Monday, May 3, 2010

Mr. Economics Guy

Hmmm, I wonder what concessions Germany will demand of Greece before supplying cash infusion? Because they have to do it, even though it's widely unpopular among German voters. German populace thinks Greeks are lazy and backward, and resent their tax money being sent to a nation with cushier gov't benefits.

But it has to be done if EU viability is to be defended. This is a hinge of history. I've been watching the EU for a long time, for two reasons.

First, because successful EU would shift financial/political dominance from US to Europe. Only US choice would be to try to cobble a North/South America trading bloc.
Second, I never thought they could do it; didn't even think they could make it this far. After all, the nations of Europe fought one another for five centuries, finally achieving the subconscious goal of mutual irrelevance in 1945.

But the EU is somewhat of a viable political entity; we'll see if it passes the Greece test. I use the 'somewhat' qualifier cause EU is hilarious. Germany runs the whole shebang. Results of WW2 just in: Nazis lost and Germany won! There's a reason Margaret Thatcher was privately uneasy about the Berlin Wall coming down.

And I'm looking at the whole world economy, and I'm starting to wonder if our expectations aren't built on a statistical anomaly. Twentieth century started with Industrial Revolution puzzle pieces starting to mesh together. We also spent two major World Wars happily destroying factory made goods all over the planet. So that's the century from which we draw our expectations of a mainly manufacturing economic model; the strangest century in Western Civ, since the Black Death/Protestant Reformation century.

Hmmm. Guess I should fold in 'planned obsolescense' right about here... it's mostly a canard. It's attributed to Brooks Stevens; very smart guy. He was refering to his idea for kitchen appliances in colors besides white. His theory was that women would off-load still functioning stoves & refrigerators for more stylish ones. Only consistent ongoing PO approach I know of is Japanese heavy machine tooling. That's not really perfidious either. They design/build on the belief that tech advances define the product's lifespan.

But what if everything we bought lasted nearly forever, and cost only a little more than crap we're buying now? We wouldn't have money to buy immortal products, that's what. So a lot of our current manufacturing world model is based on replacement sales. The Chinese don't build crap because they want to; they build it because US consumers look at sticker price before anything else, in most 'durable' goods purchases.

I actually know some guys who delivered a product with 10 year life cycle, replacing a product with 3 year life, for only about twice the cost. They made millions, and then sold the company, quite wisely. Because once the market was saturated, sales went through the basement, and were last seen nearing the center of the Earth.

So we've got an expectation of an economy where forty percent of jobs are manufacturing, based on a very unusual century. And we've got a secret relationship with product obsolescence. Maybe our expectation is long term unsustainable. Maybe the real economic model is mostly service sector and perishables like food, medicine and clothing. There's always going to be tech advances that will surge new manufacturing, but the real model, the irrevocable reality is service/perishables.

1 comment:

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