I often appreciate a blogger’s point of view and manner of communicating - while totally disagreeing with their perspective. A good example is Kevin Press’s recent post on Today’s Economy- The New Frugality: I’m not buying it.
Press cites recent items in the Economist and Time describing the New Frugality, then goes on to point out that - devastating as the downturn is to people that are directly impacted through job loss - most Canadians won’t in fact lose their jobs, and will therefore not significantly alter their consumption, long term. He’s wrong. Here’s three reasons why;
- The Markets. Whether you lost your job or not - billions of $ have been taken out of the economy. We all know people whose pension savings have been creamed. TSX is about 35% off last summer highs. Thousands of Canadians have fundamentally reset their retirement plans. Many are resigned to putting off retirement by many years, others are acknowledging the need to supplement retirement income with part-time jobs, and - you better believe - almost all have rethought their standard of living (pre and post-retirement). And as far as retirees are concerned - even if their wealth was mostly in investment certificates, savings accounts, bonds and dividend funds - you know they’re tightening their belts when they consider their yields in this new reality.
- The environment. We’re consuming our planet to death. And despite the naysayers - the awareness of this inconvenient truth is emerging. The linkages between climate change and consumerism are starting to surface. For instance, The Story of Stuff exposes the connections between a huge number of environmental and social issues, and calls us together to create a more sustainable and just world. I think this is sinking in. I often visit my old school and talk to students at Rotman. They get this, they understand that it’s just not cool to buy, consume, and dispose.
- The Social Internet. We are becoming a much more connected world. It’s a lot harder to be ignorant of stuff that happens to other people - whether it’s jobs being lost in Oakville or deforestation in Brazil. Ideas and opinions can be mobilized much more rapidly in a twittered world. Look at how quickly an idea spread - like the fundamental wrongness of multi-million dollar payouts to executives of bailouts. Obama got elected on the back of social media. Technorati lists 7024 blogs about frugality. Yes we can.
I believe that the crash of 2008 will indeed signal a fundamental change in social and consumerist behaviour. Already it isn’t right for the few to consume in a wasteful way without thought on the impact for the many. And soon, it won’t be fashionable.
#1 by Fabien Tiburce - April 26th, 2009 at 21:39
I don’t know if you are right but I sure hope you are. China’s GDP is expected to surpass that of the United States by late 2020’s early 2030’s. The economic model of the throw-away society (invented by post WWII America) is completely unsustainable beyond a select few. When 2.3 billion aspiring middle class chinese and indians want to consume the way we do, we, planet earth, have a problem. I do hope we develop an economy and industrial activity around recycling and reuse. What if 100% of cars, manufactured goods and consumable were processed, un-assembled, brought back to a raw material only to be re-used? Expensive? yes. Labour intensive? yes. Perfect now we all have jobs! I hope the crisis of 2008/2009 is a wake up call and that we do indeed learn something from it, while we can.
#2 by Kevin - April 27th, 2009 at 20:32
Great post Bill. I wish I shared your optimism, but I’m just not convinced. The New Frugality, as it has been described in the media, represents a profound change to Western Culture. I don’t think it’s an overstatement to say that it would be revolutionary. The three drivers you’ve described are all valid, but they fall far short of the mark. They will trigger change among those hardest hit (or most motivated), but that change will be incremental in the broad scheme of things. The Great Recession will not be revolutionary. (How could it be? It’s been televised!)
#3 by Roger - April 30th, 2009 at 17:49
I can’t help but think of the movie “Seven” when I comtemplate this question. (David Fincher 1995 masterpiece). Looking past the detective storyline, the movie touches on the darkest realms of the human soul.
Key thought: Do we really believe that we will learn from our mistakes (sins). The Internet bubble proved this wrong, the gas shortage of the 80s likewise. Enron, Worldcom and now the 2008 crisis.. Does greed unfortunately trump reason?
I think we will see some change until the next wave of eagerness arrives.. and it will. Afterall the exact reasons that make this medium successful, may in fact help to increase the speed of bubble economics.
Look no further than current interest rates and it’s impact on future inflation. Many are already strategizing as to how to profit from such an eventual and certain condition.
The next bubble is being blown, if history tought us anything, it is unlikely to abate without bursting.
Seven ends with a quote from Ernest Hemmingway “The world is fine place worth fighting for”. I will always be an optimist as well!
#4 by Bill McCollam - April 30th, 2009 at 18:53
Thanks for the comments. Roger, heh - I’ll have to rewatch Seven (Se7en). I just remember Brad Pitt and a particularly gruesome surprise late in the film. But I was just looking at IMDB and it raves about it.
I don’t know if it’s so much learning from mistakes as it is a changing zeitgeist. I’m thinking this will affect the spirit of the time. It’s just won’t be cool or fashionable not to be frugal.
Kevin, I don’t see a change to a frugal society (or at least a less consumptive society) as any more profound than a changes of previous generations (youth power/anti war in the 60’s). As Fabien pointed out - we invented the throwaway society… no reason to think it’s a natural or perpetual state.