The End of the Consumer Society (20 July 2011)

When the financial crisis began in earnest, lots of articles began appearing about the "new frugality" and the inevitable change in values that would occur in the absence of easy debt financing for consumer spending sprees. Financial analysts like David Rosenberg were pushing the argument that we would experience "secular changes in attitudes towards credit, savings, discretionary spending and homeownership" (original link broken, I cited it here) that would prevent a return to a consumer-driven economy. Apparently that's exactly what's happening, judging by this column from Sunday's NYT by David Leonhardt: "Consumer spending will not soon return to the growth rates of the 1980s and ’90s," he avers. "They depended on income people didn’t have." The evidence:

The Federal Reserve Bank of New York recently published a jarring report on what it calls discretionary service spending, a category that excludes housing, food and health care and includes restaurant meals, entertainment, education and even insurance. Going back decades, such spending had never fallen more than 3 percent per capita in a recession. In this slump, it is down almost 7 percent, and still has not really begun to recover.

Jared Bernstein is somewhat skeptical of this, pointing out that consumer spending's share of GDP hasn't declined and that the actual structural economic change is in residential investment. Though some economic commentators have been expecting an imminent housing recovery, Scott Sumner makes the case that housing seems unlikely to pick up because the rate of household formation has slowed dramatically, which he attributes to immigration crackdowns and the fact that more "20-somethings who can’t get jobs are living with their parents."

This concatenation of persistent joblessness, frugality, economic stagnation, and grown-up children living with their parents is reminiscent of what happened during Japan's "lost decade," and it probably won't be long it will be until we begin reading more about the American equivalent of hikikomori. I have been generally skeptical that consumerist attitudes would change regardless of income, because I see consumerism as a reflection of using goods to rearticulate status hierarchies, not as materialism as such. Goods are a communicative system; the new frugality alters the meanings of some of the terms but doesn't impoverish the language altogether. Here's what I wrote before:

Consumerist society has for too long emphasized possessions as the route to social recognition, not collaboration. The tangibility of objects seems to substantiate the argument -- the inarguable presence of more stuff seems to testify to a richer life, and marketing gives all that stuff rich meanings and fully developed fantasies we can readily enter into vicariously. And our ability to soberly question consumerism's role in our lives is hampered not only by our hedonism (the familiar and common-sense-seeming logic of "more is better") but by the persuasion industry's relentless collective efforts to invalidate ways of life that are not reliant on consuming products. Lifestyle magazines and the styles sections in newspapers help by making frugality into a trend that is marked by buying certain products and shopping at certain stores. The underlying message: We can spend less but remain consumers. So we don't need to fear.
Taking its cue from the press, the ad business will try to sell us anticonsumer goods, goods that paradoxically promise to fit in to our new recession-minded lifestyle. This not only helps ad firms continue to sell ads in a downmarket, but also helps ads maintain their prominence in the sum of our daily thinking. Ads preserve a lever in our minds, so they can reorient us to luxury when the time comes.

And here's another post I wrote in April 2009 about the "gleefully frugal"

But has the specter of slackerdom now been cast across the land? Has compulsive frugality moved us beyond competitive conspicuous consumption and the corrosive values of consumerism, despite those values' deep embeddedness in the discourses that structure our society? In the face of the enormous bulk of advertising and the engrained notion that status must be indicated through savvy product choices, have we really started to turn our backs on consumerism and adopt a post-materialistic attitude, as so many cultural critics have long urged? Maybe those people living paycheck to paycheck who are running out of money at the end of the month are learning to see that it's actually best that way. They are enjoying the really important things that deprivation can reacquaint them with -- togetherness, family, nature, and so on. Likewise, underemployment is a chance to enjoy the riches of leisure, if you can block out the nagging insecurities of precarity from your mind.

At the Economist's American politics blog, Will WIlkinson recently champions the post-materialist way, citing this survey as proof that prosperity engenders a shift in values toward autonomy and self-expression once economic survival is guaranteed. Presumably being able to show how creative you are on your own terms becomes more important than showing how much stuff you have after working hard for someone else. Wilkinson's counterpart at the blog, Matt Steinglass, concurs, writing, "What I'm trying to say here is that it seems to me that people may just be sick of buying new stuff. Or at least of buying the kinds of new stuff that the consumer economy of recent decades has been based on producing." Steinglass suggests arecovery will be driven by collectively demanded goods -- infrastructure and the like -- but of course that would need to be administered by the state, which is politically infeasible, given today's GOP, which doesn't care about economic recovery or rotting infrastructure but only its rentier clients.

Has there been a general shift in values, though? Do people want less stuff and are thus willing to work less? Do we choose unemployment over drudgery and better appliances? Are we all eager to "take our share of the economic surplus in leisure," as it's sometimes technocratically expressed? (I wonder if this is a reason new households aren't forming. Opting out of parenting, say, is a frugal lifestyle choice.) Reading values from macroeconomic data seems like slippery hermeneutics. (The mere fact of a drop in consumer spending doesn't necessarily mean a drop in the desire to spend, unless you assume revealed preference is the only reality that matters.) Wilkinson makes the case that for creative-class types, being an economic free agent isn't so terrible once you choose autonomy over material goods. Rather than make as much as you can, you can be a "threshold earner," make what you need for your minimalist lifestyle, and then segue into "medium chill" mode, to use David Roberts's coinage: "This is me," Wilkinson admits. "I don't want to maximise income. I want to maximise autonomy and time for unremunerative but satisfying creative work." To an extent, that is me also, and it's indicative of my relative privilege and my inherited social and cultural capital and whatnot -- it's a reflection of having a safety net in place (in the form of supportive relatives, inherited income, social capital, etc.) and the confidence that one could find more work whenever necessary. But, as Wilkinson notes, "whatever our level of education, if unemployment benefits and odd jobs add up to enough to keep us above a socially acceptable material threshold, we will not be in a hurry to accept any available employment, no matter how unpleasant or unsuitable." That sounds a little like work refusal and is perhaps why the safety net is under such systematic assault. This is precisely the sort of value shift capitalism can't afford. If capitalists lose their leverage over labor, from whom will they extract surplus value? If you can't force people to work for you and enrich yourself from it, what's the sense of being a capitalist? (Ideally the capitalists would see it that way as well, surrender to the multitude, and help usher in the great socialist millennium.)

Consumerist values have always been deployed to militate against work refusal, but they don't work as an effective carrot when there isn't enough money in circulation, or enough wages, to permit people to play that game. (Section three of this article by Joshua Clover on the financial crisis offers an overview of how and why this can happen). You can try to get people to strive for alternate forms of currency (attention, status) but if that doesn't work, that's when the stick of precarity comes into play. It seems like the end of consumerism because the stick is out and the carrot has vanished. Leonhardt, et al., are arguing that the carrot can't come ever back, which seems to imply precarity forever. If that's the case, the natural ideological move would be to sell precarity as liberation, just as consumer choice was once sold, while fighting to assure that liberation never occurs in practice, the safety net is perennially endangered, and autonomy remains instead merely a plausible dream form most people.

Freegan Identity (23 June 2010)

The Buffalo freegans profiled by Jake Halpern in this NYT magazine piece from a few weeks ago seem like a case for some Kranton-Akerlof identity economics, the basic concepts of which are well presented in this review by Tom Slee.

Freegans purport to be proud freeloaders off the wasteful consumer society: they are "dedicated to salvaging what others waste and — when possible — living without the use of currency," Halpern writes. Yet the identity is a fragile facade, and not merely because it is incoherent, as Halpern explains: "Freegans maintain that by salvaging waste, they diminish their need for money, which allows them to live a more thoughtful, responsible and deliberate existence. But if they succeed in their overriding goal, and society ends up becoming less wasteful, the freegan lifestyle will no longer be possible." The freegan identity, in the case that Halpern covers in the article, relies on institutional support that masks the way they actually help the society they profess to scorn.

The freegans' oppositional identity is something that can be factored in, game theory style, by institutional agents when dealing with them and trying to orient them toward helping contribute to the system they think they are leeching off of. That is, freegans want to provide useful services to the existing economy, but only if it makes them feel like outcasts from that economy. Their practices can only produce the outsider identity they hope for with the help of some ideologically oriented playacting from the broader establishment:

Eventually, one of the city’s “board-up crews,” which seal off abandoned homes, discovered the squatters and reported them to Judge Henry Nowak at the city’s housing court.... He was approached by a group of neighbors who lived near the mansion. They said they wanted to discuss the squatters. To the judge’s astonishment, the neighbors praised the young people, saying that they had kept the thieves, drug dealers and arsonists away. What’s more, they attested, the squatters were fixing up the place, making it less of an eyesore. Their presence, and the fact that the mansion was now occupied, had made it easier for people on the block to get homeowners’ insurance. Odd as it seemed, the freegan kids helped stabilize the neighborhood, and the concerned neighbors wanted them to stay. “They said, ‘Don’t you dare kick those kids out of the house!’ ” Judge Nowak told me.

After this encounter, the judge found himself in a difficult situation. “I was left with two options essentially,” he told me. “One would be to put the house in receivership, where I would tell all of these children that if they want to stay, they have to now pay rent.” This option was problematic, Nowak said, because the squatters were “enamored with the fact that they moved into a house that wasn’t theirs,” and given their freegan sensibilities, they would not consent to paying rent. Or, Judge Nowak explained, “I could essentially let things stay as they are and trust that the children are going to make the repairs to the property.”

For the time being, the judge decided to let the squatters stay. “It was a close call,” he told me. “It was an awfully close call.”

The freegans had basically embraced the quintessential bourgeois ethos of property improvement and had only a veil of radicalism to prevent themselves from recognizing that. Insiders -- the bourgeois neighbors -- had to try to accommodate the freegans' outsider status to continue to reap the benefits of their dirty work. Eventually they had to buy into the system overtly:

The squatters had already paid off back taxes and were paying utility bills — not the most orthodox of freegan practices — but, as they saw it, they were still beating the system. Ownership would, arguably, catapult them into the ranks of propertied classes.

“Many of us in the house see the whole system of private property as being something that oppresses people,” Tim said. “And if we owned the place, suddenly we’d be the ones kicking people out or the ones calling the cops.” But, in the end, Tim said, ownership was “a necessary step to keep the project alive.”

The obvious question at that point is, What does the "project" consist of? Is it still a freegan project, or has it evolved into an experiment in cooperative living within the institutions of consumer capitalism? It seems to me that freegan identity is probably a liability that prevents the more widespread acceptance of such experiments that might actually alter the institutions of capitalism for the better. But is there a way to motivate individuals to participate in such projects without baiting the hook with the promise of a oppositional, self-aggrandizing identity?

The complexity of that problem -- how to cultivate people who want to live in a "community economy" without their being stuck in capitalism's model of individuality -- is evoked in this introduction to J.K. Gibson-Graham's The End of Capitalism (As We Knew It), which is a condensation of A Postcapitalist Politics by the same author. Freeganism could potentially reveal alternatives to capitalism, alternative subject positions to inhabit (i.e. a different way to go about living, with entirely different guiding values and principles), but only if it abandons an ideology that is parasitical upon capitalism and emphasize instead communal approaches to production, consumption, distribution, and subjectivity -- reorganizing the sorts of markets we have and the sorts of people we become when we inhabit them.

Cable news mood management (15 Oct 2009)

Matt Yglesias noted the other day that no one but pundits watches cable news.

Just like traders have CNBC and Bloomberg on in their offices, political operatives are constantly tuned in to what’s happening on cable news. The result is a really bizarre hothouse scenario in which people are basically watching . . . well . . . nothing, but they’re riveted to it. How things “play” on cable news is considered fairly important even though no persuadable voters are watching it. And cable news’ hyper-agitated style starts to infect everyone’s frame of mind, making it extremely difficult for everyone to forget that the networks have huge incentives to massively and systematically overstate the significance of everything that happens.

You'd think it would be sensible if they all simply stopped watching, since hyper-agitation is in no policymaker's best interest and it leads to superfluous and counterproductive commentary. With not enough organically occurring news to fill 24 hours, the news channels are becoming ongoing emotional barometers instead, but they are tuned only to themselves. They try to make news themselves with a variety of cooked-up debates and pseudoevents and that sort of thing, reporting on the import of their own reports -- nothing new, as Daniel Boorstin's 1961 book The Image demonstrates. It's only a slight exaggeration to say that if you don't watch TV news at all, you are better informed than those who do, even if you are completely ignorant. (At least then you are capable of a genuine response to something that you learn about.) The recursive meta-news that makes up cable news regarding what's being talked and talked about on cable news just seems like information pollution.

Like Kevin Drum, I get virtually all of my news from online versions of newspapers and from blogs. I'm skeptical of TV news generally because I don't like emotional presentations of news or pretentious newsreaders or phony objectivity (as though the choice of presenting a story isn't subjective) or the oversimplification. Most "news" strikes me as attempts to regulate my mood -- build my confidence in the government or the economy or undermine it, bludgeon me with scare tactics ("What item in your closet is slowly poisoning your infant? News at 11") or feed me "human-interest" stories to, as Stewie Griffin might say, "make me smile." Am I just weird in that I want news as neutral and unengaging as possible, that puts me in a state of suspended emotionality? I miss the old Wall Street Journal.

Anyway, this interview at Boing Boing with a health news watchdog, journalist Gary Schwitzer, whose organization gave up on trying to critique TV health stories, offers some perspective.

In the early days of CNN, we had this tremendous, exciting opportunity. The channel could be place to go in-depth with background and be analytical and contextual. But then the management side swung the other way and preferred to be the wire service of the air -- take anything happening anywhere and report it with a quick turnaround.

If cable news simply was a wire service, that would not be so terrible, but when you pit three commercial would-be wire services against one another, we see what happens -- noise.

New frugality as old cultural war (8 Oct 2009)

I was thinking more about a line in the last paragraph of James Surowiecki's New Yorker column about consumer spending.

But the evidence for a radical shift in the way we consume seems more like the product of wishful thinking (there’s a palpable longing among pundits for Americans to become more frugal) than anything else.

It's what is in the parenthesis that interests me, that "palpable longing" that most likely refers to David Brooks, who pined for "economic self-restraint" in this recent New York Timesop-ed. Since I tend to think of cheerleaders for the consumer society as being situated ideologically on the pro-business right, I regarded this kind of rhetoric as a move by Brooks toward the crunchy left, with its preoccupation with environmental responsibility and conservation and recycling and the like. But an old Joan Didion piece about the Washington press corps during the Clinton years (aptly titled "Vichy Washington"), reminded me of the obvious point that Brooks is reaching back to an older tradition of conservative intolerance personified back then by Robert Bork:

Bork is worth some study, since it is to him that we owe the most forthright statements of what might be required to effect "a moral and spiritual regeneration," the necessity for which has since entered the talk show and op-ed ether. Such a regeneration, Bork speculated in Slouching Towards Gomorrah, by one of four events: "a religious revival, the revival of public discourse about morality, a cataclysmic war, or a deep economic depression."

This puts a religious-bigot spin on the The Shock Doctrine thesis: rather than use crisis to implement a neoliberal program of economic deregulation, conservatives should seize the opportunity presented by widespread economic misery to push through a variety of behavioral proscriptions. Didion quotes Bork's outrageous dictum that "moral outrage is a sufficient ground for prohibitory legislation. Knowledge that an activity is taking place is a harm to those who find it profoundly immoral."

This tradition makes it more understandable why pundits are "palpably longing" for a more frugal America and why they overlook the evidence that Americans have been spending more largely because the cost of housing, medical care and education have risen precipitously (thanks in part to the flood of credit inflating asset values). The new frugality seems malleable enough a concept to serve as fresh code for an old battle, that of restricting individual freedoms to preserve religious authority in society. Religious institutions once had a monopoly on meaning and doled it out in return for obedience. Consumerism, and the identity fashioning it enabled at the individual rather than community level, usurped that power, demanding only an obedience that often felt like liberty -- the restriction of self-expression to choosing among a plethora of goods in the consumer marketplace. The longing for a more frugal America is one of way of renewing the call for a more "spiritual" America, which is a way of demanding the legislation of morality in the name of values presumed to be universal and incontestable.

Wishing For Frugality: Is It Just an Enabling Fiction? (7 Oct 2009)

In the New Yorker, James Surowiecki writes about his skepticism of the much-ballyhooed new frugality. (He expands the column on his blog here.) After some zigging and zagging, he concludes:

But the evidence for a radical shift in the way we consume seems more like the product of wishful thinking (there’s a palpable longing among pundits for Americans to become more frugal) than anything else. In many categories, spending has dropped only slightly, if at all. And, while these are very tough times for retailers who believed that spending could only go up, retail sales rose briskly in August. Before we go proclaiming this the age of the American tightwad, a little perspective is in order. Even after the worst recession of the past seventy years, retail sales this year will be about where they were in 2005. Does anyone really think that four years ago Americans were misers?

His point about wishful thinking extends beyond pundits; it seems as though we all would like to see some more frugality from everyone else -- this would ease the pressure on us to spend more to keep up, and make what we purchase more distinctive. I suspect that many Americans carry around an idea of how much the U.S. should be saving, and that we would like to see as much as that as possible done by other people. Frugality is one of those traits we piously praise in others because we secretly believe that takes us off the hook for exhibiting it ourselves.

An Economist blogger makes a related point in this Free Exchange post. The credit bubble led consumers to bid up the price of desirable goods; the absence of credit will deflate those goods: "The end of the bubble years has meant an implosion in the market for many positional consumer goods." But the desire and appeal of these goods has not been lessened by our alleged moral soul-searching about the meaning of thrift.

At the same time, conspicuous consumption hasn't been driving the increase in consumption in recent years -- the housing bubble and great risk shift has. Surowiecki cites Elizabeth Warren, who made the case a few years ago that, in Surowiecki's summary, "a hefty chunk of the increase in consumption in recent decades has been the result of higher housing prices, the rising cost of medical care, more spending on education, and childcare." So it seems less likely that the sudden increase in the savings rate can be pinned to the disappearance of Veblenesque consumption. Surowiecki cites this CAP article by Amanda Logan and Christian E. Weller that attributes almost all of the savings rate jump to consumers cutting back spending on autos and gasoline. "Consumers have not altered the share of their total disposable income that they are spending on most goods and services very drastically," they conclude.

The point is that the level of general consumer frivolity cannot be extracted by simply looking at relative spending levels or broad savings rate data -- a lesson I have reluctantly absorbed in the past few years, having often attempted to make that case. I keep reminding myself that consumerism and consumption are not the same thing. The former is more a matter of marketing saturation, and of how people in a society orient their thinking, conceive of goals and their own identity. The consumer society can entrench itself deeper even in periods when consumer spending is dropping and savings is increasing. The mainstream media is responding to an apparent social need in pushing the "new frugality" narrative, perhaps to make us feel better about being unable to spend like we want to or perhaps to make us feel like there has been a moral consolation prize in the rising unemployment -- we've learned to be tough and economical and to surrender unnecessary vanities.

Frugality is a pleasing idea in the abstract, but what it means in practice is pretty flexible. In Rob Walker's most recent column, he notes how "habits of thrift and frugality have taken on the cast of virtue" recently before exploring the ways retailers are trying to take advantage of this through conspicuous discounting. But what attracts people is less the virtue of saving but rather the idea that they have gotten one over on the chumps who pay full price. That feeling is amplified by online retailers' creating members-only clubs for discounts. From Walker's column:

The members-only notion is an old one, notes Ellen Ruppel Shell, author of the recent book Cheap: The High Cost of Discount Culture, and pairs up well with the always-appealing bargain idea. “Once you become a member of a club,” she observes, “it makes you feel special, and it lowers your guard a little bit.” Discounting sparks similar feelings, she continues. “You often think you’re the only one in the world that could have found this. Which is why you brag about it to your friends.” There’s a trade-off on these sites, of course: the air of clock-ticking excitement isn’t exactly conducive to considered decisions. “You have to be a very savvy consumer to do your shopping this way,” Shell cautions.

But in the midst of thinking everyone else is a sucker for missing out on the bargains we've found, we become the actual suckers:

To reverse Shell’s formulation, it’s easy to conclude that if you’re shopping this way, you must be pretty savvy — and maybe that virtuously thrifty feeling gives you license. “You may think, Oh, I’m going to get a great pair of shoes today,” suggests Stacey Santo, a vice president of RueLaLa, “and then surprise yourself by walking away with a spa treatment.”

A climate of frugality may be nothing more than an enabling fiction, the necessary pretense of this particular moment to allow us to fulfill retailers' wishes and mistake them for our own.

David Brooks's moral economy (1 Oct 2009)

A recent David Brooks column in the New York Times foments about the "erosion in economic values" that he expects to launch the "next culture war."

A crusade for economic self-restraint would have to rearrange the current alliances and embrace policies like energy taxes and spending cuts that are now deemed politically impossible. But this sort of moral revival is what the country actually needs.

If it sounds familar, it's because he wrote the same op-ed a year ago. There he wrote:

There are dozens of things that could be done. But the most important is to shift values. Franklin made it prestigious to embrace certain bourgeois virtues. Now it’s socially acceptable to undermine those virtues. It’s considered normal to play the debt game and imagine that decisions made today will have no consequences for the future.

Basically, Brooks is unsatisfied with the much-heralded New Frugality, and he discounts the data that indicates the U.S. savings rate has surged in the past year.

Over the past few months, those debt levels have begun to come down. But that doesn’t mean we’ve re-established standards of personal restraint. We’ve simply shifted from private debt to public debt. By 2019, federal debt will amount to an amazing 83 percent of G.D.P. (before counting the costs of health reform and everything else). By that year, interest payments alone on the federal debt will cost $803 billion.

The logic here seems suspiciously nonsensical. Conflating public and private debt is a subterfuge if you want to rail about personal morality. If there is a connection, as Krugman notes, it's Reagan's fault. (He proved, after all, that "deficits don't matter," as Dick Cheney put it.) Kevin Drum, channelling Elizabeth Warren, notes that Americans stopped saving when their wages grew stagnant and their bills kept increasing, and banks were deregulated enough to lend recklessly to them.

And as Andrew Leonard argues at Salon, morality has little to do with our tendency to respond to economic incentives:

Americans ran up a lot of debt in the last few decades. There's no question about that. But one of the most striking developments of the last year has been how Americans have responded to the financial crisis at an individual level. We made a collective decision to start saving and stop spending. Is this because we woke up one morning last fall and suddenly became born-again Calvinists? No, it seems clear that we were responding rationally to economic incentives. The economy crashed, unemployment surged, home prices plummeted, and presto: We all started pinching pennies. Morality, insofar as expressed via our spending habits, is merely a reflection of the economy.

That's why I've generally been skeptical about the new frugality -- we've been trained by being raised in capitalism to respond to the economic drift and call that morality; the idea that we have a morality that supersedes what is happening in the economy is outdated, which is what I think Brooks is lamenting. He wants morality to drive the economy rather than vice versa, but for that to be the case you have to question the conservative tenet of trusting the market to arbitrate social conflicts. You would need to champion a resistance to economic incentives, a dismantling of the market-made consciousness, a rejection of the idea that there is justice in economic equilibria, of the idea that markets are fair. Religious conservatives can probably make that case and argue for a subjectivity grounded in religion, not the market. Brooks seems to want it both ways, though: He wants to condemn consumer desire as evil but champion the prerogatives of the businesses that have ushered in the consumerist era that have done so much to instigate that consumer desire.

When we respond to incentives, ideologically it seems as though we are being allowed to choose freely. If we are expected to adhere to some higher set of values, often these register as constraints, prohibitions and proscriptions -- curtailments of freedom. The problem is that "freedom" has come to be defined in terms of the breadth of consumer choice so that other sorts of inequalities (income inequalities in particular) could be allowed to persist. Not clear how a return to Calvinism can be sold as liberating.

Consumerism: By-product of international finance? (21 Sept 2009)

It's easy to moralize about consumerism, assume it has grown up somehow out of the malfeasance of marketers and the laziness and gullibility of consumers, who are eager to replace other fulfilling ways to occupy themselves with shopping, a seemingly derivative activity that replaces the joy of developing our capabilities with the pleasures of passive ownership. This wish to moralize stems from a desire to individualize things far beyond our control and make it seem as though we are ultimately responsible for the sort of world we live in and that ultimately it suits us; it is the product of the sorts of choices we can imagine people making. Nobody, for instance, might have seemed to want that condo building that went up on the corner, or that brand new shopping center down the street from a nearly identical one, but it doesn't seem so crazy once you see the people living or shopping there. And you can think to yourself, if we can only stop that guy, the guy walking into that new Dick's Sporting Goods, or the guy who just leased that new condo, or who took out the mortgage on that townhouse in the new development where the horse farm used to be, we can restore some sanity and balance to our lives and the rate at which the familiar is changing all around us.

But what if the choices for them (and for us) are stacked, are pre-decided to a far greater degree than we are willing to recognize? What if the matrix in which we are making our decisions is shaped by things that our puny politics can't touch, that our individual choices are grains of sand in a vast socioeconomic combine -- we might have chosen to stick to some contiguous grain to form a minute little cluster, yet some much larger force has decided to shape up into a sand castle built too close to the incoming tide. (That was a little fanciful, but you see what I am getting at.)

The point is, it may be that international capital flows have driven our consumerist microbehaviors much more than we know; that it wasn't just personal ignorance, irresponsibility, cupidity, greed and covetousness that drove the housing bubble and the boom in consumer debt; but instead those moral motives came after the fact, after our fate was sealed by the wash of investment coming in from overseas. We didn't want consumerism, but someone had to sop up all those Chinese exports. We didn't want to be in debt, but there were so many foreigners buying dollars, that the banks basically had to give money away to anybody, and who will turn down money when it seems to be offered to them for free? And if they think it sounds too good to be true, well, that's precisely what marketing is for.

Liaquat Ahamed suggests took something like this took place in the past decade in an essay in the New York Times Book Review, of all places. He taps into a sort of historical reasoning that is far removed from finger-pointing and shaming people for wanting stuff and behaving irresponsibly:

In the wake of the 1997 financial crisis there, countries in East Asia set out to build up war chests of dollars as insurance against domestic banking runs or downturns in the global economy. At about the same time, China embarked on a program of export-led growth, engineered by keeping its currency artificially low.
Interpretations of what happened next differ. Some argue that to absorb these goods from abroad while avoiding unemployment at home, the United States very consciously stimulated consumer demand. The country, in effect, was forced to live beyond its means. Others believe that the Fed misread the fall in prices as a symptom of inadequate demand rather than for what it was — an astounding, once-in-a-generation expansion in the supply of low-cost goods — and kept interest rates low for an unusually long time, which provoked the real estate bubble.

The flood of money was coming in and it had to go somewhere. If you accept this logic, the question becomes, how does a nation "very consciously stimulate consumer demand"? Is it simply a matter of sending out checks -- metaphorically dropping cash from helicopters, Bernanke style? Is it the president telling everyone to return to business as usual and start shopping, as Bush did after 9/11? Is it working ideological visions of what the good life is supposed to consist of in speeches and political campaigns? Or is it something that plays out more indirectly: Banks increase their marketing, which contributes to the promulgation of a certain view of a successful life, one that hinges on consumption rather than savings. Luxury goods makers begin trying to reach aspirational consumers, i.e. turn us into aspirational consumers. People begin to evaluate their wealth not in dollar figures but in belongings, in house size, in car size, in the extent of their credit line. I don't know what the answer is, but it seems that if there is such a throttle that can be controlled for consumer demand, we would want to seize control of it for ourselves. I never got the memo from the "Untied States" that I was now expected to consume more and like it. Instead, I ended up consuming more and felt out of control about it; I found myself spending more time in stores without knowing why and without a clue about how to reverse the trend. (This was before the government started sending out tax rebate checks to "stimulate" us all.)

Ahamed argues that the U.S. "found itself literally operating as a gigantic bank, taking short-term liquid deposits from countries with surpluses and investing the money in long-term, risky assets at home and abroad." -- I don't know if that "literally" belongs there, but the upshot is that the U.S. basically imported risk from abroad and distributed it among its citizens -- with a little creativity one could probably reconstitute this process as what Jacob Hacker has dubbed the Great Risk Shift -- the way in which middle-class people in America now have less of a social safety net. If we wouldn't take on debt and risk voluntarily, we could be forced to by the slow and steady withdrawal of social services. Goodbye Social Security, hello 401K loaded with all sorts of investments that turn out to be surprisingly dicey, like those money market accounts that teetered on the edge of buck-breaking last fall. Ahamed cites FT columnist Martin Wolf:

As Wolf traces out so well in his 2008 book “Fixing Global Finance,” the United States was able to absorb all the goods coming out of Asia only by letting its consumers go progressively deeper into debt — a process that had its own limits. Moreover, the flood of money simply overwhelmed the capacity of financial institutions to handle it. A lot, for example, ended up in the most unregulated segments of the global banking system, like off-shore deposits on the books of non-American banks. These banks, now awash with cash and desperate for places to put the money, became easy marks for American investment banks seeking to peddle securitized mortgages. When a large percentage of these loans went bad, instead of a dollar panic we had a global banking crisis.

It's hard to grasp the idea that a "flood of money" can be a problem, but that is what happens when we confuse money with prosperity -- money has to be moving to ahve value, and there can be too much of it around to keep it moving. Too much money means that the economy has become too imbalanced, that we have exceeded inherent limits, that socially useful labor has become detached from the society it was supposed to be useful for (i.e. impoverished Chinese making junk for underemployed America).

It's not clear what causes these global financial imbalances -- governmental trade policies are part of it. But individual citizen choice doesn't seem to factor in. Still, there must be reliable mechanisms by which the requisite consumer behavior is extracted from given populations. Is it some inborn greed in human nature that gets tapped into or sublimated as the situation requires? Or is it the existing class structures around the world, and the endless struggle for mobility within them (and over the signals that represent belonging) that plays the integral role? Is this the essence of the class struggle, a means of balancing international capital flows?

Anyway, if global money flows have reversed, American consumers will find the field in which they make choices suddenly changed. Suddenly they will seem thrifty and moral again, especially in the aggregate, and we can begin to generalize about what the consumption data means morally, what it tells us about how people really are. This is where a recent post by Anton Steinpilz at Generation Bubble picks up the story:Taking off from one of the dime-a-dozen "recessionista" stories about the New Thrift, Steinpilz claims that the middle classes are now "worried that their children and their children’s children will have snatched from them the exorbitant privilege of indulging their ephemeral pleasures with made-to-break trifles of sweated and immiserated workers throughout the developing world." To replace that lost privilege, they will start to loot the lifestyles of the local poor, raid their T.J. Maxxes and Aldis, and co-opt what constraints the poor have always found inescapable and make them into accoutrements and gestures, apparent trends in the hands of those classes that still might have chosen differently. When the middle class could afford to, because of international financial trends, it emulates the rich; trends have reversed, they emulate the poor; either way they remain class-signifier parasites. The rich could always contrive more positional goods to keep themselves differentiated; the poor instead (if I am reading Steinpilz correctly) find the meaning of their lives seized from them and injected into an alien lifestyle.

So, a theory: Destabilization along the boundaries of social class allows for the calibration of individual behavior with the larger demands of international capital flows, without ever allowing individuals to recognize the connection or opt out of the game without giving up the principles of personal identity altogether.

Cheap and fat (17 Sept 2009)

Vox EU posted a study by Neil Gandal about the relationship of obesity to price sensitivity.

Is increasing obesity due to changes in relative food prices? High-energy density foods are less expensive per calorie than fresh fruits and vegetables. Using data from Israel, this column shows that price sensitivity has a significant impact on obesity. In fact, price sensitivity may be more crucial than income.... We find that women who stated that price was not important at all when purchasing food products had a BMI 1.3 units below those who stated that price was “very important.” A reduction of 1.3 units in the BMI for all obese women would move approximately 25% of women who are in the "obese" category to the "overweight" category.

In other words, according to this study, people who are cost-conscious while buying food tend to be fatter, even after controlling for income. (So perhaps commentators should be careful about reflexively linking poor and fat together; fat and cheap is the proper knee-jerk insult combo.) It seems to suggest by implication, too, that being poor doesn't necessarily make you more cost-conscious about food, which seems a bit hard to believe. Perhaps you don't self-report as "cost-conscious" when you can't choose to spend more on food even if you wanted to.

Eating badly can seem like an ignorant thing to do, and conservative types tend to assume that the poor are poor because they are ignorant as well. So it seems to make ideological sense to them that the poor make bad eating choices out of the same supposed myopic ignorance that has made them "choose" poverty. They aren't forced by straitened circumstances to eat unhealthy food; they choose it. The study could be distorted to support that view. But the study also would seem to suggest that some of the wisdom and economic common sense that the poor are sometimes presumed to lack -- being more rational in the marketplace, finding good deals, being thrifty, etc. (the imprudence that allegedly keeps them poor) -- is precisely what's correlated with the unhealthy eating, that bargain hunting and obesity stem from the same miser pathology. What's clear is that the rationale of the market wreaks havoc on whatever our body might otherwise tell us about what we need nutritionally. We make market-based decisions about what body needs, letting the market dictate those needs, to our body's detriment.

The context for the study is the proposition of taxes on sugar drinks. Gandal notes that "Drewnowski and Barratt-Fornell (2004) conducted a simple "experiment" in a Seattle supermarket and found that, per calorie, carrots cost virtually five times more than cookies or potato chips, and orange juice costs virtually five times as much as soft drinks." One of the reasons for this, as Michael Pollan has argued and as Gandal notes, is U.S. agricultural policy:

Between 1985 and 2000, fruit and vegetable prices in the US increased by about 40%, while the price of soft drinks dropped by 23%. These seem like large changes in relative prices. According to Pollan, the change in relative prices is in large part due to the US farm bill, which provides generous subsidies for corn and soy, which are prime ingredients in high-density “processed food.”

The Economist's Free Exchange blogger puts the findings in perspective and makes a good point: the U.S. should take on the irrational agri-subsidies first before levying nanny-ish taxes on unhealthful consumer behavior.

Learned worthlessness (10 Sept 2009)

In the most recent NYT Magazine, the always interesting Jon Mooallem has an article about the self-storage industry in America. The need to store one's belongings in a 6-by-6-foot box miles away from where one lives is a pretty good indication that some sort of insanity has taken grip, but the very normality of that scenario shows just how entrenched consumerism has become. Once the need for storage was transitory -- a move or a divorce necessitated it. But in recent years, "the line between necessity and convenience -- between temporary life event and permanent lifestyle -- totally blurred," Mooallem explains. It has become convenient to live as though we are always in transition, that no set of belongings is stable or anywhere near complete or fulfilling. Obviously, this betokens the triumph of a consumerist ideology.

We accumulate things that we can't possibly use, but remember enough of what they once signified when we bought them -- the moments of excitement and fantasies being fulfilled that brought us -- that we can't throw them away. Much of what is stored is furniture, it turns out, in part because it's expensive enough not to seem disposable, but cheap enough to easily replace:

The marketing consultant Derek Naylor told me that people stockpile furniture while saving for bigger or second homes but then, in some cases, “they don’t want to clutter up their new home with all the things they have in storage.” So they buy new, nicer things and keep paying to store the old ones anyway. Clem Tang, a spokesman for Public Storage, explains: “You say, ‘I paid $1,000 for this table a couple of years ago. I’m not getting rid of it, or selling it for 10 bucks at a garage sale. That’s like throwing away $1,000.’ ” It’s not a surprising response in a society replacing things at such an accelerated rate — this inability to see our last table as suddenly worthless, even though we’ve just been out shopping for a new one as though it were.

This phenomenon suggests we are afflicted with a kind of schizophrenia about goods. As behavioral economists have long-known, we overvalue what we own (the "endowment effect"), yet at the same time we can't resist replacing it when we perceive a bargain. We appreciate taking advantage of a sale for its own sake, regardless of whether the opportunity conforms to any actual need, and regardless of whether we can accommodate the souvenir of our consumer triumph. We become trained to recognize potential value in everything and have a hard time recognizing when something has become worthless. It seems like the dark side of the congenital optimism that Americans are supposed to have; we can't give up on anything we once invested our faith in.

Though it has prompted the kind of turmoil that was once the storage industry's bread-and-butter, the current recession is also forcing people to give up spaces because they can't afford the rent. A measure of my own insanity: all I could think of while reading Mooallem's article was "Wow, I bet the dumpsters outside these storage units that people cant afford anymore are full of great stuff." But in this, I am just a reflection of that American optimism. Mooallem secured this great, telling quote:

“I really think there’s a spirit that things will turn around,” Jim Chiswell, a Virginia-based consultant to the industry, told me. “I believe that my children — and both my children are proving it already — they’re going to have more at the end of their lifetimes, and more success, than I’ve had. And so will their children. I don’t believe the destiny of this country as a beacon of freedom and hope is over. And I believe there will be more growth, and more people wanting to have things and collect things.”

What is hope if not the hope to have more?

Good-enough tech (2 Sept 2009)

Wired has an article by Robert Capps about what he has dubbed the "good-enough revolution" -- basically meaning the way cheap netbooks with few features are replacing laptops. Rather than buying state of the art gadgets, people are beginning to buy tech products that are simpler to use and do enough to satisfy their basic needs. Seems sensible enough; actually it's sad that this would constitute a "revolution" rather than common sense. "To some, it looks like the crapification of everything. But it's really an improvement," Capps notes, almost apologetically.

I admit that I sometimes find it hard to settle for what I know is good enough when it comes to tech; I tend to imagine what I could do with the various fancy features than remain realistic about what I actually will do. The gadgets are occasions for dreaming, especially at the point of consumption. Then, only after I own them do I feel overwhelmed by the learning curve and by the surfeit of opportunities. (It turns out I'm not really going to turn my computer into a TiVo after all. And I am not going to learn Avid.) But I bought an Eee netbook recently because I finally figured out that only certain features matter to me in a portable computer -- size and battery life. And I already have a powerful home computer to handle what little heavy processing I have to do. So for me, going with "good enough" is contingent on already ahving a backload of tech I can't use to its fullest capacity already.

Of course, established tech companies count on bells-and-whistles-induced obsolescence to fuel their growth, and if buyers begin to feel like yesterday's gadgets are all they will ever need, the companies will be in trouble. And if Capps is right that getting something "good enough" rather than "new and improved" is becoming the default consumer mind-set, then a principal tenet of consumerism would appear to be under siege. It would seem to hearken the return of use value, and the culture-wide exposure of early adopters as the chumps they are. "It's a reflection of our new value system. We've changed," Capps declares, stretching his idea to fit all sorts of efficiency measures undertaken across different industries, at which point hte concept becomes kind of meaningless. Any business wants to just enough to keep its customers happy; we figured out not to give away surplus value in a much earlier revolution. If consumers are content with less, then that is what they will get.

Tech is one thing, where new features are often superfluous and irrelevant to the core function -- a bit like auto reverse on old cassette decks. But when consumers accept less in other areas, like health care, it may because of asymmetrical information. They don't know they can get more or better. At a certain point, in order for the companies to get away with "good enough," they have to bank on customers being ignorant, willfully or otherwise.

Class consumers (21 Aug 2009)

Yves Smith noted a WSJ article reporting diminishing retail sales and heralding the new austerity in American consumers. This tidbit didn't quite fit the frame: "A cashier at Target in Los Angeles checks the authenticity of $100 bills." Counterfeiting is not exactly the act of an austere, frugal consumer, though it may be the act of debt-starved one.

Zero Hedge unleashed a long analysis of "the stratified American consumer" last weekend, making the useful point that the way the designation "American consumer" is thrown around tends to conceal the fact that it is not a homogeneous group. Statements like "Major retailers reported that American consumers are continuing to hunker down" from the WSJ article are not especially useful, because it is extrapolating a universal mental framework from aggregate macro data. (The same problem arises when a negative savings rate is extrapolated into "all Americans are spendthrifts," a rhetorically tempting logical leap I've certainly been guilty of.) Zero Hedge:

A drill down of disposable net income (after tax) and net worth, demonstrates why any discussion of "generic" consumers should be much more properly phrased as an observation of the "Wealthy" and "Everyone else". The disposable income difference between the richest 10% and even the next richest decile is staggering: a 3x order of magnitude....
While 10% of the population collects 40% of disposable income, it represents 57% of net worth! This is an impressive conclusion: on a lowest common denominator, the Net Worth variance between the 10% of the population that make up the wealthy and the 50% that comprise the middle class is over 8x! No wonder the aspirational consumer was the most vibrant retail category at the peak of the bubble: if the middle class can not accumulate 8x the net worth it needs to migrate into the top decile, it can at least dress like it. Unfortunately, it did these purchases on credit and is now paying for it (or not).

The upshot of this analysis is not surprising, but worth reiterating: that the data trends tracked regarding consumption reveal consumerism as a middle-class phenomenon driven probably by status envy of the upper-middle class for the upper-upper class. That the gap is widening means that the consumers now discovering austerity aren't liking it very much and that there is no paradigm shift to a culture of maximum utility extraction. Also worth noting: The lower classes (the bottom 40% who consume 12% of what's consumed in America) are statistically and economically irrelevant. I wonder if there is a social corollary to that -- beneath a certain income point, one's subsistence-style consumption becomes anonymous. The thought inspires in me a classic middle-class fantasy of the escape into squalor, a la the George Orwell of Down and Out in London and Paris: the dream that subsistence living is automatically authentic, and this authenticity compensates for the misery of relative deprivation.

The conclusions drawn in the Zero Hedge post seem ominous: The recession has hurt the lower and middle classes more than the wealthy, and has merely increased the wealthy's advantage. Calls for a consumer-led recovery will draw on their increased spending power, and when that spending shows up in the data it will mask the fact that more people in America are making do with less -- suffering the new frugality at the conspicuous spenders' expense.

Is it safe to say that the wealthy have managed to game the system yet again and avoided a significant loss of wealth, while maintaining sufficient access to credit? If in fact that is the case, a case could be made for a consumer lead-recovery, granted one that is massively skewed to the 10% of the population which consumes 42% in the US.

At that point, all the talk of the era of frugality will be over, even though more of us will be living it. What the Zero Hedge scenario means, as some others have remarked (now I can't find the links, grr), the U.S. will become more like Brazil -- a wealthy elite, with a monopoly on the social power that comes from the power to spend in a consumer society, living in gated communities with elaborate collections of luxury goods, with bodyguards for their children and so on, while the rest of the population is increasingly impoverished.

It reminds me of Baudelaire's The Eyes of the Poor, the poor family staring in at the lovers in their leisure at a "dazzling" cafe, whose decorations depicted "all history and all mythology pandering to gluttony." Increasingly, we are becoming that poor family, spectators of the heroic consumption of the upper classes. Thanks to the inexpensiveness of media entertainment, we consume the cheap images of their class status and derive what gratification we can.

The eyes of the father said: "How beautiful it is! How beautiful it is! All the gold of the poor world must have found its way onto those walls." The eyes of the little boy: "How beautiful it is! How beautiful it is! But it is a house where only people who are not like us can go." As for the baby, he was much too fascinated to express anything but joy -- utterly stupid and profound.

Meanwhile economic forces cement the boundary between us and those in the cafe enjoying the splendor, continue the redistribution upward, making sure we can do nothing but marvel at wealth.

"The era of frugality" redux redux (14 July 2009)

I'm generally skeptical about proclamations of the "new frugality," because I'm not convinced that we know what to do with ourselves if we are not shopping. Consumerism, as an end in itself, has infiltrated most activities, sapping away their intrinsic appeal and making them seem reliant on consumerism, rather than vice versa. Deliberate frugality has a certain novelty appeal, but when that wears off, it will probably feel like privation, not sane living within reasonable limits.

But when viewed through the lens of economic data as opposed to the requirements of consumerist ideology, the potential for frugality looks quite different. In this paper (pdf, via DeLong) economists Christopher D. Carroll and Jiri Slacalek claim that the consumerism party is over:

our best guess (illustrated below by forecasts from a simple
model) is that the drop in overall consumption spending will not be speedily reversed; indeed, we project that the saving rate will rise a bit further from current levels before stabilizing somewhere not far below the saving rates that prevailed before the era of financial liberalization that started in the late 1970s. But we would not be greatly surprised if the saving rate ultimately rises even more than in our most extreme projection. In answer to the question in our title, our view is that American consumers are not merely resting from their former role as the world’s champion consumers, they are permanently reforming their spending patterns, in response to the end of the period of ever-more-available credit that fueled the unsustainably high spending of recent years.

For them, the key factor in the advance of consumerism has been credit availability; implicit in their argument is the idea that consumerist ideology flows from such factors -- the credit is there, and then its abuse is rationalized by a consumerist ideology. Perhaps. But should we expect a painful lag as the new base economic situation gives birth to a new consumer mentality? Won't we fight this sudden need to save, having been trained to neglect it? Or is the economic crisis truly traumatizing the spender in us, obliterating it?

Gluskin Sheff analyst David Rosenberg, who was right about so much of what happened in the housing market, argues (pdf) that the American economy had a "consumption bubble," which now makes an actual "era of frugality" inevitable. As he puts it, "Getting small is the new trend," but that seems a bit misleading. He doesn't make the case that people are excited about consuming less. His argument relies more on the fact that Americans accumulated so much stuff during the past decade of consumer credit expansion.

what makes this downturn different and more troublesome than its predecessors is the downside potential for consumer discretionary spending. The level of non-housing durable goods assets on household balance sheets -- even after adjusting for the increase in the population and inflation, so we are looking at the ownership of “stuff” -- is almost 20% higher today than it was during the last consumer recession in 1990-91 and 40% higher than the consumer recession of the early 1980s.

People have a lot more stuff now, as we speak, so presumably they will find it much easier to maintain a lower level of consumer spending going forward. But that assumes that people were buying stuff because of the stuff, and not for the thrill of the buying -- the rituals of shopping, which culminate in acquisition but then must be started anew to provide the same satisfactions. The stuff we already own is sort of pointless in that respect; what the recession perhaps will do is reacquaint us with the pleasures available in the stuff we have already amassed. Maybe we will set about romanticizing the thrill of discovery in our own closets rather than in retail world. But for all that stories about the joys of frugality, I'm not convinced this is actually happening. It still seems that saving is regarded as "painful" and that increased spending will be regarded as a return to health, both for individuals and for the macroeconomic picture.

Corporate 99-cent stores (17 June 2009)

As much as I like to cheerlead for hard discounters like Aldi, my love does not extend to the chain dollar stores, the predatory lenders of retail. These include Family Dollar, Dollar Tree, and Dollar General, which Daniel Gross recently profiled for Slate. Dollar General, as Gross explains, is doing well in the recession, but not necessarily because it offers cheap deals. Instead, they have found a better way to exploit the prejudices of their often captive small-town Southern populations.

Rather than simply pile up cheap bottles of detergents and ultracheap clothes—truth be told, only about 30 percent of the items it stocks retail for less than a buck—Dollar General began to think about how the firm could be more relevant to its customers. For example, even though most of Dollar General's stores are in the South, which is hard-core Coca-Cola country, the stores had carried only Pepsi.

On my recent cross-country road trip, I found that these sorts of stores sold the same crappy quality of goods that Wal-Mart specializes in, only they charged more for them and had a less-overwhelming selection. Also, they were like traditional mom-and-pop dollar stores in that they were laid out somewhat chaotically, with no rhyme or reason to where you might find items you were looking for. Ice chests might be next to the off-brand shampoos. Of course, in theory I think that chaos is a good thing -- it runs counter to the idea that shopping should be "fun" and hassle-free and contributes to putting shopping in what seems like its more proper place in our lives. It should not be an experience, entertainment in and of itself, but a chore. When shopping is convenient, this would seem to help dispense with that chore and expedite us to our other activities, but often convenience is geared toward getting us to spend more and enjoy ourselves in the store, exist in the fantasy prompted by owning goods rather than the activities that actually use them.

I'm entirely in favor of deglamorizing shopping, but the corporate chain dollar stores, while certainly unglamorous, don't seem like the answer. Stores like Dollar General combine inefficiency with bad deals, banking on its reputation as a bargain outlet to disguise the fact that its prices aren't actually all that low and taking advantage of the fact that they often stand as the only retailers in the interstices of rural America, the vast underpopulated swaths that are too scrawny for Wal-Mart to pick at.

Chinese saving (8 May 2009)

Via Barry Ritholtz comes this chart, depicting trends in consumption in China:

As Ritholtz notes, a similar chart for the U.S. would be somewhat different. Economists who are concerned about global trade imbalances have long wonder when the Chinese consumer will emerge and begin to soak up its share of the world's output, instead of the Chinese Central Bank stockpiling foreign currencies. This chart seems to suggest that it won't happen anytime soon. What data like this makes me wonder is how the Chinese experience their own relative prosperity, how the consequences of rampant economic growth are experienced if not in terms of increasing purchasing power and more goods and more choices.

Sometimes the argument is made that the Chinese must save more because the social safety net there is extremely tenuous -- they don't even have the comfort of titles to property and social services are spotty and the bureaucracy presumably needs to be greased with many bribes and that sort of thing. This sort of logic would then be flipped to argue that a low savings rate is proof of a just, confident, and well-functioning society -- it's not a matter of impulsive consumers as the wrongheaded moralists and anachronistic puritans would have you believe. It strikes me as a conundrum of consumerism that the failure to save could be read blithely and myopically as the accomplishment a successful economic equilibrium, as though the fund for future investment to sustain those consumption levels were entirely irrelevant. Consumerism -- an economic order based on maximizing consumer spending -- must encourage the idea that savings are a kind of "glut," a residual that proves an inefficient sort of budgeting has taken place somewhere. Personal savings can then feel like a personal failure to find enough stuff to spend one's earnings on, to be sufficiently full of desires, to make having worked worth it. In a culture in which we are basically compelled to spend to keep the world as we know it going, accruing savings can leave us feeling guilty for not wanting enough. It's possible that at this point, we would feel too guilty to ever believe that we are satisfied with what we have.

Is authenticity born in recessions? (29 April 2009)

First, I saw this PSFK item that posited a link between the economic downturn and the reutrn of some grunge-fashion tropes.

Ripped stockings, boots, and short babydoll dresses (in floral and solids) are being donned by women, while boys are sporting the ubiquitous flannel button down and tights pants.... One theory on why these trends are re-emerging is that perhaps in times of economic instability youth prefer to dress down out of modesty and solidarity with those experiencing hardship, as opposed to showing off an opulent style, which is prevalent during boom times. This idea isn’t that far-fetched in that grunge fashion as we know it grew to popularity during the recessions of the early '90s, and that the king of all British fashion movements, punk, was in theory started as a social reaction and act of rebellion as opposed to merely a fashion statement. While for some time trend watchers have predicted the demise of heavily branded logo apparel, it seems that conspicuous consumption has truly become gauche in the fashion world.

I am highly skeptical that this is an expression of "solidarity" or a rejection of brands and conspicuous consumption. Fashion can't really be a medium for solidarity -- it is inherently about differentiation and stratification, about making sure one is perpetually insecure about one's fashionability or ultimately one's status. And if I was poor, and some trust-funded kid in Bushwick let it be known that they were wearing purposely shredded clothes in my honor, I doubt that I would feel flattered or recognized. I'd probably feel condescended to, if not utterly effaced. That said, it may be an attempt to capture an ephemeral social mood in one's clothing, an attempt to be timely and at the same time reinforce fashion's supposed vitality and relevance.

If fashion can be made to seem "relevant," than so can narcissism, thereby redeeming all the energy spent fretting about the currency of one's look. At that point both fashion and one's own carefully groomed and signfied identity take on an all-important air of authenticity, seeming to connote something deeper than the ability to predict and track trends. Adhering to fashion, participating in it, for a fleeting moment becomes a way of simultaneously expressing subversiveness, the real, the truth -- about oneself, about the world. In better times, the "truth" is irrelevant, valueless, unnecessary to fashion, which can revert to its more natural function of connoting that special frivolity that comes with purging the accursed share.

Incidentally (speaking of narcissism), in 1992, I was hardly a doctrinaire flannel-wearer, but I certainly listened to the music that would be labeled later as grunge. It never would have occurred to me to consider its relation to the economic climate at the time. I had no idea about the recession at all. Back then I was young and took for granted the notion that economics and art were separate, autonomous spheres -- good music was kept unpopular by some conspiracy of bad taste and ignorance. I was dismayed then was the idea that bands like Nirvana were going mainstream, creating the reified category of "alternative" and ending the viability of the crypto-rebellious subject position I had stake out for myself in college. (It involved wearing a leather motorcycle jacket, going to City Gardens a lot, and donating plasma to buy CDs.) I had thought I was outside fashion, but fashion trends sort of engulfed me -- perhaps I was always already breathing inside its bubble -- perhaps I still am.

Then, I read this Peter Schjeldahl essay about an exhibit of early 1980s "Pictures art" at the Metropolitan Museum in New York, including Barbara Kruger, David Salle, Richard Prince, Cindy Sherman, etc. -- artists that he says "demonstrate the limits of critical knowingness as an artistic strategy." He regards them as also consciously responding to down economic times (which seems more plausible than the argument about fashion): "Born of recessionary, disenchanted times, Pictures art shared menacingly cynical attitudes toward mainstream culture with punk rock, in night-life venues, and with deconstructionist lucubration, in academe. It yawed between those poles: sardonic burlesque and stilted critique."

In other words, it was among the first recognizably postmodern art movements, and it foreshadowed the whole idea of a stable "alternative" culture that could be something other than hermetically avant-garde. Here we see taunting political gestures presented with no corresponding belief that the audience will be inspired to do anything about things; instead viewers will be permitted a smug satisfaction of having "gotten it" and escaped being one of the clueless folks who make perpetuate mainstream culture's oppressiveness. This sort of art creates the possibility of unifying an audience around the idea of indifferent resistance. This group of would-be rebels are always conscious of the impotence of their pastures, but rather than lament it, they find it affirming, guaranteeing as it does their outsider status, their transcending ordinariness. It's a short leap from this sort of ironic aesthetic to the constant self-consciousness that fashion and technology have also conspired to induce.

In general, these two items have prompted me to wonder: Do recessions provide the appropriate, or perhaps requisite, climate for manufacturing authenticity? And by authenticity, I mean not a measure of how true to oneself one may have been as an artist but an aesthetic quality that connotes subversive cynicism without verging into actual revolutionary politics or anything else remotely practical. If so, is that because it is functioning as a valve for unrest that might otherwise find political expression or contribute to populist ferment? Do culture producers, artists, and their agents instinctively recognize the market potential of pseudo-subversive art during downturns, art which also happens to allow discontent to find social expression in a harmless way? It's probably not calculated. But downturns seem like the time when, for example, having the image of being a "band with no image" is a successful strategy. Authenticity is manufactured along those lines, to redeem the culture industry of its frivolity in more buoyant times.

Box of books in the trash (27 April 2009)

Who says serendipity is dead? While I was jogging around my neighborhood yesterday, my run was interrupted by one of my favorite things to stumble upon -- a box of books being thrown out. This happenstance allows me to (1) acquire several more books of marginal relevance to me for the nearly always margin-defeating cost of free and (2) believe there is some sort of destiny in my reading and them and extracting what I can extract from them, all while (3) feeling like I'm performing a noble act of unconsumption, resuscitating something old and avoiding an unnecessary new purchase. If we need to be constantly rearranging our belongings to be continually reaffirming our ever-unstable self-concept, why not do it through acquisitive acts outside the economy?

Anyway, at this particular treasure trove (I guess if I used Twitter I would have immediately posted the address so all my non-existent friends in the neighborhood could go check it out?), my attention was arrested particularly by one spine, which read "QUANT by QUANT." What was this? Was it the anonymous confessions of a hedge fund manager? Not exactly. It turned out to be this:

Very mod. Inside are a bunch of pictures of Mary Quant cutting clothes and looking at her own handiwork through shop windows. I also got a copy of Naomi Wolf's The Beauty Myth, a book about teen angst called Suburban Youth in Cultural Crisis, and this book, which I have read before but whose cover I find irresistible:

I read this book a few years ago mainly because I liked the title and found it almost impenetrably strange. If I remember right it is a Heavenly Creatures-like story of girls acting out against the patriarchy in their own misguided way. (I hope that is not too glib.) I've probably owned three copies of it in the apst, all of which I have given away -- this is my fourth. I will probably tear the front off and use it as a bookmark.

Anyway, as I left the box behind, I immediately began to do exactly what I frequently complain about in other posts -- draw conclusions about what sort of person could possibly have owned this strange concatenation of books. Is it someone who took a feminist literature course and is only now getting around to casting off the books? Does that mean the person's feminism has waned, or that the person has moved beyond the need to keep books like The Beauty Myth on the shelf as proof? Was this person a child of the suburbs who had resettled in the city (like me), or was this person just vaguely interested in a 1970s perspective on an evolving social concern? Most important, perhaps: Was this person a mod? A rocker? A mocker? Or were they someone like me who saw this book in a thrift store and thought it a kitschy artifact? What are people going to think of me when I throw it away?

It's easy to see how this mode of thinking reinforces itself and generates a low-grade cultural paranoia. It's easy to let oneself off the hook and say, Oh, it's human nature to perform such analyses and typecastings, as well as to use objects to define ourselves, but it seems ultimately more fruitful and hopeful to wonder what about our current society invites and provokes this sort of thing, which seems to trap our identities in things to a degree that seems unprecedented.

The "gleefully frugal" (13 April 2009)

I found this NYT article about the alleged resurgence of thriftiness as an ethic strangely depressing. Isn't this what I had been hoping for in writing all these screeds against consumerism, that there would be a return to some more sensible set of values once the waste and frivolity of status consumption was revealed to all? I don't know, maybe; but it's hard for me to overlook the inanity of this:

The gleefully frugal happily seek new ways to economize and take pride in outsaving the Joneses. The mantra is cut, cut, cut — magazine and cable subscriptions, credit cards, fancy coffee drinks and your own hair.

In San Francisco, Cooper Marcus, 36, has started choosing recipes based on the ingredients on sale at the market. Mr. Marcus canceled the family’s subscription to Netflix, his premium cable package and a wine club membership. He uses a program on his iPhone to find the cheapest gas and drives out of his way to save 50 cents per gallon.

“It seems a little crazy,” he laughs, then adds: “I’m frugal and loving it.”

Clearly, frugality is being regarded as a lifestyle choice, another mode of distinction. People want to be recognized for it rather than making it disapppear into a more compelling mosaic of activities that supply a sense of who we are to the world. The article suggests that those who are happy to be frugal constitute a "movement", as if they are pioneering some wholly new concept.

Instead, this suggests that consumerism remains at the forefront of how people conceive of themselves, only they are spending less instead of more. Which means less and more have become virtually arbitrary concepts that can be varied in order to add spice to the fashion cycle.

Obviously the predilection for spending less is related to the recession, but the thrust of articles like this is to provide the illusion to consumers that they are in control of things -- that frugality should be seen as a free choice that we can be "loving" rather than a conditioned response. Or if it is not a free choice, it is an opportunity, with constraints serving as the nursemaid to creativity. But something is grating to me about the way in which we seem to want to make this creativity an end in itself. Shouldn't the instinctively frugal sort also be sort of austere, circumspect, guarded? Wouldn't they be naturally wary of publicity, not "gleeful" and eager to be rubbing the world's nose in economic hard times?

I think I react strongly to all this because I'm so vulnerable to indulging in that sort of thinking, to wanting to be lauded for frugality as if it were a public demonstration of my wit and resourcefulness, when it is nothing more than preoccupation with shopping and signaling -- things I wished I spent less time thinking about outside of writing about them. (Writing about them is probably merely another strategy for trying to purge the unwelcome inclinations.) That's what seems like real frugality to me -- when shopping is taking up less and less of our consciousness. The gleefully frugal are, by that standard, as profligate as ever.

Descent into autarky (5 March 2009)

This post from Willem Buiter presents an interesting way of thinking about markets, not as theoretically convenient constructs to suit economists' models, but as improbable, fraught and fragile institutions. They are not transparent and frictionless; they don't function automatically. Exchange, as such, uses up resources above and beyond what is exchanged, and these costs must be borne. Markets are never "free." His case is elegantly argued, and it's worth reading the whole thing. But here's his distillation:

The conclusion, boys and girls, should be that trade - voluntary exchange - is the exception rather than the rule and that markets are inherently and hopelessly incomplete. Live with it and start from that fact. The benchmark is no trade -- pre-Friday Robinson Crusoe autarky. For every good, service or financial instrument that plays a role in your ‘model of the world’, you should explain why a market for it exists - why it is traded at all.

Buiter's point is to discredit the efficient markets hypothesis -- the theory that markets aggregate information from investors and interested parties and prices permit efficient capital allocation. If markets themselves impose costs, these costs distort prices. And if prices reflect the future value, who knows how far that is? Buiter says such models presume "a friendly auctioneer at the end of time - a God-like father figure - who makes sure that nothing untoward happens with long-term price expectations or (in a complete markets model) with the present discounted value of terminal asset stocks or financial wealth." No such figure exists, and the models bear little resemblance to what goes on in actual economies.

As a result, economists henceforth, according to Buiter, will be forced to use "behavioural approaches relying on empirical studies on how market participants learn, form views about the future and change these views in response to changes in their environment, peer group effects etc." In other words, they will have to find tools to study how and why confidence ebbs and flows. They will become philologists of happy talk.

An aside -- I wonder if the notion of autarky offers a different way to conceive of what is happening in the recession as the economy contracts: The costs of maintaining markets -- the trust, credit, contract enforcement, disclosure and so on -- has suddenly become too high to justify the amount of exchange we had before. The sum of social needs hasn't changed; it has fallen below some critical threshold that makes them impossible to satisfy and thus superfluous. Perhaps we experience this as a retreat into self-sufficiency at a personal level -- not merely a return to thrift (though that is a part of it) but a move toward a fantasy of autarky in which we are able to maintain ourselves by our own efforts without the vagaries and exploitations and chaotic dangers of exchange and markets. But of course autarky is basically impossible; it's a dangerous delusion to think that we can exist without be part of a community -- markets included. It seems short-sighted to collapse the idea of community into markets, and make them one and the same for all intents and purposes; but it's equally wrong to be tempted by recession into thinking that community can exist without thriving markets, that we can somehow be better off when we are exchanging less.

Diderot effects (2 March 2009)

The Atlantic's new business site (which it annoyingly calls a "channel") recently posted an interesting but fairly cryptic article by anthropologist Grant McCracken, looking at potential shifts in consumer behavior in the downturn. He outlines several possibilities in relation to a concept he doesn't really explain here, the "Diderot effect." Diderot, an 18th-century intellectual, wrote an essay about being given a fancy dressing gown, which made everything else he owned feel shabby to him. Thus, he explains in the essay, he needed to replace the rest of his stuff to maintain consistency among his belongings at the new level of their perceived status. The assumption is that we instinctively strive for that uniformity in our possessions -- that we want to communicate a coherent portrait of our cultural capital by having a collection of things whose meaning is readily legible to others and that don't embody too many internal contradictions. Pushing it further, we may pursue this consistency to convey a coherent sense of our identity to ourselves -- we don't know who we really are until we see ourselves reflected back to ourselves in a cogent group of possessions.

I'm a bit skeptical about this internal urge to consistency; it's possible that this tendency is encouraged by advertising and marketing efforts to promote what a coherent set of belongings should be, promulgating associations between objects to establish a society-wide understanding of what makes for the standard-issue set at various status levels. In other words, mass media advertising and the content it supports encourage the establishment of "lifestyles," the logical extension of what Diderot was writing about as a personal idiosyncrasy.

The coalescence of lifestyles may have the laudatory effect of elevating what makes for a subsistence level of consumption in our collective understanding -- it couples irrefutable necessities like food and shelter together with more nebulous goods -- education, media -- that allow people a minimal sense of social belonging. But while this minimum standard has improved in absolute terms over the days of starvation wages, recently it hasn't improved in relative terms. Income inequality has increased; barriers to social mobility have hardened. That suggests, in turn, that the distinctive goods that we use to make those class barriers known have become more visible and more inaccessible, notwithstanding the supposed democratization of luxury. That widely touted pre-crash trend demonstrated how an improvement in "real" standards can nevertheless leave social class in place. Democratized luxuries are just evident knock-offs, declassé goods that mark the inferiority of their owners to those higher in the hierarchy. The hypocritical cant about "democracy" that's evoked is a perfect example of ideological inversion -- Orwellian Newspeak.

But what happens now, with the recession leveling off all consumption? If consumption was the proimary way of policing class borders, does the fact that there will be less of it imply that those barriers have become more permeable? That more of us can pass as a member of a higher status group through clever and thrifty purchases? Will some other manner of social display more widely available come to signify status?

McCracken's post doesn't exactly deal with that question, but it gets at the microfoundations of status consumption. He offers several different possibilities for what will happen to consumption in the wake of the recession. First, everyone could scale back, leaving the existing hierarchy in place, only a lower level. Then with recovery, it will merely ramp back up. Alternatively, certain items of distinction will become more valuable and more cherished, and sacrifices will be made to hold on to the ability to purchase these specific exceptions.So rather than social class being signaled by a collection of goods, it will temporarily come to be signaled by one expensive good.

But is it possible that the new, scaled-back levels will prove "sticky"? McCracken writes,

Displeasure, as we move to a lower level of consumption, might for some consumers eventually lose its sting and turn to comfort too. Or not. The question is whether we might habituate to a lower level of spending. I think this can only happen if some of the deeper cultural drivers of the consumer culture fall silent. These would include competitive spending. (This is largely dead among some Millenials.) It would also include the wish to stay in fashion or in touch with the curve. (Here too some young consumers are turning their backs on fashion, especially the branded, mainstream variety.) There are positive forces: the wish to go green, to "save the planet," this has been the great staple of elementary school education and it is now on the verge of being installed in our culture as orthodoxy. (This is no doubt as it should be.) This is where we really have to do our anthropology: what are the cultural drivers that might intervene here and lock consumption habits into place.

I'm pretty skeptical that there are any such cultural drivers -- capitalism relies too much on competition for its dynamism for anything to override those sorts of pressures.

Competitive consumption in dormancy (30 Jan 2009)

The GDP figures for the fourth quarter of 2008 are something I've never seen as an adult -- a decline in growth of 3.8 percent (the number is by no means final either, and is susceptible to being revised later). It's hard to cheerlead the economy with numbers like these, but The NYT gamely tries with its headline ("Steep Slide in U.S. Economy, but Not as Dire as Forecast ") which stands in stark contrast with the lede:

The United States economy shrank at its fastest pace in a quarter century from October through December, the government reported on Friday, in the broadest accounting yet of the toll of the credit crisis. Consumer spending and business investment all but disappeared, and economists said the painful contraction was likely to continue at an alarming pace well into the summer.

Felix Salmon thinks the timid consumer has become the new normal:

I don't see any sign of a recovery any time soon: America's culture of competitive consumption has disappeared entirely, and it's not coming back.
I walked past a brand-new high-end casual menswear store last night, and it struck home to me how much things have changed in the past few months. It was always a bit weird that anybody would pay hundreds of dollars for a flannel shirt, but somehow, such shops managed to survive during the boom years. I certainly wouldn't want to be the owner today, though, or even in the years to come, should the store survive that long.

Merrill Lynch analyst David Rosenberg (who has been calling a consumer-led recession for a while) has a similar view in this dire commentary. He argues that the debt overhang from the boom must be eliminated before there is a recovery. Consumers, therefore, will be forced to save rather than spend. Rosenberg goes further and posits a lingering shift in consumer mentality (at least for baby boomers) that outlasts this necessary debt elimination:

in this post-bubble, mean-reverting process, the ability for policymakers to re-create the credit cycle, reinflate asset values and ignite a consumer-led recovery is going to be thwarted by secular changes in attitudes towards credit, savings, discretionary spending and homeownership. In other words, even after enough debt is paid off, the baby boomers’ spending years will be focused on putting their money in the coffee can.

Rosenberg elaborates on the "secular change" in consumption habits he expects, the shift from frivolity to frugality (already a popular theme in the mainstream press).

There are lags between changes in household net worth and changes in consumer spending patterns, and the $13 trillion loss to-date is a harbinger for sustained consumer spending contraction in coming years. The reason for the lags is because households only change their behavior after a shock, negative or positive, if it is considered to be permanent or at least semi-permanent. For example, the institutional changes over the decades in 401k plans and matched employer pension contributions helped reduce the steady 10-12% savings rate of the 1950, 60s and 70s down to 8% by the late 1980s. But it was the increased boomer reliance on asset inflation for savings rather than organic income that drove the savings rate down to 2% by the time the dot-com boom was in full swing in the late 1990s.

If Salmon is right about the end of the hundred dollar flannel shirt, then maybe this depression thing really isn't all bad. But will the same marketing ideology merely be used to promote something cheaper for the time being? I'd expect the consumerist ideology to be more tenacious than that -- when we can't spend, we don't immediately adapt to that new reality; we just experience want more painfully. We probably haven't been in a depression mind-set long enough for our consumer behavior to change in a fundamental way and are still in the lag period Rosenberg mentions. Collectively, American consumers could be overreacting in the short term, cutting back like crazy with the assurance that we can resume spending stronger than ever when the storm passes. (Kind of like trying to catch up on sleep all at once on Saturday rather than changing one's habits to get more sleep every night.)

Rosenberg suggests we may well come to accept our reduced means as a permanent condition just as economic trends are reversing, causing our recession mentality to persevere and act as an added drag on recovery. BUt virtually every form of public discourse is aligned against that possibility; the commercial media may be too robust to ever allow us to resign ourselves complacently to a penny-pinching mentality.

In other words, we may never reach the soul-searching stage, in which we reject the entire set of social relations that can produce a $100 flannel shirt or makes $300 jeans seem normal. It may be easier simply to suspend our consumerist hopes, manifest in so much of the material belongings that surround us, rather than interrogate those hopes and reject them for a new way of life. The competition that had been taken place through consuming has shifted to a more fundamental level -- for now we are competing to hold on to jobs. Maintaining what we had already achieved will probably feel like relative progress. But the useless ethic of status competition and possessive individualism, the endless war of all against all that capitalism breeds as an inevitable by-product, won't disappear. We are still likely to regard any cooperation brought on by hard times as a type of humiliation, even if we are grateful.

Consumerist society has for too long emphasized possessions as the route to social recognition, not collaboration. The tangibility of objects seems to substantiate the argument -- the inarguable presence of more stuff seems to testify to a richer life, and marketing gives all that stuff rich meanings and fully developed fantasies we can readily enter into vicariously. And our ability to soberly question consumerism's role in our lives is hampered not only by our hedonism (the familiar and common-sense-seeming logic of "more is better") but by the persuasion industry's relentless collective efforts to invalidate ways of life that are not reliant on consuming products. Lifestyle magazines and the styles sections in newspapers help by making frugality into a trend that is marked by buying certain products and shopping at certain stores. The underlying message: We can spend less but remain consumers. So we don't need to fear.

Taking its cue from the press, the ad business will try to sell us anticonsumer goods, goods that paradoxically promise to fit in to our new recession-minded lifestyle. This not only helps ad firms continue to sell ads in a downmarket, but also helps ads maintain their prominence in the sum of our daily thinking. Ads preserve a lever in our minds, so they can reorient us to luxury when the time comes. Then it will be morning in America all over again.