Economics and the eternal present

Here is an area that seems to be strangely driving the economic bus: economics as a present issue. Since Reaganomics (classically referred to then opponent, pre-VP George H.W. Bush as voodoo economics) and its indelible stamp on the financial landscape of the world—leading to serious economic, environmental, and labor issues in growing parts of the world while financially and morally bankrupting our entire American system—we have been led down the rabbit hole and into a world stuck in the eternal present. Quaint remembrances of the past (which includes last year or last quarter) serve to “inform” us in that we know only that we need to make more money. Asking about the future is useful only in that we are eager to make more money tomorrow than we made today.

This sense of the eternal present means that businesses and communities rise and fall with such speed and destructiveness that we celebrate their arrival with extraordinary fanfare and mourn their loss with the occasional “Huh, you remember what used to be there?” Long term prospects are not front page news, nor are they welcome, as they do not indicate a maximization of the present.

But our obsession with the eternal present actually devastates the present, as it never gives an accurate picture. This isn’t just in a sense of history, but even in current financial markets.

Think about our economic structure: we are led by monthly totals, tabulated after a month is over. We go with quarterly accounting and projections. We look at sales “this time last year”, which only gives you insights into the buying habits of last year’s consumers. At the same time, projections and speculation is the territory of future insight. Attempts to listen to what people want today only leads to future production of a product that was wanted yesterday.

A specific example of this is the automotive industry’s obsession with immediate gratification. It is well documented that American manufacturers created a new class of vehicle (SUV) to shore up lost market position from the 80’s and that it has put them into a horrible position with fuel economy as the #1 consumer interest. What I am interested in is that very lack of planning, interest in, or support for the fact that there would even be a tomorrow. Short-term projections gave way to a long-term strategy of keeping their fingers crossed that people would keep buying SUVs. Even in 1999 as Honda and Toyota were putting the first hybrids into the American Market (Insight and Prius), Ford and GM had no interest in joining them. It took years for Ford and GM to even begin the process of researching these technologies. But worse, the discussion from 1999-2005 was dominated by two principles: last year’s sales as a proportion of the overall fleet and the “increased cost” of each vehicle over the “regular” version. These obviously manipulative attempts never took into consideration the interests of the consumers or the true buying habits of their customers.

In the early 2000s, Toyota Prius sales amounted to less than 1% of Toyota’s American vehicle sales, but since day one, they have sold out of every vehicle each year, despite the ever-increasing production. For the media, economists, and domestic auto manufacturers the proof of disinterest in the hybrid was based on these statistics, not on the public’s mood, excitement, or interest in the vehicles. For Toyota, the Prius was created to be a hybrid from the ground up, meaning that it is the “regular” version. Cars of its size, power, and frills are of a comparable price—but that concept was ignored from the very beginning.

What the American automotive manufacturers, economists, and mainstream press were interested in amounted to yesterday’s statistics. There was never an interest in today. The obsession with the eternal present is truly an obsession with the past. This is the main reason that it is pushed by those that are obsessed with what they have already spent their money on: how much it cost them to fill up their car on the way to work, how much the cup of coffee cost them at lunch, and how much they had to pay in taxes when they look at their pay stub. The eternal present is based on a belief that the past is fixed, and never increasing, and the repercussions of this continuous realization. Tax, efficiency, and cost obsessions are truly a response to a fear that the present and future will inevitably lead to a more worrisome recent past. In doing so, they create a system that becomes increasingly volatile and less dependable thereby creating the world that embodies their worst fears. Maybe it’s time we remove the reigns from such unreliable and untrustworthy hands.