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?