A big week of economic news started with a whimper, as stocks closed flat to modestly in the red. The Federal Open Market Committee will release its policy decisions on Wednesday, and the U.S. government’s highly anticipated jobs report will be released on Friday, but attention turned again to Europe as investors wait to see what action the European Central Bank takes this Thursday to respond to the growing financial crisis.
The Dow fell 2 points, with 16 of its 30 components losing ground; the S&P 500 lost less than a point; and the Nasdaq was off by 12. Decliners narrowly led advancers on the NYSE and led seven to four on the Nasdaq. The prices of Treasuries strengthened. Gold futures rose $1.30 to close at $1624.00 an ounce, and the price of crude oil dropped 35 cents to settle at $89.78 a barrel.
In Earnings News:
- Chrysler’s second-quarter profit jumped to $436 million from a $370 million loss in the year-ago quarter. Revenue was $16.8 billion, up 23%. The year-ago quarter was weighed down by refinancing government bailout loans, while the second quarter of 2012 saw increased U.S. sales. Although Chrysler is majority-owned by Italy’s Fiat, the company doesn’t rely on European sales, with most of its sales coming from U.S. buyers. That positioning helped during a time of European weakness.
In Other Business News:
- Spain’s gross domestic product contracted 0.4% in the second quarter from the first quarter, according to a preliminary estimate. The first quarter also saw a quarter-over-quarter decline, falling 0.3%. Spain’s GDP is now a full percentage point lower than a year ago, which could be exacerbated by the latest round of austerity measures enacted to stave off a budget crisis.
- The trial between Apple and Samsung over patents began today. Apple is suing Samsung over patent infringement, alleging that Google’s Android operating system used on Samsung’s phones relied on Apple’s patented smartphone technology. Observers say that the fight is really between Apple and Google, two of the world’s biggest technology companies. Apple’s shares (AAPL) gained 1%, and Google’s (GOOG) fell less than a percentage point.
- General Motors Corp. fired its chief marketing officer, Joel Ewanick. Ewanick had recently made some high profile decisions, such as choosing not to advertise during the Super Bowl and to pull paid advertising from Facebook, but according to The Wall Street Journal, the dismissal was due to an improperly vetted sponsorship deal with European soccer teams. GM’s shares (GM) fell 1%.
- Apple announced that, in the four days since its release, downloads of its new operating system, called Mountain Lion, topped 3 million, making it the biggest operating system launch in its history. The software is more connected with Apple’s mobile products, such as the iPhone and iPad, than prior versions.
A recent video on the PBS Idea Channel explored the fascinating and controversial idea of the post-scarcity economy. Scarcity is the fundamental premise upon which economics rests: There’s not enough stuff to go around. Because of that scarcity, there needs to be a way to apportion the limited supply of stuff to people who need or want that stuff, and so far that way—which apparently involves supply, demand, and money—has cruelly denied me a Ferrari 250 GTO, of which only 39 were made and one of which was in an accident earlier this month. That’s scarce and getting scarcer.
But what if that fundamental law of scarcity was relaxed? What if you could have anything you wanted (within reason)? This is less far-fetched than it might seem. If 3-D printers keep developing at their current torrid pace, the PBS channel speculates, it’s possible that the machines will be able to manufacture almost anything you want, right in your own home. Maybe they could even build your home, piece by piece. Combine 3-D printers with nano-technology (someone needs to get to work on that), and you could dump a bunch of dumb matter into a 3-D printer and have the machine print you out a TV, a steak (hello, Jetsons), and a comfy couch, and your Friday night is all set. Needless to say, this would completely disrupt the world economy, costing who knows how many jobs in the process. But would jobs even be needed? Would a post-scarcity economy usher in a new era of idleness?
Here’s where the speculative bubble gets popped. Beyond physical stuff that can be 3-D printed, there’s still a huge chunk of human endeavor that will forever be scarce. One scarcity might be the booming market for the schematics for those 3-D objects themselves (although you could easily imagine those being pirated). Another would be entertainment, like books, movies, or TV. Someone needs to create those, or we’ll be awfully bored (which creates its own demand).
And then there’s land, the scarcest resource of all. There are only so many beachfront properties to go around. Even if every single need of life was magically satisfied by technology, people would still compete for the best parcels of land, using whatever barter or monetary system emerges in a post-scarcity economy, which would probably end up looking an awful lot like our current monetary system that, as of now, has left me far from the beach.
If there were no scarcity, humanity would be forced to invent it. We’d still find ways to compete in a future where the merest press of a button yields a steak and a couch. Take it from our future role model, George Jetson. Even with robots doing nearly everything, he still had to work (well, he had to push a button every hour, and then robots would do the work).