
The Experience Economy - boh
http://www.nytimes.com/2011/02/15/opinion/15brooks.html?_r=1&adxnnl=1&adxnnlx=1299081705-gh1OkXKP5ibS2FfZ9kz2Eg
======
presidentender
Technological progress has always been inherently deflationary.

Remember, the vast majority of the world's people used to work directly in
food production as a matter of necessity. Technology has allowed most of us to
get off the farm, and pursue other activities.

Whereas a day's work once bought a day's food and not much more, a human
worker (using the machines that serve him) is now able to produce a huge
surplus of wealth. This means that there's time for leisure, and that our
leisure can be much more enjoyable than our grandparents'.

The tragedy of this seems to be that we're running out of stuff for people to
do. A dystopian version of the future this could lead to is recounted in
'Manna,' by Marshall Brain: <http://www.marshallbrain.com/manna1.htm>

For my part, I'm hopeful. I believe that our current plight is the same sort
of growing pains we've experienced in the past. The invention of the
automobile made it tough to find work shoeing horses, for instance, or
manufacturing buggy whips. Just because we don't need to spend our time making
stuff any more doesn't mean we won't be able to find other ways to occupy our
time.

~~~
VladRussian
>The tragedy of this seems to be that we're running out of stuff for people to
do.

There is a lot to do for humans. Just look at the problems in any area of
science. Not all people are qualified to work there though. This is why
instead of whining about disappearing of menial labor jobs, we should be
working toward [what would be at least a start] making K16 a basic level of
education instead of K12. A thousand year ago reading and writing would made
one a basically educated person (for the rest of his/her 30 year long life).
In 19th century K8 was enough (and the average lifespan ~45), in 20th for the
most of the part - K12 (and the average lifespan is ~70 at the end of the
century). The body of knowledge is growing, we live longer, so it is natural
to learn more and apply the more advanced knowledge and skills for longer
period of the active adult productive life.

~~~
nostrademons
I'd fix K-12 before we make K-16 the default. You could easily learn fit the
amount of material in a K-16 education into 12 years if those 12 years weren't
just a matter of putting in time without any real focus on learning the
material. Let's improve quality of education before increasing quantity.

~~~
VladRussian
>You could easily learn fit the amount of material in a K-16 education into 12
years

>Let's improve quality of education before increasing quantity.

nice sound bites. Complete rubbish. The whole amount of K-12 material is
comparable in size with amount of material consumed in just one, max 2, years
of college. But it doesn't work in the opposite way. I graduated from a top
math and physics high school where students were selected from half of the
country. The amount of additional material what we were able to consume during
the high school pales in comparison with amount of material we consumed later
at the University. The brains is still not there at this age. Hormones already
are :)

------
ChuckMcM
I feel like this should be titled "I don't understand the new economics". The
economics of a material world are different than the economics of an
information world.

Rob Gingell used to point out to me that people living during the
revolutionary war didn't have a good feel for what the final rules were going
to be either.

So I buy the insight that it takes fewer people to create Facebook today then
it did to produce Chevy Malibu's in the 70's, however Facebook is creating
opportunities for people like Zynga so you really have to ask yourself what is
the set of all the people working on Facebook, or applications for Facebook,
or applications that let you visit Facebook, or derive demographic data from
the information pool of Facebook?

This is what will distinguish the information economy from the material
economy. In the material economy the product (our example is the Chevy Malibu)
is a dead end, it gets created, used, and discarded. In the information
economy people build products which turn out to be pre-cursor materials to
other products, or combined into still other products. Information products,
even those that are nominally not 'tools', by their nature can be composited
into new products, just like a DJ might create a techno trance mix of three or
four of her favorite tunes.

Google, employs 24,000 people (approximately), and how many people have
careers that exist only because Google (or I guess more properly search
engines) exist?

So I read articles like this one and I feel like the author (in this case the
meta author because the NYT is talking about Cowen's book) are struggling to
understand something their brain wasn't prepared to understand, which is that
information, like a Chevy, can have intrinsic value. Further its value
persists as its "re-manufactured" into new information by people skilled in
the art of doing so. So without the tools to understand the economics of
information they see money like Google's billions but can't see the mechanism
that creates it.

~~~
Unseelie
I think you've missed a core point of the comparison: Chevy Malibu's weren't
built in isolation, either. They were built from parts, in factories built by
people who specialized in building factories (we call it, in very generic
terms, the construction industry). They were serviced by gas stations and
mechanics. There is an entire industry focused on producing rubber, primarily
for automobile tires. There's another industry which builds tires, and another
that refines oil, one that focuses on fixing scratches, another on cleaning
the devices.

The argument that the information world is the first to stack industries on
other industries is fallacious, and misses the point entirely: Information
doesn't take labor for every instance of product.

~~~
ChuckMcM
This is the core difference between information manufacture and real good
manufacturing.

Real goods, such as the Chevy Malibu, have a pyramid of raw materials starting
with ore mining, through smelting, through plastics creation, through tooling,
to piecework to sub-assemblies, to assemblies to product.

Information goods on the other hand start with generally lower value
information which gets collected and distributed and refined into higher value
information. An inverted pyramid if you will.

And unlike ore, which once its in a Chevy Malibu is locked up 'forever', the
information that is created can be re-used in an infinte number of additional
products.

Consider a contructed example of company A which makes their money selling the
current stock ticker from the NYSE, to company B, which takes that data and
does analysis on it to create trading strategies for resale, which are
purchased by company C which uses the trading strategies combined with capital
acquisition from clients to make their money.

A completely different company, Q, might take the same stock ticker
information from company A and make a large LED sign which can display it and
sell those.

So the same 'information ore' is used in two separate product streams. There
can be dozens of such streams. So evaluating the value of Facebook's
information by the number of people Facebook employs really misstates the
economic impact of a company like Facebook.

"The argument that the information world is the first to stack industries on
other industries is fallacious, and misses the point entirely: Information
doesn't take labor for every instance of product."

I don't believe I made either of these claims.

To be clear, the claims I make are; 1) Evaluating the information economy
using the 'rules' of the real goods economy fails. 2) The information that
Facebook and Google create is more analagous to the ore someone might mine out
of a mountain than the end product of vehicle brakes. (the real goods example
used in the article).

I will grant you an example of someone making money off creating after market
products for the Chevy Malibu as a valid post production economic activity, I
know of no examples where people have collected Chevy Malibus and then turned
them into a product that itself had mass market appeal.

It is the distinctive characteristic that information can be combined into new
information which has its own intrinsic value, without losing or consuming the
source information (ie removing its ability to take part in additional
economic activity) that, for me, differentiates the two economic models.

------
nopinsight
A key concern is whether there will be enough _good_ jobs for people with
insufficient intelligence or training in post-material world.

It is common for anyone who has lived in a developing country to see a big
divide between plenty of people who hold unskilled service jobs and a much
smaller minority whose jobs require some sort of intellectual abilities or
high-level salesmanship. Wage of the latter group is 7-20 times larger than
the former. The middle group, whose jobs revolve around routine skills like
clerical or secretarial tasks, see their jobs disappear one by one. For
example, Google translation and IBM's Watson systems, once a bit more mature,
will be better than lower-skilled translators and researchers.

If middle-tier jobs are reduced to an insignificant amount, the world of jobs
will be divided into two major classes:

1) Jobs that require high-level of intelligence to make decisions/automate
tasks/invent new technology or those that require purposeful human relations
building and salesmanship.

2) Jobs to service those holding jobs in class 1)

The problem, as implied by the article, is that the number of people needed to
do jobs in class 1) is much smaller than world population. The excess of labor
pool for jobs in class 2) leads to much reduced wages and clear division in
standard of living. With increasing wealth in society and distribution
program, people holding class-2 jobs can still live fairly comfortably, but
the ideal of egalitarian society will be even further from reality than today.
(Egalitarian societies did not exist for most of history; they are in fact
quite an anomaly to appear in quite a few countries in the world today--even
in imperfect form.) Will the class-1 job holders protest ever louder about
increasing wealth redistribution to the mass? Will the class-2 job holders be
unsatisfied with status quo and seek to confiscate more wealth from the other
group?

Is there a good way to preserve the egalitarian ideal or at least achieve a
harmonious society without violent changes? I invite you to discuss.

------
bioh42_2
David Brooks almost wrote an interesting article there.

The beginning is promising, he writes about the different growth rates in
developing vs developed countries. This is a well established economic fact.
There's an opportunity to infer something from this... Brooks just never quite
gets to it.

Another interesting idea he does not clarify but does mention is the
productivity improvement we have experienced over the course of this (and
last!) century. Technology has greatly reduced the need for labor. Again great
potential for a discussion which Brooks is never able to take anywhere
meaningful.

Instead the article slowly degenerates into some kind of drivel about
hypothetical individuals states of mind... I don't even, what?

It's kind of sad when someone clearly has the education to start a discussion
but just completely lack the personal ambition to write to a much higher
standard.

Write about hard facts, falsifiable theories based on them. Write something
more akin to a readable scientific paper.

Instead we get something which resembles a bright high-school student's essay
on the human condition in a consumerist world.

But that's what the work of an op-ed columnist must be like.

If you told me I was doomed to be a ditch digger, I would be quite upset, but
I'd get over it.

If you told me I was doomed to sit in a cubicle, well I'd be rather upset that
I'll never fulfill my dream of working for myself but I would get over it.

If you told me I was doomed to create nothing other then op-ed articles like
this one, I would shoot myself.

------
keiferski
Worth a read: _The Experience Economy_

[http://www.amazon.com/Experience-Economy-Theater-Every-
Busin...](http://www.amazon.com/Experience-Economy-Theater-Every-
Business/dp/0875848192)

Read online: [http://books.google.com/books?hl=en&lr=&id=5hs-
tyRrS...](http://books.google.com/books?hl=en&lr=&id=5hs-
tyRrSXMC&oi=fnd&pg=PR9&dq=the+experience+economy&ots=IIr6ZCfMih&sig=xdAGfFjBGCGcRP6_sD3mjv2_igM#v=onepage&q&f=false)

Skip the last few chapters. The author's personal (religious) beliefs start to
show, and his line of thought weakens (experience economy leads to
"transformation" economy, in which people seek to be "transformed.") The
majority of the book is an excellent read, though.

------
petercooper
_and slower rates of technological change._

Slower? The typical office of 2011 might as well be an alien planet to someone
looking from 1981, in comparison to 1951-1981. Computers, fax machines, the
Internet, cellphones, social networks, viral marketing, hiring people you've
never met in foreign countries and who directly report to you.. several areas
of worklife (heck, life in general) have been totally redefined in the past 30
years at a speed never seen before.

------
calvinfroedge
Intensely interesting. This is the most poignant section in the article:

"For example, imagine a man we’ll call Sam, who was born in 1900 and died in
1974. Sam entered a world of iceboxes, horse-drawn buggies and, commonly,
outhouses. He died in a world of air-conditioning, Chevy Camaros and Moon
landings. His life was defined by dramatic material changes, and Sam worked
feverishly hard to build a company that sold brake systems. Sam wasn’t the
most refined person, but he understood that if he wanted to create a secure
life for his family he had to create wealth."

I would add to this that between 1950, when Sam was an adult member of the
working class, though nearing retirement, the world's population was 2
billion, and today, the world's population is 8 billion. That in itself is
going to manifest incredible levels of change.

I think the trend we're going to see over the NEXT century is going to be a
return to production, away from SOLELY consumption of goods, simply because,
as the article stated, there are fewer low hanging fruits. Couple that with
many more mouths to feed, and you have a recipe for a very different world in
100 years.

I believe just for the human race to survive, people will need to start
growing food, en masse, at a local level. Even people in cities. Energy
consumption continues to rise, but the means to produce it become more and
more expensive. We will need to produce alternative methods of energy
gathering - which are renewable. So what does the future hold, in my opinion?

1\. Rapid population decline after continued population growth because of lack
of ability to support growth (ie Malthusian theory) 2\. A "return to the farm"
- a resurgence in small farms. Energy costs WILL bring down big agrabusiness -
just wait. 3\. People using more LOCALIZED means to generate energy. In the
Philippines, for example (I was there in July 2009), there were a lot of
geothermal plants being built near volcanos. Hawaii has been investing a lot
in harnessing wave power (and generating a lot of controversy from the surfer
community). I attended a "Blue Planet" presentation in Honoulu in May 2009 and
talked to many of the leaders of this initiative. Germany is the world's
LEADER in solar energy now. People will take what they can get, where they can
get it, to meet their power needs. Even in rural Kentucky, people are starting
to put solar panels on their houses. 4\. Thank god, less of an obsession with
money and stuff. Basic survival will once again trump all other needs until we
can again reach a level of production where people can go through another lazy
cycle.

~~~
Unseelie
Aside from the fact that our global growth rate has been dropping for the last
twenty years, I'd like to point out that actually feeding the population isn't
a problem. Feeding it beef may well be, but the primary issues with world
starvation is that the market is held above their heads by unnatural means
(fallow field subsidies in the US, solar subsidies in Europe, and lack of
agricultural subsidy in Africa, just for example). Big agrabusiness, BTW,
exists only because it is more cost-efficient than small farms, and as such
could better weather rising energy prices. Energy prices will not ever be high
enough to crush big agrabusiness; A large agrabusiness would build private
nuclear plants first.

Beyond that point, Localized fuel is a funtion of rising fuel prices. Energy
exists in the world, in the form of deep sea oil, shale oil, natural gas, and
coal on a scale that makes a mockery of any renewable movement.

Its about cost-effectiveness of extraction, which, as energy prices rise, will
make so many sources of energy available to us long before it makes renewables
an efficient plan.

~~~
calvinfroedge
All good points (very good points). I think we will see the cost of extraction
result in a net energy loss by the end of the decade, and maybe sooner. I
could be wrong, though. As for growth rates, where do you see that global
growth is declining? I think that's only in advanced industrialized societies
(like Germany and Japan) where birth rates are lower than death rates. Even in
the US, population continues to grow, and big increases are expected.

~~~
Unseelie
It's been a while since I researched it, but my impression was that the growth
rate had been decelerating since the seventies. Not that it isn't still a
growth rate, just a lower one.

About energy, I expect that higher prices make many more sources of energy
available to the market than is available now, and I don't expect the demand
to drop without a very fundamental change....we've still got lots of room for
energy prices to go up in our market.

------
bfe
Actually in a more relevant parallel to Brooks's comparison, Larry Page's
grandfather worked on a Michigan auto assembly line. I don't think the
grandson's economic contributions are that much less tangible or clearly
valuable than the grandfather's.

------
amitraman1
I watch a lot of moves from the early 80s, Back To The Future I is my
favorite.

What we (Americans) had then and now has not really changed much. Items are
either faster, larger or cleaner looking, but they essentially do the same
thing they did in 1981.

The materialistic items sold today, don't add any marginal value to our lives.
The iPad doesn't improve your life by much or at all. I think its good that
people are realizing this and focusing in on enjoying life spiritually.

------
narrator
Think about the economy of China since 1974.

------
bfe
I think asking "how many jobs does X create" isn't as useful an analytical
framework as its inverse, "how productively does X allow its workers to create
new things of value".

------
jhamburger
I'd argue that everything we buy is an experience, some are just longer term
than others.

------
mkramlich
I vote we stop linking to articles behind paywalls/loginwalls, like this one.

------
Tycho
So US growth started stagnating in 1974 (allegedly). There's something
familiar about that number. Something to do with the gold standard?
Coincidence?

~~~
groby_b
Unless you can back up that statement with anything else but speculation, yes.

1974 is also the year I got my first chemistry kit. That's about as relevant
to the discussion.

~~~
Tycho
It wasn't a statement, it was a question. So now questions about monetary
policies in threads about economic stagnation are being down voted on HN, good
to know.

