Monday, May 09, 2011

Why the consumer economy is a fallacy

Let's talk about the difference between hard results and soft results.

Hard results occur when you beat a difficult structural problem. Cold fusion, for example. Or sequencing the human genome and beating a disease.

Soft results occur when you collect enough useful idiots to like a product, and they make you rich. Lady Gaga comes to mind, or maybe those "Baby On Board" car-signs that were so popular in the 1980s.

And then there's Apple:


Apple’s brand value jumped 84% to $153.3 billion, driven largely by the company’s success with the iPad and iPhone 4, the study found. Google’s brand declined 2% to $111.5 billion. IBM, McDonald’s and Microsoft rounded out the top five.

With a 246% increase in brand value to $19.1 billion — the greatest leap of any company in the survey — Facebook made its debut on the top 100 chart at number 35. Baidu, the leading search engine in China, was the second-fastest climber at 141%, placing it at number 29. - Mashable


While I was originally going to title this post "Metrosexual emo-hipsters take over the economy" (it's bigotry to accuse homosexuals of being Apple fans, although traditionally Apple has catered to The Gay Mafia) the sad truth is that soft results are dominating our economy:


  • Re-financialization. The re-selling of financial securities and other probabilistic instruments.

  • Entertainment. Movies, music, "art" and other entertainment. I hear even talk radio is a big moneymaker.

  • Consumer populist luxury products. Thanks to improved automation in manufacturing and improved materials, many formerly "luxury" products are now "populist luxury," meaning that they're slightly fancier versions of the same stuff everyone else buys. Mercedes and Apple define this category.



Are these the basis for a thriving economy?

No, but they're the basis for an inward-looking one.

We all sell each other stuff and there must be profit somewhere.

In the meantime, in the absence of hard results, others are working on those problems -- and will define the next generation of economies as we wallow in our own solipsism.

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