This Christmas season and this Great Recession combine to focus media attention on this critical question: Are Americans spending enough? News anchors breathlessly report Black Friday receipts, trends in online shopping, and FedEx shipping loads. If only people would stretch their budgets, use their credit cards more, take a fling or two, and buy! — then the economy would start up, employers would hire more people, and we’d be on our way back to prosperity and full employment. Even sober economists agree.
At the same time, many of us (sometimes the same people) worry that all that buying is highly wasteful and highly polluting. Making, shipping, and shopping for all those goods are literally ruining the planet. Critiques of consumption as being immorally wasteful go back centuries (see this earlier post). So, is spending our salvation or our doom?
Historians have often written about the coming of modern “consumer society,” which they typically define as a society in which the mass of people, not just the elite, buy luxury goods like leisure clothes, furniture for entertaining people, and special treats (in the 18th century, tea and sugar). Scholars have disagreed about when this consumer society emerged, some placing it around the mid-20th century, some about 50 years earlier, some yet earlier, on and on, all the way back to 1700s and even before that. Some have argued that it was the widespread demand for such “baubles” in the 1700s, not new mechanical inventions, that generated the industrial revolution in England and the U.S.
Americans have valued such consumption for ages. Part of the complaint the Revolutionaries had against the British monarch was that he impeded trade and twisted the system on behalf of British exporters; Henry Ford boasted that his wages allowed average workers to buy cars themselves; Herbert Hoover ran on “A chicken in every pot; two cars in every garage;” the New Deal pushed Americans to buy homes, toasters, and other appliances to move the economy; and so on. American unions, according to one line of interpretation and in contrast to European unions, cut a deal, blessed by government, with major firms: We’ll give you labor peace and free rule over the workplace; you give our members high wages so they can buy the goodies of the American Dream. In other words, the argument is that the American unions traded workers’ control of their labor for a pottage of consumer trinkets.
Yet, Americans have for ages also felt guilty about consumption. The Puritans were so down on luxury and display that they barred Christmas celebration and gifts. What we now call sustainability was a theme in back-to-the-land movements of the 1800s as well as the 1970s. Social reformers and intellectuals have long pleaded that Americans should seek the unencumbered simple life (see, e.g., here). The climate crisis has made the pleas all the more urgent…. but not, it appears, more heeded.
Is there a third way between spending binges to drive the economy and penny pinching to save the planet? One way might be to shift the spending away from today’s baubles – the plasma TVs, SUVs, disposable toys, and such – to recyclable, less polluting goods. Moral entreaties to make that transition don’t work much, but focused taxes such as energy tariffs could.
A broad, long-term strategy would be to move Americans’ spending from private to public goods, so that fewer dollars go into newer-bigger-better commodities and more dollars go to, say, infrastructure repair, park maintenance, K-12 education, and public preschools. That would require considerably higher taxes and a larger government as well.
Other democracies have gone this route. And the average citizen of those countries probably lives better (certainly lives longer) than the average American does. But public goods have not been so popular here. The politically effective slogan that you know better how to spend your money than Washington does means: You should be able to buy the new dishwasher or car or game system you want rather than have the government use your money to hire more employees or prettify a park. Americans are hearty consumers, but getting them to consume pubic goods via government is a hard sell.
In this context, we have to decide whether to root this season for more spending or less spending.
(This column was re-posted on The Berkeley Blog on December 14 2011.)