How we got here
I was recently sitting by a hotel bar in Atlanta for work when a young man in his early 20s asked me what it was that I thought he should consider as he grew into an adult. Outside of the astute nature of this question, I was myself drawn to look at what has happened and how the western economy has ended up in this state of suspended disbelief. While it’s quite difficult for many to comprehend that the western economic system might be receding, most no one would agree it’s depressed, right?
Yellen is 70, I’ll be in my 40s when she is in her 80s, and that young man will be in his 30s. Yellen won’t have to deal with the mess that the generation prior to her has created, nor will she have taken a realistic view to help create a better future for those of us who will eventually live in that present.
While there is much history, many opinions, and a lot that should/could fit into a book, I decided to provide my highly abstract thoughts for that young man. This is not meant as a comprehensive history class or a recounting of all the fact, simply the stuff I suspect someone in their early 20s should reflect upon as they mature. For them to navigate the future.
Dear 20 year old:
The Exchange of Value:
Quite some time ago (like when Jesus was around) we discovered that problems had value. If one could solve problems, that would be valuable, and one would be rewarded for solving a problem for many. That’s why we have cars and electricity and fridges and stuff like that. Over time, this value was abstracted. I imagine originally if you had 12 chickens and I had a garden full of carrots we might want to exchange some value. On the days that I needed chickens and you didn’t need carrots, I gave you paper that provided a promise that when you needed carrots, you got it. Over time that paper became computers, plastic, and promises to promise to promise someone that one day someone might promise that maybe something might happen if something happened to someone that has hedged against a promise that maybe the plastic paper plastic promise might become worth more than maybe it might be today, maybe…promise.
Consumerization:
We like stuff. Outside of the basic stuff we need/like (chickens and carrots), It’s pretty difficult to put this any other way except that, well, we like stuff. By stuff, I literally mean stuff, nothing of any particular consequence, just, stuff. The west has been credited with much innovation and invention, Henry T. Ford, Wright brothers, Sam Walton, John Postal, Jack Kilby, Robert H. Goddard, James Russell etc gave us devices, gadgets and thoughts that spurred the progress of society. From cars to planes, the internet to CDs, we love to consume and are fascinated by…well…stuff. We liked stuff so much that we wanted more and more of it, and at the same time, we wanted more bucks in our pockets. More bucks in our pocket works out just perfectly because a free market states that those with the lowest costs and the highest prices have the biggest return (profits). We also decided that if you own the company, PROFIT IS KING!!!! Shoot for profits. We liked that idea so much we basically made it the law. If you run the company, those that own the company ARE QUEEN, and the QUEEN DEMANDS PROFITS. That is basically literally the law, actually. To profit, one must keep the company cost of making to the price you pay ratio in check. While the thoughts of low costs with higher prices became the thing, we still wanted to make stuff at even LOWER lower costs.
Our relentless pursuit of more led to the philosophy that profit reigns supreme, a principle so ingrained it’s nearly law. To maximize profit, companies strive to minimize production costs while maximizing sale prices.
Advertising, Marketing and BizNiz:
During this period of PROFIT IS KING, we discovered that we could lower the price while increasing the profits. This was a win win for everyone, right? LOW LOW PRICES EVERY DAY! Savvy marketers and advertisers are charged with the mandate to trick us into buying products so as to return profit to shareholders. They discovered that they could convince folks that rather than store food in a glass dish created by the craftsperson in the city next door, we need tupperware created in a factory in somewhere that isn’t the city next door. AWESOME! Now we have loads of cheap and convenient things that had lower and lower costs and lower and lower prices but higher margins so MORE PROFITS!!
In the era where ‘PROFIT IS KING’, marketers learned to tempt us into buying more, thus boosting shareholder returns. We shifted from local crafts to mass-produced items like Tupperware, manufactured far from home. The result? An abundance of affordable, convenient goods with increasingly lower costs and higher profit margins.
Globalisation:
So, these profit things, how did stuff get cheaper and also lower cost to make? Easy, everything we created of any real meaning or consequence was sent to a factory that wasn’t next door, or well, even relatively close. This is awesome because we got things super cheap and super fast and kinda sorta maybe sometimes good but it didn’t matter, if it broke we could just buy a new one because SUPER CHEAP! While all of this magic was happening, Wal-Mart got a McDonalds so McNuggets too, nom nom nom, cheap food!!! Consider, in 2000 the price of a 50" Plasma TV was $22,000. Today you can get a Samsung 51" Plasma TV for $500.
How did stuff get cheaper? We outsourced production. This strategy brought us fast, inexpensive goods—quality occasionally questionable but usually acceptable because, hey, it’s cheap! Now we build nothing, the west is simply a land of ideas that manufuctures very little outside of those.
The Internet:
The internet is cool because I’ve worked on building it most of my life, so I can say nice things about it. LOL JK I have nothing nice to say. While we worked to quickly remove all of our creation from the factory in the city next door, we also quickly worked to make sure that the people who had jobs selling those things to us also didn’t have jobs anymore. I mean, come on, we got the privilege of buying everything from our beds in our PJs surrounded by all the awesome cheap stuff that we needed because, well, PROFITS!!!
We’ve shifted production overseas and eliminated many retail jobs, making most purchases online—a boon for profit margins but a bane for employment.
Commoditization:
While we worked to make sure that nothing was made in the factory next door and worked super hard to make sure that the people who sold us things from the place that wasn’t the factory next door didn’t sell us those things any more, we also worked super hard to make sure the way we accessed those things are super cheap. Phones, computers, bandwidth, etc etc, all became places to consume products, or, misinformation. Our cell phone plans got cheaper and cheaper, our internet connections got faster and faster, oh, and btw, our telecom industry dug a little hole for itself and jumped inside as the soil fell around them. The things that we suspected would stay the same forever (gold, oil, water, paper, real estate) also fluctuated rapidly. This is super weird because we called those things investments and we convinced ourselves that they would be around forever. We wanted them around forever SO BADLY that we decided to focus less (slash zero percent in the grand scheme of things) on using the things that wouldn’t run out or damage the earth (sun, wind, etc) and more on the things that took care of the company owners (shareholders): PROFITS!!!!
We’ve engineered a world where virtually nothing is produced locally, and retail jobs are scarce. Meanwhile, the technology to access these goods has become dirt cheap. Telecommunication prices plummeted, even as service providers dug themselves into economic holes. Traditional investments like gold and real estate have become wildly unstable, contrary to our longstanding belief in their permanence.
The Death of the High Street Bank:
Believe it or not, there was a time in the past (up till like, the 80s and 90s!!) that we knew our bank managers. I know, I know, why the heck would you want to talk to the manager of the bank?? Well, banking was based on local relationships, trust and conversation. Relationship Manager Joe would know Eric, Eric worked at the deli for 20 years and was in line for a promotion to deli manager, Joe knew this and when Eric came to Joe and asked for a $500 loan to start upgrades on his house because he was having a child, Joe could go to Sally the manager of the bank and tell her that he knew Eric for 20 years, he was getting a promotion, and trusted him for a loan. Sally trusted Eric, so Joe got his $500. Now we do everything online, so no need to talk to Joe or Sally (and no need for their jobs!). And no more trust.
Banking was personal, based on trust. Those days are gone, replaced by online transactions and faceless credit approvals, stripping the personal element from financial services.
Fiscal policy and the extraction of wealth:
HOWEVER, While we worked super hard to make sure that no one had any jobs or access to positive, relationship based capital, we figured out a really awesome system to help us continue to buy the AWESOME low cost things that we must have outside of the constructed support of the Eric, Joe and Sally high street bank. Credit cards became the name of the game with companies willing to assume some risk in return for a modest rate of interest (payment) on that loan. Over time credit cards and abstract fiscal instruments took over, strangling the high street bank and creating a complete abstraction of trust based on a relatively (very) arbitrary (and classist) credit system. Remember all those promises discussed before? This is that but baked in a really awesome donut cake that you have to eat for every meal.
As we automated and depersonalized banking, we embraced credit cards and complex financial instruments, sidelining traditional banks and eroding community-based trust. These developments have further abstracted fiscal relationships into a bewildering maze of credit scores and classist barriers.
Education and student debt:
So we got rid of all the job and we got rid of all the relationships but none of that really matters because we have MBAs. The MBA is awesome. Here is how it works. There are no real jobs so you have to go work in a bank (read: any financial institution whatsoever including anyone who is pretending they don’t work at a bank, including you VC/PE/Bonds etc.) or a company set up to make sure there are no jobs (basically many western companies today in some form or another, srsly). To do this, you simply have to acquire paper given to you by mostly old white dudes who live in castles on the coasts. This is pretty good because you pay a little over one hundred thousand dollars (slash way more than that) and then you can use the coupon that you bought to get a job at a bank or an hip consultancy that is doing god’s work in restructuring the vast majority of large business to help them cut costs, downsize, lay off, outsource, and delegate job functions to software. Pretty fun, fulfilling, and rewardingly awesome for humanity type work!
Job markets shifted, emphasizing credentials over experience. Degrees, particularly MBAs, became tickets to the few remaining corporate jobs. However GPTs and LLMs have now come for them, and they are now disposbable. This educational arms race has saddled generations with crippling debt, often for qualifications that no longer guarantee employment.
The 2000s Workforce:
This dude called Marc Andreessen created google chrome in 1994 and in 1999 he sold it to AOL for like literally actually ten billion dollars. His buddy, Ben Horowitz really liked hip hop. Combined, they decided to create what you know today as “the internet” or “apps”. It wasn’t all them, they had some help from some other people, inspired by a few folks before them. People who make the internet mostly live in the land of San Francisco. Mark Zuckerberg (facebook) really hated the phone book and Jack Dorsey (twitter) really wanted to tell people about lunch, but for sure without any real detail or context, ok? Thankfully Larry Page and Sergey Brin figured out that the internet was sorta like TV in that it had channel’s (websites) and if you could be the TV listings (google) you could create an advertising engine, nice1, ads are awesome because we can find new cheap stuff to buy and everyone PROFITS!!!. If you mostly sorta maybe knew what a computer was in the early to mid 2000s and you liked hip hop you could probably go chill with them and get v.rich (it was also helpful if you lived in San Fransisco and looked like a white dude). The first time we tried to make the internet we messed it all up because we thought domain names = profits (don’t ask), but the second time we have apps and stuff and we pay for netflix etc. paying for netflix kinda screwed with the cable companies because before we mostly paid for things on TV (like ten billion channels a month). Steve Jobs made some pretty fly stuff, not gonna lie.
The early 2000s tech boom reshaped the workforce. If you knew a bit about computers and lived in San Francisco, you could strike it rich in the dot-com craze. That bubble burst, but we’ve since moved on to apps and streaming services, disrupting traditional industries like cable TV.
Pensions, savings, investments and houses:
As you can see, things have been super stable and made loads of sense (lol, ok…) In a world with as much weirdness as mentioned above, plus wars and stuff, folks generally considered the future not as something super rad they could build anything they wanted in if they thought about how to get there but as something super uncertain. As a result, we created artificial certainty in the future by “investing in the future”. This investing for the future comes in many flavours, but much of it hasn’t been very good for large numbers of people unfortunately. It doesn’t seem like it was about the future but more about people selling the future to get rich today. You didn’t even really have to think too much either, you could just buy some future thing today, and then go get a job, and wait for that future event to pay you for waiting, if that sounds too good to be true, it’s because it mostly is.
Financial stability has become a quaint concept in a world riddled with economic and geopolitical turmoil. Investment has morphed from a means of securing the future into a gamble on an increasingly uncertain tomorrow.
Bubbles:
Blowing a bubble is cool and looks nice till it pops, then it is gone and you’re usually covered in some weird chemical that smells like a cleaning agent. In the real world we like to create bubbles to, much like the bubbles you blow, it’s just a matter of time till they pop, and the bigger you make them, the bigger the mess. We’ve made some pretty big bubbles, one with people’s houses where the promises of promising to promise to do something with buying a house and then something else that basically NO ONE understood made getting a house REALLY REALLY easy. This was great except when people couldn’t pay their bills, then the bubble popped and everyone lost their houses, oops. We did that with the internet the first time too, for example in the late 90s, someone registered the domain pets.com and then sold it as an investment for eighty two MILLION dollars (I know, I know, I know…). Except that just a domain name isn’t actually a good investment, so that popped, leaving loads of people with no jobs and feeling pretty glum about this internet thing. We are likely in one of those internet bubbles again because telling people what you had for lunch every day in 140 characters probably isn’t worth a hundred million dollars when you can’t afford your college debt. College debt is likely another bubble.
We’re adept at inflating economic bubbles, which, like their soap counterparts, are mesmerizing until they burst, leaving chaos in their wake. From real estate to tech, bubbles have repeatedly demonstrated the volatility of our economic system.
Building your own future:
So what does it all mean? Well, It’s clear we have moved everything away from us, and we live on a platform that is supposed to support us so that we don’t need to think. In doing so, we seem to have inadvertently created one of those bubbles and called it “society”. There is likely to be considerably more instability for those in their 20s as they get older if they opt not to think. Asking why is a pivotal skill for navigating this future world. Why do I need a credit card? Why do I need to buy a house? Why do I need to go to college? In some instances of asking why, there will be very good reasons, in some, the answer will simply be “because” — because isn’t a good answer. To be successful into your 20s and 30s in this world, you must look to build your own future. There are many tools that will keep you lazy, and many tools that will help you not think, but in any instance of using a tool, you must ask, why am I doing this, what does it mean, what is actually going on around me and in the world today?
with love!
(Originally Published 2015)