Timothy Lee: Pokémon Go is everything that is wrong with late capitalism

In a new article on Vox, Timothy Lee laments what he calls "late capitalism." From the article:

"If you were looking to have fun with some friends 50 years ago, you might have gone to a bowling alley. Maybe you would have hung out at a diner or gone to the movies.

These were all activities that involved spending a certain amount of money in the local economy. That created opportunities for adults in your town to start and run small businesses. It also meant that a teenager who wanted to find a summer job could find one waiting tables or taking tickets at the movie theater. 

You can spend money on Pokémon Go too. But the economics of the game are very different. When you spend money on items in the Pokémon Go world, it doesn’t go into the pocket of a local Pokémon entrepreneur — it goes into the pockets of the huge California- and Japan-based global companies that created Pokémon Go. 

There are, of course, some good things about this. Pokémon Go can be a much more affordable hobby than going to a bowling alley or the movies. In fact, you don’t have to spend any money on it. And the explosion of options made possible by online platforms creates real value — the average teenager has vastly more options for games to play, movies to watch, and so forth than at any time in American history."

According to Mr. Lee, Pokemon Go is hurting local economies because the money I might have spent going out to dinner with friends will now be spent on more Pokeballs (maybe some Master Balls?) to make sure I get that Charizard I find down the street. Since my money is now going to some developer in San Francisco that is majority owned by a company in Japan, I am basically committing harikiri on my community. And not only are Pokemon casting their evil spell on me as a consumer, but they are also destroying the local financial markets too! Lee again:

"In the 20th century, new industries tended to create a lot of demand for capital. It took a lot of cash to build assembly lines and movie studios, of course. But beyond that, thousands of people all over the country would go to their local banks to finance the construction of movie theaters, auto dealerships, and so forth. 

This meant that people with capital to lend could almost always find people eager to borrow it to finance new business ventures. This, in turn, made the job of America’s central bank, the Federal Reserve, relatively easy. Anytime the Fed wanted to boost growth, it could cut interest rates and get a burst of entrepreneurs starting new businesses. 

But the Pokémon Go economy is different. Nintendo and its partners obviously needed to invest some cash in hiring programmers and designers to build the game. But the sums involved here are tiny compared with the cost of building a new car assembly line. And Pokémon Go seems unlikely to produce very many opportunities for complementary local businesses. People play on their smartphones, so there’s no need for Pokémon cyber cafes. Smartphones are too cheap for smartphone repair shops to be a good business."

I am actually fairly confused from the article exactly what problem Pokemon Go and similar apps are creating. They make it easier for people without large sums of capital to work as entrepreneurs? They don't require a centralized work force or physical presence in a specific market? They allow consumers to have cheap, or even "free", entertainment so people with limited resources can now stretch those dollars further? I would think starving recent grads in Ames, Iowa are thrilled with this type of economy. As Mr. Lee points out in the article, not everybody can be a programmer in Silicon Valley, but the point of these new apps is that not everybody has to be. If I play Pokemon Go and get some free entertainment, those dollars I might have spent at a movie might instead go to buying ice cream with friends at a local restaurant after we all meet up to catch a few Pokemon. And hey, maybe we'll have a great idea for an app of our own as we're sippin' our milkshakes. We could start a weekend app development group and make our own million dollar game right here in somebody's basement on the north side of Indianapolis! It may not be California weather, but houses come cheap out here.

Mr. Lee is correct that this is different from the manufacturing-based economy of the 20th century, but I don't think that makes it worse. We will have some structural reform that might be painful, but overall, I expect people's standards of living to continue to increase. Technology is making things cheaper - I know because I am shopping for a new phone and am shocked at what I can buy for $200. $200! I can have piece of hardware in my pocket that does almost as much (and in some ways much more) as the $500 laptop I bought 4 years ago for less than half the price. That is amazing. Think of the implications for the working poor. That type of technology can connect them to nearly infinite resources through the internet, for only about 25 hours of work at minimum wage. And now they can enjoy Pokemon in their pocket too, without spending a dime!

While I think the article is mostly misguided in its analysis of the digital economy, I agree with a point at the end where he recommends policy changes:

"One [change] is to relax housing policy to allow more people to move to areas where high-tech products are made. While the average resident of Kansas City or Baltimore might not have the skills to create the next great mobile game, he or she probably could find work as a schoolteacher, nurse, or construction worker in San Francisco or New York — but only if he or she is allowed to live within commuting distance of technology workers."

I think zoning restrictions are a real problem, especially in high growth areas such as San Francisco. By restricting new housing development, municipalities prevent the market from working. I understand not allowing a developer to build a waste facility right behind a residential neighborhood, but loosening some of the housing restrictions would encourage more building, which leads to lower prices. Many of these types of protectionist policies are only serving those who already have amassed capital or a dominant market position. In the case of housing policy, it protects the wealthy that are already living in expensive neighborhoods by artificially inflating their property values. The real enemy isn't innovation, especially innovation that can provide cheap entertainment or productivity as well as more labor flexibility. So don't let anybody make you feel bad about your collection of Jiggly Puffs, and enjoy that double scoop for half the price of a movie ticket.