"... and almost all of that was through traditional retail stores. Today, food eaten outside the home and in it accounts for 10 percent of spending and clothing just 2.4 percent. Economists debate theories of why we have shifted to services and away from goods but no one questions that it has happened."
From "Never Mind the Internet. Here’s What’s Killing Malls/Yes, the internet has changed the way we shop. But taken together, other factors have caused greater harm to traditional retail stores, an economist says" (NYT).
The article doesn't say, and I haven't done my own research, but what are the "theories of why we have shifted to services"? My guess is that we just have a lot more income, so we have more left over after we buy the food and clothes we need (or want). Also, clothes have gotten much cheaper, especially if you consider the move away from dressing up and toward rugged, generic casual clothes (like jeans and T-shirts).
If you put things in terms of proportion of money spent, it exaggerates how little we spend on food and clothes. When people were poorer, they still had to eat and cover their bodies. Nevertheless, there's a question what we do with our extra money, and retail stores would like us to bring it to them.
Good for us if we don't! What the hell were we doing all those years poking around in shops, looking for crap to bring home with us? See? I reversed the question, so it's not why aren't we doing that anymore but why did we ever do that?
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So, he's saying that Restaurants are Collapsing too?
i mean, it's a a third of what it used to be right?
math IS hard!
I heard a few years ago that for the first time Americans spent more in restaurants than at grocery stores. Because of millennials.
Maybe because going to malls is a waste of time, doesn't save you any money, parking is a hassle, and you have to interact with and be around a bunch of weirdos including annoying people trying to sell you shit that you dont want. It was never a good idea to begin with, it's just that back in the 80s and 90s it was either that, or shop out of a catalog which is even more annoying and took forever for shipping.
Modern technology brought many changes, but it didn't bring much appreciation of what it brought.
I would question that since only a generation before most people owned only two or three sets of clothing. And what they did own was continually mended.
I haven't visited anything but a grocery store in years. Online has exactly what you want. Last two DVDs from Amazon this week, The Bridge (season 4) from France, and Spiral (season 7) from Germany. Region 2, English subtitles. Try finding those in the mall. Right angle SO239 to BNC connector also this week.
Just the last would have taken a trip to NYC and browsing through radio row on Vesey St, where the WTC used to be.
It may be that with industrialization making products like textiles more cheaply and raising incomes, people chose to go on a spending spree to get a much bigger wardrobe.
I used to eat out on my birthday but who has the time.
You are correct, Ann. Those idiots are overthinking it. Again.
Deadlines are a terrible thing.
My guess is that we just have a lot more income, so we have more left over after we buy the food and clothes we need (or want).
You are correct, of course.
I don't know what the economists cited are thinking [perhaps, they are the very economists who awarded AOC her economics degree].
We consume more goods and we consume more services because we have incredibly more wealth than we once did.
rhhardin: "Right angle SO239 to BNC connector also this week."
Very true. Thank God for DigiKey! I got the exact relay I needed to fix my darkroom ambient temperature controller from them last month.
You'd never find that at Radio Shack.
Who wants to spend a bunch of time driving to a mall, wandering through the stores, and leaving without buying anything because all of the "fashions" are either ugly, or designed for skinny teenagers (or both)? I either shop online or go to thrift stores for pretty much all of my clothes.I think I might have went to a Kohl's two years ago. I barely even go to WalMart anymore.
Whole foods led the "high priced high quality" food trend, but since Amazon has taken over, its becoming like an average grocery store. Quality is down, prices are still high.
As for the 1920's, the USA was much less crowded, housing was much cheaper, and people were just as happy as they are now. People's happiness isn't really driven by things. I like my internet, but I was just as happy before it existed.
I have a vague memory of my grandmother darning socks. I wonder who darned the last sock. It's a lost art, like Flemish tapestry....I spend extra money of sneakers. You really get something for the extra money. The comfort and fit of athletic shoes have improved markedly over the years. Modern dentistry and shoe design have done much to alleviate the pain of life... I don't see much point in spending extra money on jeans more expensive than Levis. Levis are like paper clips. They got it right the first time....Down coats are a huge improvement over wool coats. They're lighter and cheaper, but they have not done as much to make life bearable as modern athletic shoes.
Malls are for teens, immigrants, and old people who don’t want to exercise outdoors.
I know Amazon is an all-encompassing, soon to be all-enslaving, corporate monster, but it’s hard to exaggerate the material choices and convenience it brings. To someone over 50 it seems nothing short of miraculous. In 15 minutes at work yesterday, I shop for and buy a pin nailer, a pancake air compressor, and the funky Ballantine paperback edition of Gormenghast. Sadly, I forget to use the Althouse portal but, nevertheless, it’s pretty freakin’ amazing.
"I would question that since only a generation before most people owned only two or three sets of clothing. And what they did own was continually mended."
Yes. That's why people used to go to baseball games in suits. Because those were the clothes they owned.
After 20 years of business travel, eating out lost its appeal. Now it is only a really nice restaurant, otherwise I cook.
Last week we ate at Mesa Grill in LV. The lamb was superb and the pork tenderloin was masterful - worth every penny.
They cited big box retailers, income inequality, and services instead of things.
I think the second is BS.
remember the olden days?
Back when people complained that the mall was stealing business from downtown?
remember the olden days?
Back when people complained that the Walmart was stealing business from downtown?
remember the olden days?
Back when people complained that the Sears Catalog was stealing business from downtown?
I just cleared out my closet. Three 30 gallon bags full of shirts I haven't worn in more than a few years. All donated to he local church clothing collection box.
Cleared it out after going through my late mother-in-laws house the previous week. Threw out 23 bags of trashed stuff. Cans dated back to 2006 from the pantry. Piled up clothing and bedding with dead mice in them. We got through 3/4 of the pantry, and part of one bedroom. Found a dozen purses with price tags still on them.
Last few Christmases I've told family I really don't want anything. There's nothing I need. I'm getting rid of stuff.
I miss all the old-school coffee shops and lunch counters. A Perkins nearby just shut down. Going to be another brewery now...meh. Yet, I hadn't been to Perkins or any other cafe diner coffee shop in a couple years so I feel as much to blame as anyone. The food is so fattening and so expensive. But I liked knowing the place was there, open 24x7.
And clothes! I'm so sick of going all over hell and gone looking for something that should be standard, like a flannel bathrobe. Found the perfect one on Amazon.
And musical instruments. Impossible here in Bumfuck Montana! So I buy stuff online from regional specialty shops.
So basically it's all my fault.
Other sources put the percentage of income spent on food as low as 7% in the US. Canadians spend half again as much, and Europeans typically around twice at much.
"Good for us if we don't! What the hell were we doing all those years poking around in shops, looking for crap to bring home with us?"
I was poking around, looking for *and finding* stuff I wanted that *wasn't* crap.
E.g., I like beautiful, well-made clothes. I enjoyed shopping for beautiful, well-made clothes.
So people like me lost out to the people who prefer to dress in the limited variations of the cheap, poor quality global Mao suit. (Yes, I realize the online vs. retail thing and quality thing are not the same thing, though they are related.)
No complaints, that's the way the global market cookie crumbles, but no, I don't feel morally inferior to the winners. And unlike certain sanctimonious winners, I don't feel the need to make these differences in preferences a moral issue. (It's amazing what some people can holy-roll about.) A matter of aesthetic judgment, yes. But not a moral one.
Minnow Wrangler: I either shop online or go to thrift stores for pretty much all of my clothes.I think I might have went to a Kohl's two years ago. I barely even go to WalMart anymore.
Ditto! Thrift stores, especially the Cancer Society run stores, are the bomb. You can get good quality, name brand, barely worn clothing, even vintage. I don't believe I have bought a "new" blouse or sweater in years. Michael Kors, Carol Little, LL Bean, North Face jackets, Macy's brands, imported hand knits from Ireland, European and Canadian company clothing....Icelandic made wool coat (score!!!) The most I have spent on the sweaters was $10 for the Irish hand knit Aran sweater. Retails for $120.
The malls are full of stores that have things that don't fit, aren't my style, are cheaply made or don't have the size I want. On line shopping is where it it at, especially with the try it on and return policy. Zappos. Amazon.
BTW: Many of the items you can buy from Amazon are actually from small companies that you would never have been able to buy from IRL. Example: I just ordered some lemon infused white basalmic vinegar from a Texas Hill country company. Good for them. Good for ME!
ALSO:I doubt those figures for the 1920's food budgets since many more people in those days lived in more rural type environments or in smaller towns. Having a vegetable garden, fruit trees in the yard, chickens, hunting, fishing and access to others for trading purposes made your food dollars really stretch.
"For sale: Baby shoes. Never worn."
"So basically it's all my fault."
-- I remember being in one of the few remaining bookstores with a friend, who was bemoaning that there were so few remaining bookstores. She found a book she wanted... then stopped, pulled out her phone and said: "Eh, I can get it on Amazon cheaper."
I said: "So, basically, you're the problem?"
At least she took it in good fun.
Retail or online, ready-made clothing is of poor quality. On the plus side, there are a lot of nice people putting up free and very useful videos on the finer points of clothes-making. So what mo-derne life takes away with one hand, it gives with the other.
bemoaning that there were so few remaining bookstores. She found a book she wanted... then stopped, pulled out her phone and said: "Eh, I can get it on Amazon cheaper."
Amazon has been a boon for people who kept their old paperbacks. I was looking for old Erle Stanley Gardner books (the Cool and Lam series). Some of them are going for well over $200. The original price = $0.45.
Angle-Dyne-- In my experience the Lands End no-iron cotton dress shirts are very nice and a good value at $45-$60. I like being able to get my exact sleeve length. I could never find that in a department or mens' store.
Just take them out of the dryer, hang them up, and they look like they were ironed. (I hate ironing, and hand-ironing cotton shirts is a thankless and nearly impossible task to get right.)
They look and feel like traditional cotton shirts.
OTOH, I have rather low expectations when it comes to clothing, so there's that.
Economic illiterates shouldn’t write articles.
This is the wealth effect. We spend less on necessities because we can produce so much more than we used to with far fewer human hours.
It is not difficult to explain.
Ann describes the issue fairly well. She just didn’t know the jargon.
To the extent this person spoke to any actual economists it only demonstrates how far the field of economics has fallen.
Yesterday I went to a legendary, for Kansas City, appliance repair and spare parts store. I asked for a coffee filter for a 4 cup Cuisinart coffee maker. The guy behind the counter said they didn't stock it and sent me to Amazon. Talk about a death wish. I like fixing things. I'm a retired engineer so it goes with the territory. I'll miss the store when it goes out of business.
In other news, we are going to Barcelona. I decided three days ago that it would be nice to have a Michelin map for the city. I was in bed, but I ordered it on my iPad. It showed up on my doorstep yesterday. I'll miss Barnes and Noble when it closes its brick and mortar store.
Well, with the New Green Deal, we can get those percentages spent on food and clothing rising again.
Three 30 gallon bags full of shirts I haven't worn in more than a few years. All donated to he local church clothing collection box.
Some thrift stores are in trouble financially because a lot of new clothes are so cheap now.
why did we ever do that?
The lesser availability of goods or services and the high cost of shipping.
I think it is amusing that brands like Sears and JC Penney's that became a concur with mail order catalogs at the start of the 20th Century couldn't transition to the Internet sales and shipping at the start of the 21st Century. The time of the Department Store was very short lived, and less than the order and ship business.
In general, I prefer shopping in brick and mortar stores. I like to see and handle goods before I buy them, and this includes books, in particular. I like to support local businesses. I like the social experience of getting out of the house and wandering around in a public space. Plus, I like the immediacy of walking into a store and walking out the door with the product I was looking for.
I reserve purchase of books from Amazon for those books not generally available in bookstores, or to those art books that are beyond a retail price range I can afford to pay. If I can find that same pricey art book on Amazon at a substantial discount, I will buy from Amazon. If the discount on Amazon is not significant, or if the full retail price is not exorbitant, I will buy the book at the local bookstore.
"I reversed the question, so it's not why aren't we doing that anymore but why did we ever do that?"
We are made, or have evolved, as hunters and gatherers. Our ancestors hunted seals on the ice, whales in the sea, buffalo on the plains, and elephants on the savannah. We gathered roots from the dirt, clams from the sands, fruits of the vine, and blossoms of the bushes. Those who enjoyed H&G and were good at it have shaped our genes and our culture.
We've spent two centuries of the last 20 millennia in urban environments where we seek and select products from shelves. Tools and books and clothes and preserved foods and dried spice. But we maintain the urge and talent to find the best and most novel and bargain priced and magical golden prizes among the common run of dross and remains.
At the fleeting current moment we begin our hunts with Google and Amazon. But even there some people enjoy and become skilled at "search" and others are not either happy or skilled.
Next generation the fields are likely to change again. But human nature will likely not.
"I reversed the question, so it's not why aren't we doing that anymore but why did we ever do that?"
We are made, or have evolved, as hunters and gatherers. Our ancestors hunted seals on the ice, whales in the sea, buffalo on the plains, and elephants on the savannah. We gathered roots from the dirt, clams from the sands, fruits of the vine, and blossoms of the bushes. Those who enjoyed H&G and were good at it have shaped our genes and our culture.
We've spent two centuries of the last 20 millennia in urban environments where we seek and select products from shelves. Tools and books and clothes and preserved foods and dried spice. But we maintain the urge and talent to find the best and most novel and bargain priced and magical golden prizes among the common run of dross and remains.
At the fleeting current moment we begin our hunts with Google and Amazon. But even there some people enjoy and become skilled at "search" and others are not either happy or skilled.
Next generation the fields are likely to change again. But human nature will likely not.
Phidippus: Angle-Dyne-- In my experience the Lands End no-iron cotton dress shirts are very nice and a good value at $45-$60. I like being able to get my exact sleeve length. I could never find that in a department or mens' store.
I don't think men's clothing has taken as steep a dive in quality as women's clothing has, and Lands End is a case in point. (I used to buy certain staples from them; no more.) Maybe it's harder to sell crap to men; women (American women, anyway) will apparently continue to merrily buy buy buy regardless of the quality of the merchandise.
My husband has little difficulty getting good quality shirts from a variety of purveyors. But none of them are as nice as the beautiful clothing he inherited from his father, which he wears regularly and which still looks every bit as good as his new stuff, if not better, though it's been in use for decades.
It’s not just a lot more wealth and money, but these are areas where there have been a lot of efficiencies. Farming is highly mechanized, abd we are likely to see more improvements in productivity as we move towards dirt less farming. As for clothes, I buy at Amazon, Sam’s Club, and Costco. Possibly at AliExpress (China). If you shop the sales tables at the discount stores, you can find decent shirts and pants at maybe $10. Maybe $28 for Levi’s. Shirts tend to be manufactured in Bangladesh, but I can’t tell the difference between those made in the US, except for price. Those huge container ships move massive quantities of goods around the world for peanuts.
100 years ago, there was a lot more human effort that went into making clothing. And a hundred or two years earlier than that, it was all human effort, from spinning, to weaving, to sewing it together. Hundreds of hours for one shirt. Now a shirt, made overseas, can hit the American shoreline at a couple bucks. Back then, dress was an important social indicator. It was even so 100 years ago. You could easily tell social status by dress. Not so anymore. A decade ago, a friend was at his daughter’s graduation, turned around, and there was Bill Gates, then the richest man on the planet standing there in navy sport coat, slacks, and light blue shirt. As usual. I can, and do, on occasion, dress identically. Some might be able to detect the difference in quality in our clothes, but most wouldn’t. The big difference, in most situations, is that I don’t travel with security and and entourage (at his nephew’s graduation, they were likely lurking in the background, instead of being more visible and overt), and billionaires usually do. Clothing, for the most part, has men massively democratized.
If you ever get involved in rehabilitating older houses, you may be amazed at the size of closets. They were tiny, because people had so few clothes back then. My partner and her ex rehabbed the old farm house on his farm. Built in the late 1800s, the closet in the master bedroom was roughly half the side of the closets in the smaller bedrooms in our house. And that was the biggest closet in the farm house. We also have a big (for her) and a small (for me) walk-in closet. All stuffed with clothes.
And, so, to an extent has food. Or at least food that you cook yourself.
One reason that restaurants aren’t going away any time soon is that they are luxuries. And, thus, eating out at restaurants can be then sort of status marker that clothes no longer really are. We are in Vegas right now. Ate at Guy Fieri restaurant last night. The only limiting factor there was that it was moderately pricey. Tonight, it is supposed to be a Bobby Flay seafood place tonight. Pricier. But the place my partner really wanted to eat again at was Michael’s, which is even pricier ( >$500 for two with one drink each). The problem there though is getting in there in the first place. Slow nights with a bad seating isn’t bad, but she wants Valentine’s Day, and last time we went, it was after a late cancellation. Her best friend could get her on “the list” there, but she refuses to ask him. That is one of the places where you will still see the movers and shakers in LAS Vegas, and that has been the case for better than 30 years. Except, of course, you probably won’t get more than a glimpse at them, due to the alcoves, curtains, and big wingback chairs. A lot of privacy, and a lot of very discreet service. Eating like that is very much status signaling. And that is why restaurant eating is going to get around for while. It is very much a luxury.
On my mother's side of the family the majority of clothes were made until the mid 1970's. The clothes that were purchased were special occasion clothing. This was the rural side of the family.
My dad's side purchased their clothing but were urban dwellers. This side grew their own vegetables (around their trailer) but didn't farm.
Yes, food is cheaper now than in the '20's. Also then people bought for the day, not for a week or month or 6 months. Many in Europe do shop almost daily but now that big US style refrigerators are more common along with bigger food store that too is disappearing. Food is cheaper in bigger chain store than in Mom and Pop stores. That is what is called Progress.
Yep, I can sit here at my computer and compare prices at WalMart, Sams, Amazon and King Soopers. Sams has free shipping, WM free with an order of $35. Sometimes what they have online is not in their stores.
My mother was probably the last generation of mothers who sewed clothes routinely. Up until I started high school (1980), some of the pants and shirts I wore she made out of bolt fabrics. And while I was growing still, she routinely bought pants that were much too long and altered them as I grew. Who does that these days?
Robert Cook: In general, I prefer shopping in brick and mortar stores. I like to see and handle goods before I buy them, and this includes books, in particular. I like to support local businesses. I like the social experience of getting out of the house and wandering around in a public space.
Yeah, me too. Or I should say, rather, that I used to like the experience. The problem with so many contemporary brick-and-mortar stores (including bookstores), is that they deliberately create an unpleasant environment that drives away the very people who might still want shop and buy there. At least when I browse for books or shoes on Amazon I'm not tortured with loud corporate shit pop.
Plus, I like the immediacy of walking into a store and walking out the door with the product I was looking for.
Yeah, me too. But lately I don't make it very far past the front door before turning around and walking out without even looking at anything. I don't voluntarily subject myself to visually and aurally ugly environments.
Market economics, technical development, deflationary processes, and, of course, self-moderation, have been good for the state of the People and Posterity, too.
I'm surprised that no one has mentioned Abebooks.com, the premier source for used, scarce and downright rare books of all kinds, with millions of titles to choose from.
Just enter author, title, edition or any other pertinent parameter, and you'll very likely find what you're looking for. If you don't you can enter a "want", and if a copy turns up on the site, you'll get an email to alert you.
Before I retired from the antiquarian book biz, I sold about $400K worth of books through that site.
Brick-and-mortar "old books" shops have pretty much gone away, because the Internet has made searching so much easier---as long as you know what you're after. Ditto antiquarian book fairs, which are dwindling as their clientele ages.
But alas, their demise has taken away the pleasure of browsing through the shelves and coming upon something unusual that unexpectedly captures your attention.
I've found that YouTube satisfies that impulse. Yes, it's not the same as book hunting, but you can learn about just about anything once you start poking around. I spend more time on the 'net than I do watching TV, another trend that has upset the old order.
Even casual reading of 19th century literature exposes the costs of necessities a century or two ago. Food staples were expensive, and preparing food was expensive. Fabric was expensive and making clothes from the fabric was expensive.
Since then, food and clothing have decreased in cost dramatically.
The economic historian Niall Ferguson says that today, especially since China was welcomed into the world community, the market has become distorted because goods and services that can be outsourced or imported have become even cheaper, while goods and services that cannot be outsourced or imported have become more expensive.
So consumer goods like computers and televisions have become cheaper. Housing and education have become more expensive. Inflation, in other words, is greatest in the non-international trade sector, because it is less sensitive to price pressure.
It is not a simple matter of "more free trade is good," freer trade distorts the market just as trade restrictions distort the market. The question is who benefits from free trade or from trade restrictions.
It's hard for a woman to look stylish or for a man to look important while wearing a bulky down coat. On the other hand, you can talk about how invigorating a walk in ten degree weather is when wearing a down coat. Not so much otherwise.....Expensive clothes make men look important. How often do you need to look important, especially if you're retired? Wool clothes are not so comfortable, but they do look like they cost a lot.
the market has become distorted because goods and services that can be outsourced or imported have become even cheaper, while goods and services that cannot be outsourced or imported have become more expensive. . . . Housing and education have become more expensive
The sky-rocketing costs of housing, education and health care have little to do with outsourcing or importing. Rather, it is because there is no longer a free market in any of them. Government intrusion into all three -- with all of that freely printed money -- is what has distorted costs.
Case in point -- the more government pushes these "affordable housing" policies, the more expensive and less affordable housing has become.
Why should landlords or sellers lower or maintain prices if government is there to rush in with all sorts of subsidies for buyers/renters who cannot afford the listed price?
Why should existing housing stock keep prices low if government is pushing all of this "smart growth" development which tears down affordable units to construct higher-density hi-rises which necessarily must cost more to cover the cost of that construction. With their new-construction neighbors now charging more, there is no reason for the remaining existing stock to not raise its prices to the new market level.
Education has skyrocketed because The government has gotten involved.
Uncle Sam deep pockets guarantees loans.
Then the rules and regs. There used to be no diversity departments or green departments.
I think the kids still have to pay for that stupid Ralph Nader organization .
Then there health insurance.
Universities used to provide health insurance because the health insurance ran out at age 21. But now until the age 26, so what happened? How is this handled now? is there still a fee?
Then there’s legal fees.
And how can there be a free market when so much is either owned and operated outright by the government, or quasi-owned by the government in a partnership between government and crony non-profits?
Bruce Since you’re in Vegas try the Wynn Buffet. $55 pp.
Mark said...
. . .
The sky-rocketing costs of housing, education and health care have little to do with outsourcing or importing. Rather, it is because there is no longer a free market in any of them.
There has never been a free market in any of these. No one can give a Harvard degree but Harvard. No one can sell you an acre of land in Sunnyvale other than a person who already owns an acre of land in Sunnyvale. No one can practice medicine without permission from the AMA. The markets for health care, education, and and housing have organically high barriers to competition. You can get a non-AMA doc to give you hip replacement, but you have to go overseas to do it, and God help if the surgeon screws up.
Back in the days before title IX, etc., post-secondary education was very cheap.
That is because it was heavily subsidized by the government.
If you want to go back to the days before government subsidies for education, you have to go back before land-grant colleges were established in the 19th century.
Very interesting and timely post for me, Ann.
I am just writing an article on how electric cars will impact the sale of bagging machines, many of which package salty snacks.
Draft written, currently marinating and may add some of your stuff tomorrow.
John Henry
Blogger Leland said...
I think it is amusing that brands like Sears and JC Penney's that became a concur with mail order catalogs at the start of the 20th Century couldn't transition to the Internet sales and shipping
You, me and Jeff Bezos. He has stated repeatedly that he does not understand why Sears did not put him out of business his first year.
Sears already had the Amazon model, just with paper catalogs. It was a no brainer to migrate to the internet.
That they didn't is a phenomenon so widespread that it is a cliche. They didn't sell on the internet because it would cannabalize their catalog and store business.
Quite right, of course. So they let someone else Jeff Bezos cannibalize their business for them.
In the last century I sold lasers for packaging marking. In about 1995 an Israeli company developed a new laser marking technology. My company looked at buying it but decided that doing so would hurt their traditional laser sales.
So someone else bought the Israeli company and my company was right. It hurt their laser sales. They wound up closing down. The Israeli technology is now the dominant player in packaging coding around the world.
Business books preach that companies must constantly cannibalize themselves. Everyone says "Yeah, yeah" but nobody ever does.
John Henry
Here in Wisconsin, groceries and especially meat, dairy and booze are so cheap they're almost free considering the usual discounted prices.
Though I pay much less for groceries and clothes, as a child-free adult, I pay a fortune in property tax and forgone income-tax credits and deductions than I did in the old days. Whereas it used to cost a couple thousand dollars per year on average to mis-educate the Amerikan kid, nowadays it costs just under $15,000 for the same. And all they seem to learn is "Stranger Danger," which at least serves to reduce kiddie pollution in the neighborhood parks and forests.
How great it was to grow up in Amerika of the 50s!
I resist making necessities like food, clothes, health care, and housing fundamental rights, based on by Calvinist roots. But we have a looming problem, and that is that we can afford more and more people not working because we don’t need them working. I think very soon, we may be at a place where working may be a luxury. Or at least at a job that makes a difference. What happens to the people we don’t need working? I think that it may be a couple decades before machines could replace me as a patent attorney. Not the case with many other parts of the legal field. I think that we will soon be at a place where 3 years of law school aren’t going to guarantee you a job as a lawyer. And as the amount of original thought decreases, the likelihood of being automated out of a job increases.
But what do we do for the people who don’t work, because we really don’t need them working? What is their purpose in life? What is their worth to society?
John henry: "They didn't sell on the internet because it would cannabalize their catalog and store business."
Yes, and we see that pattern over and over again. Eastman Kodak, in the 80's, had key patents in technologies essential to digital cameras. They did not exploit them, in order to not cannibalize their film business. So as you said, others did it for them.
Ironically, as they watched their film sales fall off the edge of the table, their semiconductor division (they had one, who knew) was making state of the art camera sensors that they sold to e.g. Sony for their high-end "full-frame" (24x36mm) digital SLRs. Talk about selling them the rope to hang you with!
"Kodak" digital cameras today are junk made in China. The film business was sold to their pension fund and is known as "Alaris", which markets (expensive but very good) film still made in Rochester that is sold under the Kodak name.
I remember learning about the need to cannibalize one's own business in B-school, but I've rarely seen it put into practice, and never at any company I worked at.
Motorola in the cell phone business is another case in point. They also resisted, ah, digital technology until it was too late (to maintain their former market position at first, and their identity as a business later).
Regarding "cannabelizing" a business.
ISTR that at some point the Blockbuster video rental chain was offered a system of two parts. One - a DVD "printer" that could put a video file on disc in a just a few minutes. And two -- an TCP/IP internet system for "streaming" a video file from one central library holding EVERYTHING out to the ma-and-pa store on the corner and the hinterlands.
Blockbuster considered it, and turned it down. Thought it was more of a "WalMart" kind of thing, selling the disc rather than manufacturing it for rental, return, and perhaps either destruction or re-rental.
Then along comes NetFlix ...
I think that we will soon be at a place where 3 years of law school aren’t going to guarantee you a job as a lawyer.
Bruce, we were at that place 30 years ago.
I notice that LLBean down jackets rated -40 are cold in the shoulders at 15 above. You have to wear two down jackets (buy a medium and a large) to get warmth.
I have a serious down overalls with fur hood thing that's probably good down to absolute zero, but the stupid pockets are sewn on the outside of the insulation so your hands freeze very fast in any case.
Westlaw and Lexis both had computer-accessed search engines decades ago.
Either one of them could have become Google. But Lexis, for one, was too wedded to its business model and to off-shoring its jobs to the Philippines and India.
Phiddipus wrote:
. . .
I remember learning about the need to cannibalize one's own business in B-school, but I've rarely seen it put into practice, and never at any company I worked at.
. . .
Why not? Aren't CEO's trained to see business opportunities? Were they stupid & overpaid?
Or did they correctly foresee that "self cannibalization" would cause a short to medium term drop in share price? If that was the case, they were correct for ignoring self cannibalization opportunities.
Since we live in a capitalist system, I assume the short sighted CEO's paid a heavy personal and financial price for costing their shareholders billions on profits.
I assume the short sighted CEO's paid a heavy personal and financial price for costing their shareholders billions on profits.
I've heard too many stories of hundred-million dollar buyouts of outgoing failed CEOs to believe that they "paid a price" for mismanagement.
I think it is amusing that brands like Sears and JC Penney's that became a concur with mail order catalogs at the start of the 20th Century couldn't transition to the Internet sales and shipping
You, me and Jeff Bezos. He has stated repeatedly that he does not understand why Sears did not put him out of business his first year.
Me too but I worked for Sears for a while in college. They had no idea of IT or even inventory control. My college scholarship was funded by Sears people. They were hopeless. I was working in the Boyle Street store in LA about 1957 and the CEO of Sears toured the store. He walked through the Mens Department and saw a hideous tie. He said, "Get rid of that awful tie !" It was the best seller as the store was in east LA and the Mexican customers loved it. Nobody dared tell him.
Sort of like what is happening to Fox News.
"I assume the short sighted CEO's paid a heavy personal and financial price for costing their shareholders billions on profits."
Corporate CEOs almost never pay penalties for harm caused to their companies by their actions (whether merely poor judgement, incompetence, or calculated larceny). They personally profit tremendously whether they improve or injure their companies.
Barney’s in NYC is going out of business. Whodathunkit? Store is pretty picked over, but there are a couple bargains stil. Furs, tennis bracelet for $15K, stuff like that.
Blogger Robert Cook said...
"I assume the short sighted CEO's paid a heavy personal and financial price for costing their shareholders billions on profits."
Corporate CEOs almost never pay penalties for harm caused to their companies by their actions (whether merely poor judgement, incompetence, or calculated larceny). They personally profit tremendously whether they improve or injure their companies.
I was using irony to make a point, Robert Cook.
However, whether or not the CEO's profit personally for making bad decision doesn't bother me. What bothers me is people who seem to believe that CEO's consistently DO pay a personal and professional price for there failure, or would if it weren't for pesky government and laws. Show me a capitalist solution to rationing health care that is both stable and scalable.
This is not a defense of visionless or gutless CEOs, but large publicly traded companies report quarterly to investors. Aside from ETFs that mostly invest passively, the biggest investors are pension funds and other similarly conservatively managed capital. They and the stock analysts who advise holders of institutional capital are the audience for these quarterly the updates. The skill set of giving the warm and fuzzies to those types of people only rarely overlaps with the drive and balls to take short term hits to profits and stock price via self-cannibalism. Capitalism’s answer to that is not drawing and quartering gutless CEOs, it’s for money to flow into venture capital and private equity to exploit the sorry state of strategy at large public companies. Most successful venture and private equity backed companies don’t destroy their competition or even go public, rather they get sold to the big companies that could seemingly easily launched the competitive product but for a variety of sad sounding reasons did not. In the end for these public companies it’s easier to just tens, hundreds of millions or even billions to take out a clear threat than to spend a few million on a strategy that takes vision and balls and time to be realized. It all makes economic sense actually once you understand the individual economies in which these various players operate.
Pension fund managers want quality earnings, which is what most CEOs of large companies are trying to provide. Boring, predictable and don’t make major moves in any direction. If you want exciting invest elsewhere. And now even pension funds and other conservative institutional players allocate capital to these more volatile sectors so rebar they can own the quality earnings companies and also partake of the upside when an upstart comes along to blow them out of the water. It’s really hard to do exciting things at a public company given their attitude towards risk.
You're the reason Americans dress so horridly.
Go to a good tailor and you'll look like you lost 10 lbs immediately.
Use that tailor, buy 2 pairs of charcoal and navy pants. Maybe 1 lighter weight cotton/linen blend for summer.
Buy a dark gray, navy and (pick a different pattern) sport coat also from him.
Buy 3-5 good shirts, get them altered to your waist, shoulders and sleeves.
Now don't gain any more weight. You'll look like a million bucks and those items will last for years. I did this 7 years ago. I'm just now replacing an item every other year as they wear out.
But then again I also have a job.
You're welcome.
"we just have a lot more income"
Well, yes. Wah happen'?
Productivity gains, technological progress, creative destruction, private investment, capitalist competition -- you know, all the Dem taboos. Just in case Althouse is tempted to consider any of them "serious."
Bruce Hayden @ 3:13: What happens to the people we don’t need working?
**********
I think about this quite a lot. My partner and I were laid off in the 2008 recession; it was several years before I got back into a decent job. But I was in good financial shape when I lost my job (I tend to save rather than spend)and our low COL made it easy to live on unemployment. So - very similar to what would happen with a Universal Income: not working but no real worries.
It was fun for a while but not having work, structure, or purpose got weird. So I started doing tons of volunteer work. While there may not be "work" there is *always shit that needs to be done*. Those donated books need to be sorted for the library book sale. The invasive weeds that need to be removed from the park. The gutters that need to be cleared for your elderly neighbor. I could go on....
A good solution would be for people to sign up and commit to some kind of "neighborhood/community service" in exchange for the monthly check from the gov't. I can't wrap my mind around paying people to do nothing. There is always something that needs doing.
“Bruce Since you’re in Vegas try the Wynn Buffet. $55 pp.”
Will bring that up with my partner. She loves buffets, partially because her first husband was banquet chef at MGM, then Executive Banquet chef at Caesars. Most of what he did was actual banquets, but he did run the buffets at those hotels. He got the Caesar’s gig based on having put the MGM buffet on the map. Back then, when her kids were little, her husband was always competing for best buffet in LAS Vegas. And Caesars was a player there for a number of years after she lost him.
There is a mediative kind of enjoyment I get from browsing in a store irl that I find irreplaceable in an online context. As long as there are shops, I’ll probably continue to use them. But I totally understand that other people (my SO, for instance) get the same sort of thrill from online shopping.
DavidUW,
I wear suits very infrequently. My very inexpensive suit coat I bought off the rack 20 years ago has been worn maybe a dozen times.
It's 32 deg F outside right now. Windows are open. It's 82 deg F both in front and back of the operating boiler. I wear a t-shirt and lightweight comfortable camping pants most days. The kind you can zipper off the legs to make shorts. Mine have never been zippered off. I hate wearing shorts, and at work, would prefer that if I bump into a hot steam line my legs be covered.
It's a little warmer in the summer when it's 90+ outside. Steam is used to make cold in the air conditioning plant.
Good advice you gave for people who dress up for work. There's fewer around then there used to be.
Lewis Wetzel @4:38 PM yesterday:
Every case varies, but I think it often has to do with human nature (inertia, risk avoidance), and the incentive structure that is in place in the corporation. Together they can lead to decision-making based on short term concerns.
In very large companies, different divisions (e.g., the "factory guys" vs the "product development" guys) can have different agendas. If marketing recommends that the company should phase out making widgets in favor of left-handed corkscrews, the guys running the widget factory are not going to be the first on board. Business theorists don't take into account some execs have a personal stake in business as usual.
Regarding executives' personal exposure, true in principle. I've seen some go down with the ship (or be thrown overboard, but too late to help). But oddly enough they often seem to surface not long afterward at another company with another six-figure plus perks compensation package.
Bottom line, easier said than done.
'but what are the "theories of why we have shifted to services"?'
Food and clothing are somewhat self-limiting. Eating leads to satiety; one can't just spend twice as much on food by buying twice as much of it, but in order to spend more one must buy more costly food.
One could just dine exclusively on rare, costly foods but then you'd miss out on some foods (pizza, hot dogs, frozen custard) that can be very good yet just don't cost all that much. Or, you could buy food-as-a-service, by buying it in a restaurant.
Although it is possible to buy closets and closets full of clothing (and entire racks of shoes that are seldom if ever worn), that carries the stigma of "hoarding" and, in any case is not really pleasurable.
Shopping, like most things, has diminishing returns: sometimes to the point where the pleasure of buying more is not merely small, but negative. An obvious trend is toward buying experiences rather than things (as at least you don't need to store them, except in your mind). Especially now that most things can be bought with a few on-screen swipes or clicks, and what's the pleasure in doing that?
Perhaps what we really need are websites which, for a modest annual subscription fee, let us go through the motions of ordering costly, exclusive stuff without actually ordering anything. Thus avoiding the annoyance of having to actually take delivery of the stuff and then find a place to store it (let alone find a way to pay for it).
Eastman Kodak, in the 80's, had key patents in technologies essential to digital cameras. They did not exploit them, in order to not cannibalize their film business. So as you said, others did it for them.
"Eastman Kodak, in the 80's, had key patents in technologies essential to digital cameras. They did not exploit them, in order to not cannibalize their film business. So as you said, others did it for them."
Kodak presumably could have done better, yet it's hard to see what they could have done that would have been able to replace the profits they made from film.
For building a factory to make film is horribly expensive, and therefore there never was all that much competition. And in any case, Kodak did a good job of maintaining its brand and thus could earn a higher margin on film sales than practically anyone else.
So if digital photography just wasn't going to generate the profits (and margins) it had been getting from film, perhaps there just wasn't going to be a happy transition for Kodak? For the boom in consumer digital cameras was brief, lasting only until phone cameras got "good enough" for most casual users. Leaving stand-alone digital cameras as an ever-shrinking niche market for pros and enthusiasts. Or perhaps Kodak could have survived as a supplier of sensors or other business-to-business products? Yet the profitability of most of these would have lasted only until the patents expired.
Kodak could have done better than to head inexorably into bankruptcy, but, maybe sometimes there just isn't a good answer for a business that finds itself disrupted by a new technology that is both better and cheaper?
(And what was true for Kodak was even more true for Polaroid Corp., although that company was already in decline before Digital blew away what was left of it. Today Polaroid still exists, sort of, although as far as I know it does nothing but license its brand name.)
Could it be that sometimes there just is no path to a happy ending?
What do the people spend their money on?
Seems like they spend it on big dumb stuff. How big is a function of how much surplus income they've got: high income: big dumb house; middle income: big dumb pickup; low income: big dumb TV.
Its enough to make a Marxist wonder exactly where to hide his surplus capital.
There's been inflation in the cost of certain services: education, medical care - legal fees, and new services have appeared.
The one good that has gone up in price is housing, because government acts to push up the price.
Another reason is that anything involving people can't be made much more efficient
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