durable

Durable

by Bob on June 28, 2007

A durable good. If we look at most definitions, including its use in Economic theories, we arrive at something which lasts with use. It comes from the Latin verb, "durare", to last or harden.

So we have a durable good. Something that has some tangibility and some permanence; it has some sensible aspect to it in that one can touch it and feel it.

Metal coins can be viewed as a durable item, although maybe not strictly as a durable good in Economic theory. A washing machine is a durable good. Services are not.

I wanted to explore the things that are vanishing in our modern world. And the magician's trick in making it happen. The trouble with this is that people don't seem to realise that the durables are vanishing and that the magician is doing a trick.

Here we talk of a cloak of invisibility around things we use and should feel and see but no longer cannot, and this produces an illusion of sorts which directly affects our lives, for some, in a good way, for others in a deleterious way.

How about a credit card juxtaposed to a paper currency bill or coin ? There is a very big difference. We can feel how much money we are spending with the metal coins. Our purse becomes lighter if we spend more, obviously. The more we earn, the heavier our purse becomes. It's very sensible. We can see and touch and feel our money. It's under control by us.

A credit card is either a convenience or a parlour trick played on us slyly. With it, we don't have to carry around money. We just use the credit card and pay the actual money later. That's convenient. But we cannot guage our expenses easily and the depth of our spending. So, we can spend over our heads and abilities because we never see or feel the weight or jingling of the coins or money in our pocket.

This can be insidious and pervasive as a habit and mechanism of spending.

It might have been bettter in the Middle Ages when people carried around leather pouches of coins.

Reading into the history of banking, we see that there was always an bit of an illusion involved. To a very great extent, if we ignore the Italian techniques of keeping and recording ledgers for financial histories, the trick was started by goldsmiths. They were the original bankers, de facto. To wit: if we go back a few hundred years or more, a man's daughter would be getting married in six months. and he needed a gold marriage ring made. So he got some gold, and brought it to the goldsmith. The goldsmith would make the ring ready in six months. But the father would leave the gold with the goldsmith in his shop for safe keeping and as a deposit and security. So the father went back, without his gold or daughter's ring yet, back to the farm, and the goldsmith discovered that after a few fathers came with such requests, that the goldsmith had a lot of gold that wasn't his yet, and that wasn't needed for a few months. So he could lend some of someone else's gold to another person for interest in the interim. The goldsmith made some extra money on it all. The father got his daughter's ring ultimately, the goldsmith kept the gold for safekeeping, and everyone was happy in the end. Therein was the parlour trick. The father was lending money to the goldsmith for free in the interim time.

This trick has now resurfaced in the late 20th and early 21st century, in our world. It's called a Metrocard in New York City for the subway system, a Charlie card in Boston, etc. Instead of metal tokens, we put money on an electronic card. Say, we're only taking two trips today. But we put $20 on it. And we won't feel the tokens in our hand. It's magic. It's electronic. So for a while the MBTA or Transit Authority has the free money we put in which remains unused on the card. Until we use it. But if we multiply that by millions of riders in the system, the overnight and continuing interest gained in the bank by the owners of the subway system is huge. But the riding public and commuters don't quite realise that. It's all just a convenience. Put in the card and magically you're allowed on the train.

This trick has some new performers. Laundromats and washing machines are now using, you guessed it, electronic cards instead of coins. And there is a minimal amount of money you must put on the card to get a card. But you are not doing a lot of laundry today. So you put on $5 and only use $2. The remaining money is in the hands of the owners of the laundry machines and laundromat. It makes a lot of money and interest on that money in the bank for them. But it's viewed as simply an expedient, a convenience by the person using the washing machine with his electronic card.

It's even more complicated if we try to track the progress of the "cashless society" movement. You will never hold your pay in your hands, and your will never use any durable coinage to pay for groceries in the supermarket. Just swipe the card in the reader and enter your password. And magically you get tomatoes and celery and milk and rice.

Ah, but for the snows of yesteryear, as the French poet, Francois Villon, once wrote a very long time ago. It's too hard to turn back now for us. I'm not sure what will happen in the end. But I want my durable metal coins back. I can't get them back. Smart cards are in vogue now. So it goes.