Hey, my name is Sage Merlin so if anyone is going to make predictions around here, it's going to be me, no matter how dumb they may be.
But AOL occasionally lays a big one, and today's "7 Products, Concepts and Ideas That Won't Exist by 2025" from The Motley Fool is a perfect example of the breed.
The Motley Fool is a Wall Street tout, a website that disseminates recommendations for the purchase and sale of stocks and bonds. Like most touts, they are usually wrong. If they really knew what was going to happen on the market - or anywhere else - they wouldn't be selling that information. They would be keeping it close to their chests and using it to make their own fortunes grow.
The seven items - energy drinks, digital cameras, 3-D televisions, Credit Cards, the US Postal Service, the European Union, and the status of the United States as the pre-eminent world power - leaves them with a predictable 43% success ratio, and here's why.
Of the seven, four of these picks for extinction - energy drinks, digital cameras, the US Postal Service, and the status of the United States as the world's dominant superpower - aren't going anywhere.
Energy drinks have been around for tens of thousands of years. You know them as coffee, tea, anything with caffeine....or cocaine. While Monster Beverage might go out of business, human beings will always want and need energy drinks.
The Motley Fool predicts that the digital camera will go the way of the dodo bird because cell phones all come with cameras in them....with resolutions of up to 8 MP. Wow. Isn't that impressive?
Well, not really, because, first of all, the cameras in your cell phones are, in fact, digital cameras in the first place, so the disappearance of the digital camera is a syllogistic impossibility. You can't replace a thing with itself and consider the thing replaced.
More importantly, camera phones will never displace true digital cameras because the current generation of high end digital camera have resolutions of 80 MP, ten times the resolution available from smartphones. Beyond that, there are no cell phones with viewfinders, and no professional photographer will use a camera that doesn't have a viewfinder for a whole host of reasons.
Yes, 3-D televisions will disappear. Stupid ideas usually do, but who cares? Only the people who were dumb enough to buy them.
Credit cards disappear? Exactly how would that happen? The use of near-field communications devices to conduct financial transactions assumes that everyone owns or will own one of these devices, and is also stupid enough to use them. And, while the method of conducting the transaction might change, the essence of a credit card is the credit part - advancing money to the consumer - not the card part.
Now, if the Motley Fool had said that paper money was going to disappear, that would have been a much more righteous call. Paper money is an anachronism in a world where virtually (pun intended) all transactions are conducted electronically.
The U.S. Postal Service will be the last government service to disappear and, if it should disappear, it will be resurrected by the next administration.
The Postal Service doesn't just handle letters, it also handles packages and those packages are the lifeblood of American commerce. Millions of people will be thrown out of work if the Postal Service is allowed to fail, and online commerce will go into eclipse because, on average, Federal Express costs up to four times as much as the Postal Service to ship the same item. Whether the pundits like it or not, there are still millions of people in this country who don't have computers, and millions more who don't want to use them to pay their bills. Sure, you can pay your bill by phone....but can your utility company send you a bill by telephone?
The Postal Service is the one government service that every American interacts with every day. Without it, the social glue that holds this country together will evaporate.
And that's a prediction you can take to the bank.
Okay, the European Union is toast. No question about it. Germany is not going to cover the bad bets made by the PIGS forever, and perhaps not for much longer. But, really, who cares? The European Union is a legal fiction and nothing more.
But the idea that the United States will somehow lose its preeminence requires a simple explanation: how?
The preeminence of the United States is based upon one inarguable characteristic: the throw weight of the nuclear weapons at our disposal. That's what makes a superpower a superpower: it's war-making capacity.
Insofar as the supposed Chinese economic miracle is concerned, the ability of the Chinese to maintain their economic growth depends solely upon our willingness to buy what they produce because there's no other market on the planet, including their own domestic market, that has the capacity to absorb their production output.
When it comes right down to it, the undisputed champion in the global strength statistics has only one clear winner: the American consumer.
If we stop consuming, the world economy goes into collapse. If we can't maintain the middle class, our ability to continue consuming goes into collapse. Therefore, the American Middle Class is the world's preeminent superpower.
Do I actually believe these things? Well, yes and no. Yes, I believe in the laws of logical consequences but, no, I don't believe we live in a logical world any more., if we ever did.
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Steven Bridenbaugh
Tom Degan
Dr Stuart Jeanne Bramhall
Grey Treed
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Vivian Henoch
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Comments
"But the stars tell lies, it blinds the only warning
And when darkness dies, there's nothing left but morning . . .
Just day and night
Day and night . . . the shadows start to scatter
When touched by light . . . each promise made is shattered"
And you make some salient arguments here, SM, particularly about digital cameras. I carry a point-and-shoot Nikon daily, but when it comes to real photography, I grab the DSLR. I cannot see that changing.
just not another f-ing German war, is what i hope,
cuz i am German and i want them to get their confidence back.........
as forever the economic powerhouse of europe.
china is still one quarter of our economy, the usa's.
nuff said.
russia is gonna be a problem . you didnt mention that.
postal service in vienna at the time of freud was
4 DELIVERIES A DAY.
kinda like our email.
write a letter in the am
get a response that same day....
i say this
just cuz i wanted to share that factoid............
The title says it all - twice!
;-)
.
The EU has since added many layers of treaties that would not be undone even if certain states that have adopted the euro end up leaving the currency. In other words, the EU is the overarching structure, the euro is one part of it. There are many other reasons to maintain the EU besides the euro, and besides, the core states have no intention of giving up on the euro. The currency would probably be stronger without the so called PIIGS, and at this point it seems that despite all the talk--and all the predatory profit being made off private investment deals disguised as "bailouts"--a small number of states will probably end up leaving the eurozone, at least temporarily. The delay seems to be about drawing out the predation, as well as reassuring the markets about the process being put in place. I can imagine a partial suspension of eurozone membership, too, accompanied by certain conditions, being the next step. This is practically the situation in Greece right now, since the ridiculous conditions being put on its continued inclusion in the euro severely limit its ability to exercise all the benefits that go along with having a currency, any currency. For a state as a whole, a currency is only useful if you can borrow with it...so, really, Greece has a different kind of membership in the eurozone right now than, say, France, and even the agreements with the troika up to this point, without any additional requirements, will push that situation many years into the future...again, equality for some, the leftovers for the rest...
And mostly the Motley Fool is a financial information service disguised as a blog. They're part of Wall Street, and their reporting is embedded in the games and structures of high frequency trading. I'm sure the computers that do most of the trading love reading the Fool's articles--lots of financial buzzwords for the software to key in on.
Rated.
Militaries cost money, by the way.
Energy drinks, credit in some form, digital cameras, 3-d TV, agreed.
The Postal Service agreed for a few reasons. One is that the GOP keeps looking at it like it's a business but comparing the Post Office to UPS is like comparing public schools to private schools. The difference in both cases is that public institutions are obligated to serve everyone, not just the easy or profitable. If we expect package and envelope delivery to continue to be available in remote rural locations, we need the Post Office, because it's not just a business any more than Amtrak is (less, actually), it's a service.
America as the superpower? Here's the problem I see:
The American consumer is indeed the engine that runs everything, so much so that the Chinese extend us credit to keep that happening. Unfortunately, too much of American policy has shifted away from protecting the American consumer from the predations of the American wealthy, so American consumers are in trouble and it's getting late in the game to reverse that. If the Republicans get elected this cycle, we may not see a serious reversal for many years if ever and by then our dominance may be over permanently. We still have a couple of major structural advantages in that we can accept immigrants from anywhere and actually integrate them and in that we still have the best college/university system in the world by a pretty wide margin. We'll lose other advantages, though, like our greatest manufactured export: airplanes. Boeing is cooperating with China to keep market share while China uses Boeing technology to found its own aircraft industry, and it's just a matter of time before Boeing loses the Chinese market and gains a less expensive competitor. In any case, we'd need to start with awfully serious campaign finance reform to prevent industries and wealthy individuals from buying favoritism from the US Government. If this doesn't happen, the Fool is right about this one.
Less relevant.
We've still got Americans worrying about Russia. Why? The Russians have neither the finances nor the ideological impetus to challenge us. Every time we talk about putting a missile shield in some Eastern European country we're closer to starting a mini Cold War without Communism, which is to say starting something totally pointless. We shouldn't be worried about containing the Russians because they aren't expanding. This should be defused.
The Chinese? The economic relationship is way too close, the ideological impetus is mostly gone because they aren't real Communists any more, and the only serious flashpoint will be over nationalistic nonsense like Taiwan.
Now, if we continue to act as rogue as we've acted lately, some other countries might think they have to turn into potential rivals for safety's sake, but if we bring that about it will be our own faults.
On the EU, it was the EU that AOL predicted the demise of, not the Euro, but it is the Euro that makes the EU the EU. Without the Euro the EU is, as Bokko points out, a collection of restrictive treaties written more than 60 years ago that, in many cases, just don't make any sense in the current economy. The only contact the average EU citizen has with the EU comes when they travel, with relaxed border controls, and when the Euro comes under attack, as it has been. The Euro is the lynchpin of the EU. Without it, there's no point to the European Union, if there ever was one.
Hegemony - a word I didn't use - has three major elements: military preponderance, control over the money supply, and the natural resources controlled by a given nation.
Our military preponderance is expensive, but the money we invest in our military rotates through the economy, becoming one of the major sources of economic stability. Cutting deeply into our military spending would trigger another round of economic disasters. The fact that our military budget is larger than the next 26 nations combines indicates two things, that we're overspending (because we have to in order to prevent economic collapse) and that, in a shooting war, we would have the backing of 25 of those 26 other nations, not because they love us, but because it would be practically impossible for them to stay out of it.
Our control over the world's money supply is very solid. No one is going to adopt Yuan as the reserve currency because the Chinese economy won't be strong enough to replace it for 50 to 100 years and that's simply because the world can't consume enough production to give China that advantage....and Chinese economic policy dictates keeping salaries down to keep production costs down. Increasing Chinese salaries will increase domestic consumption, but the salary increases will drive manufacturing to countries that haven't allowed wages to rise.
But the key to our economic strength lies in our most overlooked and disparaged natural resource: coal. Our coal reserves make us virtually impregnable. Right now, cheap oil has encroached on our coal hegemony but, as oil prices continue to rise, as they shall, we will develop - by necessity - cleaner burning coal-fired power plants to generate the electricity we need to maintain our economy. Cheap electricity means cheap hydrogen and hydrogen - not electrical power - will be the motive energy for non-rail transportation systems because we can't produce enough economical storage batteries to supply the planet with electric vehicle. Hydrogen is, however, a fully-developed fuel system. Toyota makes a full line of propane gas fueled warehouse vehicles that could run on hydrogen just as well, and those vehicles are now being adapted for over the road use.
The comment about how the British Empire ended ignores the fact that it's the Anglo-American alliance - not Great Britain alone - that has dominated the world for the past 100 years. We are an extension of the British Empire in language, culture and outlook; while there are many other contributing factors to the American identity, we are still primarily a Commonwealth nation. (You could make the case that Great Britain is a tributary of the United States, but that's putting the cart before the horse. We still venerate the British Royals in this country. Why do we even care about them? Because we recognize the common thread between us.
I've said this before and I will say it again. The Chinese don't have us over a barrel. We have them.
As KS correctly points out, China continues to infuse the American economy by buying our bonds, which shores up our economy and enables our consumers to purchase their products....but the Chinese don't really have anywhere else to put their money and, having invested so much already, any attempt to withdraw their support for the dollar now would have disastrous effect on the global economy and the Chinese stake in that economy. This doesn't leave them holding a gun to our heads. It leaves us holding one to theirs because we have a secret weapon that could upset the entire equation.
One word: Tariffs.
I am not a complete believer in free markets.
Worldwide the consumption class (which is determined largely from tracking new car purchases, certain consummables--electronic products, TVs--and travel/luxury, etc.) is about 1.5 billion. China and India comprise 20% of this. America is about a third, but it's actually a North American super-metropolis that's usually counted as a single unit--it includes Canada, part of the Latin American middle class, especially Mexico and other countries in America's orbit. Notice that this is overwhelmingly a credit-driven class that is being described. It's not what they earn that matters (wages have been flat in the core countries for decades, Chinese workers earn even less by comparison), it's what they can borrow that makes them consumers.
What you're talking about when you talk about consumers is an identity, a whole subjectivity really, based on indebtedness. And it's largely debt that can never be retired. This is why all the talk about the "precariat" has taken hold. What we're seeing is a form of global helotism emerging, a permanently indebted, subjugated class, not a middle class or any other kind of empowered group. This already includes the vast majority of consumers in the American grouping, who are not middle class, but service industry workers with credit cards and other forms of debt. Again, you have to look at the production side to get a clearer picture of who's in better shape. China is playing a different game, you still don't get that if you think we're empowered as consumers. If anything, consumption has become both a problem and a solution. Since it largely represents debt in the system, traditional economic understanding of it--whether it's the Keynesian focus on savings as the problem during a crisis, or any other perspective, crisis-driven or not--doesn't really work anymore. Credit is not the same thing as spending-versus-savings. And since much of people's "savings" is actually tied up with credit, too--think equity in mortgaged homes, just as a starter--the picture is even further from a classical understanding.
As of 2002, 1.12 billion households owned at least one television set, there were 1.1 billion fixed phone lines and another 1.1 billion mobile connections, the internet connected more than 600 million people (it's well over a billion today), and the consumption class in China and India was about 362 million, quite a bit greater than Western Europe...and the actual percentage of oil use represented by the U.S., when you look at total production for all uses, accounts for only 26%, still very large but hardly dominant for the entire sector.
Energy consumption is not, however, a macroeocnomically significant statistic, because we don't know what percentage goes into economic maintenance and what percentage goes into growth. I could propose some paradigms to calculate that, but they would not be any better than rough guesses.
What documentation do you have to support a consumption class of 1.5 billion, and what specifically are the economic parameters that define this class? Tracking big ticket purchases isn't a valid statistic because we don't know how many of these purchases are for second and third items, or replacements of previously owned items.
Whether a consumer pays for purchases with cash or credit is irrelevant to international trade balances except to the extent that the loss of credit will affect consumption. While there is no doubt that the so-called middle class is addicted to credit, so is the macroeconomic envirnment. Without constant consumption, the entire industrialized civilization degenerates into collapse.
Credit is only credit when it is used and therefore when it is spent. There's no difference to the economy between purchases made from income, purchases made from savings and purchases made from credit. They all have exactly the same effect upon sales.
Where they are different is in their cumulative effect. I am not a classically trained economists, so a lot of these concepts are beyond my poor powers of understanding.
In what universe is it written that the ownership of a television or a telephone constitutes a barometer of being a member of the consumption class? There are many deeply impoverished peole who have cars....they live in them! And there are very poor people who have cell phones. I know homeless people in this country who have cell phones.
You have miscontrued my arguments with respect to the role the US plays in world consumption.
For sure, the Chinese, the Indians and others are joining us in our addiction to consumptionism, but their numbers are additive. Subtract the American market from the rest of the world's markets, and everything collapses.
The United States represents 4.467% of the world's population, but our gross domestic product, at $15 trillion, is 22% of the world's domestic product of $68 trillion.
China, with 19% of the world's population, has a gross domestic product of $7.3 trilion, which is just 10.7% of the world's domestic product.
Therefore, with one-fourth the population, we have twice the domestic product, which means that China would have to double its CONSUMPTION to equal ours if we were to stop consuming their products.
That's the gun to their heads....and they know it.