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.

Plutonomy (4 Jan 2011)

I didn't see Michael Moore's Capitalism: A Love Story but apparently in the documentary he references this memo, written by some global-equities analysts at Citigroup, in which they describe the U.S., U.K. and Canada as "plutonomies" -- economies in which income inequality is so vast, the spending propensity of nonrich people is statistically insignificant. The memo has cropped up again in this Atlantic article by Chrystia Freeland about the "new global elite." Guess what: there are actual people behind those statistics about the top 1% earners, and reading about their lives will probably make you sick. Freeland notes (as the Citi memos also point out in graphs) that these wealthy people didn't inherit their wealth and grow it from rents and asset appreciation; thus she suggests they are "economic meritocrats, preoccupied not merely with consuming wealth but with creating it." How much merit has to do with it is debatable, but i does seem inarguable that the recentness of their rise has made them more actively concerned with adjusting the playing field to protect their wealth -- keeping finance deregulated, securing tax cuts, etc. They had to earn their money by aggressively leveraging inequities and asymmetries in the economy, and thus learned how to create new opportunities along the same lines. This is what makes them the "working rich" -- they work to make capitalism more unfair and generally less efficient and productive so that inequality can become even more obscene. Since they are internationally oriented and are loyal only to profit, not any country or people, they thrive on regulatory arbitrage schemes and other global shell games and are heedless of the damage their activities cause to the little people in local economies. (It helps, as Freeland notes, that the plutocrats' sense of having to work to rise to the top makes them have no sympathy for those little people.) Of course, this doesn't prevent governments from bailing their companies out or protecting the value of their bond holdings. The lesson, Freeland suggests, is that helping out Big Business and finance is basically helping them gut U.S. middle-class prosperity.

The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.

That sounds almost egalitarian and certainly utilitarian, but hedge funds don't particularly care about the greatest happiness for the greatest number. That you can make poor people in developing economies slightly less poor for far less than it costs to keep middle-class Americans at the standard of living they're used to is just an excuse to distract from the greater proportion they are raking out from economies everywhere.

In short, the new global elite sound a lot like the old "power elite" described by Wright Mills in the 1950s, only more horrible and with less a sense of responsibility for the damage they do from their position at the commanding heights. I am with Felix Salmon: "If the angry bankers went off to destabilize some other financial system, they wouldn’t actually be missed."

Anyway, the Citi memo is definitely worth reading. It lays out the conditions of neoliberalism with no-nonsense aplomb:

we postulated a number of key tenets for the creation of plutonomy. As a reminder, these were: 1) an ongoing technology/biotechnology revolution, 2) capitalist-friendly governments and tax regimes, 3) globalization that re-arranges global supply chains with mobile well-capitalized elites and immigrants, 4) greater financial complexity and innovation, 5) the rule of law, and 6) patent protection.... The wave of globalization that the world is currently surfing, is clearly to the benefit of global capitalists, as we have highlighted. But it is also to the disadvantage of developed market labor, especially at the lower end of the food-chain... In general, on-going globalization is making it easier for companies to either outsource manufacturing (source from cheap emerging markets like China and India) or “offshore” manufacturing (move production to lower cost countries).

They assess the risk of a backlash against plutonomy but decide it is unlikely in the short term: "So long as economies continue to grow, and enough of the electorates feel that they are benefiting and getting rich in absolute terms, even if they are less well off in relative terms, there is little threat to Plutonomy in the U.S., UK, etc." The memo dates from before the 2007 crash, but nothing that has happened since seems to have threatened it either. The U.S. has elected a rabidly pro-business Congress, and the financial regulation bill that passed did little to change the playing field, and in fact fits the analysts' contention that "the cleaning up of business practice, by high-profile champions of fair play, might actually prolong plutonomy" by creating a broader-based illusion of systemic fairness.

I don't know if the arch tone of the Citi document is or isn't typical of analyst memos, but it's not any kind of smoking gun. If you want to see evidence that the economy is skewed toward the wealthy and the plutocrats are pleased with that arrangement, just watch CNBC or read any day's edition of the Wall Street Journal, where the ideology that capital matters and laborers don't underwrites just about everything there. Controlling labor costs and increasing companies' share of profits is always good and almost always described as if no people are affected adversely by those developments. And then there are the abhorrent lifestyle sections (like the FT's How to Spend It), which detail the glories of luxury spending and facilitate the sort of heedless consumption that supports the investment strategy the Citi memo details -- namely, buy stocks of luxury-goods companies, because given the political climate in the U.S., the rich will continue to get richer and this makes them comfortable with wasting money on yachts and things.

The Citi analysts gleefully track a Forbes "Cost of Living Rich" index, which shows how the cost of a basket of ridiculous luxury goods are rising faster than a basket of staples for ordinary people. Apologists for income inequality like to cite this sort of data as proof that inequality is overreported because it costs more to be rich, as though the lifestyle of outrageous wealth was an inescapable burden to be upheld. The Citi analysts at least have the intellectual honesty to present the data for more straightforward purposes, not to argue that inequality isn't as bad as it might seem, but to suggest that inequality is a plain fact, a boon for the wealthy that expresses itself in their positional goods' jumping in price. (The analysts go so far as to label luxury items "Giffen goods," the demand for which increase as the cost of them rises). The wealthy spend more because they are making more; this doesn't diminish the reality of income inequality; it's a consequence of it.

The analysts also have an interesting explanation for the negative savings rate of the pre-recession mid-decade period. Many commentators (me included) would read into that the idea that too many ordinary Americans were spending beyond their means. The Citi memo argues that in a plutonomy, the flush and confident rich cut their savings and spend more on the increasingly expensive luxury goods, and their lack of savings skews the averages.

when the top, say 1% of households in a country see their share of income rise sharply, i.e., a plutonomy emerges, this is often in times of frenetic technology/financial innovation driven wealth waves, accompanied by asset booms, equity and/or property. Feeling wealthier, the rich decide to consume a part of their capital gains right away. In other words, they save less from their income, the well-known wealth effect. The key point though is that this new lower savings rate is applied to their newer massive income. Remember they got a much bigger chunk of the economy, that’s how it became a plutonomy. The consequent decline in absolute savings for them (and the country) is huge when this happens. They just account for too large a part of the national economy; even a small fall in their savings rate overwhelms the decisions of all the rest.

But of course if ordinary consumers are regarded as the problem, as being spendthrift and spoiled, then that's all the better. Economic hard times can be made to seem like its their fault, a result of their alleged irresponsibility, and not the result of malfeasance by the superwealthy.

Logan's Run Economy (21 June 2010)

To follow up on the post yesterday about foolish austerity, and the noxious view that unemployment benefits shouldn't be extended because it would be rewarding a bunch of lazy slackers: some of the unemployed would love to be hired but are (a) stuck in a house in a depressed area or (b) old. Or both. Ezra Klein links to this Washington Independent piece by Annie Lowrey that details the difficulties older workers have in getting hired.

There are structural reasons that the unemployment crisis is hitting older Americans so hard. Older workers are more likely to be underwater homeowners, unable to sell their house and move away. They often have highly specific marketable skills, and seek positions more selectively. They also often have skills rendered obsolete by the recession, in outdated trades. But too often, employers illegally presume that older workers will be harder to train, more likely to leave for other positions, less productive, less technologically able or less willing to move — and do not hire them for those reasons.

I worry about this a lot. I work in an industry (magazine publishing) that is notorious for age discrimination. Also, as a PhD dropout who was "overqualified" for most of the entry-level jobs I had to apply for, I can readily remember the frustration and futility, the despair -- and this was when the economy was recovering robustly. I ended up having to spend a lot of time in temp agencies, proving my ability to alphabetize and to open up files in Microsoft Word. I felt like a useless piece of garbage, unwanted by society because I made the error of extending my education until I reached 30, and I wondered when the time would come when they would send me to the soul-renewal chamber like in Logan's Run. How much worse must it be for those laid off in a downturn because they are older and draw more benefits and better salaries and ruled inefficient relative to younger, less demanding workers.

Whenever the economy undergoes a structural shift, it seems that older workers will be disadvantaged without remedy, since they will have outdated skills and will be subject to uncorrectable discrimination. Lowrey notes that "policy experts fear that age discrimination in hiring, compounded by the recession, is a problem without a solution. Individuals can bring cases against individual companies, but discrimination is virtually impossible to prove, even if it is easy to see as an aggregate phenomenon." So even though the trend is obvious at the macro level, micro-level concerns make it difficult to change. (Sort of like the problem of inadequate demand in the economy generally.) Thus we have a Logan's Run economy, concentrating unemployment among older workers while making them scapegoats for the runaway deficit that is "stealing from our children." Perhaps the Republicans who stonewalled the jobs bill should stop pussyfooting around and tell these older workers to just go die.

The Austerity Debate (18 June 2010)

Steve Randy Waldman delivers, as usual, a clarifying post on the ongoing "austerity debate" -- the discussion among economists and pundits and politicians about whether the government should engage in more stimulus spending to support an economic recovery that may or may not be starting and help create jobs to reduce the unemployment rate (still hovering near 10%), or whether it should impose austerity measures to control the deficit and ostensibly protect the currency and prod the jobless into looking harder for work by cutting off their unemployment benefits. Waldman links to several posts that set the stage.

This debate has come to head recently with the Senate voting to block an extension of unemployment benefits, among other fiscal measures. This infuriates a lot of people (me included) because it seems to privilege political demagoguery about deficits and the interests of the leisure class over economic growth and the rest of us. It plays upon the idea that the unemployed are merely too lazy or fussy about taking jobs, not that they lack relevant skills or that employers aren't willing to hire. It also depicts downward mobility as something the unemployed should simply accept, as if moving down the wage-chain in jobs doesn't have a permanent effect on one's earning potential and prospects.

Also, austerity preaching from government sends the signal to businesses that the climate will be unfavorable, and prompts them to buy back shares rather than seek out other investment opportunities or expand. And everyone around the world can't be austere at the same time; that just amounts to worldwide depression.

Waldman's entire post is well worth reading, but a few things jumped out at me:

1. This is relevant to the notion of free labor, of the sort the networked economy has made more prominent. Waldman is question the idea of austerity at the expense of putting unemployed people to work: "Doing paid work has social meaning beyond the fact of the activity, and doing what is ordinarily paid work for free has a very different social meaning. It is perfectly possible, and perfectly common, that a person’s gains from doing work are greater than their total pay, so that in theory you could confiscate their wages or pay them nothing and they would still do the job. But in practice, you can’t do that, because if you don’t actually pay them, it is no longer paid work. The nonmonetary benefits of work are inconveniently bundled with a paycheck." I'm perhaps under the influence of all sorts of quasi-utopian "end of work" literature, but I wonder if the pleasures of work are inseparable from the paycheck. Perhaps under capitalism, the "in practice" Waldman is talking about, it is. The point I take away from this is that as our society is configured, free work is irreparably stigmatized and thus demoralizing. You have to be working for wages first in order to secure what capitalism makes into the second-order benefits -- job satisfaction, meaning, participation in the "general intellect" or what have you.

2. Waldman is worried that increased fiscal intervention could promote an aura of corruption: "Transfers of relative purchasing power from other citizens to the beneficiaries of government spending may call into question the legitimacy of the distribution of opportunity, wealth, and influence and of the government itself. Perceptions of make-work or corrupt contracting are deeply corrosive." This is what Tea Party types tend to harp on -- freeloaders soaking up their hard-earned tax dollars, etc. Demagoguery certainly helps encourage this attitude; it is easy to put across in sensationalist terms and highly divisive and useful politically. Strangely, no one seems to have much incentive to sell the idea of stimulus; the establishment media is apparently more interested in maintaining an appearance of political balance than in encouraging the economic growth that might in turn help their businesses. But some corruption is probably inevitable with government handouts, particularly since the alibi of "market forces" cannot be invoked to explain unfair distributions. And there is the Hayekian fear of the central planner, unconditioned by meaningful price signals, using resources inefficiently. Waldman suggests such effects are not merely a danger in the short-term; rather, they acquire momentum: "Since economic activity is habit forming and temporary interventions become permanent, the cost of poor government choices can be high. It matters very much what work the government is paying for. Work must be well-tailored to the talents, interests, and future prospects of individuals. Employing people badly is much worse than just giving them money." One might point to the farm-subsidies situation in that regard.

3. This is just well-put, clarifying what is ultimately at stake in these often abstract discussions: "Savers really could flee the euro, dollar, yen or yuan. Interest rates here or there could suddenly spike. A sudden dash to gold is possible. None of these financial market events would directly affect the real resources at our disposal, but any of them could devastate our ability to organize economic behavior, and would call into question the legitimacy of economic outcomes and the stability of governments." The "real resources" of an economy can't put themselves to work for our benefit automatically -- we can't put ourselves to work in a socially beneficial way through sheer force of will. There needs to be a communicative system that relays what society actually needs, revealing what uses of resources are desirable and useful and which are corrupt and which are wasteful and so on. Markets, for better or worse, are the main way this information is revealed, but the markets themselves need to be regulated so that they serve this purpose (and not the purpose of further enriching the fat-cat class and their running dogs). Production must be socially organized in such a way that the outcomes are recognized as legitimate -- are markets the only way to secure social legitimacy when capitalism has become hegemonic? -- and this legitimacy redounds to the ruling order, legitimizing the government as serving the people and not itself.

4. Waldman says we should expect, perhaps even hope for more "austerity theater" -- political noise about austerity while stimulus continues in the shadows. "We should expect policymakers to justify their actions with a lot of intuitive but awful theory. As the Modern Monetary Theorists remind us, the analogy between a fiat-currency-issuing government and a budget-constrained household is poor. It is, nevertheless, the framework under which most citizens and savers understand government accounts, and forms the basis of conventional discourse." Basically, governments are not like households (I can't just go and print more money for myself to pay my rent, for instance), but voters can seemingly only understand discussions about the federal budgets in terms of what they themselves have to do to make ends meet. And politicians feel obliged to cater to this ignorance, helping reproduce it by endorsing the "common-sense" view that you can't go on running deficits for ever and that the piper must be eventually be paid.

5. His conclusion: "We have intellectual work to do that goes beyond choosing a deficit level. The austerity/stimulus debate is make-work for the chattering classes." In other words, the austerity debate is a stalling tactic to prevent the consideration of specific interventions that might allow policymakers to assert some control over the economic cycle. Engaging in the debate is tantamount to conceding there's nothing we can do.

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.

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.

Soviet Consumerism (10 Aug 2009)

Someone on Metafilter had linked to Real USSR, which offers essays and photos of Soviet material culture. It seems like a useful resource in imagining what a postconsumer (or non-consumer) society might look like. The Soviets apparently failed in achieving a positive example of such a society; its citizens, at least in Western representations, were hungrier than their non-Communist counterparts for branded goods and the world of status consumption from which they were by and large excluded. Their seemingly dismal lack of consumer goods was possibly the best propaganda weapon for the U.S. during the Cold War: Dowdy, nondescript proles standing in lines outside gray, barren Soviet distribution centers would be contrasted with the glitz of shopping malls and the endless opportunities for self-aggrandizement. Who wants to work for a collective goal when we can enjoy a solipsistic reverie in which all causes begin and end with ourselves?

Consumerism in Western society, at any rate, is strongly associated with atomistic individualism, offering the illusion of transcending social reciprocity for a higher convenience, in which pleasure is served directly to us through various purchases in well-stocked retail outlets. Pleasure is presumed to be a matter of accumulation -- is constructed to be that sort of thing, a matter of developing the richest self through consuming and mastering the greatest amount of stuff. In Soviet culture, consumerism must have meant something else entirely, carving out a space for subjectivity -- for an alternate currency of information, about goods and what they might signify -- in an authoritarian state premised on surveillance and information control.

Anyway, the posts at Real USSR give a glimpse of the resourcefulness of Russians in the face of deprivation and the ideology that was meant to justify it or excuse it. This resourcefulness is the kind of thing I tend to sentimentalize as what's lost in consumer societies -- only the Soviets probably didn't experience it as pleasure, despite the faint nostalgia of posts such as this one about DIY fashion. It was likely felt as necessity pinching in, complicating everyday life. It was official ideology impinging on autonomy in ways that symbolized how dominated the populace was:

During the Soviet times fashion was first and foremost, an instrument of propaganda of hard work attitudes and education of good taste. Therefore the way people were dressed was very strictly regulated – just like anything else, fashion had to be “planned” and “approved”.

In other words, old-fashioned sumptuary laws were in place to discourage fashion from becoming a medium for suggesting social mobility. The link between autonomy and personal display is maintained where ideally it would be dissolved. The inescapability of invidious comparison is still implied. The post mentions the "fashion neighborhood watch" -- a sort of inverse of the feeling I have when I walk around the East Village feeling helplessly uncool. I tend to aspire toward sartorial anonymity for very different reasons than the Soviets might have -- but then again maybe they are the same, a yearning for safety. Invisibility in a socialist society is suspect because everyone is supposed to be responsible to every one else (in reality, the state) in the collective project of society -- you have to be visible but undifferentiated. In a consumer society, visibility traps one's aspirations to individuality in the realm of fashion -- judgment of who we are remains on the surface level, and can't break through to the aspects of personality that are not so easily displayed. Consequently, the culture industries work hard to produce legible symbols for every possible personality trait, de-authenticating them in the process so that all identity can be regarded suspiciously as pretense.

This post, about Soviet brands, surprised me, because I had sort of assumed that there were no brands in the USSR. The post highlights a perfume called Red Moscow, the name of which suggests how branding was co-opted for propaganda purposes -- of course it makes sense that the state would invent nationalist brands. I tend to take it for granted that brands of products function only to help individuals brand themselves, to allow them to project certain traits along the lines described in the previous paragraph. (For producers, brands allow for the elaboration of differences between competitors' commodities where there are more or less materially indistinguishable.) But Red Moscow suggests that brands could be contrived to close off avenues for the development of a superficial self. Nationalist brands would enlist users into helping complete the ideological project of the state, not the self -- a state that may not allow for an autonomous self. Such brands would demonstrate conformity and obedience in a much more direct way than our brands, which entice us to show off our conformity to the general significance of participating in fashion and having a lifestyle. Consumerism is soft coercion in that sense; it allows for a space where conformity can comfortably coexist with rebellion -- the revolution is reduced to continually turning over one's personal affect within a game whose rules are thereby protected from change.

"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.

Hooverville Williamsburg (8 June 2009)

I feel a weird responsibility, as though I am required to link to this New York Times story about the hard times trust-funders in Williamsburg are now allegedly facing. As you would expect, the story is a bit anecdotal, and full of contempt bait for those who have to work, and those for whom unemployment would be truly devastating. I'm surprised anyone ould consent to be interviewed for a piece like this, but I should stop underestimating the narcissism of people in the Facebook age.

It would be easy to languor in schadenfreude at details such as these:

Luis Illades, an owner of the Urban Rustic Market and Cafe on North 12th Street, said he had seen a steady number of applicants, in their late 20s, who had never held paid jobs: They were interns at a modeling agency, for example, or worked at a college radio station. In some cases, applicants have stormed out of the market after hearing the job requirements. “They say, ‘You want me to work eight hours?’ ” Mr. Illades said. “There is a bubble bursting.”

The photo caption is pretty amusing as well: Under a photo of a casting-call hipster, it reads: "Misha Calvert, 26, relied on her parents during her first year in Williamsburg. Such financial arrangements carry a 'giant stigma,' she said." A stigma, you say?

There's nothing inherently wrong with "relying" on one's parents, but at the Atlantic's business site, Derek Thompson highlights the problems with the parental subsidy. Regarding the report that parents are shutting off the tap, Thompson writes:

The upside and downside of this development is pretty clear. Williamsburg real estate prices have skyrocketed in the last few years -- partially on account of incomes that weren't earned in Williamsburg -- so this should help the little 'burg move toward the rest of Brooklyn in terms of affordability. It is, it must be said, unfortunate for anybody to have their lives shaken dramatically by the recession, but much as the downturn has fostered a culture of responsibility and savings, so too should the demise of trustafarianism make the sons and daughters of the affluent more cognizant of basic human things like bottom lines and debt. The ability to pursue your life dreams in your early twenties on the back of your parents' earnings is a kind of awesome gig, but in the long term it insulates you from an understanding of what life costs.

The time spent "pursuing life dreams" on the parents' dime is probably wasted if during that time one is hanging around with other trust-funders who are detached from the actual economy. Success in the "glamour" fields usually involves forming the right friendships when the opportunities arise. If trust-fund ghettos also included a mix of cultural-broker types, the time spent socializing together in the neighborhood might ultimately prove worth subsidizing. But it seems to me that the artists and creative types unsullied by the taint of employment have little in common with the realists who have managed to compromise with the way the economy works. Those compromises, for better or worse, may actually constitute the real skill of a creative person in a capitalist system -- the ability to get paid for what you make, to convince other people that you should be paid for doing it, that you believe in what you are doing enough to subject it to the bottom-line criticism of those who mean to regard you professionally. But professionalizing is the main thing that I imagine trust-fund types are trying to avoid. The whole point of places like Williamsburg, I assume, is that they are insulated from that sort of impersonal, professional failure; they are romper rooms removed from the competitive grind, from the grim scramble to make a living. They are enclaves where people can scorn money and call it bread (to paraphrase Joan Didion paraphrasing Time magazine, circa 1967). Instead of adapting to capitalist compromises, the pseudoaristocrats of Williamsburg, and places like it, can feel haunted by inconsequential failures of trendiness, the vicissitudes of purely private life.

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.

Spending less, buying more (2 Jan 2009)

Mark Thoma linked to this post from Susan Woodward and Robert Hall, in which they point out that though spending on consumption is down in dollar terms, consumption actually rose when the figure is adjusted for deflation.

Consumption of durable goods, adjusted for price declines

This is something to remember when hearing about how the recession is changing consumer behavior. Chances are it hasn't changed much at all; we're just buying cheaper stuff -- either taking advantage of falling prices (notice any sales this holiday season?) or substituting inferior goods.

Consumer atrophy (16 Dec 2008)

Rob Walker's column about the "new frugality" nicely skewers the concept.

We were told our willingness to spend more — on fair-trade coffee, eco-friendly totes, organic dog food — demonstrated a fresh consumer sophistication that would change the marketplace. Now, suddenly, our values are reflected in cheap shirts from Costco.
A new normal that revolves around buying lots of stuff while bragging about our bargain-hunting skills doesn’t seem to reflect changed values.

That's a good concise way of getting across something I've been trying to express but have managed only to formulate somewhat inchoately in posts like these.

Walker ends the essay on this faintly hopeful conundrum: "If there’s a deeper shift in our thinking, it’s still to come. And maybe it will. After all, the mere fact that we have managed to characterize consumer shock as frugality chic offers a perverse form of hope: That whatever happens, we’ll never lose our tendency toward optimism — even, it turns out, about our pessimism." But to be honest, this strikes me as all the more reason to be pessimistic, since optimism usually strikes me as ideologically induced naivete. It's better than being miserable, but it licenses our perpetuating in the same self-defeating practices with regard to consumerism all in the name of a dream -- that dream of finding our perfect reflection there in the world of things rather than discover it through the more arduous but more fulfilling route of making and doing. (I can anticipate the objections: Shopping is doing! Consuming is producing! I would argue that they successfully simulate those things while simultaneously promising an escape from them. Shopping has developed the alibi of plausibly passing as "self-actualizing.") I have a hard time reconciling optimism to anything but sunny yes-man-ism, and some critical scrutiny on a society-wide scale will be necessary to uproot consumerist fall-backs.

PSFK linked to this LA Times article that basically epitomizes the new dispensation on consumer behavior. The key goal for service-feature writers in the mass media is to show us how we can maintain the consumer mindset -- shopping with style for self-definition -- only without our having to spend as much (for the time being). This allows us to hold the cherished consumerist attitude in abeyance, keep it well-exercised and prevent it from atrophying while we wait for the economy to turn. Doing away with the mind-set is, of course, unthinkable.

Here, in this article, the formula is simple: Send a celebrity to a closeout discounter and watch him turn junk into magic with his imprimatur! In this case, Philippe Starck.

Famous for putting a modern spin on 18th century French furniture and for creating exquisite environments using expensive materials and craftsmanship, Starck also embraces sensible consumerism. Buy quality over quantity, he says.
"You must be very rigorous," he says, sifting through discounted wares in search of the gems. "Try to find the essence, the most iconic or simple representation of a thing. Look for the bowl that looks most like a bowl. That means we must avoid colors and patterns, and everything that can be trendy."

Starck is also worried about the kids:

"In a crisis, we have to think about our children and especially push their creativity," he says. "If capitalism is failing because it is a selfish system, we can teach them to reinvent society so that it is based on sharing."

A nice sentiment -- but what prompted this reflection? Prada green.

Starck is pleased by the store's furnishings and art supplies for kids. He picks out the aforementioned folding table and chairs, as well as sidewalk chalk, a 240-piece paint and marker set, a packet of paper in a color he dubs "Prada green" and a 10-pack of No. 2 pencils. Total: less than $50.

In general, the media-appointed style mavens always make an appeal to art and timelessness, which on its face seems ludicrous, since nothing is less enduring than fashion dictates. But the trope is important as an analogue for what is truly timeless from the point of view of the fashion industries -- that is, consumerism. The idea that we'll all reach a point where we don't care about the message we send with the "essence" of our bowls and our Prada green is too terrible for them to contemplate.