We Need Stuff
(fotoflippr photo.)
So says AP, observing that as consumers tighten their belts, the economy worsens. Why? Our economy relies on consumers buying things. Not just necessities, but luxuries: electronics, fancy clothes, and new cars. In 2005, the average consumer spent half his/her food budget on eating out, and one fifth of his/her total budget on transportation, including an average of $3,500 per year on new automobile purchases. He/she spent $1,800 for the year on clothing, and over $2,300 on entertainment. Americans spend $96 billion a year on electronics. Those who buy jewelry spend $2,000 per year on it.[C]onsumer spending... accounts for two-thirds of total economic activity."
In other words, our economy survives on extravagance.
“Environmental degradation is an iatrogenic disease induced by economic physicians who treat the basic malady of unlimited wants by prescribing unlimited growth.... Yet one certainly does not cure a treatment-induced disease by increasing the treatment dosage.” —Former World Bank Economist Herman Daly (emphasis added).
The problem with requiring constant growth in our economic system is that it ignores two important limits: first, there's a limit to the amount of resopurces available, from food to gold to energy. And if we're using more than our share, someone else is getting less. That doesn't bother everyone: they see it as a function of hard work, religious blessing, or luck.
But there's another limit that does affect us all: the limitation on waste disposal. From landfills to nuclear storage facilities to the planet's carrying capacity for greenhouse gases, there just isn't enough capacity available to dispose of the growing mass of waste our growth economy creates.
In economic terms, resources and disposal capacity are, in today's crowded world, scarce resources. That means by definition that they have value. But we still treat them— especially disposal— as if they are without limit. For example, there is no market and no cost for emitting CO2.
Herman Daly, in his book "Beyond Growth," discusses another failure of our economic assumptions: we measure economic productivity using Gross Domestic Product, or GDP, which includes all economic activity— whether or not that activity is productive. So if the government pays you $1,000 an hour so sweep floors (in your dreams!), that's included in GDP. Constructing freeway interchanges that go nowhere is included in GDP. Leaving your lights on all day when they're not needed, or letting your car idle while you run into the post office, or paying some teenager to make hamburgers that go into the dumpster at the end of the day— all this gets included in GDP. Sadly, conservation actually hurts GDP because it saves money and therefore causes GDP to go down.
This is not a capitalist problem: all systems, whether capitalist, communist, socialist, or something else, get measured by their GDP. The problem is not the economic system, it's the premise underlying our measurement of the system. In Daly's words:
"The American people have been told by no less an authority than the President's Council of Economic Advisors that, 'If it is agreed that economic output is a good thing it follows by definition that there is not enough of it.' (Economic Report of the President, 1971, p. 92). It is evidently impossible to have too much of a good thing. If rain is a good thing, a torrential downpour is, by definition, better!"
Our method of economic measurement says growth in economic activity is good, therefore we seek to maximize growth in economic activity, whether or not it benefits us. It's the same philosophy that argues more money will make us happier— disregarding the effect it may have on quality of life. If I work 23 hours a day to earn more money, what kind of life is that for me, my loved ones, and the people around me? What have I contributed to the society of which I am a member? Daly notes that in a very real sense, excessive economic growth (just like excessive work) makes us poorer. Much of the growth in our country these days he describes as "uneconomic growth"— the marginal cost of growth exceeds the marginal benefit.
Sadly, we live in a society that cannot (in its current form) function without increasing waste. We're catching a glimpse of this now: If we stop buying goods we don't really need, the whole structure will come tumbling down.
The Earl Butz led "get big or get out" era of agriculture enabled the explosion of fast food/chain restaurant growth and cheap junk food. The centralization and de-unionizing of meatpacking that began in earnest 20 years ago also enabled the explosion of fast food/chain restaurant growth.
when people are fatter they buy more clothing. and they end up going to the doctors more. and buying more diet books and gym memberships. I guess that is good for GDP.
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Great observations. I'm no fan of unions, though-- they too represent centralization. Our local meat processor is an individual helped by two part-time workers-- no union necessary.
I realized after I posted that I failed to offer a glimpse of what the alternative might look like. There are actually several possible alternatives, but certainly local production from small businesses emphasizing efficiency, and providing for ourselves where we can (e.g. Victory-style vegetable gardens) are both consistent with steady-state economics. Quality of life need not suffer. For example, I've been saying for some time that we could cut our energy use (and our asscoiated carbon emissions) by 50% just by eliminating waste.
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Morgan Spurlock, in his documentary "Supersize Me" about the fast food industry, makes the statement that in order to survive and prosper the fast food industry must sell us an extra 700 calories per day that we don't need and shouldn’t eat. Toward this end, the fast food industry spends over $11 billion per year in advertising alone. Aside: I don't think this counts the pretty packaging (Being a good little visually-oriented hominid, I saw your graphic and thought – oh, how pretty!)
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GDP does what it is supposed to: measure a nation's production of goods and its advancement. For example: if one nation had 100 cows and it measured the amount of milk produced, its GDP would come to some amount, lets say $10,000. But if another nation took the milk of 100 cows and produced milk AND cheese, it would have a higher GDP. If on top of that, they used the cheese to help make pizza, its GDP would be higher yet again, even though the amount of milk consumed remains constant.
However, the second nation employed more people (assumption), produced a more diverse set of goods, and had a better possibility of expansion (whatever new technology can arise from cheese/pizza development). This is true when you're talking about iron (steel), sand (glass), grapes (wine). A higher GDP points to a higher living standard for its citizens, even though we can all think of exceptions where GDP contributions do not do this. But we rattle of stats assuming that they are used for useless ends. What if the 1000 dollars spent in electronics is for educational ends? What if the money spent on entertainment includes an individual developing their artistic talents?
In the end, what good are movies? There are only a handful that will become classics. Does that mean all the movies produced around the world are a waste since the end product doesn't really employ anyone? Or do we include it in a nations's product since it does contribute culturally (even High School Musical 73) and producing an end product employs tens of thousands?
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I take your point. Of course, a nation that makes cheese and pizza also uses more resources-- and it's only productive if all that pizza gets eaten (not dumped in the dumpster).
OTOH, the fundamental flaw with development as perceived by the west (and with the growth model in general) is that higher GDP means higher standard of living, and that is absolutely not the case. Take, for example, Sri Lanka: subsistance farmers are lured to the city with the promise of more income. They work in factories where indeed they do make more money. But, having lost the unmeasured benefit of the food they used to grow andf the mud hut they owned outright, that income is no longer enough to live on. They eat substandard diets and sleop in homes so crowded they have to sleep in shifts because there's not enough room for everyone to lie on the floor at the same time. They've tripled their income but are poorer than ever. That scenario is played out around the world, from Thailand to Mexico.
Meanwhile, here in the U.S., our higher GDP also means a lower standard of living than we might otherwise have. We waste energy and eat food from 10,000 miles away, harming our envirnment, and live on fast food that's killing us-- all of which increases our GDP. We work harder, borrow more, and buy more-- stressing all the while how we'll pay our bills. And GDP goes up. You (from what you've posted previously) and I both are exceptions to this, unAmerican resisters bucking the call to consume as much as we possibly can.
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