okay so I don't need to tell you that prices for basically everything you buy have been climbing faster than they really should be sustained inflation has been a major problem in most major economies around the world for almost half a decade at this point but there are other sneakier ways that your spending power is being eroded that get much less attention but probably do much more harm you might already know about shrink flation where instead of the goods you purchase just getting more expensive they stay at the same price but just get smaller Toblerone that
look like this when they used to look like this YouTube play buttons that look like this now look like this or the packets of Oreos that are half empty for some reason and if you were ever wondering why you can't get a nice girthy can of soda anymore well shrink flation is probably to blame the price tag may have stayed the same but you're getting less for your dollar and you need to repeat your purchases more often so in the end it's the same thing as just raising prices the problem for companies is that people
are starting to catch on to this in some countries food items now need to be labeled with their total price as well as the price per kilogram of the products inside now this video isn't about regular inflation or even shrinkflation it's about ship flation which is probably costing you a lot more than these other two while also hurting your health wasting your time and just being a massive inconvenience so what is inflation why is it so much worse than all the other types of inflation why has become such a big problem all of a sudden
and how is all of this different from businesses just cutting costs like they always do to properly understand the phenomenon of [ __ ] flation we need to briefly but properly Define regular inflation which is something that most people understand in theory but often get some key details wrong inflation is the general increase in the price level of goods and services within an economy if the price of one thing goes up that's just the price of one thing going up but if most things increase in price then that's inflation this is normally measured using the
Consumer Price Index which is a list of goods and services that economists decide is around about what the average household would consume they then look at the total price of that list of goods and services Often by actually going down to supermarkets and looking at Price tags and if the prices of those goods have gone up by 5% in a year they'll say the inflation rate is 5% some people and even some economists equate this to your money being worth 5% less and while that's sort of true it's not actually the same thing for a
few very important reasons the first reason is that headline inflation only tracks consumer goods and services there are other things that you might want to spend your money on like shares or a home for example the general price level of publicly traded shares in the US Stock Market have roughly doubled in The Last 5 Years but that doesn't mean that the value of the dollar has hared housing is another thing that clearly outpaced regular inflation as measured by this basket of goods if you're saving up for a house I don't need to tell you that
it feels like your money is buying less and less every month inflation can also act completely independently of the value of the currency most countries in the EU use a common currency the Euro but all of these different National economies have different inflation rates because there are other things that can make prices go up or down besides how much money is being printed or what interest rates are now that's not to say that those variables aren't important if if a government sets interest rates to zero and prints trillions of dollars worth of their currency that
will all other things being equal push up prices but other factors like sales tax production slowdowns shipping costs trade restrictions and just plain old corporate profiteering can make those items more expensive the problem this creates is that unless after tax wages keep up with the increasing value of these things sacrifices have to be made somewhere companies are now struggling to make things more expensive and they're not getting away with just making them smaller with shrink flation so they're cutting the quality of their goods with flation now businesses have been trying to cut costs and pass
off inferior products for literally as long as one human was willing to trade with another whether it's inferior copper or a chocolate bar filled with palm oil company's cutting Corners is nothing special by itself what's different right now is the widespread increase in the general shittiness of goods and services we consume remember one product increasing its price is nothing special every product increasing its price is inflation and we are living through that right now in the worst way possible don't believe it well let's look at some examples take something like plain old peanut butter a
tasty Staple in most kitchens if you've ever made or purchased 100% natural peanut butter you'll know that it's mushing up peanuts makes a lot of oil often too much oil so then why do most major peanut butter brands add even more random veg vegetable and Seed oils to their products well what really happens is the companies have started extracting the more valuable peanut oil which can be sold separately and used for cooking and substituting the oil they take out with cheaper inferior oils they put back in most packaged food is generally heading the same way
substituting expensive ingredients with cheaper oils emulsifiers and an ingredient that's proudly displayed as the equivalent of milk if you've noticed that a lot of food you're eating just doesn't taste as good as it used to you aren't going crazy but beyond just the taste this slow process of making stuff cheaper is also a health risk medical and dietary professionals have highlighted the health risks associated with these ingredients but the thing is that people are much more likely to look at and understand the price tag then they are to know what type of seed oil is
better for heart health or if phosphoric acid is better than heter metaphosphoric sorbic acid for companies it's become much easier to deliver worse products at the same same price than to deliver the same product at a higher price now it's not just the grocery aisle ship flation extends to much bigger purchases as well car companies are desperate to maintain market share especially as new competitors from China enter the mainstream they know that most people don't have the technical knowledge to accurately compare the hundreds of different features that modern cars come with so they've just made
them all optional extras the sticker price starting from is about as accurate as a stormtrooper most car cars once on the road with options packages can easily cost twice as much as their advertised starting price some automakers like Tesla have become particularly bad for this advertising starting prices that are almost never available but more automakers are stripping down basic features like materials Lan keep assist keyless entry adaptive cruise control and electric seats and adding them back in as optional extras BMW tried to take this a step further by charging an ongoing subscription to heated seats
in their car a feature that was already installed by default and would have cost the company nothing extra to just enable in all of their vehicles if you think that's bad Kia and Hyundai removed an ignition immobilizer feature from their cars a unit that reportedly saved them about $5 in manufacturing costs but without this basic device though their cars became incredibly easy to steal going so far as to render them uninsurable in many countries for more and more cars even premium Brands the starting price price is what sells and while it may look the same
year toe and keep people coming back to their dealerships the amount of car people are actually getting for their money has been [ __ ] flated housing is another area where the general quality is declining rapidly people in general don't want smaller homes and more people than ever are spending all they can reasonably afford on their homes so the only thing that's left is to cut quality building standards have been slipping in dozens of major economies around the world especially with apartment buildings that are developed to a budget that hasn't always accounted for swings in
material and labor costs across the world there have been apartment Towers literally collapsing because construction and maintenance standards were loosened to keep a competitive price tag these buildings apart from being dangerous to inhabit are also more expensive to heat more expensive to cool more prone to maintenance problems and more difficult to repair when things inevitably do go wrong now of course this varies country to Country state to state and building code to building code but the general quality level of housing around the world is also going backwards so why is this happening well it's easy
to anthropomorphize greedy companies screwing consumers wherever they can just to shave out some more profit margin and that is absolutely happening but truthfully we share some blame in this as well the rise of online retailers like temu wish.com and shine that almost proudly advertise themselves as cheap at the expense of quality shows that there is demand for garbage products as long as the Price Is Right This extends to even large purchases as well people want a house with five bedrooms and four bathrooms and they will largely buy whatever one is cheapest in that category should
people be expected to have comprehensive knowledge of building materials and construction standards no but many houses are now being purchased off the plan with very little in the way of due diligence on what is the largest purchase most people will ever make the same goes for cars food and anything else we consume companies can and do sell on quality it's just that in a global economy where so many people are stretched so thin a low price tag is where the demand is right now but if you thought all of this was bad with Goods this
all has absolutely nothing on the ship flation hitting our services when we think about buying things we tend to think about buying things but the majority of consumption in advanced economies is services not actual tangible Goods it's hard to think of a single service that's gotten better over the last half decade streaming services have less variety spread out over more providers all with stricter rules about who you're allowed to share accounts with and while many of these apps can't raise their prices without losing market share in an increasingly crowded space they have started experimenting with
ads on Services you're already paying for delivery and rhare apps that were supposed to be the technology-driven solution to a broken business have themselves become an even more broken business plagued with hidden fees degrading service quality and expanding weight times speaking of businesses that were supposed to revolutionize Industries for the better Airbnb went from a platform that provided a better cheaper alternative to hotels to a penny pinching premium service where you have to do your own housekeeping and don't even get me started on gaming video games have always been a very cost-effective form of entertainment
for the price of a nice meal out you can get a game that provides you with hundreds of hours of fun but people are only willing to pay so much for that game companies can't raise prices so instead they degrade their service in just the last month there have been headlines about big companies shutting down positively reviewed but less financially profitable Studios forcing people onto buggy platforms that track their usage and games that used to cost 50 bucks being cut up into multiple installments and sold as two or three completely new games one year after
the other some particularly egregious examples don't even have the decency to run the new game through a different menu screen ship flation is especially bad for services where the price tag is $0 and therefore can't really move at all in any direction other than getting worse to increase or maintain profits YouTube Facebook Reddit all to say nothing of free-to-play games or journalism are all covered in invasive advertising cookies and content that an algorithm decides you want to see speaking speaking of which please like And subscribe if the algorithm at least got this recommendation right just
plain old customer service has also become worse as support staff are either outsourced to cheaper call centers or far more popularly these days replaced with barely functional AI chat Bots something as simple as credit card reward points used to be a great way to save on hotel rooms or maybe even snag a flight upgrade if you had enough of them but now seat upgrades are basically impossible to find unless you have extreme flexibility on on your travel schedule and loyalty programs really just take advantage of customers that are too lazy to shop around now getting
some cold nuggies an hour after you ordered them not getting a business class seat or not having June part two on the streaming service you're trialing this month is a problem but maybe one of the first world variety but the ship flation of services has hit far more serious areas of Our Lives as well medical checkups across the world have gotten shorter and less comprehensive this goes doubly for medical and living care provided to the elderly retirement homes can't raise prices very much on people who have no way of making an income so to remain
in business Staffing food facilities security and even basic hygiene have been cut from these services to make it fit a predetermined budget Financial Services like insurance and advice are also providing less coverage with higher deductibles and requiring more due diligence than ever from their customers most Financial advice in most advanced economies really just amounts to a barely qualified salesman trying to push you a loan or a mutual fund to hit their quarterly quotas this is costing people hundreds of thousands of dollars over their lives now again none of these things by themselves is anything new
just like the price increasing on one product is nothing special by itself but the increasingly widespread and consistent lowering of quality across basically everything we buy should be just as much of a concern to economists as the price tag that come with those things it's a lot harder to measure and that's why it's become so popular but ship flation doesn't just cost people money it costs them time stress and their health all while contributing to the problems caused by living in an increasingly disposable World unfortunately individually there isn't that much you can do about it
even if you do take the time to carefully assess the quality of everything you purchase you're not going to be immune from ship flation the reason that so many Industries can get away with doing this all so quickly is that there isn't much in the way of Alternatives the pandemic also provided a fantastic Catalyst where consumers temporarily forgave some of these shortcomings writing off as businesses trying to manage in a radically reshaped business environment unfortunately a lot of these changes ended up being anything but temporary
