September 10, 2004

Just Not Materialistic Enough

Virginia Postrel has a piece in The New York Times that makes that very claim. She's not staying up late worrying but she thinks it affects economic stats more than people realize:

As incomes go up, Americans spend a greater proportion on intangibles and relatively less on goods. One result is more new jobs in hotels, health clubs and hospitals, and fewer in factories.

In 1959, Americans spent about 40 percent of their incomes on services, compared with 58 percent in 2000. That figure understates the trend, because in many cases goods and services come bundled together.

Guitars excepted, I don't have the material lust I used to for stereo equipment, computers or recording tackle. I updated the studio for my recent CD project but I bought good quality, older technology gear (some used on eBay).

Virginia rocks for intersecting economics, social and political trends:

As an economist would put it, this research found diminishing marginal utility - less enjoyment from an additional purchase - from new possessions, compared with experiences like travel and restaurant meals. "The good life," the authors wrote, "may be better lived by doing things than by having things."

This result sounds both logical and humanistic. It's consistent with economic theory. But translated into economic life, it disrupts cherished assumptions.

In the popular imagination and the political debate, making things is "real" work. Providing experiences is not. Analysts assume that working in a factory is a good job and working in a hotel is not.

This perception is not just a question of relative wages. Even at the top, it's more prestigious to create stuff than experiences

Similarly, the election-year news suggests that the economy is bad all over. But in fact, states like Florida and Nevada, whose economies produce experiences, are booming. States like Ohio and Michigan, whose economies produce stuff, are hurting.

The shift toward intangibles creates geographic winners and losers, redistributing economic and political clout.

Over the last eight years, the demographer Peter Francese reports, "people have been moving out of the Northeast and Midwest at a net rate of just over 30,000 a month." In the July/August issue of American Demographics magazine, he documents the story of "young people pulling up stakes in the Northeast and Midwest and dispersing to better jobs and more affordable places to live, where the weather often happens to be a lot better."

Americans are pouring out of the Northeast and Midwest, where water and rail transportation and convenient raw materials once provided an economic advantage. They're going to the more hospitable physical and economic climates of the South and West.

There, catering to emotion and imagination is "real" work and pleasure is a form of quality.

Posted by jk at September 10, 2004 09:00 AM
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