The Limits of Hipster Capitalism

 

Last year, my wife and I went to the New Hampshire Crafts Fair. We bought a couple of small things, but mostly spent our time ogling hand-crafted products — particularly wooden tables — that were both beautiful and well outside our budget.

Though most of the craftsmen were old boomers, there were a few our age. One in particular was a bladesmith who had quit a financial services job in Boston to turn his hobby of knife-making into a full-time business. Zack now forges his own metal and handcrafts the blades and handles himself. I’m no expert in knives, but the quality was clearly amazing: perfectly balanced, razor sharp. But, just as we had to pass on the handcrafted furniture for now, I had to resign myself to sticking with my CRKT knives for the time being — and praying that Zack is successful enough to be in business when I can afford his work.

Wild_Feather
Jonas Blade & Metalworks’s Wild Feather Bowie

I had this in mind while reading Elizabeth Nolan Brown’s fascinating article, “Rise of the Hipster Capitalist” in the October issue of Reason. Brown’s contention is that the Millennial generation is far more entrepreneurial, business savvy, and pro-capitalism than the media lets on, though they tend to favor small-scale, artisanal, locally-sourced businesses over impersonal corporate behemoths. In other words, they follow paths much like Zack:

The hipster mixes hippie ethics and yuppie consumer preferences, communal attitudes and capitalist practices. Unlike prior generational stand-ins — from flappers to beats, punks to slackers — hipsters aren’t rebelling against their parents or prior generations; they’re mixing and matching the best of what came before and abandoning the baggage that doesn’t interest them.

The hipster ideal today is neither a commune nor a life of rugged individualism. It’s the small, socially conscious business. Millennials are obliterating divisions between corporate and bohemian values, between old and new employment models —they’re not the first to do this, but they are doing it in their own way. Armed with ample self-confidence but hobbled by stagnant prospects, millennials may be uniquely poised to excel in an evolving economy where the freelance countercultural capitalist becomes the new gold standard…

In the Buzz Marketing Group/Young Entrepreneurs Council survey, 33 percent of the 18- to 29-year-old respondents had a side business. (This included activities like tutoring and selling stuff on eBay.) Platforms such as Etsy, an online emporium for handmade goods, and the ridesharing service Uber put self-employment, of a sort, within millions of millennials’ reach. Much is made of how the new “sharing economy” disrupts old business models and empowers consumers, but these businesses have a transformative effect for workers, too.

It’s a fascinating read, and well worth your time. As someone who goes to the New Hampshire Crafts Fair and blows his spending money at the independent wine, beer, and cheese shop in my office’s lobby, I finished the piece with an optimistic smile on my face. But there’s a problem with Hipster Capitalism.

Of the many forces that have led to our prosperity, the least appreciated has been soulless, impersonal, far-away, semi-automated mass production that has driven prices down to such spectacularly low levels. This not only gives people more spending power, but vastly expands the kinds of products and services available to the poor. Just as the early industrial revolution made metal goods and manufactured textiles affordable to nearly everyone, so has it turned the personal computer into something that costs a weeks’ wages and fits into your pocket. And while things are always changing, the virtues of economies of scale have been proven and larger companies still employee the majority of Americans.

Hipster Capitalism not only fails to get this, but actively denigrates the practices that make it possible. Mass production, big corporations, and impersonal trade may not be lovable, but they’re the source of much of what’s made us prosperous and raised the standards of living worldwide. In contrast, artisanal products are — by their very nature — produced in small quantities and are more expensive than their manufactured counterparts.

Small companies and hand-crafted goods are wonderful — and we may have come to under-appreciate them relative to cheaper, mass-produced options. But those less lovable ways of making a living provide necessary, important work that Millennials should applaud, if not embrace.

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There are 85 comments.

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  1. Done Contributor

    A generation that has never experienced scarcity isn’t going to understand the value of mass production until it has.

    • #1
    • August 28, 2014, at 11:00 AM PDT
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  2. AIG Inactive
    AIG

    Right. Capitalism, as the name implies, has something to do with…capital. Something to do with the efficient allocation of scarce resources. 

    Small scale artisanal modes of economic activity aren’t “capitalism”. There’s other forms of “market-based” economic models that aren’t “capitalism” in the strictest sense of the world. The Middle Age world had small scale artisanal economic modes, it had trade etc. What it lacked…was capital. Or rather, a means of communicating how capital should be allocated, accumulated towards its best use and a mode of transacting all of this.

    That’s capitalism. That’s what created the modern world, and America. 

    Simply making, buying and selling isn’t “capitalism”. It’s just what has always existed in the history of humanity. 

    It seems to me, this sort of “hispterism” is a rejection of capitalism, by rejecting the impersonal market forces, i.e. rejecting the invisible hand, in favor of the “socially conscious” modes of business. 

    “Socially conscious” is precisely the sort of thing Adam Smith warned against.

    • #2
    • August 28, 2014, at 11:06 AM PDT
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  3. Amy Schley Moderator

    Tom Meyer, Ed.: In contrast, artisanal products are — by their very nature — produced in small quantities and are more expensive than their manufactured counterparts. Small companies and hand-crafted goods are wonderful — and we may have come to under-appreciate them relative to cheaper, mass-produced options.

     This is why I don’t try to build a successful crochet business. In order to price my time above a sweatshop’s $/hr, I would have to charge far more than what the market (at least the local craft show market) would bear. Even the quickest designs I have still take at least an hour of work from skein to finished product, and very few people around here are willing to $5+ per ornament.

    Everyone likes the idea of doing something you love to make money, but as a general rule, the more you love it, the less money there is in it.

    • #3
    • August 28, 2014, at 11:06 AM PDT
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  4. Profile Photo Member

    This is basically the principle of comparative advantage and opportunity cost that you are describing. Adam Smith and David Ricardo taught us this stuff over 300 years ago. 

    But there is a market for this type of less efficiently produced, higher quality goods. So I don’t think it needs to be discouraged. The market will teach the millenials the right amount of effort and investment to put into these “hipster” trades and in the meantime some pressure will be put on the mass producers to up their quality or expand the range of quality in their product lines.

    Case in point, I’ve seen several examples of the large breweries – Miller, Coors, etc. producing some smaller batch niche beer offerings in response to the whole micro-brew/home brew trend that started some twenty years ago. And the micro brewery scene has matured into midlevel mass producers who have been able to maintain quality and offer an array of beer drinking options at “reasonable” prices that no one could have possibly guessed at in the early nineties.

    I think that this type of more earnest passion-oriented entrepreneurship will be a huge boon to consumers.

    • #4
    • August 28, 2014, at 11:11 AM PDT
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  5. RobininIthaca Inactive

    As someone who makes things to sell, though certainly not for a living, this is something that I grapple with all the time. I love handmade items and I love making items, but there is no way to compete with the global marketplace. If I follow the Etsy rule of pricing, my items are priced out of most budgets, including my own. I treat it for what it is – me spending my time doing something I love that puts some extra cash in the family budget. It also led to me finding a job that I enjoy outside of the home, so the networking opportunities are not to be overlooked. Teaching classes making stuff can be pretty lucrative.

    • #5
    • August 28, 2014, at 11:14 AM PDT
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  6. Midget Faded Rattlesnake Moderator

    Amy Schley:

    Everyone likes the idea of doing something you love to make money, but as a general rule, the more you love it, the less money there is in it.

    I agree that the correlation between loving something and profiting from it isn’t nearly as positive as we Millennials were taught. I doubt it’s demonstrably negative, though.

    Forcing yourself to do well at something you hate is grueling. By contrast, if you love something, doing your best at it is usually easier (though that doesn’t by itself make your best good enough).

    Plenty of people, of course, have found themselves in a situation where they have had to do what they hate, at least for a little while if not for their whole lives, in order to just get by. This kind of sacrifice – doing what you hate so that you and your family can survive – should be honored, of course. But it would be masochism of the deepest sort to actively court this sacrifice if you could avoid it.

    Moreover, the highest achievers generally get a thrill out of what they do.

    Loving a job matters. It’s just hardly the only thing that matters.

    • #6
    • August 28, 2014, at 11:43 AM PDT
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  7. Barkha Herman Member

    I am with John Wilson on this. f course a small producer is going to say trash about the mass production – it is a way to distinguish your product. The market will allow for mass produced goods for the masses as well as many small, inefficiently produced but high quality products.

    No different that having private schools when the Government monopolizes mass education.

    • #7
    • August 28, 2014, at 11:45 AM PDT
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  8. Amy Schley Moderator

    Midget Faded Rattlesnake: Moreover, the highest achievers generally get a thrill out of what they do. Loving a job matters. It’s just hardly the only thing that matters.

    Okay, I overstated my point. Let me put it this way — if your proposed line of work is something more commonly done by robots or Third World workers and you aren’t one of the best people in the world doing it, it doesn’t matter how much you love doing it; there simply won’t be enough money to support yourself in the First World by doing it.

    One of the possible etymologies of the word “hooker” is that it referred to women employed as crocheters who had to pick up some “side work” to make ends meet. Homemade handicrafts are very rarely a path to economic self-sufficiency.

    • #8
    • August 28, 2014, at 11:54 AM PDT
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  9. Midget Faded Rattlesnake Moderator

    AIG:

    It seems to me, this sort of “hispterism” is a rejection of capitalism, by rejecting the impersonal market forces, i.e. rejecting the invisible hand, in favor of the “socially conscious” modes of business.

    Do you have so little faith in impersonal market forces that you think people can successfully reject them just by saying so? Whatever the professed motivations behind a business, it will either attract capital or not, succeed or fail, depending on whether people want what the business is selling at the price it’s charging.

    Even people with demonstrably crazy motives can succeed if they happen to sell something people prefer buying. Have you ever read a Dr Bronner’s soap label?

    Exploratory consumption – purchasing stuff to see whether you like it, not because you know you do – has utility, even if it’s a luxury not everyone can afford. Likewise, exploratory production has utility. Some hipsters engaged in “boutique” exploratory production have already made it big, giving consumers products they might not even have dreamed of until they tried them. And sure, many more will likely fail.

    Impersonal market forces, like evolution, don’t stop happening simply because someone fails to believe in them.

    • #9
    • August 28, 2014, at 12:10 PM PDT
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  10. AIG Inactive
    AIG

    Midget Faded Rattlesnake: Market forces, like evolution, don’t stop happening simply because someone fails to believe in them.

    That’s not what I implied, of course. On the other hand, Capitalism didn’t always exist, even if market forces always existed. 

    • #10
    • August 28, 2014, at 12:18 PM PDT
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  11. Misthiocracy secretly Member

    People can afford the occasional high-quality, hand-crafted item THANKS TO the fact that they save so much money relying on the abundance of cheap, mass-produced goods for their daily needs.

    These “hipster” people are producing luxury goods, and good for them!

    While it’s true that a national economy cannot exist solely on the manufacture of luxury goods, it is not true that a large number of people cannot make their livings solely on the manufacture of luxury goods. They surely can, otherwise there would be no luxury goods industry in the first place.

    It is surely no coincidence that the majority of people who enter this market come from well-off backgrounds … and there’s nothing wrong with that, as long as they don’t insist that their way is the only politically-correct way.

    For, after all …

    “I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain.” – John Adams

    • #11
    • August 28, 2014, at 12:21 PM PDT
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  12. Barkha Herman Member

    Why would anyone want Harry’s blades when there is Schick and Gillette?

    • #12
    • August 28, 2014, at 12:21 PM PDT
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  13. Midget Faded Rattlesnake Moderator

    AIG:

    Midget Faded Rattlesnake: Market forces, like evolution, don’t stop happening simply because someone fails to believe in them.

    That’s not what I implied, of course. On the other hand, Capitalism didn’t always exist, even if market forces always existed.

    Sorry, should have said “impersonal market forces”, just as you did. Fixed it.

    • #13
    • August 28, 2014, at 12:22 PM PDT
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  14. Tom Meyer, Common Citizen Contributor

    Amy Schley: Let me put it this way — if your proposed line of work is something more commonly done by robots or Third World workers and you aren’t one of the best people in the world doing it, it doesn’t matter how much you love doing it; there simply won’t be enough money to support yourself in the First World by doing it.

    I think part of the problem is that colleges have had this asinine message about how important it is to find a vocation you’re passionate about. Obviously, it’s wonderful if you can find that but 1) the kind of jobs that offer that sort of fulfillment aren’t always remunerative and 2) there’s nothing whatsoever wrong with taking a boring job to pay the bills and fund your non-income-generating passions.

    • #14
    • August 28, 2014, at 12:23 PM PDT
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  15. Amy Schley Moderator

    Midget Faded Rattlesnake: This kind of sacrifice – doing what you hate so that you and your family can survive – should be honored, of course. But it would be masochism of the deepest sort to actively court this sacrifice if you could avoid it.

    Tom Meyer, Ed.: there’s nothing whatsoever wrong with taking a boring job to pay the bills to fund your non-income-generating passions.

     Agreed on both counts. My advice to my children will be to find a career that will compensate you adequately and that you think you can tolerate doing for at least as long as it will take to recover the costs sunk to get the career. (i.e. long enough to pay off the student loans, licensing fees, etc.) Don’t work any job you hate so much you want to drink before you go to work, and realize that practically no one works a job they love so much they’d do it for free. Work’s a four letter word for a reason.

    • #15
    • August 28, 2014, at 12:34 PM PDT
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  16. Tom Meyer, Common Citizen Contributor

    Misthiocracy: People can afford the occasional high-quality, hand-crafted item THANKS TO the fact that they save so much money relying on the abundance of cheap, mass-produced goods for their daily needs. These “hipster” people are producing luxury goods, and good for them! While it’s true that a national economy cannot exist solely on the manufacture of luxury goods, it is not true that a large number of people cannot make their livings solely on the manufacture of luxury goods. They surely can, otherwise there would be no luxury goods industry in the first place. It is surely no coincidence that the majority of people who enter this market come from well-off backgrounds … and there’s nothing wrong with that, as long as they don’t insist that their way is the only politically-correct way.

    We’re in complete agreement; my concern is that many of them do have the bolded prejudice you describe.

    • #16
    • August 28, 2014, at 12:38 PM PDT
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  17. Tom Meyer, Common Citizen Contributor

    Barkha Herman: Why would anyone want Harry’s blades when there is Schick and Gillette?

    Or Damascus steel bowie knives. ;)

    • #17
    • August 28, 2014, at 12:40 PM PDT
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  18. Misthiocracy secretly Member

    Tom Meyer, Ed.:

    Misthiocracy: People can afford the occasional high-quality, hand-crafted item THANKS TO the fact that they save so much money relying on the abundance of cheap, mass-produced goods for their daily needs. These “hipster” people are producing luxury goods, and good for them! While it’s true that a national economy cannot exist solely on the manufacture of luxury goods, it is not true that a large number of people cannot make their livings solely on the manufacture of luxury goods. They surely can, otherwise there would be no luxury goods industry in the first place. It is surely no coincidence that the majority of people who enter this market come from well-off backgrounds … and there’s nothing wrong with that, as long as they don’t insist that their way is the only politically-correct way.

    We’re in complete agreement; my concern is that many of them do have the bolded prejudice you describe.

    Well then, when you go to the farmer’s market, buy your artisanal luxury goods from the stall across the field from the jerks’ stalls. Free market capitalism in action!

    ;-)

    • #18
    • August 28, 2014, at 12:43 PM PDT
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  19. Misthiocracy secretly Member

    Amy Schley:

    Agreed on both counts. My advice to my children will be to find a career that will compensate you adequately and that you think you can tolerate doing for at least as long as it will take to recover the costs sunk to get the career. (i.e. long enough to pay off the student loans, licensing fees, etc.) Don’t work any job you hate so much you want to drink before you go to work, and realize that practically no one works a job they love so much they’d do it for free. Work’s a four letter word for a reason.

    It’s sorta like the advice I heard (sadly after I’d already graduated) that every artist’s major should be in business or law, and all their elective courses (or their minor) filled up with what they REALLY want to do.

    You’d be amazed how many movie and tv producers have law degrees.

    And just look at the knife-maker example from the OP. Would he have any hope of building a successful knife-making business if he didn’t have a business education?

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    • August 28, 2014, at 12:47 PM PDT
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  20. Fricosis Guy Listener

    Tom Meyer, Ed.:

    Barkha Herman: Why would anyone want Harry’s blades when there is Schick and Gillette?

    Or Damascus steel bowie knives. ;)

    Well, “looks like” Damascus steel bowie knives. Afaik, the original Damascus steel forging process is still not reproducible.

    • #20
    • August 28, 2014, at 1:15 PM PDT
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  21. Tom Meyer, Common Citizen Contributor

    Fricosis Guy: Well, “looks like” Damascus steel bowie knives. Afaik, the original Damascus steel forging process is still not reproducible.

    Yes, yes. I know.

    Tangentially, this is awesome. Absurd, but awesome.

    • #21
    • August 28, 2014, at 1:20 PM PDT
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  22. Rachel Lu Contributor

    People tend to enjoy doing things they’re good at. That may or may not coincide with where the money is, but the bigger thing about localism is that it encourages community building and entrepreneurship and the like. But, it doesn’t encourage cheap goods. So there’s the trade-off.

    Of course there’s no reason we can’t have some of each. Sometimes you just want something cheap and functional; other times the fun of hanging around with the other small-scale beer brewers or artisans or whatever is itself part of the joy of it, which justifies the higher expense. If you can support both sorts of market, that’s the ideal.

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    • August 28, 2014, at 1:21 PM PDT
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  23. Man With the Axe Inactive

    This discussion reminds me of a song I heard sung years ago by the Limeliters, called, “I Picked a Hard Way to Make an Easy Living.” It was about being a musician, but the same notions apply. 

    These hipster capitalists will figure out soon enough that capital investment, economies of scale, and division of labor are necessary to compete in most markets. 

    I recall during my college days the hippies of that era didn’t like it that the local food markets made a profit by selling us food, so they created a food coop, staffed by student volunteers and run on a not-for-profit basis. Unfortunately, thc coop’s prices were higher than the for-profit stores. I don’t think it lasted that long.

    • #23
    • August 28, 2014, at 1:58 PM PDT
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  24. Jamie Lockett Inactive

    One thing neither this article in Reason, nor the vast majority of “hipster capitalists” take into account is how dependent their particular business model is on the soulless impersonal capitalism that drives the rest of the economy. Without us soulless wage slaves earning extra income at jobs that provide value to the population en mass no one would be able to afford their $250 kitchen knives or locally sourced artisnal honey at $26 a jar.

    • #24
    • August 28, 2014, at 2:06 PM PDT
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  25. Misthiocracy secretly Member

    Jamie Lockett: One thing neither this article in Reason, nor the vast majority of “hipster capitalists” take into account is how dependent their particular business model is on the soulless impersonal capitalism that drives the rest of the economy.

    a) I don’t think Reason has ever published condemnations of soulless impersonal capitalism, and one can argue that’s outside the scope of the article in question. Must every article about a specific economic topic be a treatise about economics in general?

    b) How do you know that more than 50 per cent of “hipster capitalists” are unaware that they are producers of luxury goods and that they are therefore dependent on the surplus wealth created by mass capitalism? That’s sorta like saying that builders of hand-built luxury yachts are unaware that their livelihoods depend on surplus wealth generated from the wider economy.

    I wager that people who successfully make their livings selling artisanal goods are probably fully aware how their customers are able to afford their wares, and they tailor their business and marketing models with that fact in mind.

    • #25
    • August 28, 2014, at 2:20 PM PDT
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  26. Kermadec Inactive

    With the world polarizing into a small super-wealthy and super-entitled elite and a vast mass of morlocks, essentially paid to not work and kept happy with bread and circuses, with perhaps a shrinking disempowered middle-class in between, I’d say the future looks bright for the handicrafts sector. That’s for the sector, but not necessarily for any individual going into that sector, where competition will remain fierce.
    Who will be motivated to do so? Mostly people trying to flee the sinking ship of the middle-class.

    • #26
    • August 28, 2014, at 2:24 PM PDT
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  27. Jamie Lockett Inactive

    Misthiocracy: a) I don’t think Reason has ever published condemnations of soulless impersonal capitalism, and one can argue that’s outside the scope of the article in question. Must every article about a specific economic topic be a treatise about economics in general?

     1) I never said that. I said that that particular article didn’t take it into account. 

    b) How do you know that more than 50 per cent of “hipster capitalists” are unaware that they are producers of luxury goods and that they are therefore dependent on the surplus wealth created by mass capitalism? That’s sorta like saying that builders of hand-built luxury yachts are unaware that their livelihoods depend on surplus wealth generated from the wider economy.

    2) I go by both my interactions with said artisanal capitalists “you should buy locally man. Its better for the community and the world!”, I use the reasoning in the article Tom mentioned from Reason and I also use my readings on various things such as the locovore movement.

    • #27
    • August 28, 2014, at 2:26 PM PDT
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  28. Misthiocracy secretly Member

    Jamie Lockett:

    Misthiocracy: a) I don’t think Reason has ever published condemnations of soulless impersonal capitalism, and one can argue that’s outside the scope of the article in question. Must every article about a specific economic topic be a treatise about economics in general?

    1) I never said that. I said that that particular article didn’t take it into account.

    b) How do you know that more than 50 per cent of “hipster capitalists” are unaware that they are producers of luxury goods and that they are therefore dependent on the surplus wealth created by mass capitalism? That’s sorta like saying that builders of hand-built luxury yachts are unaware that their livelihoods depend on surplus wealth generated from the wider economy.

    2) I go by both my interactions with said artisanal capitalists “you should buy locally man. Its better for the community and the world!”, I use the reasoning in the article Tom mentioned from Reason and I also use my readings on various things such as the locovore movement.

    Do you demand that Coca-Cola state in all their communications that other beverage choices are equally valid?

    • #28
    • August 28, 2014, at 2:31 PM PDT
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  29. Misthiocracy secretly Member

    Kermadec: That’s for the sector, but not necessarily for any individual going into that sector, where competition will remain fierce.

    Is that not true of most economic sectors?

    • #29
    • August 28, 2014, at 2:32 PM PDT
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  30. David Foster Member

    Much of the excitement about 3-D printing probably stems from the (incorrect) idea that it will make mass-production manufacturing obsolete.

    • #30
    • August 28, 2014, at 2:33 PM PDT
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