After reading the analogy of the slumlord’s artificial capital gains as a “psuedo-derivative” in my last post, one may ask, “Did our values in America somehow, at some point, radically change?

I think so…
If you look at the “pre-global” society of early 1900′s America, certain values come to mind. When we think of products produced by Americans for use by Americans we see the Model T truck, a vehicle designed to last a lifetime. We see shoes and boots of leather and vulcanized rubber. We see typewriters handed down from generation to generation. We see fresh produce and local meat markets. We see things made in steel factories with qualities like “strength”, “durability”, “long-term usabilty” and “lasting value” equating to Society’s impression of “quality”.

In the post-modern technological society we have rubber flip flops, cell phones, computers, plastic cups, paper plates and frozen foods. Our cherished qualities have become: “convenience”, “upgradeability”, “eco-friendliness”, “technical superiority” and “immediate usability”. We have drifted away from the old fashioned quality paradigm, and have shifted to a “disposable” mentality.

Cars are swapped out on the average every 4 or 5 years, computers every 2 or 3, Televisions every 1 or 2, cell phones more frequently than that. We want foods that can be made quickly and with the least mess. We want the latest and greatest digital high-def TV’s (analog models won’t even work next year). We want blue tooth cell phones with wi-fi capability and better web browsers. Operating systems in computers are changing every few years, as is the hardware.
The age of technocracy brings with it this “disposable” mentality of rapid change. Change to the latest and greatest, newest is best, last year’s is obsolete. In this paradigm, the concept of “lasting value” is an oxymoron.

The net psychological effect of this mentality is that we lose our connection with the traditional standards of quality. A thing loses it’s intrinsic, lasting value, and that value is replaced with it’s current relevance, its immediate utility. If the cell phone in your hand does’t allow you to bid on eBay with the latest sniping program, it has suddenly become unusable, worthless…throw it away or trade it in — it’s easy enough to do.

Surely one can see that in relation to traditional values, todays new value paradigm is somewhat tentative, if not “artificial”. Things are not inherantly permanent or lasting. They either have an immediate, relevant usability, or they need to be disposed of, replaced or upgraded. This is the “artificial value” paradigm that concepts like artifical capital, artificial capital gain, and derivatives thrive in. If you can’t make the logical bridge from “disposable” to “artificial”, then just replace the terms “artificial capital gain” with “immediate capital gain”, “disposable capital gain” or “replaceable capital gain”.

There is no “strength”, “durability” or “long-term usabilty” in the actual physical structure of an eroding, decrepit tenament project, which a slumlord refuses to improve or maintain. Only the “immediate usability” of the present rate of return–extracted as a marketable commodity–is of any relevant value.

When, say, a frozen pizza factory strips its assets–assets like employees, quality health coverage and material improvements and maintenance to infrastructure, it does so to lower costs and raise the margin of profits. If the same amount of product can be produced and sold (if for no other reason than the growth of the customer base) then the rate of return on investment increases, even if the intrisic or “traditional” quality of the product suffers. If the factory replaces whole milk mozzarella with cheaper skim milk mozzarella, it does so to lower cost, at the expense of traditional quality. After all, they will probably gain back (on price) customers that were lost on quality–especially in a society that is gradually shifting from the traditional quality paradigm to the modern quality paradigm. That being the case, the bottom line profit “looks” better, and the stock value rises, even while the traditional quality of the product evaporates.

Think about it; if the lasting value of an asset is pretty much irrelevant, what good is it? Why not strip it away? Thus we have the cycle of asset stripping within our society’s infrastructure that has gradually defined this new value paradigm.

In this new “disposable society” that our children are growing up in, they have less and less exposure to the old values of quality that the older generation took for granted – and this has been going on for a while now. These are the pizza factory’s future customers. These are the new deciders of “what is quality?”

Though I’m certainly not a trained cultural anthropologist, some things are intuitive and self-evident. As such, looking at the societal trend, it becomes a bit easier to understand how the concept, and the skewed valuation of derivatives evolved.

The only cure for this disease is to recognize it, label it, and avoid it. Avoid teaching it to your children. Avoid advocating it to your peers. Do what you can to bring back the traditional definition of value and quality at your home and workplace, and you strengthen the inherant value of Society.

If you do not, your children probably won’t ever know what they’re missing.

You Should Also Check Out This Post:

More Active Posts: