Living a western lifestyle on a shoestring budget

Great Debates
1

So it seems that much of the wealthy world has overextended itself. Entitlement programs and aging are going to be a big global problem, various wealthy countries are reaching bankruptcy, etc.

I assume the big goal of innovation and economics lately has been to make things bigger, safer, faster, better, etc. Bigger TVs with better resolution. Faster computers. Cancer treatments that save more lives. More cars on the road. Longer life expectancy. Bigger homes. Safer cars.

But with the western world on the brink of insolvency combined with a rapidly growing developing world with strong domestic demand for a high income western lifestyle on a middle income budget, will innovation switch to trying to live a fairly western lifestyle on a shoestring instead of advancing improvements in the west? For example, will finding ways to give someone chemotherapy for $2,000 that works as well (or almost as well as a $200,000 cycle) instead of finding a new form of chemotherapy that costs $300,000, but is 20% more effective than our current treatments be where more and more of our innovation ends up going to?

With all the public and private debt in the US, and various european countries having their own economic problems, combined with developing world nations wanting a taste of western lifestyles it seems there is a huge market for providing western lifestyles on a shoestring budget. And with many in the west near bankruptcy, I don’t think providing bigger/better/safer/more (and by proxy more expensive) products is really going to be as marketable IMO as it was in the past.
Which brings me to another point, is that in any way a normal market mechanism? I know that you have booms and busts due to oversupply of capital eventually causing a flood, which surpasses demand.

Is something similar to that what I am describing where innovation and investment goes to making technological and lifestyle advances bigger, safer, better, etc. then after that busts the innovation goes to making those same advances cheaper?

With cell phones and laptops this is already happening in my view. The goal of many companies is to provide high quality but dirt cheap laptops and cell phones to saturate Asia, Africa & Latin America. The goal isn’t (just) to make an expensive cell phone or expensive laptop to be sold in the US, europe or Japan that is 30% faster than the previous versions. It is to sell basic versions that cost $1000 a few years ago in the west for $100 in Africa and Asia. Instead of innovating to provide a $1200 laptop that is 30% faster than the $1000 model and selling it in the west, the goal it to make a basic laptop that is 1/3 as good as the $1000 model and selling it for $100 in Africa and Asia. However as those of us in the west struggle with public and private debt, the market for $100 laptops will grow here too.

Tata motors and the $2500 car is another example of this. Instead of creating a car that is faster, safer or nicer looking for $30,000, the goal is a basic car that can be afforded on a shoestring.

But either way I think the fact that this kind of market is probably going to grow dramatically in the west as well (making it a global market since many in the west may have to deal with lower income, higher taxes and lower standards of living soon) makes it more and more appealing to companies as time goes on.

2

I think you are conflating western lifestyle with technology. Some guy in an African village might be able to buy a basic cell phone at a reasonable price, but he’s not driving an SUV to make the purchase, and he won’t be stopping off at the local branch of the giant supermarket, or Burger King, etc., in the end he’s probably sacrificed a good deal of his income to have the technology, not western lifestyle.

This suggests an alteration to the western lifestyle. The glory days are done, they’re not coming back via shoestring budget.

3

These are two sides of the same coin, however. Cheap options are only available because of advances at the leading edge. For instance, I could buy a $100 laptop down the street today if I wanted, as long as I was willing to accept the technology of a few years ago. But the reason that the technology of 3-5 years ago has become so cheap is because the cutting edge of laptop technology kept moving forward. If Intel etc. had decided not to keep pushing forward after inventing the Pentium 4, then the Pentium 4 would still be just as expensive as it ever was, because there wouldn’t be anything better to switch to.

4

I don’t think I am. The global middle class grows by 60-100 million a year. My impression is the world used to consist of wealthy countries and fairly poor countries. Now you have (bankrupt) wealthy countries, tons of middle income countries, and poor countries.

I was thinking more about nations like China, India, Mexico, Brazil, etc. rather than rural Africa. In China migrant workers now earn about $3600 a year in USD in factories. That is a far cry from living on $1/day like many people in rural Africa do.

And there seems to be a huge market among the middle income and wealthy countries to live western style lives on a middle income budget.

The Chinese guy making $4000 a year probably wants electronics, living arrangements with privacy, individualized transportation, a wide variety of consumables, etc. At the same time the westerner making $20k a year who is seeing his public and private debt explode does too. So there is market overlap.

So I assume innovation may start switching more and more to doing that rather than new advances in the west.

5

Notebook CPU speeds have been clutching down for some time vs the big leaps seen in years past. This has more to do with technical vs marketing issues. Spending 3 times as much for a 30% real world increase in speed is not a value proposition that has much appeal for most users. Notebooks have longer lives these days and are not becoming doorstops in 2-3 years as they did in years past. A decent notebook can last 5-6 years these days with adequate performance across the term.

6

Miniaturization is just as much a technological innovation as making things more powerful, and can be just as profitable. Just look at the netbook market for example. But this is no challenge to The Western Lifestyle, and will have the same market mechanisms and enrich in inegalitarian meritocratic fashion as previous waves of innovation.

7

I was sure this was going to be a thread about the recent reissue of Possum Living, which in fact might be a useful node of discussion here.