In an ideal world, every credentialed economist would spend a day, week or semester in Orlando as a way of facing up to the myriad fallacies that stalk their profession. What gives Orlando life is reality about how economies work, and it runs counter to what economists teach.
Think the popular notion about the role of small business in the economy. Though not economists themselves (and that’s decidedly not a critique), Harriet Torry and Justin Lahart write at the Wall Street Journal that “Small businesses – those with up to 500 workers – employ nearly half the U.S. workforce and represent more and represent more than 40% of gross domestic product.” They learned the latter from economists who worship at the altar of GDP, which vivifies the fraudulent nature of “economics.” Orlando instructs.
What gives the city vibrant economic life isn’t the myriad small businesses that populate Central Florida, but the remarkably large ones like Disney, Universal, and SeaWorld around which small businesses cluster. Just as the economics of shopping malls are powered by big, well-known anchor tenants, so is the booming small business scene in Orlando an effect of the big names in the city that, in pulling hundreds of millions of people in annually, make it possible for all manner of small businesses to sprout and grow.
At Disney’s Hollywood Studios park, there’s a Sci-Fi Dine-In Theater restaurant that resembles the drive-movie theaters of old. The bet here is that in time, Sci-Fi Dine-In will revive the drive-ins experiences that it recalls, but that’s a digression.
For the purposes of this piece, the restaurant replays numerous previews, ads, and documentary footage from decades ago, including one about rotary dial-up telephones that would soon enough connect users via camera. Had the leap been possible way back when, the expectation was phones fetching $5,000. Economists claim near monolithically that economic growth is the stuff of rising prices, but as we see repeatedly, the growth that economists incorrectly associate with consumption is actually all about talent being matched with capital on the way to huge productivity bursts that drive down the price of everything. Readers know this well through the supercomputers that fit in their pockets, and that provide video calling amid literally thousands of other features.
Which brings us to birthrates. Economists wedded to consumption as the source of growth, and the GDP that measures consumption, claim that falling birthrates signal fewer people, subsequently less consumption, and slower growth. Which speaks to the problem with Keynesian economists (a redundancy), not birthrates. Orlando, Disney, and the surging growth of the tourist industry in Florida yet again instruct.
As opposed to the instigator of economic growth, consumption is an effect that always and everywhere emerges from production. That’s why Disney et al continue to expand in Florida, California and around the world. They reflect reality, not what’s taught in textbooks. And in Disney’s frenzied expansion, we see yet again that production represents 100% of GDP or any other false number divined by consumption-addled economists precisely because there’s literally no consumption without production first.
So, while birthrates are declining, the productivity of those already working and their offspring isn’t just set to increase, it will skyrocket. Which means that locales catering to parents and kids won’t decline as birthrate alarmists and GDP indicate. Quite the opposite.
There’s so much more. And there will be so much more now and in the future about real economic activity and the drivers of it. Orlando and its growing roster of booming businesses reflect a production reality that economists and GDP don’t grasp, and can’t measure.
Originally published on Real Clear Markets.
