07-01-2019, 12:56 PM
(05-30-2019, 12:30 PM)David Horn Wrote:(05-30-2019, 11:28 AM)Kinser79 Wrote: ...I keep hearing about this supposed service economy that is going to arise at some point. Strangely it still hasn't happened yet. I'd argue because wealth (not money, wealth) can only be created when one creates goods. Any other form of economic activity must therefore consume wealth. In short without industrial production (somewhere) there will be no consumption of services.
Old thinking for a young man. The service economy is already here, and, at some point, automaton makes 'goods' almost irrelevant. We're not that far from there today.
Indeed we are often (unless destitute) at the point at which more goods will not make us happier. Conventional economics has the concept of marginal utility. I might want a mop, but a second one is of little value to me unless the first one goes bad. Needless to say, we do not hoard mops. The first one might have a marginal utility of $500 even if it is priced $15. The second one has a marginal utility near zero: to find it valuable one might need to find an unconventional purpose to it. I am not buying another until the first one starts to go bad or disappears.
Material objects are valuable to the extent that they provide services or at least their potential. So it is with a book, a compact disc, a car, a refrigerator, a chair, or a pair of slacks. Or of course a mop.
Now let's suppose that some crackpot leader says that we need more economic activity, and to get that activity everyone has a quota of buying fifty steel pails. Does the level of economic activity go up? Sure. Question: what do people do with those steel pails? Maybe we recycle the vast majority of them. A finished good becomes a raw material. Such is waste, an anathema in a market economy.
At one time, food was a gigantic share of the cost of living and medicine a slight one. Many people never saw a doctor except in desperation, by then usually much too late. After all Doctor Quackenbush's Secret Miracle Cure, consisting of booze and laudanum could cure anything -- OK, all it could achieve was to mask the pain of cancer or (paradoxically) cirrhosis. Today a cancer treatment that can give someone another five years of life might cost the equivalent of a house -- and whether insurance or the person pays for it, it gets paid.
One can assume that $1000 in services are worth $1000 in material goods. if people act rationally, a standard assumption in a survey course on economics. For such a service as auto insurance, the insurance itself is a service, but the payout in the event of an accident is some combination of goods (replacement parts) and services (repair work or medical costs).
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.