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July 21, 2014

Economists have a lot to learn from ‘The Big Bang Theory’

The 300m or so people who were alive 2,000 years ago are each reckoned to have had access to goods and services worth, on average, about $800 a year in today’s prices. It was not an opulent lifestyle but, for the first millennials, making money was not an all-consuming concern.

In the east Buddhism taught the virtues of renouncing worldly things and earning a livelihood without doing harm, the so-called Noble Eightfold Path. Hinduism taught that artha (the pursuit of material advantage) must take second place to dharma (morality), which included charity and compassion. Confucian ethics promoted ren (humaneness), a form of altruism.

Such ideas still find expression in some quarters – even in the US, where the average income now stands at $53,000 a year. But, by and large, they live on as empty words. Modern men and women have found a common philosophy. It is revealed in the way they act, and its central tenet is that more money is better than less. Apple founder Steve Jobs may have been a Zen Buddhist but that did not stop him from amassing worldly possessions with an estimated worth of about $11bn by the time of his death in 2011.

Such materialism is perhaps to be expected in an era that glorifies whatever can be quantified. More than that, it reflects an economic orthodoxy that sees income as the key to increasing “utility”, or satisfaction. That gives intellectual support to the idea that making money is one of life’s deepest purposes.

The US is remarkably good at amassing material wealth, and much of the rest of the world wants to catch up. Emerging markets such as China and India are making particularly zealous efforts. But economic statistics can hide as much as they reveal, and those who wish to copy the American dream should first try to picture it more vividly.

The typical US job is in retail, either as a cashier or a middle manager. Only three in five workers can take paid leave, and those who do generally take about eight days a year away from the grind. These are the lucky ones; if you include the prison population in the potential labour force, the US unemployment rate – although low by international standards – looks less impressive. This exacts a huge economic toll. Keeping America’s 2.2m prisoners costs double what is given out in unemployment benefits to the 2.7m people who receive them.

The average American sleeps for eight hours, works for eight hours and spends about three hours doing chores – cleaning, shopping, looking after children. The remaining four hours are devoted to leisure. Sometimes this involves exercise, socialising and reading. But mainly it involves sitting quietly in front of a television. The shows that Americans watch on those mesmerising rectangles bear little trace of the past millennia of human progress. Last year’s most popular show, NCIS, is about a grumpy man who always carries the day for his colleagues in the Naval Criminal Investigative Service. The next biggest audience was for screenings of American football, a game in which big men in elaborately padded outfits chase an elongated ball. Then there was The Big Bang Theory, a sitcom about elite scientists who can wrap their minds around the deepest secrets of the universe but are baffled by the simplest routines of life on earth. Also popular were a glorified karaoke show, American Idol, and the amateurish gambolling display of Dancing With the Stars.

Modern man, Homo Sapiens Sapiens, first emerged about 200,000 years ago. Since then we have created majestic art, architecture and literature. Philosophies and religions have flourished and taught us different ways to live. Advances in technology allow us to see deep into space and to split the atom. We have learnt to heal our sickened bodies. We have explored places where our ancestors never dreamt men or women could tread. All of this has culminated in modern America. It is the richest civilisation that has ever existed, yet one in which free time is both scarce and difficult to fill. The financial crisis has shown their way of life to be more fragile than once thought. That is a valuable lesson. But Americans should also ask some fundamental questions about the worth of their wealth – and their would-be emulators should be careful what they wish for.

The writer, Bilal Hafeez, is managing director and global head of foreign exchange research at Deutsche Bank. This story has been published in the Financial Times' comment (op-ed) section.

 

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