlook the material sciences. That holds the potential to alter the makeup of materials, opting for more abundant/less costly materials for different things.
A classic example, the cost of copper is not (less) relevant in plumbing world where PVC piping is used.
It's honestly so interesting!
I guess realistically technology is deflationary, but companies will also try to keep prices high.
Whether through innovation, differentiation, collusion, monopolies though technology or regulation, etc etc.
On top of everything you mentioned there will also be the impacts of climate change, technology advancement may be disrupted by extreme weather events or shifting priorities... forecasting the future has surely never been so murky.
Thanks again for the chat, as always you've given me a lot to think about.