In their pre-election Pledge to America of last year, the Republicans
proclaimed: "If we've learned anything over the last two years, it's that
we cannot spend our way to prosperity." They soon went back on it,
however, and are now supporting Obama in wanting to add yet more billions
of dollars to their national debt.
But where does prosperity come from anyway? I suggest its origin -- and
continuation -- is in four parts. My account, brief (and simple) though it
is, makes it much more complicated than any election manifesto, and uses
basic facts of life outside the usual economics textbook covers.
1. Prosperity means that we need to take in more energy than we give out --
with just enough surplus to be able to raise the next generation. In this
we are just the same as any animal species. In our case we were able to
multiply our energy income 50-fold when we turned from hunter-gathering to
agriculture. And we were able to do so yet again (at least 50-fold again)
when we turned to burning fossil fuels in a serious way 300 years ago.
2. Each status level exploits the next one below it -- sometimes viciously,
sometimes more subtly -- all the way down to the bottom. In this we are
also just the same as the other 4,000 species of social mammals. Males
always rank themselves in order. Females always tend to choose males as
their life partners from as high a social level as is available, and the
bottom-most males never get the delights of sex at all. In our case, much
more than sex alone is involved, of course, including such matters as
economic security (for the sake of the females' children) and particularly
choice consumer products and experiences (for themselves!).
3. Prosperity can be gained by making or supplying any existing product or
service more efficiently than previously (that is, using less energy). This
is almost exclusively a human ability, though chimp mothers who devise
cleverer methods than usual in cracking hard nuts raise more prosperous
(healthier) offspring than the other mums.
4. Prosperity comes to any individual who can devise a uniquely new
consumer product or service that causes others to work harder (or more
efficiently) to earn enough extra income to buy it. This is exclusively a
human phenomenon and was particularly rampant during the industrial
revolution of the last 300 years when a cascade of brand new products and
services kept on appearing. It began to stall at around 1980. Today we only
have marginal improvements to, or embellishments of, previous goods and
services. (Or amalgamations of previous ones, such as PCs, mobile phones
and the Internet.) This is the real reason why the financial sector of the
advanced countries became desperate at around 1980 and started throwing
vast amounts of credit at the consuming public, and why governments urged
us to become spenders rather than savers.
It's all looking very sticky now in the Western advanced countries -- while
China, India, Brazil and other countries are still being swept along
powerfully by the above. But we really need to think more carefully about
each of them if we in the West want a future. What will be our future
source of energy? How do we satisfy our status instincts in more benign
social arrangements than we have now? Could we not use our inventiveness in
many other more interesting ways than trying to conjure up and market yet
another gewgaw that merely gives a consumer a minor -- and usually
temporary -- uplift in status feelings?
That's the agenda for tomorrow's economist or, as I prefer to hope, for a
group of young minds whose fast-growing frontal lobes are still developing
and not yet completely full of the conventional wisdom of their elders.
Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/2010/12/>http://allisstatus.wordpress.com/2010/12/
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