Friday, October 7, 2016

Wealth Makes More Sense When It's Quantifiable

Initially, this post began with thoughts I wanted to explore, re the quantification for time value via a complete and measurable loop of activity. However I was pleasantly surprised when Scott Sumner wrote an Econlog post, "Non Materialistic Millennials and the Great Stagnation", which highlighted the truly quantifiable wealth of (seemingly) "missing stuff". All that stuff made quite a difference in the lives of Baby Boomers! And his post PS was intriguing:
This might be a stretch, but is the Trump phenomenon at some deep level a longing for the old stuff-oriented economy? And is Hillary the "services" candidate?
Why do services register so differently in our minds, as a form of product? Even though we occasionally value experiential components as a part of the package, those qualities don't necessarily hold substantial monetary value or "worldly" worth. Nonetheless, both services production and consumption are closely related to supposed levels of intelligence or skill - not to mention the level of economic access which skills can also impart.

While economic access is more necessary than ever, all those earlier associations with physical stuff not only felt more natural, they were a lot more fun. While I scoffed along with other Baby Boomers when Madonna sang "Material Girl" years earlier, many of us lived some version of that materialistic reality just the same. Even now, a few vestiges of that earlier materialism are part of my environment. There's thousands of books stashed alongside the shelves filled with thrift store collectibles, which my mother happily discovered in the "thrill of the hunt".

Also noted in Scott Sumner's post, was the fact that eating out at a young age was somewhat of a rarity for some Baby Boomers. Apparently Houston must have been an outlier for restaurants and eating out, compared to other parts of the country. Indeed, the biggest part of my restaurant consumption took place when I was young, and Houston had no shortage of great food options - even in the sixties and seventies.

Consider how restaurants have proven an interesting way to bridge the gap between "stuff" and services, in a number of ways. Even though many restaurants include a strong time based service component, these services tend to be quantifiable as simple measures, in part because of a reliance on internal coordination for well defined product sets. For the most part, it's also easy to tell whether this form of organization serves practical or experiential roles, and time considerations are planned accordingly.

If only more time based services capacity could be organized internally on self replicating (hence primary market) terms, instead of having to rely on other forms of redistribution, to take place. Knowing what to expect in terms of competition and market formation, would make it a lot easier to appreciate time based services as a valuable form of product.

 Ryan Avent also noted the shift from "stuff", to what is increasingly a services based economy:
Indeed, it is true of our consumption in general; we once devoted most of our household budgets to physical things: food and drink, clothing and furniture. Now we spend vast amounts on things like education and healthcare, or on housing, the value of which is mostly dependent on the access it provides to social capital rather than the wood in the walls and the plastic in the pipes.
In short, services could benefit from more time based quantification, and less judgement all around as to the levels of skill that are necessary or desirable in every instance. Part of what made free markets so easy to defend in earlier decades is the fact they tended to be a lot more fun, when there was less insistence as to how they were "supposed" to take place.

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