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How societies save for the future

Matthew Yglesias on how societies stock up for the future:

A lot of the stuff we make has a pretty short shelf-life. Computer software gets obsolete super fast. Clothing wears out. Food spoils (even Twinkies). Durable goods like cars last longer. Airplanes last even longer. But the real durability is in structures. Houses, office buildings, bridges, tunnels, factories, train tracks. As a society, we save for the future by channeling resources—steel, elecricity, human labor power—into the production of things that last a long time rather than things that are more perishable.

This is a point the federal government does not seem to really understand.

I would take issue with his point about software, though. Yes, most software does not last very long, but as we build software, we also build a corpus of knowledge about how to build software more efficiently, and to create more powerful computers to run that software. I would argue that the software industry has created massive social value over the course of its existence.

6 Comments

  1. Can we even do those other things without software anymore? Building durable goods usually requires using a lot of tools that aren’t as long-lasting. Those still need to be made.

  2. “Computer software gets obsolete super fast” — in fact, by one measure, most of it is obsolete when it is delivered, because it is more or less defective, but it continues to be used. Whole industries are running on software that has been “obsolete” for decades. So what is his point?

  3. I think his point is that given the choice, you’d rather build a subway than invest in some of those other things, because the subway is an investment that pays off for at least a century. And that is of course true when it comes to fancy dinners or funny T-shirts. They may bring us enjoyment but they’re not a long term investment. I just don’t agree when it comes to software.

  4. I still have some t-shirts from my college days (and one from high school), I disagree that they aren’t long term investments 🙂

  5. The single most durable thing we can invest in are our fellow human beings. Humans live a really long time and have a productive career of at least 40 years.

    Investing in humans frequently means investing in food, clothing, shelter, and healthcare so they can get on with learning things, whether in school or as working adults.

    It’s not that I’m opposed to infrastructure investments, far from it. But the idea that the only worthwhile long-term investments are in poured concrete is kind of Soviet-like in its stolid refusal to consider that the supposed frills of a reasonably comfortable consumer lifestyle might have their own long-term payoff. The US economy has been an overwhelmingly consumer-driven economy for a really long time and it seems to have worked out just fine.

    This is like all those economists (even the leftish ones) who are in love with the idea of a VAT or other consumption tax because supposedly investing more would make us all richer. Except that we have plenty of investment capital, what we have a shortage of is aggregate demand on the one hand and good ideas on the other. A higher savings rate will make the former worse and won’t help the latter either.

  6. Software goes away very fast… except when it doesn’t. How much fortran from the 70s is still running? Mind boggling.

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