I noted a while back that the U.S. savings rate was on the rise, that it looks like U.S. carbon dioxide emissions peaked in 2007, that President Obama was making a big push toward making America a nation of creators as opposed to consumers, and asked in May,0 “Is the U.S. consumption binge over?“ Well, I’m asking again:
Have you personally seen evidence of permanent behavior shifts or is this is just a small speed bump on the Autobahn to oblivion.
On Friday, a NYT piece, “Reluctance to Spend May Be Legacy of Recession,” made some similar points:
The Great Depression imbued American life with an enduring spirit of thrift. The current recession has perhaps proven wrenching enough to alter consumer tastes, putting value in vogue.
“It’s simply less fun pulling up to the stoplight in a Hummer than it used to be,” said Robert Barbera, chief economist at the research and trading firm ITG. “It’s a change in norms.”
Of course, it’s a long way from Hummers to John Stuart Mill’s “Stationary State.” Also, the “the savings rate dipped to 4.2% from 4.5% in June and from 6.0% in May,” and even the 6.0% was only a blip to the 50-year average (the figure below is the 3-month centered average of the personal savings rate).
Still, the NYT notes:
On Friday, the Commerce Department said spending rose 0.2 percent in July from the previous month. But most economists see this activity as short-lived, pointing out that incomes did not rise. Some suggest the recession has endured so long and spread pain so broadly that it has seeped into the culture, downgrading expectations, clouding assumptions about the future and eroding the impulse to buy.
And the piece offers this interesting factoid about gardening:
At a mall devoted to home furnishings, many storefronts were vacant, and survivors were draped in the banners of desperation: “Inventory Clearance,” “50% Off,” “It’s All On Sale.”
But at the Natural Gardener “” a lush assemblage of demonstration plots that sells seeds, plants and tools for organic gardening “” business has never been better.
Sales of vegetable plants swelled fivefold in March over past years. The company added a public address system and bleachers to accommodate hordes showing up for vegetable-growing classes.
Part of the embrace of gardening stems from concerns about the environment and food safety, says the company’s president, John Dromgoole. Momentum also reflects desire to save on food costs.
“People are very interested in shoring up against losing their jobs,” he said.
You tell me where we are on the binge-purge scale of 1 to 100, with the 100 (binge) being a Hummer in the garage of every 5,000-square-foot home and 1 (purge) being total collapse of the global Ponzi scheme and embrace of The Transition Handbook.
Andy Revkin at DotEarth has the comments of some economists at two posts, “An Upside to the Consumption Chill?” and “Are You On a ‘Hedonic Treadmill’?” Let me end with an excerpt (via Revkin) of one of my favorite thinkers, John Sterman, Director, MIT System Dynamics Group, Sloan School of Management, who lays out his own version of the global Ponzi scheme:
We have been consuming natural capital far faster than it regenerates, whether it’s fossil fuels, fish, forests, wetlands, or the capacity of the oceans and other sinks to take up greenhouse gases. Wackernagel et al. (originally in PNAS; see updates at footprintnetwork.org) document these dynamics, arguing that we have already overshot the global carrying capacity. Of course, carrying capacity is dynamic, partly endogenous, affected by technology as well as consumption, and a notoriously slippery notion to nail down. Nevertheless, a number of new studies are consistent with these results. In particular, the new “Planetary Boundaries” paper, forthcoming in Nature, makes the case that humanity has overshot the global carrying capacity in a variety of key areas, including GHGs [greenhouse gases], nitrogen, phosphorus, fresh water, land use, and biodiversity.Material consumption is critical to easing down below these limits and building a more sustainable society. And there’s tremendous scope for greater efficiency and de-materialization in our consumption. Through technological and organizational change, supported by proper pricing (internalizing the currently externalized costs and environmental risks of material consumption and waste production), we can almost certainly provide for the needs of the projected population, at a good standard of living. But of course that’s not enough. As long as the dominant ethos is the drive for more consumption per capita “” ever greater accumulation and consumption of material goods, energy, etc., then no amount of efficiency will suffice. For example, improvements in the efficiency of water or energy use just let water- and energy-constrained regions grow further until some other limit is reached, or water and energy once again becomes the constraint. And so on. As long as everyone wants more “” a bigger home, a bigger TV, a fancier vacation, more stuff, more consumption, more than they consumed last year, more than their neighbors “” there can be no technological solution to the problem. As Herman [Daly] has long pointed out, there is an essential moral character to the dilemma in which we find ourselves.
The ironic thing is that the pursuit of more, so stunningly successful so far, has not increased our happiness. Again, this is a contentious arena, and the science of subjective well-being is still emerging. But many studies, including the great work Danny Kahneman and colleagues have done, show that, for the developed economies at least, greater consumption per capita is only weakly associated with greater well-being (happiness, utility, life satisfaction). Consumption per capita in the developed economies has increased dramatically over the past half century, yet reported life-satisfaction is no higher. People tend to base their “needs” on habitual consumption, and on the consumption of those they observe around them through their social networks, in their neighborhoods, and in the media, feeling greater satisfaction when they have bigger houses and more expensive cars than those around them, and feeling deprived when they have relatively less. Economic theory used to suggest that as people got richer, the marginal utility of income would fall, so people would naturally shift their energies away from material consumption and towards higher pursuits. This doesn’t seem to be happening, as Keynes long ago feared. Instead, through habituation and social comparison, we find ourselves in a no-win situation in which no level of income or consumption remains satisfying for long “” the hedonic treadmill. The more people seek to boost consumption, the more income they require and the harder and longer they must work, undermining those activities that are actually fulfilling and satisfying: for example, Juliet’s work, and that of Kahneman, Krueger and Schkade (I hope I’m not overinterpreting) shows people spend far more time working, commuting, and doing other aversive, unpleasant tasks, while the time spent in satisfying activities such as building friendships and intimate relationships, athletics, spirituality, self-improvement, etc. is small. People move to distant suburbs far from their jobs so they can afford a larger house, thinking this will make them happier, but don’t adequately account for extra hours they must work to pay off the mortgage and the way their long commute erodes their happiness by stealing time they could be spending with their spouse and children, friends and community. Thus even if there were no environmental constraints to endless growth, even if the capacity of the planet to support material consumption where infinite, growth in material consumption, the never-ending quest for more stuff, is not taking us where we want to go.
During this economic crisis we have heard a lot about people getting back to basics. From gardening, to carpooling and bicycling, to swap meets and barter, to mending clothes and appliances instead of throwing them out and buying new, people are rediscovering traditional values of frugality and community. The unanswered question is how much of this will stick once the economy recovers and people find themselves feeling a bit flush. Will people keep riding the bus once they can afford gas again? Will they trade that Ford Focus they bought under Cash for Clunkers for a big new SUV? A cynical view suggests that all the talk about the recession fostering frugality, living within one’s means, and the virtues of helping and being helped by one’s community is just talk, and that what’s actually happening is that people are building up a deep well of perceived deprivation, a backlog of buying, such that when the economy recovers we’ll see another binge of overconsumption, carrying us farther still from a satisfying life and speeding the collapse of planetary life support systems. I don’t believe this is inevitable, but it will take a lot of work to shift our lives from the self-defeating path we are on to a more satisfying, sustainable path.
- Robert F. Kennedy challenged our Ponzi scheme pursuit of growth for growth’s sake, much as his heir, Barack Obama, does
- Revkin has leading system dynamics expert Sterman on NOAA’s 1,000-years-of-hell paper
- MIT Part 2: Tackling the biggest source of climate confusion
- MIT’s systems thinking on climate, Part I: SOTU
- Ponzi redux: Scientific American asks “Could Food Shortages Bring Down Civilization?”