The Experience Economy

The Experience Economy
nytimes.com

Rob Gingell used to point out to me that people living during the revolutionary war didn't have a good feel for what the final rules were going to be either.

So I buy the insight that it takes fewer people to create Facebook today then it did to produce Chevy Malibu's in the 70's, however Facebook is creating opportunities for people like Zynga so you really have to ask yourself what is the set of all the people working on Facebook, or applications for Facebook, or applications that let you visit Facebook, or derive demographic data from the information pool of Facebook?

This is what will distinguish the information economy from the material economy. In the material economy the product (our example is the Chevy Malibu) is a dead end, it gets created, used, and discarded. In the information economy people build products which turn out to be pre-cursor materials to other products, or combined into still other products. Information products, even those that are nominally not 'tools', by their nature can be composited into new products, just like a DJ might create a techno trance mix of three or four of her favorite tunes.

Google, employs 24,000 people (approximately), and how many people have careers that exist only because Google (or I guess more properly search engines) exist?

So I read articles like this one and I feel like the author (in this case the meta author because the NYT is talking about Cowen's book) are struggling to understand something their brain wasn't prepared to understand, which is that information, like a Chevy, can have intrinsic value. Further its value persists as its "re-manufactured" into new information by people skilled in the art of doing so. So without the tools to understand the economics of information they see money like Google's billions but can't see the mechanism that creates it.

"For example, imagine a man we’ll call Sam, who was born in 1900 and died in 1974. Sam entered a world of iceboxes, horse-drawn buggies and, commonly, outhouses. He died in a world of air-conditioning, Chevy Camaros and Moon landings. His life was defined by dramatic material changes, and Sam worked feverishly hard to build a company that sold brake systems. Sam wasn’t the most refined person, but he understood that if he wanted to create a secure life for his family he had to create wealth."

I would add to this that between 1950, when Sam was an adult member of the working class, though nearing retirement, the world's population was 2 billion, and today, the world's population is 8 billion. That in itself is going to manifest incredible levels of change.

I think the trend we're going to see over the NEXT century is going to be a return to production, away from SOLELY consumption of goods, simply because, as the article stated, there are fewer low hanging fruits. Couple that with many more mouths to feed, and you have a recipe for a very different world in 100 years.

I believe just for the human race to survive, people will need to start growing food, en masse, at a local level. Even people in cities. Energy consumption continues to rise, but the means to produce it become more and more expensive. We will need to produce alternative methods of energy gathering - which are renewable. So what does the future hold, in my opinion?

1. Rapid population decline after continued population growth because of lack of ability to support growth (ie Malthusian theory) 2. A "return to the farm" - a resurgence in small farms. Energy costs WILL bring down big agrabusiness - just wait. 3. People using more LOCALIZED means to generate energy. In the Philippines, for example (I was there in July 2009), there were a lot of geothermal plants being built near volcanos. Hawaii has been investing a lot in harnessing wave power (and generating a lot of controversy from the surfer community). I attended a "Blue Planet" presentation in Honoulu in May 2009 and talked to many of the leaders of this initiative. Germany is the world's LEADER in solar energy now. People will take what they can get, where they can get it, to meet their power needs. Even in rural Kentucky, people are starting to put solar panels on their houses. 4. Thank god, less of an obsession with money and stuff. Basic survival will once again trump all other needs until we can again reach a level of production where people can go through another lazy cycle.