| mrstickball said: As for the Netflix-Redbox-Blockbuster analogy: Such changes in market dynamics have gone on for ages. Yes, part of it revolves around less workers, therefore more profit. But lets consider the other aspects, too: The reason Netflix/Redbox do so well is that they provide an arguably superior product (movies delivered to your door, TV or rent-at-any-store) for less investment. Blockbuster is dying because they were charging $3/day for the latest movies while Redbox was charging $1. What that means to the consumer is that they can allocate their capital to other purchases which will fund jobs in other markets. That is why increased productivity is a net benefit: costs to purchase an item go down, and the consumer can spend elsewhere, creating new demand. |
And looking at the bolded part. IF you have a situation where consumers were overextended with debt, and they then acquire more money for lower costs, then you won't create new demand. The end result, when the bills come do, and people fear for their lives that they could be out of work, you have what is going on now. What is going on now is that growth is very weak, and will remain such. It is likely this lower levels of demand will be sustained. It gets down to a lower level, and savings increase. The problem is then, there is a lack of demand to create new opportunities. And if banks decide to restock and not lend, you don't even get new ventures launched at all, so consumers can't even see what else they would demand. There ends up also being a level of despecialization happening, which also impacts things. The American consumer, for example, decides to simplify and and get less things. Things unwind. And in all this, while this is going on, no one is sure what the heck the future holds, which causes even more contraction.
In this, thrift will go up, and you end up having a reshifting of values in society. I would say that it would be worth studying the values of people who lived through the Great Depression ended up living and what they thought, because that is what one would expect to see out of Americans, and the rest of the world going this place forward. Seeing people out of work for years, and knowing them, and knowing they are capable, does make one feel they need to stop spending in foolish ways, and figuring out how to pinch pennies. Pinching pennies now is a trend seen in advertising today.
