Individuals who wish to accumulate wealth and become financially secure are told to work hard, be productive, save, and invest. The advice is old fashioned and trite. Recent events have shown it doesn’t always work, but, it’s difficult to suggest a better alternative. Work hard, don’t produce, spend every dollar you make and then some will certainly not lead to financial security.
However, as the holiday season approaches and with it the annual nationwide orgy of shopping, we are told that the way out of the economic crisis is to keep up the behavior that made the mess. Black Friday sales figures are headline news. The media, politicians, and corporate executives spread a gospel of salvation through consumption. Robust consumer spending will lead us out of the financial wilderness and avert a reenactment of the 1930s great depression.
On my local NBC affiliate in Baltimore— WBAL— the general manager broadcast an editorial Saturday night pleading with people to shop. While he urged responsible use of credit, he stated: “If you can shop you should. We must each do our part to get the economy jumpstarted. The message from Washington is clear—happy shopping.”
I’m sorry but if consumption without production is not a recipe for individual success, how can it lead to prosperity for all? If Americans saved, invested and then produced what they consume the argument might have some validity. But, as a nation Americans accomplish none of the above.
Americans buy lots of stuff that people in other countries make. For the first time since the great depression our national savings rate is quantified with negative numbers. And for all the trillions of dollars our federal government and large corporations have burned through recently, there appears to be nothing with future value to show for it. Our public infrastructure is crumbling along with our manufacturing base.
Consider Dan Rodricks' column Sunday where he observed: “Look at us: We've become a nation that thrives when people spend money they don't have. This is completely upside down from the society baby boomers recall, when the economy was robust, when people made a decent wage and benefits from manufacturing jobs, and the only things they had to finance were their homes and cars.”
The lesson from the economic crash of 2008 is that unchecked consumption and debt accumulation without production and investment in the future is unsustainable. All bills come due and all debt must be paid back. Shopping is not the magic elixir that will lead us to economic salvation; it’s an ingredient in the poisonous brew that’s killing our prosperity.
Joseph Ganem is a physicist and author of the award-winning The Two Headed Quarter: How to See Through Deceptive Numbers and Save Money on Everything You Buy