Your example of the Blueray player is a good one, and I can't disagree with it.
I will say that I mainly had housing in mind when I made that statement. That was somewhat short-sighted of me, but in my defense housing is quite different from something like a Blueray player or a TV. House prices are much, much more fluid than those of gadgets and are also highly localized. One house can be 3x more expensive than another carbon copy simply because it's closer to an office district that employs a large number of comparatively wealthy people. In other words, housing prices in competitive markets are determined mostly by factors other than the cost of production, which can be nearly negligible in some cases. Housing prices certainly would go down if everybody's income was simultaneously cut by two-thirds; this is exactly what happens when a local job market crashes (e.g., see the Houston oil crash in the 80s).
Regarding your final point, about standard of living simply veering upward over time, I think there's a lot of truth to it. But I also think there's a lot of complexity. I know plenty of folks who still live very modest lives that are barely different from the 50s -- small homes, often homes that were built in the 50s and are still standing and are in bad condition, certainly worse condition than when they were first built; small TVs; old kitchens; no vacations; public schools; many family members living in the same house; etc. These people are often working classic middle-class jobs: nurses, school teachers, etc. Despite not having many of the materialistic advances you list, they also often have pretty bad debt, either student loans or credit card debt.
Yeah, you're right of course. Housing prices would go down towards the cost of production. Those $750k McMansions really only cost $300k to build (making numbers up here). But if new homes drop below the cost of production then we're in trouble.
Any economic model that doesn't assume for the cost of production simply isn't realistic.
Japan has a particularly weird model that might work: homes drop in price like cars over time, so prestige signalling means building a new house and not living in an old one. It also means homes are built cheaply and without intention to last more than a couple decades. It also means that the new home construction industry maintains a fairly flat work schedule and increases certainty.
There's a bunch of other construction economics that occur in Japan. Something like 5% of the people working in Japan work in construction.
Studies of Japanese economics are interesting in terms of how many economic problems the Japanese have tried to solve with construction projects.
I will say that I mainly had housing in mind when I made that statement. That was somewhat short-sighted of me, but in my defense housing is quite different from something like a Blueray player or a TV. House prices are much, much more fluid than those of gadgets and are also highly localized. One house can be 3x more expensive than another carbon copy simply because it's closer to an office district that employs a large number of comparatively wealthy people. In other words, housing prices in competitive markets are determined mostly by factors other than the cost of production, which can be nearly negligible in some cases. Housing prices certainly would go down if everybody's income was simultaneously cut by two-thirds; this is exactly what happens when a local job market crashes (e.g., see the Houston oil crash in the 80s).
Regarding your final point, about standard of living simply veering upward over time, I think there's a lot of truth to it. But I also think there's a lot of complexity. I know plenty of folks who still live very modest lives that are barely different from the 50s -- small homes, often homes that were built in the 50s and are still standing and are in bad condition, certainly worse condition than when they were first built; small TVs; old kitchens; no vacations; public schools; many family members living in the same house; etc. These people are often working classic middle-class jobs: nurses, school teachers, etc. Despite not having many of the materialistic advances you list, they also often have pretty bad debt, either student loans or credit card debt.