Time and Stuff

‘Had we but world enough and time,
‘This coyness, lady, were no crime.’

Andrew Marvell

An epiphany!

We are in a farmhouse…looking out at the ‘cour’, which is an area in grass and apple trees, boxed in by barns and other farm buildings. The buildings are not in bad shape. None are falling down. But all need work. Physical work. Work done by people in work clothes.

One has a roof in need of repair. Another needs a new roof altogether. New doors for one of the storage sheds are in order. And there is a little abandoned cottage, which has been recycled from a bakery…with its classic dome-shaped oven…into a pigsty…and then into living quarters. Today, it is a wreck…in need of total renovation:

All of these things require materials…skills…and time — the kind of things you find in the ‘old economy’. They are things that produce more GDP…and make us wealthier. When the work is done, we will have better facilities…a better view from the farmhouse…and maybe even get more production (GDP) from a more efficient farm.

Had we enough time, we could spend all day on the internet…and squander as much wealth as we want — in ‘wars of choice’, in bailouts of bankers, investors, or students…invested in companies that can never earn enough to justify the capital…or given away, either to the rich (contracts, jobs, grants, boosting stock prices, low interest rates) or to the poor (food stamps, unemployment comp, ‘disability’, rent support).

But in the world we live in, time and stuff are limited. And when they are wasted…they’re gone forever.

Choke chains

By contrast, we open up our laptop. We are immediately in a different world, without apparent limits. We can go as deep as we want. We can find out about the entertainer ‘Boo’ and how she died last week. Or we can learn how to decline a Latin noun. Or we can dig into the debate over selling scrap iron to Japan before the Second World War (it was used to make ships, planes, and bullets).

And yet…even on the internet, the dogs race out with loud barks and growls. But they eventually reach the end of the chain. Last week, Dan told his readers about five companies that got choked:

‘…eight stocks that lost a combined $5 trillion in market value — Tesla (down 65%), Meta (down 64%), Netflix (down 51%), Nvidia (down 50%), Amazon (down 49%), Google (down 38%), Microsoft (down 28.9%), and Apple (down 27%).’

And let’s not forget Salesforce. The stock was at US$300 in November 2021. Now, it’s US$130. Salesforce is in a sleek San Francisco business tower. It provides software to other tech companies to help them handle customers.

But when the customers went away, so did Salesforce’s sales…net income fell from more than US$4 billion in 2021 to less than US$1.5 billion in the most recent 12 months.

Salesforce is a special case — combining the illusions of the dotcom era with the conceits of Jack Welch-style roll-up madness. CEO and founder Marc Benioff followed much the same playbook as Welch at GE…buying companies left and right in order to increase his own sales.

Fantasy worlds

It’s hard enough to figure out one business. Trying to understand and digest dozens of other businesses is hopeless. And last year, all of these ‘tech’ companies ran into the brick wall that separates the real world of time and stuff…from the fantasy world of Zuckerberg, crypto, and federal finances.

Meta and Google, for example, are advertising-driven media. Their revenues grew as they took ad spending away from traditional media. But ad budgets are always limited by sales…and sales are always limited by incomes…and incomes are always limited by time. Shoppers earn their money by selling their time by the hour. They can’t get more hours. So their incomes are limited by the amount of stuff they produce/hour. And that, too — productivity — is going down at the fastest rate in 40 years. From CNBC:

‘Salesforce CEO Marc Benioff recently made waves when he told employees in a Slack message that the company’s newest hires aren’t being productive enough, and he wanted help figuring out why. The tech giant’s employee productivity issue is not an isolated one.’

The most powerful organisation on the planet, the US Government, ‘prints’ our money. But even it is on a chain. It can print all it wants, but ultimately, all wealth comes from taxpayers…and taxpayers live in the real world of time and stuff. The feds can try to by-pass the taxpayers; they can just ‘print’ money to pay their bills. But then, people just get less stuff for their money.

Coy mistresses

We were suspicious of the ‘information revolution’ right from the beginning. It was said, in the 1990s, that ‘information will replace capital’. Investors thought they had discovered a new source of wealth. They could buy a dogecoin…an NFT…or something ‘on the blockchain’. And somehow this new, unchained economy would make them rich. That is, people thought time and stuff no longer mattered; our mistress could be coy as long as she wanted. The infiniteness of the electronic media would make it vastly easier and faster for us to get what we wanted.

Theoretically, the peasant in Borneo, labouring with a steel-tipped hoe, was more or less confined to his lot. But now, with the worldwide web at his fingertips, he would see that he could till the land better with a four-wheel-drive John Deere tractor. He would then greatly improve his productivity…food prices would fall…and we’d all be better off.

But wait. Where was the tractor? Didn’t it still have to be made — with capital, steel, skill, and time? And didn’t the manufacturers still have to wonder how much purchasing power the Borneo peasant actually had? And wasn’t it just as likely that the Borneo peasant — knowing he couldn’t afford a John Deere tractor — spent his time on the internet gambling on meme stocks, reading dumb opinions, or looking at dirty pictures of white women in Dusseldorf?

On the evidence, the US’s new technology — led by Amazon, Facebook, Google, and countless others — has actually slowed the output of stuff. GDP growth rates were in the 3% range in the 1990s. Now, they’re close to zero, after falling gradually and suddenly for the whole 21^st century.

What to make of this? We don’t know yet. Stay tuned…

Regards,

Bill Bonner,
For The Daily Reckoning Australia