Monday, February 09, 2009

Futurist Economics

Hey, it's nutball pseudoeconomics!

So, this recession's got everyone in an uproar. It's pretty severe, to the point where calling it a recession is pretty optimistic. Per capita, it's not particularly notable on most axes when compared to the various other recessions we've had, but there are some unique factors.

Chances are, if you're a big geek, you've seen some of these figures. I've got half a dozen blogs on my feed that like to wax poetic, and any time I see their figures, I feel sick. Not because their figures are disheartening, but because they're always so shallow.

For example, this recession shows an unusual characteristic (according to one feed): it's the first one where we've lost more private-sector service jobs than manufacturing jobs. This could be a sign that this recession is going to have a different kind of result than usual.

That may be true, but to imply that this recession is preferentially affecting service jobs is just a total fabrication. The simple truth is that we now have an order of magnitude more service jobs (technically, MY job is a service job!) than ever before and far fewer manufacturing jobs, both per capita and in absolute.

Understanding this is important, and it's important to realize that this is probably also a factor in the slower recovery times associated with more modern recessions: I could make the argument that the service industry recovers slower, adds jobs more slowly, than the manufacturing industry. So a weaker manufacturing industry would therefore slow recovery time.

But that's not a judgment. Even if I were to say that, I certainly wouldn't argue in favor of an increased manufacturing sector. I would instead argue that this trend is moving us rather unavoidably into an ever more info-heavy economy.

Our current economy isn't really built for that. It's definitely a manufacturing economy, and it served us fairly well when we were a manufacturing country. It's served us less well as we've transitioned to an "information-centric" country. Its instability and slowing recovery times may also be side effects of this transition.

When the pundits talk about the economy dipping and resetting, I think they're probably right... but I'm not sure I agree that the economy... well, is the economy.

Please take this pet theory into consideration. I am not arguing that we should put effort into transitioning into a new kind of economy. I am instead arguing that we will slide into a new kind of economy without trying. In fact, I expect we will try very hard to not slide.

I am not arguing for any particular market or any particular theory of economics. I am arguing that our technology has become so powerful that we will see - slowly, unless viewed through a historical record - a tipping.

Our economy currently views everything as if it were a manufactured good, whether it actually is a manufactured good or whether it's a music file or a news report. I think we'll see a slow transition to viewing everything as if it were information, whether it is information or a manufactured good.

You can already see it beginning. Apple is one of the kings of this. It's true that they sell computers of various kinds and purposes, but their company focuses on the design, branding, and market penetration aspects. The hardware is designed with these things in mind. The hardware is subservient to the information elements.

This is inherently a luxury economy, at least by the classic definition of "luxury". The whole point of this system is that information is more important and more prevalent than food. Or, at the very least, that food (and manufactured goods, etc) is somehow bound to information so tightly that it makes more sense to buy and sell that information instead of directly buying and selling food.

Banks already do this, obviously. I'm arguing it's going to become more common. It's already pretty common, actually: we waste a hell of a lot of cash on food that's been "info-ed up" for our easy consumption. McDonalds, Starbucks, "organic" produce, these are all things where the physical food is wholly subservient to what they mean, where they position themselves in culture, and how they sling information.

Despite how "bad" things are, the truth is that this is still a luxury economy. As blue-collar workers turn out their pockets to find the cash to pay for their cable bill, their car payments, their heating bill, we need to realize that those are all luxuries. Most people - even those who are out of work and gnawing on their fingers in stress - are living in luxury.

Luxury is strangely fragile in our new world. Today, a comfortable life either shatters completely, leaving you utterly destitute and with absolutely nothing, or it remains pretty comfortable. The issue at hand is that "luxury" is not significantly more expensive than "baseline survival". If you have a family, your monthly bill for your internet connection is less expensive than a day's food. Canceling it isn't make-or-break. Even if you did cancel it to save money, your life would still be full of books, food, heat, cars, and probably more TV than can possibly be healthy.

So, even though an information economy is inherently a luxury economy, we're still living in a luxury economy. Even if we stop being consumerist in terms of forking over cash, we're still consumerist in terms of watching TV, sending text messages, and reading some ivory-tower idiot blather about economics. That's not going to change, because these activities are so cheap, and they're only getting cheaper. Even if you're starving and have your gas cut off, you can still pop over to the library for free internet! Luxury is CHEAPER than survival!

I think it's inevitable that our economy, as it recovers, will begin to put its emphasis more on information, and less on manufacturing. I mean on a very fundamental level, not just in terms of percentages.

Well, I might be biased.

Did that make any sense to anyone?


Olick said...

Basically what you're saying is that we will probably naturally move towards a more information based economy, because that's what we are focusing on as a culture. And not just "we sell more information." The basic structures we consider to be the economy will gradually shift and become ones based in information trade.

Possibly we'll come up with some better intellectual property laws that make sense all the time, rather than this "they worked well before, I can't see why they're failing to cover these new scenarios properly" crap.

In fact, its entirely possible we will find an amazing new way to use and profit and prosper from information economics without having to worry about intellectual property at all... If THAT makes any sense. And is totally not a tangent.

Craig Perko said...

Well, I would argue against specifying "because that's what we're focusing on as a culture". That implies that a different culture would focus differently, but I think that at this technological stage, it's inevitable that a culture should focus in such a way.

Otherwise, I'm 100% in agreement.

Patrick said...

I don´t know about that entirely, I think you´re biased from your background as a technophile computer programmer, and while there will be elements of info-centrism in the next phase we´re violently trying not to transition to, it will instead be characterized by decentralization of manufacturing. Food will be grown by small operations in greater quantity, such that 20% of the population is involved at least part-time in it´s production, and stuff like the reprap will be displacing poisonous chino products to some extent.

You could say that´s all information based, I guess, but short of nano-tech a pure info-economy eludes us.

Craig Perko said...

Arrggh, Patrick, that's precisely what I went out of my way NOT to say.

"Hey, there's a nice hot dog place a few blocks north of here."
"Are you kidding? They don't sell hot dogs on the north pole! And who would want to walk that far?"

"Turn the lights on, would you?"
"Don't be daft, the room can't be replaced by pure light. The idea is silly."

"Could I have a drink of water?"
"NO! You'll DROWN!"

Novack said...

"Luxury is CHEAPER than survival!"

Oh no, my friend, it is not.

Your current perception is produced by the permanent externalization of the actual costs of the luxury goods.

Thats why, besides this economic crisis, there is also a global social and environmental crisis, of a much deep and wider importance.

Craig Perko said...

But that ignores the fact that the non-luxury goods have at least as many externalized costs.

It further ignores the fact that the more adept we become about information, the more we can address these externalized costs and, in fact, addressing them may very well be one of the primary moving forces forcing us to a more information-centric economy.


Novack said...


Interesting points, I'll think about them.

Patrick said...

No you´re right, I just wanted to point out that the manufacturing concept will have to shift. Luxury and survival goods are likely going to have to go through a phase of localized production before we get to the 3d printers in garages scenario, that´s all I´m saying. Even so, the paradigms that promulgate the relocalization, besides energy economics, will be based on information technology and likely game design. Equity investment and credit can both be reimagined as web-based systems oriented towards localized networks of participants.

It´s important to distinguish between future economics in the sense of the distant future and economics that need to be implemented now but will take a bit of time.

Craig Perko said...

In all honesty, I think home 3D printers are likely to come before any significant change to the economy... Hm.