Intangibles key to our economic future
Well, the boys have done it again. This time they have discovered how to rescue the American economy.
News Item: a 22 year old has purchased a virtual island for $26,500 in real money. The virtual island exists only in an online game.
In the 21st century, a post-industrial economy such as that in the United States can and must transform itself from a material economy into an intangible economy.
The 22 year old Australian who purchased the virtual island produced several economically positive things for post-industrial countries like the U.S. But let's pretend he was an American.
1. The $26,500 went to the maker of the game, a U.S. based company, with U.S. workers. The money stayed in our economy. The money pays for U.S. workers.
2. The $26,500 did not go into tangible items made in China, so it does not contribute to our trade deficit. Instead, it helps lower the trade deficit.
3. Part of the money is used to sell the game to people in other countries, thus creating more income for the American company and more jobs.
As part of the game, the owner of the virtual island will sell "beachfront property" (all virtual) to others. That money then stays out of China. The beachfront owners hire architects to build virtual hourses. The virtual island may seem bizarre and unreal, and its economic lesson equally unreal, but when applied to online movies, software, information and a host of other intangible products and services, the same positive economic outcomes occur.
Americans will not cease to buy tangible items from China. But $0.00 purchases is not the goal. And ceasing consumer expenditures is not the goal. The goal is to cut tangible purchases down so they are balanced out by intangible purchases. Instead of buying 12 toy fire trucks, mom and dad buy 1-2 toys and then software, online games, online music and online movies for their kids.
Intangible products and services:
- Can and must be the primary business of American companies.
- Can be sold without a manufacturing intermediary.
- Can be sold internationally.
- Create high paying jobs for knowledge workers in the U.S. and other post-industrialized nations.
- Lower the trade deficit and restore a balance of trade.
Two good articles that explore the economic impact of this virtual transaction include Real Profits from Virtual Worlds in the Telegraph, and Jeffrey Harrow's thoughtful comments in "A Shadow Economy?"
February 10, 2005 | Permalink
I've always been amazed that not many people in the US know about David Suzuki the Canadian environmentalist. Last night David addressed 2000 people in Perth Western Australia and one of the things he asked people to do was go to his website www.davidsuzukifoundation.org and look at his ten points for change. These are relevant to the nineshift as we need to be adaptive to the changes that are emerging and look at what we can do personally. The only change we can ever really make is to ourselves, the way we are, the affect we have as extreme consumers of resources. We need to remember the wisdom of Thoreau "If a man does not keep pace with his companions, perhaps it is because he hears a different drummer". It is time for us to leave the herd and walk to a deeper tune.
Posted by: Kim Roberts | March 8, 2005 07:18 PM