Posted On: Saturday - December 26th 2020 9:50AM MST
In Topics:   Economics
Peak Stupidity has fixated lately on the Kung Flu stupidity, especially the Totalitarian face-diapering LOCKDOWN business. We haven't had a solid economics post in ages. ("Ages" in internet time, that is.) We have written before with this topic key about Inflation, debt of all sorts, and most American's terrible financial ways and current state. This time, the subject, one we've wanted to write on for, ages(?) is slightly different, and enough for at least a 3-part series. At some point, it will come down to the Kung Flu PanicFest too, yes.
The question long ago was: Can you really have a good economy that consists of guys serving gourmet hamburgers to customers whose livelihoods are the serving of fancy craft beer to customers who run or are employed at said gourmet hamburger joints? OK, that's probably not exactly the way this was put in the early 1990s. The gist of it, however, was can America have a great economy just based on service industries? Can we be an economically powerful country just by serving each other?
The answer from most of the pundits and politicians at the time was "sure, why the hell not?" (There were exceptions, such as THIS GUY - your blogger here, without an internet to blog on at the time - and this guy - H. Ross Perot - and your Buchanans and another guy that I will highlight in an a personal anecdote in Part 2). "What exactly is wealth creation, and do you really need that stuff?" was never asked, by anyone I was familiar with.
The 2nd question may have been understood by fiscal conservative types, those who understood that you can't borrow from the world and each other forever. The 1st question is kind of a doozy, which is due to the fact that after one gets through that 1st semester of Econ, supply & demand, elasticity, the Laffer Curve, and that, the "Science of Economics" can be seen to be no such thing at all, but more a hazy cloud of bullshit.
What is wealth creation? I admit that it's hard for me to wrap my mind completely around this subject too, hence my passing grade in a 2nd economics course. It's pretty obvious that when a company produces cars for a profit, there is wealth creation going on. Those cars produced are more wealth in the world. Then, the steel, glass, plastic (LOTS of it), and electronic components (LOTS MORE of that!) that are components were wealth produced by other people beforehand. One could go back to the digging of the sand, the mining of the iron ore and coal, and the drilling for oil (plastics) as even lower-level wealth creation too.
It is wealth creation when the Australians dig out all kinds of minerals from what is otherwise unusable Outback and send it to China. The manufacturing that goes on in China using these materials is higher-level wealth creation that obviously makes for a stronger economy than the lower-level type. What goes on there is that Australia is being used as a colony of China*, just as the Western Europeans used the colonies for lumber, tea, sugar cane, etc.
It's hard to separate some services from production wealth creation too, especially when the terms are purposely confused - see Services are now Products. (Ex: "Let us introduce you to our newest life insurance product!") American ag is the best in the world still, so there's some wealth creation in producing the beef, bread, and veggies for the gourmet burger guy, and production of barley, hops, and berries/chocolate/whatever-they-put-in-the fancy stuff for the craft beer is wealth creation. There is cooking and brewing (obviously at the big-swill breweries with their own amusement parks, the latter is production), but what about service with a smile? Again, is a nation with lots of people serving others with a smile (well, not all the time) creating wealth at all?
This is interesting stuff to me. Hopefully it's the same for readers here - please feel free to comment.
I will continue in Part 2 with the same question as put forth by pundits and pols back 3 decades ago, as asked more in the context of Big Biz and the already burgeoning computer technology business. Then, there is the subject of the current Kung Flu PanicFest doing a number on this service economy of ours. Stay tuned. I hope you all are enjoying some masks-of family time, if possible.
* In more ways than this too, as the Chinese are immigrating to Australia in big numbers (not big for China, but big for Australia), changing the good character of the country.