Confident Economics - October 21st, 2013
by Paul Winghart
You don’t need me to tell you that confidence is in short supply these days. Uncertainty, it would seem, has a stranglehold over our economic lives. Much of the uncertainty, though, is due to the revolution in productivity and is likely to recede once more people become aware of it. The economic fundamental that is surplus productivity, subsequently, continues to make its presence known in virtual every facet of our day-to-day living. Yet, the more we come to terms with it, the less powerful uncertainty will be.
Acknowledging how we measure gains in productivity or define innovation is slowly changing. Of course, you wouldn’t expect something this radical to come from academia. In fact, economic professors are still bemoaning the lack of productivity growth in the country. Yet as the US has transitioned away from a manufacturing / agriculture economy and to a service dominated one, so to has the way we have come to appreciate productivity.
Back then, productivity was only “real” if it combined two physical things together to make a greater good. Rail+ Road, Steam + Ship are just two of a multitude of examples that fall under this definition. These inventions were considered innovations because they made life physically easier but not necessarily less complex. At the same time, they had a greater relative impact on the standard of living given the tremendous physical demands of labor. As a result, that type of productivity was more appreciated and well rewarded prior to 2000.
Now, given the service nature of our economy, productivity is much more valuable if it is the combination of a human quality and a physical thing: Smart + Phone, Social +Media just to name a few. Rightfully so, these types of productivity gains continue to “pop up” everywhere as they make our lives if not less laborious, at least less complex. For example, if a particular human quality is hard to come by, producers will find a way to get it to you. Case in point, toilet paper.
This package of Quilted Northern Ultra Soft & Strong unscented bathroom tissue caught my eye last week while I was out shopping. In the lower left hand corner, they are saying that by buying this product you are purchasing “ a confident clean”. A clean apparently measured in units of a personal state of being, i.e. confidence.
I emailed the good people over at Georgia-Pacific to see if they could elaborate on just what construes a confident clean and this is how they replied, ‘Thank you for contacting us about Quilted Northern Ultra Soft & Strong®. This bath tissue is strong to protect against tissue breakthrough during use for a confident clean.” - Georgia-Pacific Consumer Response Center
In this case (unlike Ziploc Bags' Smart Zip - read 10/3/2013 post “Reinventing the Reinvented”), the producers are making a stronger tissue but not promoting it as stronger. We are a society that works and lives in a service dominated economy. Therefore, we don’t really understand or care about stronger. No, they are highlighting the human benefit of greater confidence that comes with a better tissue. Now that, we as consumers, is something we can really sink our teeth into.
It may sound trivial, but this economic dynamic of surplus productivity is a very key concept that marketing departments are becoming more and more in tune with. You should too. Because the more you realize that productivity today is a human quality and a physical thing, the less uncertainty you will have with respect to our economic future and standard of living as a country. I’m confident about that.
A note about the author, the founder and chief contributor of the economic website www.surplusproductivity.com, Paul Winghart graduated from the University of Minnesota in 1998 with a BA degree in Economics. Over the course of the next 15 years, Paul has been employed in the financial sector working as a Senior Fixed Income Strategist for a global wealth management company, achieving the level of Vice President. Based on the reputation earned over the years as a consistent prognosticator of economic fundamentals, Paul has also had the opportunity to speak at a number of events as well as serve as an adjunct professor of business for Bethel University. Most recently he presented the topic “Productivity and the Future of Interest Rates” to the World Futures Society’s 2013 annual world conference. Additionally, Paul is a two-time nominee (2011, 2012) for selection into the Financial Advisor/Private Wealth magazine’s national Due Diligence/Research Manager All-Star Team. Paul resides in St.Paul, MN with his wife and four children. He can be reached at [email protected] or followed on Twitter at @SProductivity
by Paul Winghart
You don’t need me to tell you that confidence is in short supply these days. Uncertainty, it would seem, has a stranglehold over our economic lives. Much of the uncertainty, though, is due to the revolution in productivity and is likely to recede once more people become aware of it. The economic fundamental that is surplus productivity, subsequently, continues to make its presence known in virtual every facet of our day-to-day living. Yet, the more we come to terms with it, the less powerful uncertainty will be.
Acknowledging how we measure gains in productivity or define innovation is slowly changing. Of course, you wouldn’t expect something this radical to come from academia. In fact, economic professors are still bemoaning the lack of productivity growth in the country. Yet as the US has transitioned away from a manufacturing / agriculture economy and to a service dominated one, so to has the way we have come to appreciate productivity.
Back then, productivity was only “real” if it combined two physical things together to make a greater good. Rail+ Road, Steam + Ship are just two of a multitude of examples that fall under this definition. These inventions were considered innovations because they made life physically easier but not necessarily less complex. At the same time, they had a greater relative impact on the standard of living given the tremendous physical demands of labor. As a result, that type of productivity was more appreciated and well rewarded prior to 2000.
Now, given the service nature of our economy, productivity is much more valuable if it is the combination of a human quality and a physical thing: Smart + Phone, Social +Media just to name a few. Rightfully so, these types of productivity gains continue to “pop up” everywhere as they make our lives if not less laborious, at least less complex. For example, if a particular human quality is hard to come by, producers will find a way to get it to you. Case in point, toilet paper.
This package of Quilted Northern Ultra Soft & Strong unscented bathroom tissue caught my eye last week while I was out shopping. In the lower left hand corner, they are saying that by buying this product you are purchasing “ a confident clean”. A clean apparently measured in units of a personal state of being, i.e. confidence.
I emailed the good people over at Georgia-Pacific to see if they could elaborate on just what construes a confident clean and this is how they replied, ‘Thank you for contacting us about Quilted Northern Ultra Soft & Strong®. This bath tissue is strong to protect against tissue breakthrough during use for a confident clean.” - Georgia-Pacific Consumer Response Center
In this case (unlike Ziploc Bags' Smart Zip - read 10/3/2013 post “Reinventing the Reinvented”), the producers are making a stronger tissue but not promoting it as stronger. We are a society that works and lives in a service dominated economy. Therefore, we don’t really understand or care about stronger. No, they are highlighting the human benefit of greater confidence that comes with a better tissue. Now that, we as consumers, is something we can really sink our teeth into.
It may sound trivial, but this economic dynamic of surplus productivity is a very key concept that marketing departments are becoming more and more in tune with. You should too. Because the more you realize that productivity today is a human quality and a physical thing, the less uncertainty you will have with respect to our economic future and standard of living as a country. I’m confident about that.
A note about the author, the founder and chief contributor of the economic website www.surplusproductivity.com, Paul Winghart graduated from the University of Minnesota in 1998 with a BA degree in Economics. Over the course of the next 15 years, Paul has been employed in the financial sector working as a Senior Fixed Income Strategist for a global wealth management company, achieving the level of Vice President. Based on the reputation earned over the years as a consistent prognosticator of economic fundamentals, Paul has also had the opportunity to speak at a number of events as well as serve as an adjunct professor of business for Bethel University. Most recently he presented the topic “Productivity and the Future of Interest Rates” to the World Futures Society’s 2013 annual world conference. Additionally, Paul is a two-time nominee (2011, 2012) for selection into the Financial Advisor/Private Wealth magazine’s national Due Diligence/Research Manager All-Star Team. Paul resides in St.Paul, MN with his wife and four children. He can be reached at [email protected] or followed on Twitter at @SProductivity
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