Monday, January 14, 2008

Are Consumers Using Common Sense, or Are We in a Panic?

Americans have been overconsuming for decades; American savings rate are reported to be negative, with higher levels of debt every year. This cannot be a good thing for the people involved, nor for the planet. A popular statistic to quote is that if the rest of the world consumed at our rates, it would require four planets to meet our appetites.
I am not an economist, of course, but I am always mystified why consumption is equated with "supporting" the economy. Supporting the economy by borrowing money to buy stuff, wasting a lot of it, and then paying interest on your purchasing seems like a very bad idea all around.
So when I see a headline like in the New York Times today, Americans Cut Back Sharply on Spending, I wonder why that is bad news. Perhaps it is good news - maybe Americans are simply starting to act more responsibly, frugally, and using a little common sense? Fewer Hummers and more carpooling/carsharing, fewer purchases of single use bottle of water and more tap water in Nalgenes, less over-processed, overpackaged junk food and more fruit - it could all be to the good. It does look like we're in for a scary ride this decade - energy prices will obviously drive (pardon the pun) all kinds of personal purchasing changes, and hopefully some policy changes, too. And just maybe this will coincide with an interest in wasting less and more people will choose to live beneath their means. This was just business as usual for earlier generations; since happiness levels are no higher than they were when people consumed much less, there obviously can't be that much to be gained by overconsuming.


Traciatim said...

Another reason to bring up . . . it's a pretty preachy, but informative site.

The reason people are consumers is because corporations and the government want us to be (is the premise of the site).

It's a pretty interesting video and point of view.

Jacob said...

I don't get why consumers support the economy either. I mean, I don't get it at all. The only thing consumers do is to consume (which means destroy as in "consumed by fire") and in the process bring money back to investors. Investing is the real or fundamental underlying support of the economy. Without investment there would be no economy. Rant over. :-)

Data Babble said...

Because the media wants bad things to happen.

Anonymous said...

Jacob, you really need to take an economics class. The economy needs consumption and investing. If you invested in a company and no one bought the would it be a good investment? It wouldn't be, you would lose money.

This is not an argument to keep up the previous levels of unsustainable consumption, both in economic terms and in environmental terms.

Also, Traciatim, the government/corporations don't make us consumers, they facilitate the consumption. We, though not I, choose to be consumers. No one to blame but ourselves.

Traciatim said...

h_roarke, I was more commenting on the premise of the video and ideals rather than personal thoughts.

I would argue though that the consumer based society in which the entire thing crumbles to a halt if people don't consume more is created as a whole. No one raindrop considers it is responsible for the flood (taken from

Look at the bush 'bailout of America's stupid' plan by giving everyone money. That money will find it's way to charities, investments, bank accounts, on debt. Mostly it will pay for things already purchased, in order to speed spending on more things. If there is no payment outstanding the majority will be used to purchase things. That makes the economy go, instead of falling apart.

I would like to see them take that 145 billion and instead pay off a small portion their own debts and make a 'public address' speech that says all of America should do the same, take as much as they can afford and pay off debt, because debt is the destructor of society. I bet all the banks would be in an uproar after that one.

Maybe the economy needs to recede a bit, since people need to realize that instead of buying things they should be spending time with their families and enjoying life, not working to feed their lust for stuff.