Controlling Consumption as an act of Revolution

For the majority of the 20th century, the US economy was based around consumption. Somewhere in the late 1960s to early 1970s, that percentage began to decline.  It is not a phenomenon unique to the US, it is part of an overall global decline in % GDP contribution globally.  worldmfg A decline in GDP % does not mean we are manufacturing or producing less, it just means that the profits from Manufacturing make up a smaller percent of the revenues in a country or world wide.  One natural conclusion of this is that manufacturing is less profitable.  But this is not the simple truth.  The revenue per share for Apple, which manufactures computers, tablets, ipods and phones have increased in a graph that is the inverse of this.  Certainly, some manufacturing areas ( automotive comes to mind)  have struggled- but overall this is not true.  The number of small to mid manufacturers making a happy profit continues to grow.

The other way to have your percentage decrease is to have some other area grow disproportionately.  And there is an area  that shows this very clearly- the financial industry.   ( Graph from Professor James Kwak)


A year ago, Bloomberg gave us some more insights into the growth of the financial sector.

“Let’s start with the question of why finance has grown so much in recent years. We can get some clues to this by considering which parts of finance have grown. Financial economists Robin Greenwood and David Scharfstein took a look at this back in 2013, and found that the acceleration since 1980 has come from two sources: 1) asset-management fees, and 2) lending to households.”

That is, the largest area of profits for the Financial Sector are coming from everyday people- the households who pay what seem like small fees ( 1 or 2 % management fees here and there that add up)  and the households who use credit more and more.

Why is this interesting and important?  What is the link to “compliance”?

In Requiem for the American Dream, Noam Chomsky looks at the impact of the concentration of wealth and inequality , and how it is both a natural progression/cycle and a backlash to the movements in the 1960s that increased democracy. He shows how some of this was even seen as an “excess of democracy” by the people threatened by it.  This is cyclical,  a teeter/totter seeking a balance point and often tipping from one side to another.  But every teeter totter only changes position when force is applied to it.

When the GDP12118999464_37f54f6d3b_m ( and the profits of the super rich)  were significantly made up from the profits of manufacturing, then the people had easy pressure points.  Strike, Sit in, Slow Down, Destroy property– all of these were easy physical actions that had an immediate bottom line impact and quickly built of pressure that required a release of power and an increase of democracy.

We are now playing a different game.  If you are a worker trying to get concessions from a single production company, a strike may still make sense.  But when are are trying to make wide sweeping changes, to put overall general pressure on the pockets of the super rich so that they have no choice but to relieve their pressure by decreasing inequality just a bit, general strikes and the destruction of property have little impact at all.

Let’s go back to those two points where the financial industry makes a profit.  M2823255013_9fa5d21650_management Fees and Credit.  Management Fees will require shopping around and pressure on the asset managers.  For the most part, 401K investments and the like are chosen by companies, not by individuals.  We can and should make sure we are informed and put pressure on people making the choices to make the choices most in our favor, this is a long game.

The second was credit.  Yep, that percentage you pay on your credit card(s), the interest and fees on every loan you take.  This becomes more of a psychological battle than a physical one.  The pressures put on the market place by advertising are powerful and designed to make you feel unhappy and dissatisfied– and to spend to feel better.  I am not saying “Do not buy things”.  That is an absurd statement and would quickly fall apart. But what if we really focus on “Only buy within your means”?  Some would argue that for them, this equals “Do not buy things”, but I say this is where we need to gather together and make this possible.   Everyone has something to offer– there are ways to get those birthday presents or other necessary luxuries that do not always mean going into debt.  Exchange of services or products without exchange of cash can assist in lowering credit usage in some of these cases.

How we can we collectively work to drop the profit out of the credit economy?  How can we force the market out of being a credit market and back to being more of a production market, where the pressure points on our economic teeter totter are more accessible to all?

For me, this means consumption that I am in control of- and not something that is an impulse that continues to drive profits into the pockets of the super wealthy.  It also means careful monitoring of the data to watch for the right pressure points to move the teeter totter back into balance.   The actions of a single person will be close to meaningless.  But the actions of a single person multiplied across millions can be a driving force.

What changes  will it take for you to not contribute to the profits generated by credit?


How bandwidth caps will hurt the economy more

I remember the days of dialup networking well. I don’t mean the old AOL/Geni/Compuserve dialup service, I mean “put your funny shaped, wire tethered phone headset down in a cradle and listen to the funny tones squeal while you wait for a handshake” dial up. When network connectivity was difficult, you saved it for important things. You did not squander precious bits without putting thought into it. Modems evolved, and then became incorporated into computers. It was easier to connect, so we shared small pictures,backgrounds for webpages ( usually tiled), animated images and silly sounds. But the connection was still slow and we paid by the hour. Some people even paid twice.. once to the service/ISP and then again in cost per minute to the phone company for the connection. Things like video and online shopping could not take off because the overhead of paying for the connectivity, and the worry that you would run out of minutes and not be able to continue with basics like email. Then came always on, unlimited bandwidth. No longer did I have to dial up to the ISP, wait for the connection and then carefully count the minutes I was online.
With a bigger pipe and free access, the business model for the web changed. Want to share all 1200 pictures from your last vacation with me? Cool. I have all the time I need to sit and admire them, and I know I will still have bits left over to read my email. Someone put videos on thee web? holy crud. Let’s sit and watch, who cares if there are advertisements on the page, these are funny videos!
Busy at work? Need to get birthday presents for your grandma who lives on the other side of the country? Here.. order flowers online- you can page through the images and select one. Not flowers? How about any one of a million other products you can order online and have easily shipped to her? Maybe you would like to buy her one of those nifty products you saw advertised while you were watching the funny videos.
Like to play games> No need to get up from your computer and go to the store to buy and install discs, just buy them over the internet and download them directly to your PC. Why not to your wii? your PS3? Your Xbox? Download them to your console and then move them to your DS or your PSP.
Too busy to go to the store, buy CDs, load them in your computer and then copy them to your mp3 player? No matter. We have many different services where you can buy music directly over the internet and then just download it. You like to buy music? how about music videos? TV shows? Movies? Don’t download it- you can just stream it. Heck, stream it in high definition- why not? Your bandwidth is virtually free!
Soon, it became easier to shop online than to get in your car, drive and interact with grumpy, rude people at the mall. The price of gas went up- you are saving money by staying home, so you can buy more. Right?
The internet is the ultimate impulse buy.
What happens when we go back to that old dial up mentality and we are worried about how many bits are flowing to and from our houses again? Will you let Spore waste your bandwidth uploading and downloading creatures? Will you continue to directly download audio books from the likes of How many ad-supported video podcasts will you download and watch? Will you let your video game console communicate over the net?
Last month, I spent hours and hours looking at images of dresses on the internet while I was shopping for a wedding dress. If I had a cap on my DSL, I never would have done that. Nor would I have bought the dress online from the merchant I did. What will happen to iPod hardware sales if people are concerned about how much they are downloading from iTunes or to put on it? What about your cell phone that uses a wifi connection when you are at home to save on your cell phone minutes? Will you still let that connect? If not, will you talk less or will you spend money on your cell phone bill instead of something else from a store in your home town?
Personally, I work a lot from my home office. Bandwidth is cheap, I can VPN into the corporate network and do my teleconferences. It saves me gas money from the commute and time to stay caught up on things like laundry. If my bandwidth gets capped, I will be driving into the office again every day to use their bandwidth instead. The money I have to spend on gas will take away from things like eating out, seeing movies, or buying new wii games for the kids.
What other gadgets and habits do you have that eat away at the bits you consume every month. How many purchases will you forgo, if you are worried about being able to read your email at the end of the month? how many youtube or 12second videos will you upload? How many will you watch? Will you Hulu? How useful is that iPod touch if you are not connected to the internet?
Will your highspeed bandwidth provider become the gas companies of the next decade, making big profits to give you virtual mobility at the expense of other businesses and sectors?