Mid-Century Madness

The Story of Stuff is a great online piece. I think I will use it in my class, it will be a great contrast to the traditional circular flow model which is standard in every intro textbook.

It is rather odd, though, that the piece hearkens back to the "good ol' days" of the 1950s. I guess it was a simpler time really, when lead was in our gasoline and paint, asbestos was the flame retardant of choice, mercury was a fun thing to play with in chemistry class, and Valium kept the nuclear family happy. O how times have changed. Apparently women were happier then too (check out this editorial in the NY Times and tell me what you think).

All in all, I think it raises some important questions about our economic behavior and draws the conclusion that--gasp!--maybe our consumption decisions are not as rational as they could be.


So what is preventing people for being rational?


Lack of information?
Maybe. But even with some sort of simple rating system (4-star for labor relations or some label indicating "greener" production habits) it is hard to say if people would respond. Organic local produce is good, but price is still king. I say information is not enough, the price of goods must reflect its true cost in terms of all of its externalities.

How do we measure the true production costs of a good?
Ok, this one is pretty tough. How much is clean air worth to us? Clean water? What about improved labor standards? What wage level is an adequate wage level (ask Krugman or Kristof about this one)? Should the government set the price directly (yuck) or influence industry with market games like a cap-and-trade program for emissions?


Even if we adjust prices to match the true costs, do advertisers really have such a powerful pull on the consumers' behavior--enough to make them behave irrationally?
Some might say keeping up with fashion gives one a false sense of happiness. But who's to judge, really? Can we really judge everyone's purchases with one stardard? Just because dippy hippies buy thrift store clothes doesn't mean everyone should buy them. Afterall (as you are well aware), wearing thrift clothes can be a sign of status too (just in a different way). Different strokes for different folks, right? Or is one group being douped while the other has seen the light of true consumption happiness?

What about you, Jeffy? Are you happy with your recent purchases? Take a moment and think of the top 5 material goods that make you happy. Then list the 5 most expensive things you have ever purchased. Do they match up?

Here is my list (in no particular order):
Happy
1)Beach Vacations
2)Eating out
3)My computer
4)Grill
5)Tennis Racket

Expenses
1)Car
2)Computer
3)Glasses
4)New Bed
5)New Carpet

My proposal for required viewing in 5th grade

Everyone should watch The Story of Stuff.

Seriously, why are you even still here?

Less is More

That seems rational, no?

There certainly are trends out there that run counter to the bigger is better and more is always preferable to less philosophy (another example is this not-so-big house architectural movement). In light of all this, I think the key question is will we change our behavior in time before we bury ourselves in widgets and do-hickies?

The economist in me screams "yes". In my little theoretical world we are all just happiness maximizers and we are also capable of looking into the future. We SHOULD be able to avoid the grim future predicted by Disney & Pixar's Wall-e (boy, that movie was a tough one to sell through merchandizing). But then again, we live in a world were someone can make lots of money as an expert on clutter--just look at this Peter Walsh guy on Oprah.

What will provide the best incentive for more efficient consumption? Will it take something drastic and catastrophic to change our behavior or will we be forward looking enough to change on our own and avoid disaster? And can we really ever be efficient consumers if we are always bombarded with advertisments?

Well, I think we are capable of change and avoiding catastrophe (see Malthus). After all, having less stuff is cheaper and certainly very freeing. The whole green movement is certainly taking shape rather quickly (I have never seen so many compact florescent lights at Lowes). However, a little nudge from big brother doesn't hurt. Let's keep that tax incentive for hybrid cars, shall we?

How much RAM should my hairbrush have?

Okay, so I never made it back to comment on greed. However, you anticipated where I was going and made your case. Horrifically, I don't think the quality of that conversation suffered from my absence!

I think you make some excellent points on material acquisition. No government is going to lead the way on this one, and I strongly encourage you and our readers to take a look at the voluntary simplicity movement. Sometimes called "mindful living" or "deliberate living," there is already an increasing number of people looking to scale back on what they bring into their lives. Take a few minutes to Google "voluntary simplicity" or check out Voluntary Simplicity by Duane Elgin. Many in movement see this book as the bible. While some people take this concept to its extreme, there is definitely something to be gained by embracing these concepts in our own lives.

The one thing I have to wonder about is whether our modern wants are satiable. From reading I've done over the years, my understanding is that our consumerism has evolved over time. Initially, we bought in order to have life necessities like food, clothing and shelter. At this point, demand for these items would never vanish, and luxury items were rare and expensive. Demand was steady and production was costly. By the time you hit the early 20th century and mass production took root, the ability to satisfy demand emerged as an economic problem. Automobile manufacturers, in particular, recognized that there would soon be a car in every garage, and demand would drop precipitously. In response, they created the era of consumer identity. "Yes, you have a car, but given your latest promotion at work, shouldn't you really upgrade to the Cadillac?" (Feel free to weigh in, AnonEcon. My summary may be inaccurate or overly simplistic. I yield to your expertise.)

This mindset has dominated our economy for most of our lives. Our drive to consume became less physical (I'm cold, hungry, and sick) and became more social (I want to be loved, admired, and respected). But now, I sense another fundamental shift is taking place in our approach to consumption. Slowly, we're forgetting about our physical and social motivations for consumption. We now simply consume to...well...consume.

Ultimately, wants can only be saturated if they are driven by some external purpose with a finite goal. I can have enough to eat. I can feel sufficiently admired within my community. However, when the drive is simply to buy the latest item because it is available, the demand is generated by the creation of the product. The demand is the product. And while there may be a limit to the number of cellphones that I want to own, there is no limit to how many cellphones I will buy sequentially as part of my responsibility to upgrade. Further, since I have no external measure by which to evaluate these upgrades, I must pursue all of them. All enhancements are equal if the goal is simply to enhance.

All that said, I do believe it is possible to reform our consumption. In many ways, this will have to be a personal revolution, one in which the individual shrugs off the mantle of "consumer" and defines a life purpose outside of the market. Consumption will serve our larger goals, not replace them.

Given that this will not be easy, and needs to take place on an individual level, how shall we approach this, AnonEcon? How can we effectively break free from the habit of unnecessary consumption? Will the economy suffer from responsible living, as we are told? Can we afford not to change?

Because we are liv--ing in a material world,

But do we really need all of this stuff?

Growing up, I remember my parents complaining a lot about being overwhelmed with stuff. And now that I have earned the title "Papa," my battle with stuff is just beginning. It is amazing how much plastic we have in the house, even when we take bags and bags out. Sell stuff on Craig's list, donate to charity, or just plain trash it--it is an endless cycle of consumerism and waste. Yipee!

In my consumerist daze, I have come to the following realization: I aspire to have less stuff than my parents (sorry American economy). Now this post is not about living like a Buddhist monk or something, rather it is call to rethink our approach to economic growth. Following 9/11 Bush told us all to go shopping to save our economy. Local signs around town say "shop local, spend now, save the economy." But creating an economy that is totally dependent on consumers insatiable wants will eventually hit a wall. Why? Because, even though economist refuse to admit it, some of consumers "wants" are eventually satiable. Yup. There are only so many of these cell phone/PDA/iphone/mp3/back massagers that people will want. Producers must find ways to manufacture more wants in order to keep up the production.

Now that the economy is in recession, maybe some people will realize that it is possible to be truly happy with less stuff. It sounds unAmerican I know, but the quest for happiness and the quest for stuff are only partially correlated. For a developed country like the US, maybe its time to measure the quality of an economy by something other than just counting stuff. Because I certainly would be happy with less (I would also be happy to get from one side of my house to another without stepping on something plastic with wheels).

Can we redefine the American dream? Something like this needs a movement and not a government program. Let me know Jeffy.