I wanted to follow-up on this inflation issue that we are reading and hearing about non-stop. What we don’t often consider, is the role that technology plays to combat inflation.

 

I’ll go through an example of technology being deflationary so we are on the same page. Recall in the early days of the pandemic, when thousands of companies and millions of workers all moved to remote work. Within a month, a whole bunch of teleconferencing companies and services became mainstream: from Zoom, to Google Meet, to WebEx, etc. They were able to handle this massive increase in demand for their product, without needing to raise the price of their services.

 

Some us might recall some firms many years ago had these incredibly expensive “teleconference rooms”, that cost millions of dollars. Today, the entirety of the market’s demand for remote conferencing tools was met seemingly overnight, without price increases: That folks is technology “destroying” inflation.

 

One final example: As a final example, consider the entertainment industry. Streaming services have dramatically reduced the cost of media consumption and allowed new market participants to scale and compete more efficiently. With a Netflix or Disney or any other account, we can watch a nearly unlimited number of movies and shows for the price of one movie theater ticket. New music artists can produce studio-quality albums from their basements (via improved recording technology) and make their content accessible to millions of potential new fans overnight (via services like YouTube).

 

So recall the price of hand cleansers, disinfectant wipes and toilet paper soared: this was certainly “inflation”. But Clorox for instance can now produce 2 million canisters a day of wipes (mostly using robots by the way).

 

This is how much of cars are built today: These robots don’t get sick, don’t need wage increases or benefits, and work 24/7. This too kills inflation, even while we read about the current high price of cars due to pent-up demand:

It’s a short week for many of us: enjoy the weekend