I sometimes feel I’ve been ploughing a lonely furrow when I write about the drying up of new status goods — the last ones being the car and colour television — as being the cause of the economic malaise in the advanced countries.
Not so, any longer. I appear to be joined by Larry Summers, arguably the best known economist in the world. Previously chief economist at the World Bank, Treasury Secretary under Clinton, President of Harvard University, chief economic advisor to Obama — when he was frequently flying to Beijing and speaking with the Chinese government — he came out recently with his belief that the world had entered a period of “secular stagnation”.
The cause, he maintains, is that we are transiting from a manufacturing economy to a less capital intensive service economy, together with a decline in ‘consumer durables’. The last is, of course, the more orthodox economists’ term for what I call ‘status goods’ — goods such as house, car, furnishings, apparel, on which a lot of money is spent in order to show our personal or family status.
We are now increasingly into a repair and maintenance economy rather than one that’s driven by yet another exciting and uniquely new consumer durable. None has appeared in the last 50 years. The personal computer never attained mass sales and the smartphone became affordable too quickly to acquire a status label. In short, the industrial revolution as we understand the term has come and gone.
There are several more implications which readers of my blogs know about and which Larry Summers may well be considering. I welcome the extra hand to plough a deeper furrow that nay yet persuade others.