image fromm here
Anyone who has ever worked in the service industries knows that for many people, making a purchase is a little power trip. A consumer is a thing to be cherished, courted by corporations, lauded by politicians, envied by the other Consumer-Americans for his ability to publicly demonstrate his wealth and therefore power. And people often get a little thrill from imitating those with more money and power by shopping where they shop or buying what they buy. It's like going on a cruise or staying at a hotel; for a few days you live like the rich, pampered with new, clean, expensive surroundings and servants to wait on you. We've all seen people trip out on this power as well, insulting the waitress or demanding immediate service or being needlessly critical. We've also seen people spend far more than they can afford or need to spend as they are driven to seek more power in their social and professional sphere. You have to spend money to make money, they say, and some people spend money freely in a futile attempt to satisfy an inner need for power, acceptance and self-esteem. (Which is another reason why our corporate overlords and their servants hate self-esteem.)
Which brings us back to our case study for emotional dysfunction, our symbol of status-seeking, our icon of ignorance, Megan McArdle. These are difficult times for Consumer-Americans. With thousands of people gathering en mass across the country to protest the stranglehold our elite have on our necks and criticizing our winner-take-all consumer society, Megan McArdle's entire raison d'etre is at risk. All this commotion in the streets might hamper McArdle in her quest to buy entrance to the upper crust, her ultimate and most precious goal. McArdle dimly realizes that she is doomed to fail since, partially through her own efforts, the rich have become so very, very rich that she will never be able to earn enough to join them. She will never be anything but a useful idiot who will be willing to pick up the tab for the lesser elite in the hopes of rubbing shoulders with the truly elite one day. But at least she can have the same toys as the rich, God and Visa willing, and for now that is close enough.
A few months ago, I became the proud, and slightly sheepish, owner of what must be the world's most expensive food processor. The Thermomix costs about $1,500. It not only chops the food but weighs the ingredients and cooks them for you while stirring constantly. Perfect hollandaise and flawless béchamel can be produced in minutes with virtually no effort.
After seeing one last summer in the home of a friend, I promised myself one if I completed a particularly large and time-consuming research project. By the time I did, I was no longer sure that I wanted to spend the price of a good chair or a bad car on a kitchen-counter appliance. But I went ahead and ordered one. However guilty the pleasure, I couldn't resist the joy of the long-planned splurge.
McArdle knows that it is declasse to discuss how much one spends for a purchase but how else can you excite admiration and envy from your audience? McArdle observed the proprieties by pretending to be abashed by her extravagant purchase but quickly gets to the main point: Consumerism is under attack and nobody is more willing to rush to its aid than Megan McArdle. And because no honest person can support the enormous consequences of our third-world level of inequality, McArdle must begin with a little bit of dishonesty.
Nor, it seems, can any of my countrymen. For decades, Americans have wallowed in credit, shunned savings and delighted in debt. In 1982, the personal savings rate was 10.9% of disposable income, by 2005 it had fallen to just 1.5%. It has since rebounded, but remains a measly 5%.
As everyone who read this article noted, people are "wallowing" in debt because wages are not rising and they are losing jobs right and left. Americans also refuse to admit that they no longer can afford a 1960s-style middle class comfort because they are exceptional and exceptional people do not become poorer, they only become richer. For decades they elected leaders who promised them more money, mostly by cutting taxes, but that didn't work out very well as cutting taxes helped the rich a great deal more than the middle class. To undercut Americans' growing unhappiness some corporate-sponsored pundits made a career of chiding the middle class for their greed and spending habits in an attempt to deflect blame from the rich to the rabble. Genuine concerns about the nature of American society and consumerism are mocked as the pundits celebrate the joys of spending money in this, the best of all possible worlds.
All this profligacy supports a rather vibrant cottage industry in polemics against consumerism. Authors as varied as the economist Robert H. Frank (1999's "Luxury Fever") and the political theorist Benjamin R. Barber (2007's "Consumed") have ganged up on what they see as the particularly unequal and excessive American spending habits. Unsurprisingly considering their abhorrence of waste, they are avid recyclers; the same arguments, behavioral economics studies and anecdotes appear time and time again. Access to credit makes consumers overspend. Materialistic people are anxious and unhappy. The conspicuous-consumption arms race is unwinnable. Down with status competition! Down with long work weeks, grueling commutes and McMansions! Up with family time, reading and walkable neighborhoods! The effect is rather like strolling down the main tourist strip in a beach town: Each merchant rushes out of his shop, gesticulating wildly and showing you exactly the same thing that you saw at all the previous stores.
This passage is just embarrassing. McArdle does not attempt to discuss Frank and Barber's arguments because the facts might interfere with her goal of supporting corporate consumerism. Instead she addresses an emotional argument that she hopes to deflate by being even more emotional herself. McArdle flings out exclamation points and knee-jerk conservative cliches about liberal arguments, waving her arms about in the same method she attributes to her ideological "enemies" to deflect criticism from coherent arguments and unwanted conclusions.
The latest person to open up shop on this boardwalk is Baylor marketing professor James A. Roberts. "Shiny Objects: Why We Spend Money We Don't Have in Search of Happiness We Can't Buy" runs mostly true to form, its main innovation being to add financial self-help advice to the usual lectures. The book includes not only exhortations but actual instructions—how to make a budget, get out of debt and save for retirement.
It's a thorough survey of both academic research on consumerism and basic finance advice. Still, I first ran into an argument I hadn't seen before somewhere around page 200—that the perfect surfaces of modern products hasten the replacement cycle because they show wear so badly—and well before then Mr. Roberts had fallen into some of the terrible habits of the genre. Though less openly contemptuous of the spendthrift masses than many of his fellow scolds, he still exudes that particular sanctimonious anti-materialism so often found among modestly remunerated professors and journalists.
It's no surprise that Dr. Roberts is on McArdle's Naughty List. He has said:
There are “his and her” spending patterns…but the desires that motivate consumption are only superficially different. “Women generally value their appearance more than men, which can lead to retail therapy; men value social recognition…both trying to build self esteem from different directions.” Women tend to doubt their financial acumen might shop “in order to take comfort in the trappings of financial success.” Men, more optimistic, just want to strut their stuff. “How big your collection of power tools or music boils down to feelings of self-worth.”
The research is overwhelmingly clear…The more materialistic you are, the less happy you are…we’ve been told by Madison Avenue that happiness can come through the mail.
Telling McArdle that money does not buy happiness is futile since spending money makes her very, very happy and increases her feelings of self-worth. Since McArdle cannot imagine any other way of feeling good about herself she is deeply threatened by any attempts to take away her source of happiness.
Here are some of the things that upset him and that "document our preoccupation with status consumption": Lucky Jeans, bling, Hummers, iPhones, 52-inch plasma televisions, purebred lapdogs, McMansions, expensive rims for your tires, couture, Gulfstream jets and Abercrombie & Fitch. This is a fairly accurate list of the aspirational consumption patterns of a class of folks that my Upper West Side neighbors used to refer to as "these people," usually while discussing their voting habits or taste in talk radio. As with most such books, considerably less space is devoted to the extravagant excesses of European travel, arts-enrichment programs or collecting first editions.
McArdle attempts to frame any discussion of inequality or consumerism in the only way that she can understand, a way that fits in with her preconceived notions, prejudices and neuroses. Liberals are elites who are just jealous of more successful elites and liberal elites look down on conservatives out of snobbery and that evil, dreaded "self-esteem" thing they all have. All academics are liberal elites but they are poor elites, who substitute egg-head competition for consumer competition because they are poor.
One of the running themes of the economist Robin Hanson's excellent blog is that arguments like the ones found in these books are actually an elite-status proxy war. They denigrate the one measure of high-visibility achievement—income—that public intellectuals don't do very well on. Reading "Shiny Objects," you get the feeling that he is onto something.
Consider the matter of status competition. Mr. Roberts, like so many before him, argues that conspicuous consumption is an unhappy zero-sum game. But this is of course true of most forms of competition: Most academics I know can rank-order everyone in the room at a professional conference with the speed and precision of a courtier at Versailles. Any competition, from looks to money to academic credentialing, both consumes a lot of resources and makes many of the participants feel bad about themselves. Why, then, does the literature on status competition always tell us that we should redistribute capital gains or inheritances and never tell us that we should redistribute academic chairs or book contracts?
In your face, liberals! This childish and threadbare argument seems utterly devastating to McArdle. If academics think inequality is so bad why don't they give up some of their hard-earned rewards, huh? Huh?? Naturally McArdle is delighted to find a way to fight back against all those evil liberal academics, with their pipes and leather patches and class envy. Sadly, she is disappointed again.
And so I was excited to see that Rutgers history professor James Livingston had written "Against Thrift: Why Consumer Culture Is Good for the Economy, the Environment, and Your Soul." The book sets out a provocative thesis: Since about 1920, net private investment has not correlated very well with GDP growth, as conventional wisdom has it. To hear many commentators talk, you would think that growth increases basically in tandem with savings and investment, but in fact the numbers bounce around a lot.
Note that McArdle very seldom addresses actual numbers; a wise choice considering her innumeracy. She will never win an argument on its merits and she know it.
Consumption, not investment, is the key to prosperity, Mr. Livingstone argues; most of our recent woes, especially the housing bust and subsequent disaster, stem from excessive savings, driven by rising inequality. Rich savers with no particularly productive outlet for their capital create bubbles, he says, when society would be better off if ordinary people, and the government, had been given the money to spend rather than save. (Though "Against Thrift" is an argument against saving, it interestingly ends up in the same place as most arguments for it: with a call for greater government redistribution of incomes.)
But the question of whether saving is always productive is an important one. In the present crisis, the global economy has been damaged by serial stampedes of desperate investors seeking a safe-but-lucrative spot for their excess capital. Money fled housing bonds to money-market funds, money markets to sovereign debt, sovereign debt to gold. It now looks as if the euro may end up getting trampled to death by the herd. So savers do pose dangers.
Yet Mr. Livingston places far more weight on his favorite statistic about net private investment than it will bear, reaching the ludicrous conclusion that "economic growth since the 1920s did not require net private investment or net capital formation." Since 1947, the real value of businesses' tangible assets (everything from machine tools to the buildings they're housed in) has roughly doubled. Would we really be just as well off if it hadn't?
McArdle deliberately ignores the fact that 70% of our economy is based on consumer consumption. (If she does not know that fact she should be running the Recipe Corner of the Podunk News Gazette, where she would still be ignorant but do less harm.) Despite having just said that Americans were wallowing in credit, she also does not acknowledge that credit has been keeping the consumer economy afloat, credit helped drive bubbles, and when credit dried up, so did the economy.
Mr. Livingston doesn't address this. He also attributes the "global savings glut" of the past decade to excessive wealth even though Asian central banks probably played a larger role than rich Americans and claims that the "Bush tax cuts" caused the housing bubble by leaving those over-saving rich with too much money to play with even though three-quarters of the lost tax revenues stayed in the hands of people making less than $250,000 a year—the de facto threshold for "rich" established by the Obama administration.
McArdle blames Asian banks for loaning money to America instead of America for borrowing money from the Chinese and Japan to finance wars and tax cuts for the rich. This enables her to claim that income inequality isn't as bad as it seems to be.
These are not small omissions; they are central rebuttals to his thesis that Mr. Livingston ignores. After sketching out his interesting but badly incomplete thesis, he simply moves his book onto a series of somewhat tedious meditations on consumer culture, heavily larded with confusing references to luminaries like Freud, Marx and Marcuse. These are confusing not because they are hard to parse but because there is no obvious reason for their inclusion.
Again, McArdle does not address Livingston's arguments, she just calls them confusing, incomplete, tedious, and larded-up with irrelevancies. Why work hard on analysis when you can simply tell everyone that you are right and the other side is wrong?
Like their forebears in this robust polemical genre, neither Mr. Livingston nor Mr. Roberts gets us much closer to answering the essential questions: What makes American consumers spend as they do—and is it a bad thing? For some thoughts on these matters, I'd suggest turning to James B. Twitchell's "Living It Up" (2002), a wry account of the author's own complicated relationship with luxury brands that explores the moral and psychological aspects of our free-spending ways without seeming to be a paternalist rant against the folly of BMWs. "The pleasure of spending is the dirty little secret of affluence," says Mr. Twitchell, a professor of English literature and advertising at the University of Florida. "The rich used to do it; now the rest of us are having a go." He is keenly alive to the risks—and occasional risibility—of American-style consumerism. But he never pretends not to understand its undeniable appeal.
What do you have against spending money, Mr. Academic? It's fun for the whole family! And now that she has recommended a pro-shopping book, McArdle's job of examining our consumer culture in a time of economic crises is done. Let's bring it on home, sister!
The money I spent on a Thermomix, after all, would have more prudently gone into an emergency fund, or retirement savings. Yet having spent it, I really do enjoy my little robocooker, and not because it is (embarrassingly) more expensive than all the other food processors on the block. It has significantly improved the number and tastiness of meals I make from scratch and thus my standard of living. Was it worth $1,500? Hard to say, but I wouldn't sell it back.
Of course not. If she gave it back she couldn't tell us that it is more expensive than any other food processor on her block and raised her standard of living above that of the masses, who will never have a $1,500 appliance, the schmucks.
God bless consumerism and God bless Corporate America, who paid McArdle so much money to support corporations that she can afford to blow the price of a used car on a kitchen appliance while poverty soars and children go hungry.
See also TBogg, Charles Pierce, DougJ, and Rugosa.