The Mythical Service (Servant) Economy Appears To Be Starting Its Disintegration
One of the major themes on here is that a job is not a job is not a job. There are capital-producing activities or employment and capital-consuming activities and employment. The first makes society richer and the latter simply derives its existence through the consumption of wealth created by the former. In other words, capital-consuming jobs are really nothing more than a tax. Some examples of capital-consuming jobs or activities are politicians, lobbyists, retailing, merchant businesses, hedge funds, financial advisors, MBAs, banking, insurance, real estate agents, lawyers, professional sports, entertainment, etc.
Some people have a hard time understanding this simple concept but as noted on here before, it would have the same impact on the wealth of society if we paid people in capital-consuming employment to stay home and watch TV. Now, because the only way we are able to survive in modern corporate capitalist society is via money (employment, work or demeaning state handouts) we have some capital-consuming activities that people are actually paid to perform that may create a higher quality of life for our citizens and society as a whole. And, thus, society may wish to pay the tax of enjoying these activities. A few examples may be the arts or entertainment or your favorite local restaurant.
So, a major point in this theme discussed on here is that the post-capitalist service economy is a myth. And I can assure you 100% that it is. And I will explain this in excruciating detail this year. But as noted many times on here, about 85% of all jobs in our economy create zero wealth. Many are do-nothing, doing-each-other’s-laundry service (servant) economy jobs. These jobs and the service economy as a while have grown to be so large that they are literally reliant on most citizens spending every single dollar they make to prop up this mythical meme. Once society begins to save (not possible for most Americans) or run out of money, people will cut back on much of the service economy and start doing their own proverbial laundry. So, one method of actually measuring the early phases of coming liquidity shocks to this segment of the economy would be to watch the BLS or some reliable source for the number of, say, retail restaurant or bartender jobs created. That’s just one example. I’m sure you can think of many but PCE (personal consumption expenditures) itself is well too distorted. By the way, there will be more horrifying penning on this topic soon enough.
Another long-time theme is that the sports/entertainment industry and casinos, a segment of this broader measurement, examples of doing-each-other’s-laundry or capital-consuming economy, are headed for massive hard landings. As noted on here a few times over the years, we can expect salary haircuts as much as 90% for many of the the amusement industries amongst us. An example might be that we would see the ultra-high paid sports athletes and entertainers eventually see their wages plunge drastically. Instead of making $20 million per movie, maybe a top actor makes $2 million. Who know, maybe substantially less. Ditto with athletes. That is, if money doesn’t actually become useless first. Which, by the way, would produce the same outcome but simply more severe. I can assure you without any doubt that this is coming and will explain the whys of this dynamic in detail.
Hmm… Without money or without an outsized doing-each-other’s-laundry service economy, how does someone like Mitt Romney, Jamie Dimon, Al Gore or LeBron James, four examples of people who create zero wealth in our nation, afford to keep multiple residences and convince a plethora of service economy lackeys to maintain their garish lifestyles? They don’t. And, they won’t. It’s coming.
Atlantic City’s gambling-addicted doing-each-other’s-laundry casino economy is already starting its implosion. (Trump’s owners now just confirmed it too is closing this fall.). As noted on here in the past, I suspect we are going to see casinos fall like dominos in coming years. Atlantic City consumers are either running out of money (another data point of liquidity draining out of the service economy as wealth-creating employment continues its collapse) or Gambler’s Anonymous must be doing a more brisk business or the nationwide casino bubble is saturated and reversing trend.
Another long-time thesis is that the capitalist and empire-necessary hyper-consumerism are headed for the dung heap. Remember, hyper-consumerism goes hand in hand with the mythical bloated post-capitalist service economy. In other words, the service economy requires you to fork out a regular weekly or monthly payment on often useless and frivolous spending aka a tax on society in order to prop up useless job creation and sustainability. So, go buy a new car you can’t afford - record high monthly payments and record long monthly terms as we see today. Both payments and the length of payments required to buy a car have hit record highs.
Self-sufficiency of any kind is a threat to the mythical post-capitalist service economy. Be that making or growing your own food, learning to maintain your health in lieu of endless reliance on the sickcare complex, learning your own crafts and skills to make or fix more of what you need or whatnot. The service economy cannot exist if you are self-sufficient in any way. It requires you to simply be an ignorant consumer reliant on everyone else for every aspect of your existence. Americans and people in general are more reliant on the state than at any time in history. I am quite confident that trend is changing and we see this already in many self-sufficiency dynamics, including barter, developing critical mass. (A future of barter, including between nations, is also a long-time theme on here. And if you watch intently, you have seen many nations setting up direct trade settlement and barter arrangements in the last year or two. Just as I anticipated they would. Btw, barter is a rejection of state authority including the violence of centrally-controlled creation and distribution of money.)
This past few weeks it appears Shopaholics Anonymous must be picking up quite a few new members. Retailers are reporting unusually weak behavior with the American consumer. Of course, turning sentient beings into dumbed-down drones whose favorite pastime is shopping is another example of state violence and part and parcel to the ignorance that is so necessary for corporate capitalism and the service economy to succeed. The corporate capitalist Idiocracy (the dumbed-down corporate state) is starting to show new signs of stress. “Waking up” must naturally result in the failure of hyper-consumerism. Of course, so must the end state of a system that doesn’t create wealth but only shifts it from the weak (oftentimes the honest, the just and those exploited) to those backed by the force of the state. (Predators, victimizers, exploiters or as Ayn Rand noted, moochers and parasites.)
On that note, as discussed on here many times, per capital retail space in this nation has swelled 500% in the last 35 years. Additionally, casino space and overall gambling in the economy has gone from nearly nothing during that period of time to a massive bubble. And, mind you, being a capital-consuming tax on society, it certainly is a bubble used to extract massive rent out of American hyper-consumerism. These two trends are simply not sustainable and they will revert back to trend or possibly even overshoot to the downside before normalizing. Whatever that means. And no one knows exactly what a normalized future does mean.
Our economy has grown through capital consumption rather than capital formation for a long, long time. At least since the times of Reagan.
A job is not a job is not a job. Capital-consuming jobs are a massive wealth-shifting tax on society. It’s a tax on an economy that doesn’t create the vast majority of its own wealth we cannot afford. So, instead these wealth-shifting schemes have been funded through massive debt. And, that means these types of employment are in serious trouble. By the way, we can thank supply-side economic policies for this. I’ll be writing more of this in a rather unique look what I am talking about. (Because what is now on the verge of failing is that very economic ideology.)
But, it is not money itself that allows the type of inflation we have seen in the last forty years. There are other factors involved including empire and debt. Whether that is through a debt-based monetary system or not is irrelevant. Debt is a primary driver for that inflation. Debt allows prices to artificially rise substantially beyond what otherwise could ever occur without systemic failure. So, the price of your house, the stock market and food are all a function of the same dynamics. Enslaving people to debt has allowed corporate capitalism to raise prices (rent-seeking profit), often indiscriminately, without any concern as to sustainable supply or demand. And to do so for decades beyond that which fundamentals ever would have allowed. It has created the illusion of prosperity to mask the economic blight that defines the U.S. economy for most Americans.
In other words, effectively a function of debt is the ability to raise prices beyond which otherwise would be possible. On that note, I have noted many times that debt deflation is a myth. The Federal Reserve is afraid that a debt unwinding will cause deflation. I have noted that even if all of the debt in this nation or the world was wiped away, we are going to see deflation. It’s not the debt itself that is the source of deflation. It’s the dynamics that debt creates through the artificial ability to raise prices beyond that which economic fundamentals support.
There is no way most people in our nation could afford anything without the debt or rent extraction dynamics of the monthly payment. We are all slaves to a monthly payment and debt. That includes our government. Food, cars, education and houses should be cheaper to produce than ever. But they aren’t. Why is that? The same reason the Dow Transports are up 64x in the last forty years.
As written on these pages before, because corporations, not just banks, control the money supply in our nation, the only way any modicum of economic recovery can ever happen is for corporate capitalism to fail on a grand scale. Globally. That can happen through many dynamics. It could be the collapse of globalization, the end of money in some form, the end of private banking in some form, the end of American empire, the end of the state that props up this system through its violence or some other example that subverts corporate control. This is one of the inherent contradictions of corporate capitalism that will likely result in the permanent demise of the state-created corporate matrix. And possibly the eventual demise of the state itself.