Overanalyzed

Steady-state economy

April 14, 2009 at 6:49 pm | In Business, Politics | No Comments
by Chris Davenport

I’ve been wondering lately about what the steady state of the American dream is. What are the unavoidable outcomes if every player in the game is following that strategy?

Seems to me that there’s a finite number of lawns to mow. There are economies of scale, and it’s well known that when providing a service or doing business, that results in a natural monopoly.

So if you push it all the way out, you have “MicroLawns INC”, that owns all of the lawn care business. Maybe there’s room for specialty? OK, that seems to be happening in the medical profession.. each doctor is a specialist, and the fields of specialty are rapidly narrowing. General practicioners are more and more rare, just because the development of new fields has been so aggressive.

So the extreme situation there is that everyone’s job is unique. Everyone works as hard as they possibly can on the thing they’re absolutely best suited to do, because anywhere that someone else can do better becomes grounds for them to outcompete you.

The monopoly would be composed of such people, so that the gestalt entity can handle all such situations, and thus compete better than a standalone individual.

There’s a lot lost in the fray.. no matter how diverse the menu of options, preferences are also diverse.. If every need shares that diversity, then there’s an unending list of meetable needs, which can be met optimally but not exactly by one provider. And that has a margin for improvement.

In a lot of ways, it’s a multidimensional market. I’m speaking in general and more abstract terms, but we’re all familiar with the idea, to use another context, of buying a new computer. Dozens of parts and features, you decide what you like or want, look at what’s available, and choose something that’s imperfect but close enough.

So there are a lot of margins… availability of information, availability of service/goods providers, mutability of aspects of the need..

Specifically, I’m trying to look at the situation in which those margins disappear. Because I think that’s what happens when the American dream is executed by all players until there is no more benefit possible to any player..

Further, I think as the game progresses, it becomes more and more challenging for the individual players. Jeffy’s got a thousand ideas on how to make a good product or make something better, like his automatic plant waterers.. But he can’t compete with wal-mart or sky-mall.

I do believe there are upper limits to an individual’s ability. So what happens when you have someone who, trying as hard as they possibly could, fulfilling all the potential they have, has nothing to offer?

It’s easier to analyze with world of warcraft toons, because they have a finite set of abilities/attributes, a definite maximal ability, yet still participate in an economy. My paladin can’t become a better engineer than the best engineer on the server. Someone’s already got every recipe and max skill. There is a limited need for those people, assuming any of them will be happy with 10% of the available business, after the minimum availability is 10, there’s nowhere for my paladin to peddle. Wow still has margins of locality, but we can narrow it to the number of major cities reasonably. All that’s left is price, and we all have the same lower limit of costs, somewhere it’ll come down to the minimum gold value of playtime. (Sweatshops anyone?)

I wonder how close we are to that today.