Raise the Hammer

Economists have long recognized that markets mature and eventually fall away. That is the basis for soap marketing. Soap is soap. It hasn't changed in hundreds of years. People buy a lot of it, but every new soap brand is advertised to sound like a new nirvana, cleaning and maintaining everything in the home without any work from the homeowner. Eventually this pitch wears thin and the market plateaus. That is when the soap becomes "new and improved," driving another round of marketing growth. Eventually these pitches too wear thin. Time to introduce a new brand. Mass advertising drives mass marketing.

What many media-savvy economists appear to have missed is that entire industries or even economies can plateau and go into decline, as the auto industry or even the entire mass-production economy appears to be doing right now. Perhaps it is because advertisers have long survived by dreaming up new pitches to stimulate buying. Perhaps it is because mass media are vital components of mass advertising and mass marketing which drives mass production and consumption.

But as the mass production of reliably durable goods improves, the decline of economies based upon manufacturing them is inevitabe. This is hastened by the apparent fact that rates of human reproduction fall as economies improve. The world's richest economies have long relied upon immigration for market growth as much as for cheap labour. Now it relies on foreign trade, and that will have the same limits.

Over a decade ago mass media were agog over demographics as the driver of economic growth, but you don't hear about it much now that Boomers, who have driven economic growth for decades, are entering retirement. Boomers have already bought tons of shit, and now need to downsize, but they do require services. They are part of the move back to urban centres where medical and other such entertaining services are close to hand. More importantly, Boomers are gradually giving up their cars, first reducing the numbers they own, then the size of the ones they drive. Eventually they will become passengers and inevitably not even that.

Not surprisingly, some parts of the economy are not in decline. They may be slowed somewhat, but thus far advanced, post-industrial communications businesses and services still seem to be doing reasonably well. Mr. Balsillie still seems to have the money to buy an NHL team. The problem is getting someone to sell him one. And despite the layoffs and downsizing in the manufacturing sector there is increasing demand for medical and educational services that governments are slow to fund as they hand out billions to declining manufacturers.

Mature economies become service economies. Manufacturing won't disappear of course, but it won't drive economies as it has. It is not a matter of choice, but if I were choosing a life-time career now, I'd become and stay educated in finding more and more ways to enhance the lives of my fellow citizens. Even a robot can wind a nut onto a bolt for less money than I'd want to do it.