By Dave Cummings
YNOT – Politics and economics, especially economics as influenced by politics, are in the news a lot lately. Taxes, debt ceilings, revenues, entitlements, budgets, Congress, the White House, energy, military conflicts, healthcare, Social Security, natural disasters, jobs, housing, consumer spending, the economy and many other aspects of American life are bantered about and discussed in the media almost to the point that it’s nearly impossible not to notice the constant pontificating.
It’s my thought that the adult entertainment industry is affected by politics and economics. Yes, the unknowns associated with the economy, government, political developments, adversities and all that matter to the industry as much as piracy, Cal/OSHA, dot-xxx, 18 USC §2257, etc. One of the aspects I particularly worry about is the potential for significant future inflation, an economic factor that could wreak havoc on everyone including those in the adult industry. I’m talking here about performers, families, production companies and fans.
Inflation occurs when prices rise concurrent with a general devaluation of the currency. Often this happens because when the government needs more money, it just prints it. That means there are more physical dollars floating around in the economy than there were before, but those “extra” dollars are chasing the same quantity of goods and services the previous currency levels purchased. Prices rise not based on demand, but on the availability of more dollars. Unfortunately, when prices rise, they have an annoying tendency not to fall back to reasonable-for-the-consumer levels.
I believe the Federal Reserve has printed a lot of “extra money” these past few years as it tried to spur economic growth in order to cope with a recession and economic sleepiness. After all, two-thirds of the economy is fueled by consumer spending. If we adult industry people are hurting for bookings, we have less money to spend. The same is true for the general public, what with job cutbacks and business slowdowns due to consumer inability to buy products and services.
Increased productivity and today’s subdued economy helps to keep inflation in check. But…. Have you noticed how grocery prices have increased? The size of the ice cream containers and some other items has decreased, but the prices for those items haven’t gone down. Manufacturing prices for raw materials are relatively high, energy costs have skyrocketed, healthcare charges are on the rise, and now it looks like apartment rentals are heading higher. The world of porn is not immune from this tough economy.
The Producer Price Index and the Consumer Price Index “appear” relatively tame, but I sense that’s because food and energy are not considered among the core indices when inflation is measured and reported. Also, costs of goods and services are holding back wholesale and retail price inflation artificially, because workers are working harder and longer than they used to, without a rise in wages, just to keep their jobs. High worker productivity contributes to a decrease in inflation only if wages and employment figures increase, causing a related decrease in social welfare program expenditures. When wages stall and unemployment figures rise at the same time consumer prices are rising based on artificially inflated worker productivity statistics…. Well, I worry that productivity is being stretched to the breaking point, and inflation is about to explode.
Right now, it looks to me like the dollar is about to weaken due to the government printing presses flooding money into the economy — an economy that’s still not creating enough new jobs or rehiring formerly terminated workers. That creates a situation where employers must further increase productivity, cut back output or raise prices. The presently high prices of precious metals which are favored by many as a hedge against inflation, runaway government spending and a continuous, slow climb in unemployment numbers all may be signs that inflation is on the horizon.
Thank goodness interest rates remain low, thus allowing credit card purchases to continue — at least for those who have jobs and/or the means to make the payments on credit card debt. A low prime rate also allows mortgages and other loans to be more affordable. But what has the Federal Reserve historically done to control inflation? Raised interest rates as a means of strengthening the dollar and making dollar-based financial instruments more attractive to investors while dampening consumer spending. Bottom line, inflation will increase interest rates and prices. Buckle up when that happens.
Higher interest rates not only cap consumer spending but also cause rents to rise and increase the prices for essential goods and services like groceries, auto repairs, clothing and medical care. Will the adult entertainment industry adversely feel the impact of future inflation? Of course it will, and it will be a double whammy: Not only does inflation have an inverse relationship with disposable income, but as consumer purchasing power declines so will the number of adult productions undertaken. Content piracy, on the other hand, likely will rise dramatically.
What should we do to prepare for potential inflation and the resulting higher living costs it brings? In my opinion, it depends upon individual circumstances, but maybe cutting back on nonessentials and saving for a “rainy day” might help. Accepting bookings you might otherwise reject might help. Moving into a cheaper apartment might help, and finding other avenues to generate income might help. One of the things I’ve recently done is activate a pay-per-minute website that allows me to generate additional income by answering questions over the phone for fans and others. [email=dave@davecummings.com]Email me[/email], and I’ll be happy to tell you how to activate your own for free.
I think we all need to be setting up strategies now to survive the coming inflationary period. Adult industry performers and production companies aren’t immune from the vagaries of the economy. We need to consider options and plan ahead.
I promise to get back to covering sex, swinger parties and other naughty stuff next month. In the meantime, hang in there, use sun block, plan for a rainy day, don’t do physically risky things (don’t drink and drive; do use condoms), and be nice to yourself and others just for the sake of being nice!
Dave Cummings, “the world’s oldest porn star,” is a performer, producer and director. Visit him online at DaveCummings.com, DaveCummings.tv or DaveCummingsVOD.com.
