I’ve been thinking about the meaning of value. Value is the amount of service you get in trade for something. When I was growing up, if you wanted nice things, you had to pay a lot of money. More than I had, anyway. Not anymore.
Since the advent of communications and computers, we have been able to get more and more for less and less money, every year. The other side of this is that fewer and fewer people are getting paid well, every year. Those that do are getting paid very well, but more of us are getting replaced with simple shell scripts or cleverly designed robots, and have to go searching for other work. This has been the case since the deindustrialization of America and the rise of Asia as the thingbasket of America. First with Japan, then with India, and finally with China. Much of the commerce of these places is because of the money we are willing to spend her for their trinkets.
And what trinkets they are! Cheap, flat pack furniture replaces my great, great, great grandmother’s single chair, bed and small table, medical technology tells me what’s wrong with me to the 3rd decimal place where my ancestors would put up with an educated guest from a family friend or country doctor, and a device in my pocket offers instant connection to the world, a camera, and whatever tools to learn Hindi I might want, while my ancestors were lucky to get mail delivery, much less a phone after 1876.
The problem is, very few are getting really wealthy under this scheme. While GM hired 50,000 in its heyday, Google employs 5,000. All the value and money redounds to a very few actual inventors. Yet anyone can invent now, anyone can make. You no longer need a record deal to release a CD, a camera crew or a press bureau to report on something, a book deal to publish, or a bar tab to have great conversations with friends you haven’t seen in decades, or ever. We are getting much more value for little to no money. Which is good, because we are now making little to no money. This new economy, where information is free with enough time, effort and lawbreaking, is a real danger to the established pillars of wealth, as well as the household finances of the middle classes.
While less money in the household economy is a problem for making car payments, the mortgage or the rent, and paying for fixed costs like water and electricity, it is also a problem for the wealthy who rely on a somewhat wealthy customer base to support their service.
The first example that I mentioned was furniture. While furniture was once the expensive product of true craft, it is now automated and disposable. Nearly everything is available as a flatpack, assembled by the user at under half the cost of the original item.
The second example is food. While food proximally has been getting more expensive in the last five years, since 1940 food prices has plummeted. The economy of scale and industrial production of fertilizer from natural gas, rather than manure, has revolutionized the pricing of food. Now we all can afford to be obese and get diabetes, formerly the privilege of luxury. The reason High Fructose Corn Syrup is so prevalent is that it is so cheap. We produce so much food with his economy of scale that we can satisfy many of the drug and vitamin needs of the nation on even 0.001% of the mass of corn.
This is not a one way street, and it is moving from a cash rich to a value-rich economy. Two victims are law and medicine.
Already law firms are moving from a best-in-class model to a best-bang-for-the-buck model. This sudden awareness of value and income is jarring for many of the most established law firms. Lawyers have not had to think of sales for a long time. The reputation and their skills was enough for their well heeled clients for over a century, no matter the price. Partners, associates and attorneys can no longer casually bill in five minute increments. Staff attorneys in the trenches, reading hundreds of pages of documents searching for keywords are being replaced by much faster and cheaper keyword/context software. Websites now offer legally ironclad forms for power of attorney, wills and contracts. Its a grim time for the legal profession, but a great time for legal consumers.
Another coming wave of valuation is medicine. The cost of healthcare has continued to rise faster than inflation through the last three decades. Doctors, hospitals and insurance companies, are invested and employed in this continuing income spiral in the form of mortgage and car payments by each of their households. Even a 10% cut in rates would be calamitous for many. They have obligations. I realized that medicine is about to get replaced by a value rich economy when I heard about a 3D printed cast and an android enabled hearing aid. Both could be had at a fraction of the cost of the conventional models, and are the harbingers of the future of medicine.
If prices for medicine and a doctor’s care have become unbearable for consumers and insurance companies alike, there is a rich opportunity for the tech sector to step in with diagnostic and treatment tools to replace the functions of many doctors and hospitals.
People would be able to rent these sensor arrays and software for the time they are sick, get a prescription for treatment, and possibly even get synthesized drugs, all without having to make an appointment or deal with billing. If medicine did not want this to happen, they would have stayed affordable.
The same upheaval has happened before. Forage replaced by crops, Storytellers replaced by scribes, Human labor replaced by oxen or horses, Weavers replaced by machines, Teamsters replaced by truckers. Secretaries replaced by word processors, Locally grown produce replaced by interstate or even global food markets, Farmers replaced by systems-from-Monsanto. All these changes over the last few millennia have been disastrous for people raised up in the proud tradition of the old ways, but great for most of us. Our population has continued to grow, so somehow we have found work for everyone without the proud, rich, and labor intensive traditions of farming or paperwork.
This current movement from cash to value has been going on since the 1970s. It is time that we embraced it and learn to thrive in it.