The View | Some people see bubbly pockets in the US and world economy
The low-hanging fruit of development is already picked.
For those fearful of the effects of the Federal Reserve’s telegraphed tightening of monetary conditions, I have two words: water sommelier.
The water sommelier is a creature that now exists in places like California, guiding customers through the list of exotic stilled and sparkling waters on the menus of high-end restaurants. Their very existence would seem to indicate a bubble, one that could be pricked if the US raises interest rates, as Fed chair Janet Yellen has indicated recently.
Some economists, in warning against such a hike, have acknowledged bubbly pockets in the US and world economy, but argue that we may need bubbles in order to have full employment. Developed economies in particular suffer from “secular stagnation” — high savings rates and thus lower investment/consumption as populations age and prepare for retirement.
Moreover, the low-hanging fruit of development is already picked. In other words, we are running out of things to build. The bridges-to-nowhere and build-another-factory approach to pump-priming is clearly reaching the end of its useful life.
So services are where we can pick up the slack, including luxury services. Adam Smith wrote about this nearly 250 years ago — do not condemn the indulgences of the wealthy, as their predilections create economic activity. John Maynard Keynes later added that it was good to keep people busy even if it involves digging ditches and refilling them.
But water sommeliers — really? I was OK with Doga — yoga with dogs — or personal shoppers or sunglasses for house pets. But the idea of advisers on bottled water seems to mock humanity.
It’s not just that water is water. It is that water is, after all, a commodity we have used rather recklessly. According to the United Nations: “Water use has been growing at more than twice the rate of population increase in the last century, and, although there is no global water scarcity as such, an increasing number of regions are chronically short of water.”
