Opinion
How a 5¢ Tesla explains the problem with inflation
A fundamental economic truth explains ever-rising services inflation and why it’s a big problem for governments.
Richard HoldenEconomics professorWhen Ludwig van Beethoven died in 1827, a musician playing one of his string quartets could expect to earn about 75 Austrian florins. Adjusting for inflation that’s roughly $US3750 ($5666) today. Nearly two centuries later a musician playing the same piece can expect to earn about $US75,000 a year.
The technology involved hasn’t changed – it still involves a violin or a cello and the musician’s talent – but real wages have grown twentyfold, or about 1.5 per cent a year. How come?
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