Optimism About U.S. Economic Prospects

by philg

Thursday, October 08, 2009 at 10:13 AM EDT

My favorite economist (never understand what she says, but love to hear her talk) sent me “Possible Macroeconomic Consequences of Large Future Federal Government Deficit” by a Yale economist under a subject line “fodder for your bleak outlook”. She summarized my recent Weblog postings on the economy as “bleak”, which to me means “pessimistic”. Yet I’m actually very optimistic about U.S. economic prospects in an unfettered market. Here are some reasons for optimism…

• The average American worker is better educated and more capable than the average worker worldwide. There are, of course, many excellent workers in countries such as China and Mexico, but on average a U.S. worker is more useful to a business.
• We have a better-than-average infrastructure of transportation, communications, electric power, and legal system.
• We have a lot of natural resources, including the basics of land and fresh water.

How come we are having trouble growing our economy? Part of the problem is that the products and services that people want to buy aren’t available. Let’s look at a top-of-the-head list. We’ll exclude products that require a huge amount of scientific and engineering innovation, e.g., a house-cleaning robot.

• A basic city car, gas or electric, priced similarly to the Tata Nano (i.e., $2500)–I would buy one tomorrow
• A dock for using a smartphone as one’s home computer (see this 2005 article)
• A compact motorhome, sort of like the old VW camper van (see this article on making recreational vehicles in China)
• A home aquarium hood combining lights, filter, heater, UV sterilizer, and automatic fish feeder (see this posting; I would buy one tomorrow)
• A floor lamp consisting of an upright fluorescent tube covered by a paper shade (see this posting; I would buy one tomorrow)
• A prefabricated one-room house, for someone who wanted to have the industrial loft experience in the suburbs (see this design)
• Mobile phone software that would, based on its knowledge of your location, show you a list of nearby hotels and how much they were charging for rooms at the moment, with the opportunity to reserve a room through the phone (useful for travelers; I used this as an example of the lack of innovation at phone companies back around 1997 when it became technically straightforward (Expedia was up and running by then)–it never occurred to me that we still wouldn’t have this 12 years later)

It is true that the same old products aren’t selling quite as well at their same old prices, but that’s partly because people already have the same old products. It is a lot easier to sell new products for which no competition exists.

So that’s my optimistic posting about the economy. All that we need to do is design and produce a few things that aren’t available already.

This article originally appeared on Philip Greenspun's Weblog.