Comfort and Joy

New at Reason: Virginia Postrel uses a string of Christmas lights to take the economy's measure.

Comments

[joe]

"We mourn the loss of manufacturing jobs?"real jobs"?and ignore growing aesthetic professions, from installing holiday lights and landscaping lawns to giving manicures and facials, from designing brochures to crafting granite countertops."

There is clearly a sentimental attachment to manufacturing jobs vs. service jobs that doesn't really help, but there is a substantive difference as well. Manufacturing is a base industry, bringing wealth into our region/state/country from outside. It contributes to our overall wealth. The "aesthetics industry" is about passing around money that's already here. So where are our base industries, that allow us to have the money to pass around to light display designers?

[PLC]

Joe - go back and take Econ 101. Here's a hint - there are no "base" industries.

[joe]

Go take some applied econ, PLC. Yes, there are.

[keith]

US base industry...

My guess is "entertainment": movies, TV programming, professional sports, and video games.

[PLC]

Hey Joe - I've taken plenty of Econ... earned a degree or two; I've even won awards for my writings on International Economics theory as well as general scholarship... how much Econ have you taken?

There are no "base" industries. If there are base industries, how is that the world, as a whole, becomes wealthier each year - even though all we are doing is "passing around money that's already here"? ("here" in this case defined as the Earth)

Wealth is created by increases in productivity, not by "bringing wealth into our region/state/country from outside".

[PLC]

Keith:

The US actually holds a comparative advantage over essentially all other nations in almost every form of intellectual property development, not just entertainment (consulting, software development, semiconductor development, scientific advancement, drug discovery, etc).

[Warren]

PLC
you are right

joe
you are an idiot

Virginia
I live in the South East burbs of Grand Rapids Michigan and I am disgusted by the lack of lighting displays. I live in an apartment complex and of the 100 or so apts. facing the courtyard, only half a dozen have made any effort at all (with one truly excellent showing). It doesn't stop there. The street opposite my complex is lined with McMansions, only one has put up lights. After Thanksgiving, I went and toured the sub-divisions in my part of town, only one house in five was noticeably illuminated. There are exceptions of course, a house here and there goes all out, but by and large, I am as I say, disgusted.

I'm glad that things are different elsewhere. I love lighting displays, especially when a whole block tries to outdo each other.

MERRY CHRISMAS TO ALL AND TO ALL A GOOD LIGHT

[thoreau]

Joe-

Let's look at a machinist. Does he simply move money around, or does he add value?

Think about it: I've done a little machine shop work. If you give me some tools and a piece of metal, I could make something that might be half-way usable. But if you gave the same tools and metal to a skilled machinist, I guarantee you he could make something far more valuable.

Now give me, an unartistic klutz, some lights. Give the same lights to a skilled designer. The designer will make something far more valuable.

What about a landscaper? Or a contractor who remodels homes? The home remodeler takes raw materials and makes something that's far more valuable, both aesthetically and functionally.

So who's creating value and who's moving money around? Answer: They're all creating value.

[joe]

Ah, that explains it. There are certain obvious facts that can only be ignored if one has had years of discipline. "There are no base industries" is just as true as "there are no solid materials, because of atomic structure." Accurate, but not particularly useful in understanding how things work at a functional level. I'm sure it's quite interesting to the academics, though. Have fun with the rhetorical games; the rest of us are going to have a dialogue.

I'm not postulating a world of constant value, thoreau. What you're describing is what I mean be a "base industry," one in which value is created by applying inputs like labor and materials to create products with greater total value than the sum of the inputs. My point is that not all economic activity consists of generating value. A counterexample would be the bagger at the grocery store. His inputs, which have costs (his wages) don't add any value to the groceries he's packing. Thus, the cost of his labor must be paid with wealth that is created elsewhere, rather than with wealth created by his activity, whereas the machinist creates value beyond what his labor and other inputs cost.

Now, the concept of "base industry" is dependent on geographic context. Retail clothing stores don't create any value in a global sense. However, if people from surrounding towns spend their money at stores in a central city's downtown shopping district, than retail can be said to be a base industry for that city. So things like movies, that don't create any wealth globally, can be a base industry for the US, as long as overseas sales are greater than costs.

[Cyrano]

A bag of packed groceries is more valuable than a bunch of groceries with a bag sitting next to it waitng for a customer to pack it himself. In what way is a person bagging groceries not "applying inputs like labor and materials to create [a product] with greater total value than the sum of the inputs"? If the bagger were not creating value, the store owner wouldn't hire him.

Joe, how about a definition of "base industry"? That would help our dialog.

[Mark Fox]

The bagger doesn't add value to the groceries, but does add value for the shopper. joe's idea of wealth is stuff that is both enduring and transferrable. Lighting displays and haircuts are neither, so they don't add to global wealth. Yet they may inspire or allow someone to write a poem or carve a hunk of wood, and so indirectly create, or at least support the creation of wealth.

If thoreau doesn't have hair in his face, he can do better at writing software that helps retail clothing stores sell more tutus, which means that somebody will have to sew more tutus. If the sewing is done in Bangladesh, but the tutus end up in Boise, the US finshes with more wealth, in the form of garments and software. Certainly if the sewing was done in Berkshire all the wealth would stay in the US, but outsourcing and transferring some wealth has allowed the US to get ever more efficient at employing the capital already at hand.

Taken separately, my sense is that the lighting designers are frivolous, but I must agree with Postrel's point that such specialization is an indicator of fantastic wealth already accumulated.

[joe]

I just figured out the problem while I was baking cookies. The term "base industry" doesn't have a geographic component in Economics, does it?

The terms "economic base" and "base industries" are commonly used in city and regional planning to describe economic relationships between geographic areas. A base industry brings new wealth into a given geographic region, either through selling goods or services externally, or adding value through a process.

In planning parlance, clothing store is part of a city's economic base to the extent that the money spent there is spent by people from outside the city. Some businesses, like corner stores frequented only by neighbors, don't contribute much to the economic base, while a big manufacturing plant adds to it considerably by taking money from outside the city and spending it on salaries, property taxes, maybe some business to local vendors, etc.

Non-base activities, like government, finance, and retail, don't create new wealth, but convert the wealth that is already there (the paychecks of the people who work at the manufacturing plant) into things goods and services. The light hangers in Postrel's article don't create new wealth; they convert the $$$ of the homeowners into a nice light display. Those homeowners either work for the economic base, or sold goods or serives to someone who does (though possibly several steps removed).

So, that's what "economic base" means in city planning. I have to read the comments after my last post.

[joe]

Intellectual property development, hmm? The cultural and economic factors that would produce a thriving domestic "aesthetic industry" would seem to be related to those that would produce those types of thought industries.

[david]

Brilliant article, Virginia - thank you.

[thoreau]

Joe-

The grocery bagger adds value. If a store requires me to bag my own groceries I'll pay less money for the groceries. But he saves me time. In fact, in a week the bagger probably saves people almost 40 hours of time, time that can be spent on other productive endeavors. He transfers my time away from bagging groceries to doing something I find more profitable. The software engineer shifts my time away from doing calculus by hand (a lengthy and error-prone activity) to doing my integrals numerically in Mathematica.

I'm not necessarily convinced that every single economic transaction creates value; I'm hesitant to make statements with the word "every single" until I've carefully thought it all through. But I am convinced that an economic activity producing a service rather than a durable good can nonetheless produce economic value.

[joe]

The bagger provides something of value to the customer, but he doesn't create any wealth for his city or region. What he does is transfer something of value (the labor of putting the groceries in the bags) that already exists. This is different from a metal fabricator, whose labor increases the amount of wealth in the region that the metal shop is located.

Not everything that people are willing to pay for makes them wealthier. The attentive sales force a high end retail store, for example, doesn't increase the shopper's net assets, despite the fact that they cost of the clothing he pays for is higher to cover their wages. They just make his experience more enjoyable.

[Grinch]

Warren, have you figured out a quick and easy way to discover the bad bulb which turns of half your strand yet? I'm talking about the web lights, where there is sometimes 3-4 different lines intertwined. And please don't say buy a new strand. The guy who figures this one out should get next year's Peace Prize

[Jason Ligon]

Lights are all well and good, but Virginia missed the greatest innovation in plastic lawn junk in the last decade. The market has brought us - inflatable lawn junk!

I always marvelled at people that could muster enough Christmas cheer to store an eight plastic reindeer, a sleigh, and a six foot Santa all year. Now, Santa collapses and folds right up - no muss, no fuss.

[Huang Kenneth]

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DATE: 05/20/2004 12:57:06
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