

The Technology-Driven Consumption Trap   - cwan
http://rick.bookstaber.com/2010/10/i-just-finished-reading-robert-reichs.html

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Vivtek
Wow. In this dark, dark future, everyone has sufficient food and cheap
transportation, along presumably with medical care and other material needs,
but the "economy is broken".

How is that broken? Because everybody isn't sitting in cubicles all day?
Sounds to me like a description of the ideal end state of technological
development - we all get to go back to being neolithic social butterflies,
only without starving or dying at the age of 22.

Besides, I'm pretty sure this same sort of scare story has been told about
every technology since the printing press - maybe since fire. We're still H.
sapiens, and still haven't solved the economy and brought that damnable
universal prosperity - we've just raised the ante. I think there's no need to
worry just yet because Facebook is Changing Everything.

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ebiester
There's still a matter of status. When everything mass produced is cheap, the
wealthy will demand hand produced goods.

Entertainment will not all go free -- it will still cost goods and services to
create more elaborate entertainment. (How do you stage an 18th century show?
Perhaps CGI will be advanced enough to cover the material cost, but how do you
organize 150 people doing CGI without paying them? After all, nobody wants to
do the grunt work for free...)

The problem, instead, looks to be that we won't have enough for unskilled
labor to do. We used to be able to throw them at manufacturing -- even that is
going away.

~~~
cperciva
_There's still a matter of status. When everything mass produced is cheap, the
wealthy will demand hand produced goods._

Why would I want something produced by a _human_ when I can instead get
something produced by a robot to within 0.001" tolerances?

Humans are very poor craftsmen; their only advantage is that so far everything
else is even worse. 20 years from now we'll probably react to hand-made goods
the same way as parents today react to what their 5 year old children produce
-- admire, praise, and then place on an out-of-the-way shelf to collect dust.

~~~
nostromo
This already happens today. Rolex: handcrafted, expensive, not very accurate.
Digital watch at Target: mass-produced, cheap, and very accurate.

~~~
cperciva
Yes, but how many people buy Rolex watches? There are always going to be
idiots in the world; but this is a very small group of idiots.

~~~
jfarmer
They aren't idiots just because they don't share your values.

~~~
cperciva
Of course not. Sharing my values is irrelevant. They're just idiots because
they pay more for a lower quality product.

~~~
jfarmer
Really you mean, "I think they're idiots because..."

There are many reasons someone might want to buy a Rolex, of which quality is
just one.

Why are they idiots for having reasons you disapprove of?

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stretchwithme
Consumption is not the key to economic wellbeing. Deferring consumption is.
When you defer consumption and instead invest your resources into enhancing
your ability to produce, you wind up producing more.

Consumption beyond subsistence is only possible because of such investments.
And its as true for countries as it is for individuals. High levels of
consumption are made possible by economic wellbeing, not the other way around.

If everybody decides to defer personal consumption at once, they save more and
borrow less. That means more savings and lower interest rates. More capital is
then available to invest in new businesses, education and other things that
create wealth.

Of course, that's how it works when government isn't distorting the cost of
money and subsidizing consumption. Things are so distorted now, no one can
tell which banks are sound or whether housing will rise or fall even more.

And all of these uncertainties are a much bigger factor than Facebook.

~~~
josh33
Agreed. Investment is the machine that moves the economy. Consumption is the
natural by-product of people investing in their power to produce more value.
When you produce value in the world, the world pays you for it and you are
able to by what you want (miracle of exchange and currency).

I think you may have been down-voted because you forgot to mention that the
investment you refer to is not investing in a 401k or S&P 500 fund. You refer
to business spending on capital goods, new technology, entrepreneurship, and
productivity. Retail demand grows with wealth. The worry shouldn't be on a
future where we don't demand, as demand will always find new products to make
scarce. We should rather worry that wealth will be redefined as having things,
which will reduce a person's focus from producing to consuming. If we are all
worried about consuming more and focus our effort and energy there, we'll stop
focusing on producing and will then turn to financing our consumer goods
(spending tomorrow's capital today).

~~~
stretchwithme
I think I made it clear I was talking about investing in productive capacity.
Why they down vote I leave for them to say.

I think people know how much consumption is right for them and how much they
wish to invest in their own capabilities. They balance these things all the
time. So I don't worry about them.

The problems start with government subsidizing consumption like owning bigger
houses. Many people actually got deceived into thinking buying such houses was
the way to make money. And everything not subsidized must get more expensive

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Tichy
"The root of our economic problems is the ever widening income gap. The rich,
who are laying claim to a higher and higher percentage of income, don’t spend
as much of their income as do those down the income ladder, so demand for
goods and services is dropping"

Actually, a case could be made that a rich man not spending his money is
actually beneficial to society. It is like society owing the rich person
services, but the rich man never claims them. That implies that before the
rich man gave some things to society for free (in exchange for the money).

An example might be China exporting lots of stuff to the USA in exchange for
"worthless" slips of paper (a ka dollars).

Of course the whole story might be more complicated than that - but it is also
very likely more complicated than "our problem is that the rich don't spend
more".

Reference: <http://www.slate.com/id/2110817/> (Defense of Uncle Scrooge)

~~~
yummyfajitas
You are not taking into account the viewpoint of many of our elites.

A loaf of bread is not produced in order to be eaten and satisfy hunger.
Instead, people get hungry in order to stimulate demand for bread and create
jobs.

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Das_Bruce
Don't trust anyone to predict the future of technology 15 years ahead,
especially when they use a cliche like VR.

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rblion
Facebook is not the end of the web's evolution!

More alarming is the fact that America's education system and Facebook are
jointly producing a mediocre generation that is not prepared for the great
changes that lie ahead over the course of this century and defines itself by
how much stuff they own and how much attention they get, a worldview that
centers around a "Wall" is blind to the universal picture that concerns all
humanity and organisms of Earth. If homo sapiens has any chance of even
surviving ecologic-economic collapse that is due within a few centuries with
our current understanding and application of science, we need more than social
networking, we need compassion networking.

Call me crazy but I am building such a network and will be applying to YC this
fall.

~~~
johnny22
sounds interesting. care to share more?

~~~
rblion
I'm going to share it the entire HN community before the end of this week. You
will see it then. Feel free to add any feedback when you see it.

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CoreDumpling
Sorry, but I just don't think I understand how this post drew such a
conclusion. What does decreasing marginal consumption have to do with this? If
the argument here that all those fabulously rich people are content with
_wasting their time on Facebook_ , I'm just not buying it.

Technology, while a potent equalizing force, is also a moving target, and it's
one that depends on creative input much more than an infinite supply of cheap
labor. Even if we have a post-scarcity society by 2025, I don't see any reason
why the "elite" will not have access to some expensive, difficult-to-produce,
meticulously customized product or experience that is coveted by people
without it.

EDIT: Seems like someone changed the submission to point to the linked
article. My point seems less valid now, but I would still maintain that
creative activity will not be cheapened as much as Mr. Bookstaber seems to
think.

~~~
qq66
I went to business school where some of my classmates were from "fabulously
rich" families (multiple $billions). Many of them spent a lot of time on
Facebook (I would never call the way someone chooses to spend their time a
"waste.")

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lwhi
I think society needs to fundamentally change its objective - in terms of a
measure, or currency, that we can use as a touch stone for deciding what
something is worth.

If the subject of cost is extrapolated enough, traditional concepts of worth
could be factored out of the equation to an extent. I believe this is
especially true when an economy moves from consumption (and the trade of
finite resources) to an economy that revolves around the trade of intellectual
property (and infinitely renewable) resources.

I quite firmly believe that the sale of intellectual property is corrupt. I
don't hold this view because I'm particularly morally opposed to the idea, but
because - logically - I don't feel it's either sustainable in the long term,
or compatible with the economic models that society has been traditionally
built upon up to this point.

In the intermediate term, I think a logical solution to the problems presented
re. making money from IP, is to sell IP as a service. This model deals in
absolutes - real costs can be factored into pricing decisions associated with
the sale of IP. Rather than consider sale of IP as a 'cash cow' (able to be
milked infinitely, creating an unending stream of capital for the associated
company), I believe a service model is - by its nature, tied to the real world
in a much more realistic way.

If this idea is extended .. what is it that's unique about the sale of a
service? How can its essence be factored down, and what is the base variable
that's being sold?

I'd argue that the new currency is time - the most important 'finite' currency
that's available to human beings.

The concept of money has become so abstracted from both time, and the physical
resources it's traditionally represented. I think in the coming decades this
abstraction needs to be resolved. If physical resources are are to play a
reduced part in economics due to necessity - I think that latter logically
needs to step to the fore and be considered as more important.

It would lead to a fundamental shift in the way we all function on a day to
day basis - and I think the change would be entirely positive.

------
qq66
Interesting observation that Facebook is something that is consumed with equal
vigor by people at the top and bottom of the socioeconomic pyramid. Tough to
think of other products like that.

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ZachPruckowski
I sort of read this article as "this guy's book makes no sense if you assume
The Singularity", which I don't think we have a reason to assume. Yes, all of
what he says makes sense if super-robots and iMovie9000 are really 15 years
off, but there's no reason to believe that that will be the case.

