{"id":2217,"date":"2011-07-14T20:50:28","date_gmt":"2011-07-15T01:50:28","guid":{"rendered":"http:\/\/jimgworld.com\/blog1\/?p=2217"},"modified":"2011-07-14T20:50:28","modified_gmt":"2011-07-15T01:50:28","slug":"creativity-content-an-american-dilemma","status":"publish","type":"post","link":"https:\/\/jimgworld.com\/blog1\/?p=2217","title":{"rendered":"Creativity, Content — An American Dilemma"},"content":{"rendered":"

There’s a rather unexciting business article in the front pages of the July\/August Atlantic Magazine, entitled ‘Why Content Isn’t King’<\/a>. It examines \u201chow Netflix became America\u2019s biggest video service\u2014much to the astonishment of media executives and investors\u201d. In this article, author Jonathan Knee tries to explain some basic economic concepts regarding fixed costs and efficiencies of scale and scope, and doesn’t really do such a great job of it. The conclusions of the article itself are rather mundane; overall I give it three and a half yawns. <\/p>\n

And yet, this may be one of the most important articles that I have read in recent years about why America seems to have lost its groove in the world today. There has been plenty of commentary published in recent years about America’s economic role in a changing world. I am old enough to remember when the USA was the number 1 maker of things; in my lifetime, that has changed quite a lot. There were once factories all over the place in my corner of New Jersey; now there are almost none. <\/p>\n

The manufacturing segment of the American economy is not dead by any means; the US still produces about 19.4%<\/a> of world manufacturing output, versus around 22.3% back in 1995, and probably above 30% after World War 2. Highly automated factories in the Midwest and South bang out stuff with an efficiency that the old plants in NJ could never match. However, the Chinese have both efficient technology and cheap labor, and since 1995 China has gone from 4.7% to 19.8%. This trend arguably will continue — at our expense.<\/p>\n

Back when I was in college in the 1970s, our teachers were already aware that America was facing increased competition from the East (back then, Japan was the feared industrial giant). We could literally watch the factories in the old industrial cites closing (given that I went to college in Newark, NJ). But we were assured that the USA was not out of the game. Although the developing nations could grind out simple stuff with its cheaper labor, we here in the US would expand our role by working smarter, i.e. through technical innovation. We would innovate and offer better quality than they could; that would maintain our edge. Such innovation and focus on quality would create all kinds of new jobs in manufacturing that would reward vast numbers of people, so long as they had a bit of college or some post-secondary technical training. <\/p>\n

Well, the first part of this idea has arguably occurred; the USA still has a significant role in world manufacturing. However, as to it creating all kinds of new job opportunities for smarter people, that hasn’t panned out so well. To work in American manufacturing today indeed requires more skill; but for the most part, American factories maintain their edge by eliminating people, smart or dumb, from the process. <\/p>\n

What has all this to do with Netflix? Well, despite Jonathan Knee’s clumsiness in explicating basic microeconomic concepts, his article effectively makes the point that people and companies (and by extension, whole nations) that create new things generally come in last. It’s the groups that learn how to use and re-sell the ideas that others come up with that get rich. Netflix is not a \u201ccontent creator\u201d; they don’t produce movies or shows. They don’t get involved with highly creative people. Their business is to get their hands on what the creative types come up with, and distribute it for as much as possible (with enough convenience and variety to make it worthwhile to the customer). <\/p>\n

What obviously happens in the modern economy is that innovation and creativity, whether in science or the arts or any other field, doesn’t bring a good price. The creative types, whether scientists or engineers or authors or designers, etc., can’t seem to hold out for a big chunk of whatever their new ideas will eventually earn in the business world, despite legal supports like patents and trademark laws. Those who learn how to spot a valuable new idea and use it to sell desirable stuff to the masses (such as Netflix with its digital movies) seem to get the upper hand. <\/p>\n

As a footnote, President Obama made a promise regarding \u201cgreen jobs\u201d that was similar to what my college professors promised. Obama set forth a vision of new factories throughout the nation offering good-paying jobs manufacturing solar panels, wind turbines, bio-fuels, etc. Unfortunately, the Chinese area already undercutting American green-energy equipment producers. Once again, America leads the way in coming up with better green energy technology, but just can’t hold on to the manufacturing and business end of it. Thus, no new good-paying jobs for us, because the Chinese can figure out how to do it with ‘not-so-good-paid’ workers.<\/p>\n

And thus, we can see why my professors back in college were wrong. They said that America would stay rich and continue to get even richer and more powerful through innovation and creativity. And America is still the place for creativity, both in terms of science and the arts. But the developing countries have learned to take our new discoveries, technology and designs and make a buck off of them. We can’t seem to hold back what we come up with. <\/p>\n

Part of the problem may be legal, but at bottom I think it’s just a question of human nature. People who are creative love what they do, and do it for love. And love gets in the way when it comes down to dollars and cents. Companies like Netflix, and nations like China, aren’t in it for love. They want financial results. <\/p>\n

And thus, creative America isn’t earning what it once did, back when the producer-distributor nations (China, India) and resource-providing nations (Russia, Canada) were recovering from colonialism and the great wars of the 20th Century (or preparing to fight another one, in the case of the Soviet bloc). Just like a family that has declining take-home pay but doesn’t want to own up to it, America is over-spending and going into unsustainable debt. We may enjoy being creative, but we haven’t learned to live yet like the typical struggling artist and inventor. <\/p>\n

All of the political angst going on today relates to the struggle about whose ox is going to be gored, in the great economic adjustments to come. Which groups are going to absorb the necessary decline in living standards? Who is going to get less medical care? Who will have to live on beans in a cold water flat after retirement? That’s what politics all come down to now, despite claims for grand themes such as freedom and individual rights. \u201cContent\u201d can still fetch a price, but not like when the USA was the only game in town and both invented, produced and distributed that content. In a hyper-interconnected world, you can’t keep a new idea a secret. You can only hope that the \u201ccontent aggregators\u201d will be nice enough to keep our creative nation comfortable if no longer powerful, just as Netflix does what it can to support Hollywood and the other California studios that are now struggling.<\/p>\n","protected":false},"excerpt":{"rendered":"

There’s a rather unexciting business article in the front pages of the July\/August Atlantic Magazine, entitled ‘Why Content Isn’t King’. It examines \u201chow Netflix became America\u2019s biggest video service\u2014much to the astonishment of media executives and investors\u201d. In this article, author Jonathan Knee tries to explain some basic economic concepts regarding fixed costs and efficiencies […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,24],"tags":[],"_links":{"self":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts\/2217"}],"collection":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2217"}],"version-history":[{"count":4,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts\/2217\/revisions"}],"predecessor-version":[{"id":2221,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts\/2217\/revisions\/2221"}],"wp:attachment":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}