US Fairy Tale Capitalist Economy

Investment Analysis Clubs Macro Economic Trends and Risks
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Here’s our mythology in a nutshell: human needs are limited but human desires are unlimited, and the economy is fueled by smart people motivated by profit to fulfill our desires. Since desires and human ingenuity are both unlimited, the economy is unlimited.

This story is heartwarming but it’s a fairy tale because it leaves out marketing and monopoly : marketing shapes desire to fit what’s being sold, not the other way around, and monopoly eliminates choices that don’t generate enormous profits for those who own the monopoly.

It isn’t surprising that our economy is dominated by marketing and monopoly, because these are what generate the really big profits. The fairy tale features the canny innovator producing a better mousetrap but the real profits are made by eliminating competing mousetraps and forcing consumers to buy products and services that are highly profitable without being highly beneficial.

Which brings us to this question: does the “solution” actually solve the problem, or does it just make somebody a lot of money? Since the most important component of “wealth, abundance and prosperity” is our health, let’s focus on health.

It’s self-evident that being overweight/obese is a systemic risk to our overall health. It’s also self-evident that this risk factor was relatively rare in the early 1960s and is now prevalent, with recent studies finding only 22% of the US adult populace normal or underweight and about 70% are obese.

Traditional calculations find about 75% of the adult populace is overweight/obese and 25% are normal weight.

The solution being offered is expensive, highly profitable weight-loss drugs which have many side-effects. But is this really the best solution, or is it a “solution” to the “problem” of how to generate higher profits?

Isn’t the obvious line of inquiry here to ask why we were healthier 60 years ago and seek to replicate those conditions? In other words, isn’t the obvious solution to go back to what worked without costly, risky interventions?

Here’s the real problem: there’s no profit in a raw carrot and a walk around the block. “Solutions” must be profitable or they’re not “solutions.” That these fake “solutions” generate new unsolvable problems–well, you can’t stop “Progress.”

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Reading through this discussion, I can relate to the frustration about how disconnected markets can feel from the underlying economy. Debt cycles, asset bubbles, and constant stimulus make everything look stronger than it actually is. Still, investors tend to adapt because the system keeps rewarding the same behavior. It’s fascinating and a little unsettling how much confidence drives things long before fundamentals catch up.

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Historically, I would emphasize supply over demand. Mass production made it easy to sell cheaper goods. The world long ago learned to live with the lavish consumption of the rich and genteel. With mass production even ordinary folk could aspire to to ownership of more hard goods – watches, clocks, bicycles, telephones, radios, automobiles.

This was, as noted in the OP, facilitated by innovations in marketing: installment buying, consumer credit, catalog sales, rights of return and exchange. Mass consumption made mass production feasible and profitable, and vice versa. However, the production had to come first.

DB2

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