Monday, October 22, 2012

Micro-Capital Flight

Short one and them I'm going. 

Filled in for a buddy of mine who runs a security company last night.  I worked this gig before.  Basically baby sitting the adult children of DT Minneapolis as they are released from the night clubs around 2AM to make sure they don't puke, urinate or fight too much on the client's parking ramps. 

There are multiple ramps, but we meet at one to get radios, any kind of briefing about the evening and whatnot.  Once I met with all the other guards, I was enroute to the ramp I was assigned.  As I went downstairs from the "HQ" ramp I noticed a soda machine missing in the hallway that was there a no more than a year ago.  Last I saw it, however, it was tipped over as some of the local nightclubbers tipped it over.  Naturally the owner of the soda machine removed it since it was not profitable and was only going to get damaged.

Immediately my brain (which is gifted with SAEG - TM) realized what economic phenomenon I was witnessing.

Capital flight.

You see, it doesn't have to be the entire productive class fleeing France thanks for Hollande's 75% confiscation tax.  Nor does it have to be Zimbabwean's money flowing out of the country to invest in western companies' stock as a hyper-inflationary hedge.

Capital flight can be as simple as something as somebody deciding to move their sole soda machine out of DT Minneapolis.  It was obvious s/he wasn't going to make any money.  It was obvious the locals and club goers were not going to respect their property.  It was obvious there was no reason to put a soda machine there.

But what i really like about the now-missing soda machine is the "empty shelves of communism" aspect of it.  Admittedly, it was only one soda machine, but economically it was NO DIFFERENT than an entire grocery store whose shelves were empty.  What's better is who does it hurt?  If you think about it, it's the night-clubbers.  They now no longer have the opportunity to enjoy a soda as they stumble their way back to their cars.

Of course this microscopic economic phenomenon was unnoticeable to the drunk thugs and dregs of society as they walked by.  And that's another thing I like about the missing soda machine.  It's silent, it's clandestine, you don't notice it.  It's the reason why neighborhoods, cities and countries don't just "collapse" overnight going form pristine, vibrant communities with economic growth and low unemployment to the ghetto.  It's why they slowly, deteriorate and die out, the deterioration of which is unperceivable to the naked human eye.  It's also why people wake up one day and start asking, "what happened to this community?  Do you remember when it was nice."

Perhaps disappearing Coke machines is what gives economic rats like me the foresight to flee sinking ships.


Steffen said...

Good eye, Cap.

Enjoy the urban decay?

Cogitans Iuvenis said...

Perhapes the best breakdown of capital flight I have read yet. If you ever do another video or campus tour you should work this in as an example.

I bet we can also reasonbly guess as to where the soda machine went. Most likely to some middle class suburb that was profitable. That illustration of yours just explained inner city flight to the suburbs. Why would I want to live, or run a business in a city full of thugs, drunks, and ne'er do wells when I can run the same business in a nice quite suburb or town and be more profitable?

J H P said...

Great insight, as good as poetry!

William Hughes said...

That is very perceptive and quite spot on. It was even a chunk of tangible capital - a machine - that kept the cost of service down by replacing several human vendors manning a booth at odd hours with several machines serviced by one technician. Definition of improved productivity by use of automation right there.

Anonymous said...

I believe it was an economist who said, "some say that poverty causes crime, but they're wrong: crime causes poverty."

beta_plus said...

Excellent. You are a modern Bastiat.