An uninformed observer might assume that the rate of inflation is calculated by simply measuring how much prices have risen. This, perhaps, is why so many of us have lost trust in figures that say prices have only risen by 3 percent even as our rents, utility bills and food shopping seems to have gone up by multiples of that.
It turns out, of course, that governments do not simply measure price increases. That would be far too honest. They exclude things like housing costs. And they are very selective about what items get measured in their “basket of goods.” But by far the most underhand deception involves claiming that goods bought today are cheaper than their actual price because they are better than they were in the past. For example, a car today is cheaper than a car bought decades ago because it has power-steering, heated windows, a music system and electric mirrors. This all sounds fine, until you head off to your local car dealer and try to get a car for the same price as you paid for your Ford Cortina back in the 1980s.
This would not be so bad if the government measured wages in the same way. That is, when the pay board is calculating next year’s 3 percent pay settlement, they might note that owning to government spending cuts, they’ve fired a third of your colleagues and you now have to do their work on top of your own. Moreover, the amount of work you have to do at home has increased by a couple of hours too. And then there are all of the soul-destroying unproductive team meetings that you have to prepare for. Calculating wages in the same way as inflation, we would have to conclude that even though you are paid the same as you were a year ago, actually, since your work was so much better then, your pay has actually gone down. As a result, you need a 10 percent pay rise just to keep your wages where they were.
Of course, no government is going to calculate your wages in this way, any more than they are going to be honest about price rises. But it does go to prove the old saying about lies, damned lies and…
As you made it to the end…
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