Re: Shoppers in your Palm

Rohit Khare (rohit@uci.edu)
Fri, 11 Jun 1999 14:44:46 -0700


At 4:50 PM -0400 6/11/99, Kragen Sitaker wrote:
>Somebody wrote:
>> >Imagine something as simple as checking off your grocery list,
>> >being able to determine whether other stores have discounts on
>> >canned ham, or simply automatically giving a total plus tax sum of all the
>> >items you've put in your shopping cart.
>>
>> THIS DOESN"T ADD VALUE TO GDP.
>
>Fuck the GDP. It adds value to my life, the same way having trees in
>my yard does. It frees up time I was spending on unproductive things
>(really, how interesting is grocery shopping?) and lets me spend that
>time on things like making love or contract work or free software. And
>it increases the available pool of labor, meaning everyone will work
>longer hours for the same pay. :)

No, much as I've tried, I can't.

I've tried to argue time and again that the "IT productivity paradox"
was a myth: that a few years ago, when no one believed in the "New
Economy" it was still widely held that computers didn't produce more
stuff per year than they cost -- it wasn't contributing to net
productivity growth.

I'd say what you're saying: it's not that GM products the
million-and-first Bonneville, but that they can produce it in purple,
just for me, increasing my customer satisifaction. That the
revolution is in 24 hour customer service, customization -- in
general, more consumer *happiness*, and tough beans if it isn't in
the GDP.

But as an economist, I keep coming back to the ground truth: money is
money, and nothing else is. If I'm so damn thrilled to get a purple
Bonneville, I should put at least a dime on the table for the
privilege -- to say nothing of the $3,000 for a Ford holographic
blue-purple paint job :-)

But if I'm not willing to pay for it -- i.e. that prices have been
flat throughout this era of exploding consumer choice -- then there's
something else mysterious at work here. Maybe it's that I could
always walk out on GM and go somewhere else to get my purple
transportation. That means that even after a trillion dollars of IT,
industry hasn't gained any pricing power.

And if it doesn't have pricing power, it doesn't have fundamentally
increased profits, which means more money doesn't end up in your
pocket, either. It's a race to the bottom, as each industry
computerizes straight into a perfectly competitive market, reaping no
excess earnings.

If there's no more money on the table, then something very fishy is going on.

Like an engineered stock-market bubble papering over the rotting
weakness of a genuinely deflationary economy.

Rohit

PS. If it's worth 20% on wine for your time, by all means, you've
made a good deal. It's a simple equation: as long as your wages are
above $50/hr, it's worth saving fifteen minutes buying it from a web
site instead of a grocery store... if they deflate below it, well,
pow!... how many of these istartup companies just sell
software/services to each other?