The Imagic Economy
by Robert Winter
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About 10 years ago, when I worked in the South Bay area of Los Angeles, I was struck by an odd juxtaposition in the businesses I drove past on my way to work.  The overwhelming majority of the companies were aerospace and defense, but in the middle of everything was Mattel Toys.

“What an economy,” I thought.  “Death and diversion.”

Then I realized that when all the movie studios and other entertainment companies in Southern California were factored in, this was an apt description for the metropolitan area at large.

In the intervening years, a lot of the “death industry” has been removed from our mix, with sustained and often wrenching contractions in the area’s defense industries.  A number of other industries have also faded away, such as financial services, leaving the nation’s most populous state without a single major bank of its own.

Entertainment, though, is going stronger than ever.  Burbank may have lost Lockheed, but it has gained a number of new entertainment-industry campuses and expansions.  The net result is that these days, if you want to work in a large and secure industry with an expanding job base, you can’t do much better than a movie studio or other entertainment corporation.

Our drift toward an imagic economy here in Southern California is thus hard not to notice.

Lately I've come to the further realization that what's happening in California can be considered representative of what's happening in the country at large.

That’s not just because we tend to be ahead of the curve on trends (substantive and silly alike), or even because more people live and work here than in any other state.  Take a look at what America exports to the rest of the world.  In no area is our global stature more unchallenged than in entertainment and pop culture.  We dominate the world with images of one kind or another:  Lion Kings and Terminators and R2D2s, Britneys and Garths and Eminems, not to mention their associated baggy pants and turned-around baseball caps and so forth. 

The imagic economy also has a substantial grip on more traditional businesses.  To give just one small example, the licensing and merchandising of characters from animated movies has made major inroads into the marketing of children’s pajamas and lunch boxes and a host of other kid-oriented products.

More traditional businesses are also becoming more imagic on their own, without any prodding from the entertainment industry.  What are we really buying, when we pay top dollar to get a product emblazoned with the Nike “swoosh?” Isn’t this fundamentally an image that we’re choosing?

Nike shoes are also representative of another widespread trend, in which purportedly American products are actually made somewhere else in the world, and all that's really handled in this country is the marketing and branding--i.e., the imagic components.

In fact, the most prestigious knowledge leaders in business are all quick to point out that in today’s environment, the most important asset any business can have is a brand.  This speaks volumes about the nature of the contemporary economic milieu.  What counts most is no longer anything tangible, like an oil well or a mine or a bulldozer or even an entire state-of-the-art automotive assembly plant.  The most significant form of economic value today is an imagic item.

It’s also important to point out that consumers are not the only players on the economic field who are more concerned with imagic factors than with substantive ones.  Think of all the money that was invested in Enron, when all it was ultimately selling was an image--a set of perceptions, based on lofty pronunciamenti about new economic directions, plus an artfully managed spectacle of “results” that turned out to be nothing more than an accounting flimflam.

Moreover, as we are finding in the wake of its collapse, Enron was far from the only large, apparently prosperous company whose foundation was imagic--i.e., just a carefully cultivated set of perceptions involving creative fun with numbers.

While we’re looking at imagic wealth, we ought to also consider empty management razzle-dazzle for the entertainment of Wall Street that doesn’t have anything to do with accounting shenanigans--things like "Chainsaw Al" Dunlap's favored ploy of announcing job cuts to trick up stock prices.

In fact, what does any stock price reflect today, other than perceptions about how other people feel about the stock, and how much they might therefore be willing to pay for it?  Contemporary stock prices certainly don't have much to do with the classic expectation of being paid a dividend.  When we reach the point where what we're mainly buying is "buzz,"  it's time to acknowledge that the imagic dimension of our economy is every bit as predominant on Wall Street as it is in a shopping mall or supermarket--and every bit as capable of being artfully manipulated.

For an American, what’s especially disturbing is the difficulty of finding an area in which we lead the world these days that is not ultimately imagic in nature.

Computers and high technology might seem at first glance to be in this category, but the impression tends to wilt a bit under closer scrutiny.  Consider the bursting of the tech-stock bubble, and the subsequent revelation that much of the “new economy” that everyone so eagerly awaited was really nothing more than a well-spun tale.

America has become so caught up in the imagic economy that it can be disturbing to contemplate what might happen if economics were to return to a more substantive basis.

An emblematic contemporary product is the SUV, whose popularity has in recent years been the foundation of a resurgent American auto industry.  Detroit quickly and happily plunged into SUVs, seeing the strength of their imagic appeal (the outdoorsy "spirit," the  reassuring--if largely illusory--sense of security);  while the rest of the world’s auto makers, searching in vain for more literal, practical advantages that they might exceed with their own designs, took a long time to even offer SUVs.  If we were to all suddenly start buying more genuinely sensible vehicles, what would happen to Detroit?

For that matter, how about the New York Stock Exchange?  If all the imagic components were to be shaken out of it, we could see the bursting of a bubble that would make the recent tech-stock bust look like a minor blip in comparison.  We might be all the way back to 1929--with the ultimate difference being only that this time, the houses of cards won’t be based on over-extended financial assets, but on the imagic nature of contemporary securities investing itself.

Of course, it may not look this way to everybody right at the moment.  American business is still somewhat full of itself, boasting wherever it can of what it can teach the rest of the world about increased productivity under deregulation, open markets, and so forth.

But what if the edge turns out to be mainly just a matter of being more at home in the imagic state into which all economies are drifting?  It could well be that we’re just less “encumbered” in our thinking by an urge to have business decisions make old-style literal, objective sense.

It’s more than a little scary to think of the comeuppance that may ultimately await such habits of mind. 

It may be even scarier, though, to contemplate a world in which such disregard for objective sensibility does not ultimately end up being corrected.