What effect does Web 2.0 and, more specifically, sites like Craig's List and eBay have on the cost of living? I would argue that we are living in an extremely deflationary time. I've been able to maintain a fairly good standard of living despite a huge loss in income. I would not have been able to do that without these two sites.
Witness Dr. Frankenstein's Stereo. I was inspired to start looking into this because of the stereo deals I found on Craig's List. In fact, I was on my way to buy a Craig's List one when I stopped at a thrift store to look at speakers. The Craig's List seller wasn't answering his phone, so I wondered if I could scrounge components elsewhere to build a nice system for my garage. I ended up with a stereo that probably cost about $1000 new. I spent $14.
People selling used gear and thrift stores have been with us a long time. Garage sales and estate sales have long been a staple of those living on a tight budget. What makes this era different is the access to information. Back in the day, sellers who had small, cheap items for sale would have just thrown them out rather than pay for classified ad space that might have cost more than the price of the item. Now that we can list items for free and the buyers can search quickly and easily for what they want, more items are available than ever before.
As an aside, this is greener than anything the environmental movement has ever done. Buying used products is the ultimate in recycling. I ended up with a stereo system that can annoy the entire neighborhood with bad music and other than those required for transportation, no raw materials were consumed to get it.
After 18 months of living like this, how much of an effect has it had on my lifestyle? Well, certain costs remain fixed. My mortgage is fixed. My car costs remain unchanged. You can't buy used gas and I don't scrimp on car repair. I've reduced my utility bills, but only marginally. Food bills have dropped, but only because I stopped eating out. I'm also growing a vegetable garden, but I don't think that will have much of an effect.
These costs represent a lower limit on your cost of living and are unaffected by greater access to information. For everything else, I've dropped my costs on the order of 90% and have still managed to make improvements to my home and lifestyle. That must have an effect on the cost of living, don't you think?
Elsewhere on the Web
Over at Metafilter, holyrood asks about the cost of living in LA. His little post is interesting in a Dave Ramsey way even though he doesn't know it. He's been living a productive life with very little money. Ironically, he's asking questions about the cost of living after having demonstrated that the standard government calculations are inaccurate.
The Technology Liberation Front goes completely off the deep end and claims that this somehow demonstrates problems in capitalism. A prolonged gloat about open source software follows. The free market is an organic, evolving thing. Improving access to information just changes the environment in which it lives. I think they really just wanted to write about open source software and this was an excuse.
Anomalous Presumptions discusses more alleged flaws of modern capitalism, using the TLF rant above as a springboard. Intellectual property rights are examined. At some point, both of these discussions leave Earth and head off into deep space, propelled by over thinking the problem.
NYMAG, being a Mainstream Media (MSM) publication, focuses on sex workers. It provides only the most dilatory examination of the economics of the situation and instead writes about pimps and escort services. The authors, Kate Pickert and Emma Rosenblum, might want to stop wondering why bloggers and other web writers are obliterating the MSM and instead start looking at Craig's List. Under "help wanted."
The Carnival of the Capitalists and the Festival of Frugality both have lots more good stuff like this.