GuidoWorld

Buying According to Need

January 1, 2010 on 12:10 pm | In General |

Since the recent economic downturn it has become fashionable to complain about the obvious excesses of our consumer culture. People are being told to save money and pay off their debt. Those with excessive debt are viewed as being reckless and harmful to the stability of our nation’s economic superiority.

Not that long ago US citizens were being told that buying and borrowing were the only true ways of having our economy and way of life defeat terrorism and keep our country strong.  Almost every day we were told that 70% of our economy depended on the American consumer. Consumption was both our right and duty as patriotic Americans. Staying out of planes and out of shopping malls would bring joy to the terrorists and help them defeat the US.

Since March the stock market is on its best run in history. The Nasdaq 100 best known as the father of the dot com bubble finished 2009 as its second best year ever, with over a 50% gain. Since March it has risen over 80% the sharpest rise ever on record.

The reasons for this rise according to the financial media are simple. First, the bailouts worked and the financial crisis has been averted. Second, the recession is over and the economy is bouncing back. Third, the “resilient”  American consumer has continued to spend.

So how is that the American consumer is simultaneously paying off its debts and increasing its consumption? The rebound in consumer spending is occurring despite the fact that the employment situation continues to look bleak and wages growth is stagnant.

Though the financial media claims the recession is over, polls show that the average US citizen still feels like they are living in a recession. I’ve already covered this apparent contradiction in a post entitled Stock Market Loves Bad Economy written less than two months ago.

Today I’d like to talk about what would happen if the US consumer truly began to pay off his debt, save money and reduce his purchases.

What would your purchases look like if the bulk of your expenditures were limited to satisfying your basic needs? First of all most purchases would be restricted to food, shelter, clothing and medical care. Second a lot of semi-essentials or things that are not needed on a daily basis could be borrowed from or shared with friends.

Think of how much you could save if you pooled resources with friends. We know the economic and environmental benefits or carpooling or taking public transportation. Yet, think of how much money you could save by sharing tools such as ladders, hammers, lawn mowers, etc. that you use on a weekly, monthly or occasional basis.

When I was a child we borrowed frequently from friends and neighbors and were glad to buy some items which we knew others would borrow from us. If our neighbor had a six foot step ladder good for many tasks, we might buy an eight foot step or an extension ladder which would successfully handle other tasks. It seemed silly to clutter the garage with two ladders and duplicate resources, and was both practical and neighborly to lend and borrow tools.

If a sharing relationship ever became too inconvenient you could always buy your own duplicate item, but for the most part sharing is both economically wise and socially reinforcing. It’s nice to be helpful or of service to others and to feel part of a practical caring community.

Now, even if we didn’t share we would drastically reduce our expenditures if we bought more according to need rather than convenience.  Eating at home and preparing simple meals is both healthy and inexpensive.  Buying clothes because of practicality and usefulness rather than fashion would save many people a lot of money.

Yet, we have barely scratched the surface of how much money we could save if we became conscientious purposeful shoppers who made the majority of the purchases based on need.

The next time you go down a non-residential street or to a commercial district such as a shopping mall, think of each store in terms of need. What in the store does anyone really need? How many stores are dominated by objects that people have no need for? What percentage of stores you see do not contain a single item which you could realistically say you would ever need?

When I personally have done this exercise I find relatively few stores that actually tend to my basic needs. I find that even shopaholics have to admit that the majority of shops they know would fall into the category of inessential in their lives.

I think it is pretty safe to say that many of the shops and commercial establishments in every town would cease to exist if people reduced their purchases to meet their needs, or even slightly above their needs.

Over the last few decades the percentage of jobs related to services has risen while the percentage of factory, craftsmen, professional and skilled labor positions has decreased. The vast majority of service jobs are far less essential and need based than are the others and hints at how hard our labor market would be hit if we began to live and consume according to need.

The simple fact is our economy would fall apart if people became thoughtful consumers and lived within their means. Our society is dependent on conspicuous consumption, without it, most businesses would fail or not even exist.

In a few previous posts I have pointed out in a variety of ways how dependent our profit based system of economics is on waste. Once again I’d like to write the logic chain which I think most succinctly depicts the limits and dangers of free market capitalism:

Profit = Surplus = Excess = Waste

In this post we have just noted another way in which the above chain is true. If we lived efficiently and need based, their would be no surplus and all profit would vanish.

The fact of the matter is our economic system is dependent on flagrant consumption and wastefulness.

Sharing, being honest, kind, charitable, conscientious, frugal, safe, and contented are human characteristics and qualities which are in opposition to and a danger to our economic system.

The question is how dangerous and destructive is our economic system to our humanity? How much harm does our economic system do to our sense of pride and self-esteem?

Many think that our economic system though flawed is the best option available. Many would go on to say that we can’t live without an economic system, and that our free market economy is the best and most humane system possible.

Yet, how can this be, when living according to one’s needs would actually destroy the economy and many of man’s best qualities are in opposition to the essential competitive nature of a free market economy?

Jim Guido