What he misses, or at least doesn't say, is what's really driving the death spiral. And that factor is what I've mentioned a few times along the way: as capital moves to finance, rather than production, it faces ever diminishing returns. This was true in the run-up to The Great Recession, just because the tsunami of moolah had to crash somewhere, and the American buck was the safest place to land. And, within that venue, the surest and safest way to get more return than what Treasuries were offering (recall that Greenspan had already cratered rates) was the slam dunk residential mortgage market. Until it wasn't.
While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring those costs to near zero.
Or as Paul Graham once put it (2005; that long ago):
Like everything else in technology, the cost of starting a startup has decreased dramatically. Now it's so low that it has disappeared into the noise. The main cost of starting a Web-based startup is food and rent. Which means it doesn't cost much more to start a company than to be a total slacker.
So, we get, as I recently termed it, high tech cottage industry. The problem is that, while one can outfit a quad-core i7 with 32Gig and an SSD for about what the average 20-something slacker spends annually on a smartphone and thus be able to code most anything, the fact is that what gets made by these guys is truly trivial. (I slipped that bit of confirmation in the backdoor. Hehe.) One guy can make most of an angry bird by his own self, then hire a bunch just like hisself later on. Building a modern ERP, to replace SAP (for instance), takes a big bunch of people working industrial. All these kiddie apps? Not so much.
What Rifkin doesn't get at: the problem as been around since, at least, the music CD. They're really much cheaper, in marginal cost terms, than the LP. Nor does he address the unintended consequence of vanishing returns to real capital. Capital will continue to move to financial/fiduciary instruments, and thus to more Too Big To Fail corporations. Which brings with it the concentration of wealth and income we've seen recently. That's not going away any time soon. So, through the bathroom window, here's where the Kaufman quote came from. Without a fat middle class, we end up with a stagnant economy, much as the 19th century was. Huh? Well, in 19th century America, there was an entire continent full of resources never seen before. The development of the USofA derived not from being smarter than those gay Europeans, but by having natural resources sufficient to enable unprecedented waste and profligacy. We don't have a continent like that, anymore. There was little in the way of a middle class, and most worked to eat and produce goods for the 1%. What Rifkin gets to is that we won't have even the need for vast numbers of subsistence laborers to make stuff for the top X%. But the 47% won't be allowed to lie around in hammocks, leaching off those productive banksters.
Capital will still control, and as it continues to concentrate, its control becomes more absolute. And the finance quants will continue to ask, "what are my orders?"
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