Moving
Into
A High Cost Era
Hi-tech gadgets are great, but
they also pile up the cost of living
Feb 6, 2001
Last weekend our family broadened
its involvement with what Daniel Yergin called "the
24-hour interconnected, hyperactive, sleep-deprived,
e-mailed-fuelled world." We bought a Personal
Digital Assistant (PDA).
It is a pocketsize, power-packed device that connects
the owner to the Net, so that he can download data
(including e-mails), pictures and music from it or
transmit material to a similar device.
Itís also a partial secretary, which lists his tasks,
reminds him of his appointments, and allows him to
read a pre-stored book or magazine while he is waiting
for his date.
A pre-launch advertisement had a grandma using it
to swap recipes which had better produced a darn exciting
meal ñ considering these PDAs come at $920 per whack.
In addition I have a laptop and a scanner and my son
has his own hand-phone and a score of mobile music
devices not to mention a desk top computer and a host
of expensive accessories that come with them.
Throw in the software all these stuffs cost a mini-fortune.
Why did we buy them? It is for more than a lifestyle
choice. I figured that if we didnít have them we would
never learn how to operate them and get left behind
in this knowledge world.
In recent years, a whole expensive range of products
have been pushed into the market in quick succession,
including broadband Internet, digital camera and radio,
interactive television and soon-to-come third-generation
Wap phones.
For those with an unquenchable thirst for "knowledge"
gizmos, the cost of buying or renting the devices
and paying for their time- or volume-based services
are astronomical.
They are expensive. Yet no one who is serious about
staying ahead can afford to miss out.
Cable TV is, of course, luxury but cable Internet
is not.
Other lifestyle necessities may even include the mobile
high-tech gadgets that are replacing the personal
computer. Are they luxury items ñ or a necessity for
someone wanting to move ahead.
But if he does want to buy them ñ even a selected
number ñ his cost of living is likely to shoot up.
All this leads to a point.
The CPI ñ Should it be reviewed?
During the past three years, there is hardly
a person or society that has not been affected by
the new high tech economy. A big impact is the collective
spending habits of the middle class.
The Consumers Price Index (CPI) which measures cost
of living is one of the most misunderstood set of
statistics in many cities, including Singapore, even
before the complexities of the knowledge economy changed
spending habits.
It works out the index by covering 4,940 items that
Singaporeans pay according to a weighting system ranging
from large items like food (27.5%), housing (22.9%)
and transport (18%) etc to small ones like a T-shirt
or a cinema ticket.
At last count, prices had risen by 1.7 per cent during
the preceding 12 months, a figure that, as usual,
evokes a great deal of public skepticism.
Despite repeated official explanations, many people
believe the CPI does not reflect it accurately reflects
the stateís actual inflation.
They point out the widespread price increases in recent
months for public health, electricity, water, petrol
and gas, public transport, education (university and
pre-school) and soft drinks.
One distortion is, of course, differing lifestyles
between the rich and poor.
Between a five-star hotel and a hawker centre, food
costs vary widely. The inflation rate for the upper
middle class is different from that of a lower-class
family.
To better reflect each segment, the Department of
Statistics issued separate figures for three segments,
the rich, the middle class and the poorer class.
Several years ago the bureaucrats also included new
expenditures into their calculation for new items
including pagers, mobile phones, computers and vacation
trips abroad to represent changing lifestyles.
But today, the world has moved even deeper into the
new economy and it requires a review of spending patterns
to see what should be added and what needs re-weighting.
The CPI was drawn up long ago when spending patterns
were very different.
More and more lives are evolving around cable (eventually
interactive) television, broadband Internet, mobile
gadgets and digital wonders and the high costs they
bring.
The difficulty is distinguishing between devices that
are necessary (higher weighting) and which are for
leisure (lower weighting).
Harm of the Financial Crisis.
By decimating Southeast Asiaís currencies, the 1997
downturn is making the import of new technology from
US into the region even more expensive since they
already are since they are paid for in US dollars.
Worse still, Asians need to sell more (cheaper manufacturing)
goods paid for in cheaper local currencies just to
keep up with the imports.
This is one of Asiaís complaints against globalisation,
a digital divide that will always work against the
Asian masses. That is, of course, another story.
What is relevant here is to let the deprived get sufficient
training and buy the hardware they need despite the
high costs.
Seah
Chiang Nee
