Tuesday, May 13, 2008

The New Economy

Over the past nine months I've received varying responses to my non-consumerism project. I'm lucky in that most of the response I've received has been positive, though I do admit I've heard my share of, "Wow, why would anyone do that?"

But perhaps the most annoying response is from people who adopt a sort of holier than thou tone and say stuff like, "Wait, you're still allowed to buy used stuff? Or go to restaurants? I mean isn't that ... like ... cheating?"

Yes, I still buy used stuff, I still go to restaurants, I still go to movies, I still go to plays, I still go to concerts, I still pay for high speed internet, and I still occasionally download music from iTunes.

I'm not a martyr and I did not start this project in order to receive accolades from strangers for living an austere life.

In fact, I became a non-consumer because I saw Evan Osnos discuss how the high demand for cashmere has damaged much of China's land. It's the environmental and humanitarian costs of new stuff that has led me, personally, to stop buying it.

After I watched Evan Osnos on The Colbert Report, I weighed my options and ultimately decided to stop buying new durable items for a year. I further decided not to buy any clothes period, because I already had so many pieces of clothing in my closet that never got worn, that I thought it was stupid to buy any more clothing.

I could have gone further. I could have tried not to buy anything at all for a year like Judith Levine. Ultimately though, I decided that I wanted to make a choice that I might be able to sustain beyond a year. For me, non-consumerism is like a diet. If you get rid of all sweets altogether, once your diet ends, you might find yourself binging on the sweets and end up gaining back all the weight you lost. On the other hand, if you still occasionally allow yourself sweets, you might find that your eating habits are just generally more healthy once the diet is over. My hope is that while on August 3rd I will technically be allowed to go out and shop till I drop, I won't actually want to shop.

So that's why I still buy used, why I eat at restaurants, and why I still go see plays. It's because my beef is primarily with "stuff," how it's produced, the conditions under which it is produced, and what happens when I get bored with said stuff. But after partaking in this project for so many months, I've realized that there's more to my buying philosophy than just that.

You see, when I started my project, my economist uncle seemed a little perturbed. Because, well, what happens, if everyone stops spending money? The economy tanks.

I'm not an anti-capitalist and I support a strong economy, but when I began my project, I did so thinking, "Yeah, if everyone stopped buying new stuff, the economy would tank, but since everyone's not going to stop buying new stuff, we'll be okay." In retrospect, that was kind of a weird position to take since most personal environmentalism is always couched in terms of, "If everyone did X we'd save Y energy." But as I've mentioned before, I kind of dove in with this project without really considering the consequences.

But the truth is, I never really stopped spending money. I've been calling myself a non-consumerist because I'm not buying new stuff, but a true non-consumerist would probably be hoarding gold bricks under her bed. Which is decidedly not what I'm doing. Instead, I'd probably be better classified as an alt-consumerist.

About 13% of my money gets split between my 401(k) and my savings account. That's certainly higher than the 5% I was managing before I began the non-consumerist project, but it's not an insane amount. In fact, I think it's fairly reasonable, and probably around the amount we would want most Americans to save. When you keep money in a savings account, 401(k), or IRA, you are still contributing to economic growth because your money continues to be in circulation. Given that, I think personal savings rates of around 15-20% are not incompatible with economic growth.

As for the rest of the money? Well, it goes to rent, my car loan, food, car insurance and utilities. All clear signs that I am continuing to participate in the economy. Like many Americans, I suspect, I don't have a ton of discretionary income left after I pay for all that. The money I have left over gets spent mostly on experiences (eating at restaurants, travel, concerts, etc) and charitable donations.

I said that when I began my project, I thought that if everyone did as I did, the economy would tank. I no longer believe that. Sure, if everyone became a non-consumer or alt-consumer, the economy would go through some rough patches, but eventually we would switch from a product-based economy to an experience or service-based economy.

We're already headed in that direction anyway. America no longer manufactures many products, and buying products made in China mainly serves to increase our trade deficit. Services on the other hand, cannot be easily outsourced to another country. It's just not that easy to have someone in Asia wait on your table or give you a massage. As far as the American economy is concerned, buying services instead of stuff is a winning proposition. (It's true that buying less stuff would be a blow to China's economy, and that is something to consider, but I have to believe that there are better ways to bring prosperity to the Chinese than to make young Chinese boys manufacture crappy plastic toys in inhumane conditions.)

The experience based economy is my new hope for America. I believe that by buying experiences instead of stuff, we can be happier and more fulfilled. We can spend more time with the people who matter. We can afford to donate more money to worthy causes. In short, we can focus on living instead of on accumulating.


Burbanmom said...

Yeah, I disagree with those economists who say that if we all stopped buying so much new shit our economy would tank. I think it's BS. Our economy would evolve into something different. As you said, an experience-based economy; a fine, local food economy; a used-commodity economy; even a trip-to-the-moon economy (not that I'm promoting that!). People in America like to spend what they earn and that won't change. We just need to change what we spend it on.

Sam said...

I shouldn't post this since my own livelihood is at stake but...I am not sure I want to live in a world where the "service" sector contributes 78.5% to the GDP. I think we can stand to have a change in the composition of the GDP. I don't know if I want the economy to keep growing...I don't see what good has come out of this growth besides various groups of people being shat on at some point or the other. I'm with burbanmom in that the economy (this wondrous god that everyone worships) will just evolve into a different beast if everyone quit being buying shoddily constructed goods made in third rate conditions.

Anonymous said...

Saving more for your future vs buying crap you don't need now is more that economically responsible. Max out that 401K! I'm not quite sure how all these people who spend everything they make on junk without thinking of what they are going to do when the money is no longer coming in are planning on supporting themselves....oh wait...they're not. How is sucking the inadequate system dry exactly good for the economy?

As to the cheating thing...it is always amazing how people who do NOTHING positive like to poke holes in people who do SOMETHING positive. You are creating real changes in your life, like you said, many of which you can maintain without being miserable. You are changing what defines your happiness. Another reason I love your approach; you really do things for genuine progress.

Anonymous said...

OK...there are like 10 typos there...but you get the point. It's early people.

Sam said...

It _is_ early.

Regarding yer list...you have heard of localharvest.org right? They have listings for restaurants, grocers, farmstands, etc, etc. I don't know how often its updated, but based on the results you get you can google the business names to get more info (like to see if they're still in business).

Jennifer said...

Cheating? How can you cheat on something you created when you are following the rules YOU created? People are funny.

I must say, I agree with you. We all have money to spend... and spending money in any way will affect the economy. Unless you hoard it under your bed and don't let it ever get out, you are going to help the economy... plus money is lumpy to sleep on after a while. (Though you could put it in Chile's plastic buckets).

Savings helps, buying experiences helps, buying used even helps. So many other possibilities!

Anonymous said...

Excellent post. Though not an economist, I still believe that transitioning from product-consumption to service-consumption is beneficial in many ways - supporting local economy, reducing raw material usage, continuing quality of life, just to count a few.

A lot of times, inertia prevents us from changing to a better direction. Economists have been so wrong so many times in the past.

The one point I want to elaborate on is the argument of our impact on economy in other countries. Immediately, yes, if we stop buying cashmere from China, the cashmere industry there will suffer. If we stop buying coffee from Columbia, the coffee growers will suffer. But shouldn't countries be responsible for its own livelihood? Before globalization kicked into full speed, Columbian people lived their lives and Chinese people lived their lives. I am not against trade. Trade is as old as human kind. But the way we are trading now effectively destroys the ability for some countries to survive on its own.

Additionally the cost of labor will eventually level out as developing countries enter the developed world. It is highly important for the countries with cheap labor to figure out solutions when that the leveling out eventually happens. It will probably be sooner than we can anticipate.

Leila said...

I think I learned in economics that saving reduces the overall supply of money (and hence constricts the economy) while investing in stocks keeps it in circulation and expands the economy. But I do agree that buying useless stuff is not good for the economy. Debt is bad, foreclosures are very bad. So how can overextending your credit to buy xmas presents, etc possibly be good? I would say that spending in general is good for the economy, but only as long as you are spending on investments and assets and services and not on throwaway "stuff".

EcoBurban said...

You are so right - we are moving to an experience economy. The way I see our economy as it pertains to a birthday cake:

In the early 1900s we were agrigarian - if you needed to make a cake you had to get eggs from a chicken, milk from your cow and grind your flour.

Then came the industrial revolution and WWII into the product age and we were introduced to the Betty Crocker Cake Mix to make our lives easier - we bought products that made us feel better or equal to other people.

Following that we moved into the service economy where you ordered a cake from a bakery or a specialty shop and had it delivered to your house.

Today, the acutal birthday cake is just a small part of the party - You have an experience with the cake - a cupcake decorating party for kids for example.

So, the acutal product is not what people buy these days, it's the feeling or fun or experience they have with the cake. The cupcakes can be homeade, storebought or designer - no one cares. They talk about the 7 different colors of frosting at the party or the unique sprinkles and candies for the top etc.

Whether the product is new, used or from a thrift store, do you have a story to tell about what you experienced? I know I for certain have many, many more stories and experiences to tell since I embarked on the local challenge. I can tell you about our local soap maker who named her soap after her grandfather or the bakery that makes homemade cannoli shells and will fill them on request or my funny juice glasses from the thrift store with the strange numbers on the bottom that my kids created a game around. I don't have many stories to tell about the perfectly matching boring juice glasses from Target!

Great Post Arduous!!

EcoBurban said...

OK - that was long and the example of cake doesn't really represent the whole economy, but it could be a model for how we buy lots of things, no? Cars, houses, clothing? Tons of really cool "vintage" clothing stores in hip neighborhoods are really just selling used goods! :o)

ruchi said...

Burban & Beany I agree. We're still going to want to spend what we earn so our economy will naturally evolve.

Orgie, yes, I'm with you. Saving for the future is a positive economic choice. Weird that we almost demonize it in America.

Beany, I have heard of localharvest, but I don't know if I've spent much time at the site. I'll look at it.

Jennifer, I have never slept on money, but yes, I have a feeling it would be uncomfortable!! ;)

Cindy W, I think you are right to a certain extent. I am not an economist either, but I know that there is growing concern that while globalization has bettered the lives of a small percentage of people in the third world, it has worsened the lives of a much larger percentage. Something to do more research on.

Leila, actually I believe both savings accounts and stocks expand the economy. (As long as your savings acct is in a bank.) Savings accounts don't reduce the supply of money because when you put your savings in a bank savings acct, the bank turns around and loans the money to someone else.

Ecoburban, totally understood the cake thing. I get you. I think you're right. I am happy we are moving towards an experienced based economy. I think we'll be happier to spend our money on experiences rather than things anyway.

Green Bean said...

Very good point. I think we can start to move toward a different type of economy. One more based on services, experiences, and, as Burbanmom said, used goods, local foods. It is a transition and sometimes those can be a bit bumpy but I think we will all be a lot better off. Heck, if we don't transition, we'll just be off.

Going Crunchy said...

Oohhhh.......great post!

I think an "evolved" economy is incredibly smart. Nothing can keep growing and growing - unrealistic.

Maybe I just have a little utopian dream about what we could be.

I think a regressed economy could actually help with so many other environmental factors and certainly with our unchecked population growth. Limits to ourselves is not necessarily the worst thing.

ruchi said...

GB, very good point. We HAVE to transition, because our current economy isn't sustainable forever. Better to do it now.

Shannon, I am not so sure a regressed economy is the answer. The problem is that if we hit a major recession or depression, people are going to turn to the cheapest available energy source we have: coal. That's (part of the reason) why I support a strong economy, I just support a new economy.