Forget commercialism! The new realities of consumption and the economy.
Posted on Tuesday, November 18th, 2008 at 6:01 pm by Juliet
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Further analysis of the financial crisis by Dr. Juliet Schor
Spending our way to prosperity? Not this time around.
As a “New Dream” economist, I am asked all the time: won’t consuming less hurt the economy? When there’s less spending, people get laid off, their incomes fall and businesses, especially small ones, go bankrupt. This question is especially urgent today, given that the recession is deepening and spreading. George Bush was widely (and rightly) criticized for suggesting shopping as the patriotic response to 9/11. Would Barack Obama be wrong if he suggested the same?
Short answer: Yes. But with this topic, there’s rarely a short answer. So here’s the longer one.
Let’s remember, first, that the economic crisis wasn’t caused by a decline in consumer spending. It was triggered by the bursting of the housing bubble, Wall Street excesses, and some other factors. Consumers are cutting back now, but the decline in spending is one of a series of falling dominos—more an effect of recession than a cause.
Even if she didn’t cause the problem, can the heroic consumer can still save the day, as she has in recent recessions? Not this time around. Consumers can’t afford to be the engine of growth because they’ve suffered traumatic losses of jobs, incomes, creditworthiness, homes, and wealth, far beyond the experiences of other recessions. If the government were to give another tax rebate, it would most likely be saved, not spent. And if it were spent, a lot of that money would flow right out of the country, because so much of consumer spending is for imports. That’s especially true at the holiday season, when people buy apparel, footwear, toys, games, household items, and other so-called durable goods. A huge fraction of those items (in the 90% range for some of the categories) are now manufactured abroad.
In a stunning reversal of the reigning “free market” or “neo-liberal” paradigm, economists across the political spectrum have recognized this and are saying that the government needs to step in with big expenditures to put people back to work. They recognize that jobs, not consumer spending, are the key. Action on foreclosures, debt, and some other issues is also needed. But the system needs bold action from its biggest player, the Federal government, to instill confidence, stabilize demand and provide leadership.
So we’re getting a lot of calls that harken back to the 1930s. But old-style Depression-economics isn’t the answer either. Because the planet is telling us, loud and clear, that it can’t cope with business as usual (BAU).
People who are following the news on climate, bio-diversity and other ecological issues also understand that the standard remedy of getting consumers and/or government, to spend more can’t work this time around. We’ve lost the ability to profitably or responsibly grow our way out of recession. The usual kinds of consumer spending (cars, electronics, furniture, apparel, travel) degrade vital eco-systems and have an economic cost. BAU puts us deeper into an economic hole, because every dollar of GNP creates new and unacceptable damage to the planet. A government program which mainly goes to shoring up a failing automotive infrastructure (roads and bridges) suffers from the same problem. It’s throwing good money after bad. The latest findings about climate are that we need to stabilize greenhouse gases in the atmosphere immediately. Whatever government and consumers spend on needs to reflect that reality.
So where does that leave us? We need to do more sharing—job sharing, property and income re-distributing, and sharing of access and know-how. This time the economic pain needs to be assuaged by deeper structural changes that re-introduce fairness into our system. That’s not just moral, it’s also good economic sense. The deepest, underlying structures of inequality are ultimately at the root of why we got into this mess. Reversing the dramatic growth in inequality will help us get out of it.
And yes, there are opportunities for spending. But they are for purchases that enhance and re-generate the planet and its people, such as buying from local food systems, hiring the unemployed to provide services (especially green ones), and supporting non-profits that are solving, rather than creating problems. It’s good to spend on businesses that are truly sustainable, especially those that are expanding the green economy. Those patterns of spending, which new dreamers are in the forefront of, are key to the structural transformation toward more equality, fairness and sustainability. So here’s to a local, frugal, just, and fun holiday season. More music, less wrapping paper!
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[...] resident economist Julie Schor explains: Even if she didn’t cause the problem, can the heroic consumer can still save the day, as she has [...]
posted on November 19th, 2008 at 4:35 pmThis big consumption bubble has been created over many years. We have bought too much of what is unnecessary, products and services. Too many companies are competing for profits and are using aggressive marketing to persuade consumers to buy even more. The sales pressures will continue as there is so much corporate strength behind it. Advertising needs to be restricted in some ways so as to benefit consumers and cause less harm to society. Only new types of government that are willing to establish a level corporate-consumer playing field will fix this mess.
Advertising can sell junk as needs, garbage as food. This has to change.
posted on November 19th, 2008 at 10:41 pmThis whole thing started with Bernays and the embrace of his ideology by the corporations. Which is why I, for one, highly object to being called a “consumer”. I’m not a consumer, I’m a person. The whole object to Bernays’ way of looking at things was to create a passive army of consumers via pandering to a psychologically created desire.
It’s been further honed by the politicians who found that they can sell the American People dang near any solution to a crisis, as has been so ably documented in Klein’s book, The Shock Doctrine.
We, the people, have to stop acting like Pavlov’s Dogs. We need to vote out anyone who doesn’t follow our will, regardless of his or her party affiliation. We need to stop buying the marketing MESSAGE. The best way to do that is to throw out the TV, since even the news and the “entertainment” are one big commercial via the fake news and product placement. And we need to buy locally made goods. In the 1930’s most things people bought were sourced within 250 miles of home. They were actually in a better place to get through their recession than we are today.
posted on November 20th, 2008 at 2:31 pmI feel we will be eventually vindicated in the notions expressed above. We cannot buy our way out of anything. Nothing sustainable at least. We’re a world economy now, as is painfully evident from watching the Nations decline into recession as we have done. We must realize we’re being ‘played’ by advertisers who have dollar signs in their eyes. It’s a proven fact they use psychology to prey on people. Advertising is ubiquitous and in my humble opinion disgusting. For me, at this stage in my life it is actually working against them (I’m 48). I refuse to buy anything from the hucksters who scream at me every morning to BUY BUY BUY and if you don’t do it NOW you’ll lose out. I also agree with BJ. The TV (and sadly now, the Internet) is a wasteland of meangingless drivel placed there by people in collusion with the ad industry. Throw it away. There have been studies regarding autism. How it is higher in places which have heavier rainfall than other places. What does the American Mom and Dad do when it’s rainy outside? Put Jr. in front of the TV and let it be the babysitter. Our fattening of America is directly due to advertising. Eat more and while your here, have two. Markets are designed to lure you into the fat food sections first and end caps are filled with garbage which may tate yummy, but is toxic to the Human Body. Maybe I’m a bad person for suggesting this, but this collapse economically is a good thing. People in the higher branches of the Government would be wise to seize this time in history and really make a change in the way we’re going about what we do. Stop the insane drive for things. Stop the wasteful filling of petroleum bottles with water. Stop rewarding companies for acts which will in the end help destroy the planet we’re living on. Stop the continual mental control credit companies have over us with their false ‘freedoms’ they tell us we get from becoming debitors. People need to be responsable for thier actions. Expecially corporate C level people. What a slap in the face it was to see GMs Wagoner fly to Washington on his private jet (20,000 estimated) to ask for a hand out to save his miss managed company.
posted on November 20th, 2008 at 6:59 pmIt’s a mess and we’ve created it. Now, let’s actually think. Let’s actually change it. If we don’t we only have ourselves to blame.
Unfortunately most of the economic “gains” that have been made since the economy started to recover from the last recession have been based on the populace aquiring even higher levels of debt. Does anyone rememember the mysterious “jobless recovery” of 2004-5 where the economic numbers were improving but job creation was not? Most of the jobs created since then have been in the financial segment, investment firms, bankers and mortgage brokers. Now all these folks are leading the way down the job lass drain.
Unfortunately also, our economic growth HAS been fueled by the “consumer” rather than business i.e. growth in production. For those of us who think that just having the government spend on infrastructure or whatever will solve the problem, you have to realise that that will help only as long as the money keeps flowing from the source.
It’s really too bad but in order to maintain our standard of living we have to create new jobs at least at the same rate as our population grows compounded with the inflation rate. Granted our standard of living is ridiculously high compared with most of the rest of the world and is based on imagined needs, but that’s another story:~)
What really needs to happen is for government to support, through investment or tax advantages, real innovation that creates products that solve real problems in a sustainable fashion.
Personally I would like to see the government spend a lot more on public transportation. If we could wean ourselves from the automobile it would go along ways toward solving many other problems.
posted on November 20th, 2008 at 9:24 pm[...] For more info on the whole “can’t spend our way out of this one” dilemma, check out the New Dream blog. [...]
posted on November 21st, 2008 at 2:41 amInflation is caused by an increase in the money supply. This is fairly simple. Why does almost no one talk about the cause of inflation. Consumer spending does not fix this as money continues to be printed wantonly. The culprit is the federal reserve. Stop printing so much fiat currency !
posted on November 21st, 2008 at 11:52 am[...] Read the rest of the article at http://www.newdream.org/blog/?p=332. [...]
posted on November 21st, 2008 at 12:09 pmWel, FINALLY, I’ve Seen thru this website that There IS INTELLIGENT THOUGHT Happening In Some of Our ‘Society’…..this Is My 1st time to this site, so I have just Begun to See What It’s ALL about….I Am HAPPYLY Watching this ‘thing’ called ‘the economy’ CRASH FOR EVER……Americans Need and Are HEALTHFULLY HUMBLING Them Selves…..With or WithOut Their Permission….MOTHER NATURE IS MAKING IT HAPPEN…..WE, Each of Us, Must take Personal Responsiblity for Making the POSITVE Change that We Want and Need to BE……to depend on so called ‘the government’ IS downright Stupid…..We MUST LIVE In HEALTHFULL HARMONY WITH and AS A PART OF NATURE…..STOP Being BrainWashed Consumer Robots, which Demands that One Be a Work-Slave…..Use LESS, LESS, LESS…..BE Self-Sufficient…..Grow as much of Your FOOD, Organically, by Hand, in Your yard, Use Much LESS of Our Precious NECESSARY For LIFE W A T E R…….Eliminate ALL chemicals from Your LIFE…..WALK, WALK, WALK !!!!! That IS the # 1 Step to and of HEALTH, of MIND and BODY……Buy the extra FOOD that You Need at a NATURAL FOODS Grocery, and, BE MINDFULL of What You buy….We have Been BrainWashed and Addicted to the POISON JUNK that Goes InTo Our BODYS……. Each Day, as BEST One Can, make HEALTHY Changes…..Make It ALL a FUN Game…..Take It EASY on Your Self as You Go…..I Did and Still Do that…..Take Back CONTROL Of YOUR OWN HEALTH…..I DID THAT 35 years ago…..Eliminated so called ‘doctors’, their money-making DRUGS, and BODY MUTILATION aka surgery…..I dropped so called ‘Health Insurance’……Your ONLY HEALTH INSURANCE IS YOU, and YOUR Choosing to MAKE HEALTHY CHOICES…….Get OFF the BRAINWASHING ADDICTION Of TV……I Did That, One Step at a Time, 20 years ago…….Sit Still at least Once a Day and Simply BE…..Some Call It MEDITATION…..It WORKS!!!! STOP Being a multi-tasking ‘ Human Doing’…….BE a HUMAN BEING…..GO Out In NATURE As Much as Possible……EVERYTHING IS THERE……VERY NATURALLY SPIRITUALLY NOURISHING……I Will Share more at a later date IF It IS Wanted and Of BEST BENEFIT…….THANKS TO ALL………THINK POSITIVE, As BEST YOU CAN, EACH DAY…..With a Smile, Polly
posted on November 21st, 2008 at 12:53 pmHow about the formation of community stock markets? All stock holders and investors would be local and all bussinesses would be local. Local restaurants could network with community gardens while there are more community gardens created. This would create jobs in the gardens in the fields of farming and agriculture. That’s just one example, but it can go in lots of directions. If it’s done sustainably and kept strictly local it might really help communities thrive in a otherwise unhealthy economy. If the Obama really walks his talk he and his administration might even offer to offer assistance for this kind of thing, too.
If anybody has any thoughts, feelings and especially advice about this please email me at: TruthSeeker@communitymail.net
posted on November 22nd, 2008 at 1:50 amSo many thoughts and opinions. So complicated the economic landscape has become. Perhaps the human race should try and see that money has become a purpose unto itself and there in lies the potential problem. When an entity seeks on thing only as a goal such as money then all actions towards that goal are questionable due to the fact that money srves nothing but itself. It cares not for the human condition and those that follow that goal will inevitably damage all that surrond them such as the ecology and all that rely on it. Money is not the purpose of life and we can not count on a goverment to do this for us. We must do this ourselfs as a global community .
posted on November 22nd, 2008 at 7:17 amWe’ve got a problem here that is never mentioned in our political discourse. That is: We are all of us embedded in a system that does not, never has and never will work in the long run. Which is: civilization. The root word tells it all. From the Latin civis which translates as city. In other words a system based on cities; that is collections of people so large they must import resources. And truth to tell do not give back except in the form of death (of ecosystems, indigenous peoples etc), destruction and garbage! Every civilization that has existed has fallen, primarily due to destruction of the land/resource base. In the past this has been a local problem. When the Mayan civilization went down what effect did that have on the Inca or Ankor Wat. Nada. Now however we have a global civilization that is mining the entire planet, literally tearing apart the biosphere and whose economy is based on growth with no end in sight. What is a recession but a period of time when growth has slowed or stopped? But earth is finite. As are its “resources”. And the system is based on grow or die. Guess which one is gonna win out? My guess is the collapse has already started. So what to do? Just wait til the towers fall on our heads or get busy and dismantle the system while there’s still time. And replace it with what? Well we’ve been human for something like 2-3 million yrs and did quite well without cities which first appear about 10,000 yrs ago. So maybe there’s a clue here. And it’s called tribalism. And the economies of such are always local and in balance with the land/resource base. So buying and selling local is definitely a start. But the current system is not sustainable in the long run “green” or not. And it goes with out saying that consuming is certainly not the answer. Especially when we go on doing “civilized” things such as defecating in drinking water (instead of composting our refuse back to soil), converting vast quantities of earth into throwaway cell phone toxic waste, monocropping complex systems into barren deserts and breeding without regard to carrying capacity because we can. Oy Veh!
posted on November 22nd, 2008 at 7:17 pm[...] Greening the Great American PastimeTerri Small on The Universal Language of Slow FoodWolverine on Forget commercialism! The new realities of consumption and the economy.Sighclops on Forget commercialism! The new realities of consumption and the economy.Arran on Forget [...]
posted on November 24th, 2008 at 4:43 pmI’m doing all my Christmas shopping on Freecycle and Craigslist this year. I guess I’m still buying consumer stuff, but at least my money for it is going into the pockets of community members. I just can’t afford to go out buying new stuff. But I’ve been a big supporter of Buy Nothing Day since I was 17. I like it so much, I even gave birth to my son on Buy Nothing Day last year.
posted on November 24th, 2008 at 7:45 pm[...] – Dr. Juliet Schor, economist, on Forget commercialism! The new realities of consumption and the economy. [...]
posted on November 25th, 2008 at 3:03 pm[...] about their buying habits. The economist Juliet Schor, who is co-chair of the New Dream board, has an article on the group’s website calling for “a local, frugal, just, and fun holiday season” filled [...]
posted on November 27th, 2008 at 10:41 pm“We need to do more sharing—job sharing, property and income re-distributing, and sharing of access and know-how. This time the economic pain needs to be assuaged by deeper structural changes that re-introduce fairness into our system. That’s not just moral, it’s also good economic sense. The deepest, underlying structures of inequality are ultimately at the root of why we got into this mess. Reversing the dramatic growth in inequality will help us get out of it. ”
Frugality is a virtue, but only when it is internally adopted rather than externally enforced. Who is going to MAKE us share our jobs, property, and income? Sounds like Big Brother to me. Be careful of what you wish for.
posted on December 4th, 2008 at 8:15 pm