To my mind there is only one fundamental explanation of why we are
now poised on the edge of what is increasingly becoming known as the
Great Recession in contrast to the Great Depression of the 1930s. It
speaks to two questions that economists don't seem to be able to
answer. Why are so many very large businesses sitting on large
quantities of money and not investing in something new? Why are the
banks so reluctant to lend money to small and medium businesses?
My answer is a simple one. It is so simple as to seem simplistic. It
is that there are no more iconic consumer goods in the pipeline. By
"iconic" I mean mass-producible goods that are so attractive that
everybody demands them even though, initially, they are hand-crafted
and so expensive that only the very richest people can afford
them. As they become cheaper due to increasingly wider swathes of
factory production, each class in turn works hard and saves hard in
order to buy them. Examples of these goods in the past are too
numerous to mention but they range from cotton dresses and shirts of
300 years ago to colour television of about 50 years ago or the
personal computer/mobile phone of 30 years ago.
There are, of course, many goods that the rich enjoy exclusively but
they are either non mass-producible or they are in permanent short
supply for intrinsic reasons. They may motivate the careers of the
exceptionally ambitious among the rising young but can only remain
dreams for most ordinary folk, whether they are well-paid or
poorly-paid. There isn't a sharp cut-off between exclusive goods and
mass goods but there's a discernible inflexion roughly between, let
us say, those who can afford two or more homes (and, usually, have
ample leisure time to spend in both or all of them) and those who have one.
But we have now reached a steady-state. Of course, there is a
plethora of consumer goods and an almost infinite variety of, and
tweaks to, traditional ones but there are now no more truly iconic
consumer goods. If there were -- even if there were only two or three
of them in the offing -- then the largest and most technologically
advanced corporations with plenty of cash-in-hand would already be
making them. Banks also would be recognizing some possibilities from
the propositions of millions of small and medium-sized entrepreneurs
-- there have never been so many as now. Depressing though the
general scene is, surely one iconic idea would have emerged by now
and dared at least one bank to take a risk. However, as with
previous iconic goods, say during the Great Depression of the 1930s,
if they existed at all they should already be making their way with
large profit margins and opening up more big sectors in the market place.
Increasingly, all round the world, we're now being locked into a
'standard' urban way of life with a 'standard' range of iconic
consumer goods that we have the time, energy and space to use and
enjoy. Is this steady-state so remarkable? Man has become locked into
previous ways of life many times in different cultures for long
periods of time. It doesn't necessarily mean backwardness, nor need
our present phase be permanent while China and other countries catch
up. Goodness knows, we already have what amounts to a revolution
going on right now in the scientific research of our genes and,
increasingly importantly, epigenes. Results and developments from
these will inevitably break out into the market place sooner or
later. We'll have iconic new consumer goods and services that will
then ease us into a different pattern of life just as the consumer
products of the last 300 years have done so.
Paradoxically, even during a prolonged pause period, there'll be many
opportunities for entrepreneurs to make fortunes in helping us to
adapt more equitably and more happily to our present way of life.
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/
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