Thursday, March 18, 2010

Giving Each Other Haircuts

My uncle closed an email discussion about long-term economic prospects about two months ago with the line “We can’t all get by just giving each other haircuts.” Quite true, of course, and reminiscent of my observation that entire towns in NH seem to survive by sharpening each other’s saws – but not survive very well.

Yet in another sense we can, and that’s what we do now. If our ancestors from 200 – heck, from 100 years ago observed us at work, they’d see a lot of us doing jobs that didn’t exist then, not actively engaged in making anything they could relate to. Few of us supply the home with more than a hobbyist’s amount of food, fuel, or clothing. We are not much engaged in primary provision. There have always been inns, services, and entertainment, but nothing of the magnitude we now enjoy. The percentage of Americans involved in this would seem to great-grampa that we were all just giving each other haircuts.

There have been magical energy sources on the far horizon as long as I can remember. More recently, the expectation of these proving out has moved from the decades measurement to the years measurement, at least for prototype and small-scale. So, push that out 20 years, and one of these science-fiction ideas turns out to work. What we would now view as unlimited electricity, very cheap. So we can build things we can’t afford now, like desalination plants or pipelines from Great Slave Lake, because the heavy building equipment can all be electric. Electric transportation – if we’ll even need that, if virtual realities improve enough (No one wants to go to Fake Vienna now, but if an evening in Fake Vienna, darn close to the real experience, can be bought for $200, will anyone shell out $2000 for the honor of the real thing, which is only marginally better? Some, but that would be a specialty item.) – with electricity costing pennies, would be easier. Growing food, making clothes, and certainly all our entertainments, could be had on the cheap.

Even if it’s 40 years out, it’s still a world-changer. Their lives would look to us as our lives would look to our ancestors. We would be making our livings by providing extra value in service, attention, entertainment, design – that is, by giving each other haircuts.

I expect that unlimited energy would create unexpected problems, perhaps even ones that are unimaginable now. That’s what’s happened with every other technical advance – general improvement, but at a cost. We might not even like that life very much compared to the one we have now. Comparative wealth might go completely kablooie, with incomes as stratified as in the Middle Ages. But even the poorest would be rich by current standards. As we are now by older standards.

We might find that comparative wealth is more important to human happiness than absolute wealth – that the feelings, both noble and ignoble, of having to determine your own status and importance turn out to be 90% of the wealth equation beyond subsistence and safety. Perception of wealth or poverty might be the basic driver. If that turned out to be true, all of our current economic systems might produce comfortable, even wealthy, but dissatisfied people.


David Foster said...

unlimited power?...We will be very lucky if the political classes allow us to keep the electricity we have now:

Der Hahn said...

“We can’t all get by just giving each other haircuts.” shows a deep misunderstanding of an economy based on fiat money. We're not only doing that, we've been doing it for at least century, if not longer. While I agree that our forebears from 1910 might be a bit puzzled at what many of us do, I do think you would have to go back at least one hundred and fifty years (1860) or even the full two hundred (1810) to find a time when most people would be extremely unfamilar with labor that didn't generate tangible goods. Even then, I think a substantial portion would recognize what office work produces, if Civil War era grumbling about government contracting can be believed.

Hollerith created his mechanical tabluator and punched cards for the 1890 census. I started my DP training about ninety years later punching programs on the progeny of Hollerith's machines, and I think I could probably get one of the men who operated a Hollerith tabulating machine to understand what I do. (I have a bit of trouble explaining it to my 87 yo farmer-father but he doesn't have any trouble understanding what my brother the loan officer does :D)

I liked what you said awhile ago about the past being a foreign country but I think in this case you might be giving us more credit for being unique than we deserve.

The impediment to cheap electrical energy is primary social and political. As the memory of Hiroshima and the Cold War fades, (I recently read a newspaper article from my hometown that talked about a child'sgrandpa coming to class to discuss service in Vietnam) we're going to deal with nuclear power more realistically and open up a huge mostly untapped resource. Provided that Iran doesn't pop one off in the meantime.