(2012-05-15) Rao Facebook As Economic Transition

Venkatesh Rao on how the FaceBook IPO symbolizes our Economic Transition. See related 2010-09-20-LewisSustainableServiceEconomy.

*The closest comparable event is the radical and rapid shrinking of the the agriculture sector (from around 80% to around 5% if I recall correctly) due to industrialization (Industrial Age) a century ago. We are in the midst of an equally rapid and radical shrinking of the sector of the economy that dominated the twentieth century the way agriculture dominated the nineteenth century: the Consumer economy. I mean the consumer economy in the core sense of the word: the production and consumption of nice-to-have stuff that is not strictly necessary to sustain life, through the artificial creation of demand by marketers.

What exactly is so “serious” about the Old Economy?

Suddenly digital chicken-throwing doesn’t seem so bad as an alternative activity. It seems practically like austerity. We get the same amount of frivolity for much less steel, gas, electricity, plastic and landfill waste.

Or take the acres of trees that are cut down to make paper that is then printed on using harsh chemicals and delivered to your doorstep using gas-guzzling vehicles. For what? So you can read about the latest celebrity train-wreck (Printed Book)? Is it really such a bad thing that much of this junk now flows in purely digital form?

Ultimately, to a scary degree, everything in the American economy is about sustaining frivolity. Much of it obesity-inducing, gas-guzzling, non-renewable, planet-destroying frivolity (BullShit). If we’re going to do this, we might at least do it more efficiently. Enter Facebook... Facebook is actually about getting a better sense of proportion. We are pricing frivolity right, finally, after a century of spending far too much on it.

One of the most startling things about Facebook is not so much its projected market cap once it goes public, but how few people it will take to sustain such a large chunk of the economy... It is creating a newly freed-up labor force that can now do new (TBD) things. (UnEmployment)

A farm laborer suddenly having to work in a mechanized steel plant or textile factory did not have to go through a particularly steep learning curve. A carriage driver or longshoreman suddenly being required to flip burgers probably had to get dumber to make the transition. The Internet is different. To become an economic producer on the Internet, as opposed to a consumer, takes very different and (to be blunt) harder-to-learn skills... We’ve hit rock bottom in terms of how dumb production can get. There really isn’t dumber stuff for the labor force to do. We know. We’ve tried (it’s called Amazon Mechanical Turk).

At the same time, the labor force does have to work. We are not in a post-scarcity world that can sustain the vision in the movie Idiocracy (thankfully). (The RICH Economy)

Direct participation in software development or product design (D And D) is frankly too difficult for most of the population, which means some indirect participation in derivative producer sectors is going to have to emerge as the answer. The first Internet boom created small armies of EBay traders and Affiliate Program marketer-bloggers (Internet Marketing) (both relatively easy producer skills - Labor Market). This second boom hasn’t yet created armies of producers in any recognizable form... But it will happen. If it doesn’t, the entire house of cards will come crashing down. Under the threat of such dire consequences, I suspect people will find a way.

This also means that it is time for very hard reflection on the part of people who thought their lives, work and careers were about better things than sharing cat videos on Facebook. Was it really? Just because you spent all day solving complicated production problems in a factory that produced something “serious” like cars or steel doesn’t mean, in the ultimate analysis, that you were contributing to a noble purpose. Even if you were working on a cure for cancer, what were you doing? Extending the lifespans of depressed couch potatoes shuttling between TV and Shopping Mall? (Meaningful Life)

Facing up to this challenge will be good for us. *