This Is the End


Markets, Risk and Human Interaction

November 20, 2013

Live to Eat, Eat to Live

In a recent New York Times opinion piece, Paul Krugman assessed the possibility that the economy is in a new, constant state of mild depression, and suggests several reasons why this might be occurring, including slowing population growth and a persistent trade deficit.

To this I would like to suggest another one, which has been a topic of some of my previous posts: We simply demand less in terms of the consumption of produced, brick and mortar types of goods because that is not where we are spending our lives. Granted, we need a place to live, food to eat, a car to get around, but now we are not living to eat, we are eating to live; we are living to do things that do not require a huge industrial machine. (I won't even get into the point that insofar as we require the output of the industrial machine, it is now being run with less labor required).

Take a look at how people are spending their non-working, non-sleeping, non-eating time. It is increasingly doing things where the sum of the goods required are a chair, a table, and the machinery necessary to get a window into the virtual world, whether for binge-watching Breaking Bad, juggling texting with downloading photos, watching YouTube, or, for those who are creatively engaged, producing those YouTubes, in the case of my nine-year old, making movies on Movie Star Planet. The more we are focused on these activities, the less we feel invested in the homes where we generally occupy a five by ten space for our virtual activities, or in our car, which we now use as a transportation vehicle for those occasions where we venture out.

It doesn't take much of a reorientation in this direction to make a difference; and it takes even less when, as Krugman points out, there already is a drop in the demographically-driven demand even if everything else is held constant. And the forward path from here has the potential to be far more troubling that for the demographics, which at this point are mostly behind us. As I have written elsewhere:

We are in the year 2025: Because of advances in production technology, much of the path from extracting the required renewable resources through to the production and distribution of most of the items we demand can be accomplished with automated methods overseen by a small cadre of engineers. The main items we demand, beyond food, clothing and shelter, are the nth generation social connection systems. We are approaching the level of Nozick’s experience machine; we can anyone we want in whatever world we want, accompanied by whomever we want. If you think you used to burn a lot of your free waking hours with your jumping between email, video games, Facebook, and HBO way back when….

Given our evolved interests, most of us are spending a fraction of our income on consumption. There just isn’t a lot that we demand. What we do demand is cheap, and doesn’t require much of any labor to produce. 
Or, doesn’t require production at all. For those who have the money to burn, demand is moving increasingly toward things like land, art, rare wines and Super Bowl tickets, by and large transfers without any economic impact. These notwithstanding, conspicuous consumption is also being dampened; what you wear or drive no longer is so dominating a signal; a far better picture of you and your status is just a few clicks away.

We are a society that basically eats, sleeps, works and then veges out. Not surprising, I guess, given that the tip of the spear of the economy, such as it is, are those same kids who a decade or two earlier were living at home with their parents after college, after graduate school – well, some still are. Though many of us now have our own prefabricated SmallHouse® (McMansions are a thing of the past; no one needs all that space, and, like mink stoles post-Mad Men, social norms regard these as the extravagances of a bygone era). That plus a car, food (the former rarely used, and both produced very inexpensively), our two-hundred dollar experience machine, and we are happy as a clam.

I don’t know exactly how this economy of the future works, but I can tell you that it is not working well. Where is the money coming from for even this minimally consumptive society? What levers can we pull to get ourselves out of this stagnant economy, to reduce unemployment?


  1. Why worry about reducing unemployment? This will be a post-work world. Labor force participation goes to nearly zero with baseline food, housing, and other necessities seen as rights in a civilized world like single payer healthcare is in many industrialized nations. Economics as we know it will have to evolve to other measures or be replaced with some other metrics science.

  2. Oh.... and you pay with it using deflationary Bitcoins. In an environment where real consumption is constrained anyway, the deflationary aspect of that currency is desirable. A sufficiently large set of initial Bitcoins can be used to fund consumption in perpetuity.

    It will be a bumpy ride to get to it though. The death throes of existing currencies and economic systems will cause a lot of human misery. So it goes.

  3. I wish I understood Bitcoins.
    But I totally understand the lack of need for stuff. I would however still want to see more culture produced - beautiful things, good designs, deep histories, intricate studies - maths, physics, The Brain, Africa, Arabic - enough to keep us busy and keep us exchanging some things sometimes.
    Like the previous two people, I don't fear a future in which the "economy" isn't a constantly expanding concrete jungle. That's fine, mighty fine. Still, don't put it beyond humans to find a new excuse to enslave the millions; the new pyramids as I call it. Like defense, oooh America loves that one. Or maybe something to do with the moon or space. Maybe something stupider.

  4. Car? What self respecting 2025ite would own a car? I gave mine up around 2020 when self-driving cars meant that the cost of catching a taxi fell by 90%.

  5. Ok, now it's time to actually leave your house. In the real world, there are actually people that go outside and do things (besides getting inside of their transportation to go to work). Ever heard of sports, gardening, hunting? That's not going to stop. Better yet, now it's time to go outside of a city, or perhaps this country, and you'll see that it will be a long time coming before even a small minority "acheive" the very stupid, superficial, and sad reality you envision.

  6. The new period for posts is six months? Welcome back.

    Bleak outlook, appeal to dystopia, and such? Has everyone given up on painting a more optimistic picture nowadays?

    How can we get some type of resurgence of good spirited-ness? The youngsters, with their zombie fixation, tell us a whole lot (about their elders as well as the milieu). What happened to the flower children's dream?

  7. To answer the last question first, "What levers can we pull to get ourselves out of this stagnant economy, to reduce unemployment?", I believe the answer is clear: maintenance and improvement of our national and personal infrastructure. To answer the first question second, "Where is the money coming from for even this minimally consumptive society?", I'd say in the short-term from a public-private investment bank, in the mid-term from the jobs created by infrastructure maintenance and improvement and, in the long-term, from the efficiencies and new technologies created in this new infrastructure economy. This paradigm needs to be understood in the context of global warming and some frightening, and indeed life-threatening, changes in weather behavior.

    To get the engine of the economy running, we're going to need some smartly invested seed money from a public-private investment bank. Investments need to go to projects that will have a demonstrable impact on productivity and efficiency in the economy as well as on reducing our carbon footprint going forward. There will be a ripple effect through the economy that will coincide with your view that we are becoming homebodies. If people are spending more time at home, they’re going to want to have the most comfortable and economically sustainable environment possible. As jobs from infrastructure increase, income from those jobs will not only support the basic needs of life but also personal investments in homes aimed at comfort and economical sustainability. Of course, that only occurs in cases where the argument for renovation is more compelling than the argument for buying a new energy-efficient home, which incidentally spurs more economic growth, although nothing close to what we experienced from 2002 to 2009.

    I will concede that some sectors of the economy are becoming less consumptive, but not all. For example, we're going to see an increasing number of solar panels on roofs in the sunny regions of the country. I believe the polar vortex is going to stimulate some major home renovations aimed at superinsulation and self-sufficient energy reserves. Only the middle class and above will, in all likelihood, have the financial resources to make those changes. As our attention becomes increasingly focussed on one weather horror story after another, fear will overtake those with the means to protect themselves. That fear will be a pony engine to our national and eventually international economic engines.

    Below the middle class, we're going to be confronted with a major public policy debate about how to convert old, inefficient rental housing stock into stock that doesn't scalp the poor with excessive power bills and still leave them freezing or cooking. The climate change debate is only going to get more heated in at least direct correlation with the planet's temperature. Fighting for our survival will become the driving force behind our economy and the foundation for a whole new world of technological innovations, I believe.


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