Month: October 2012

The conversation has nagged at me for a week now.  I was speaking with a mother who was also a high school English teacher and we chatted about teens and teaching.  As we spoke, she looked at me and commented that where we were failing was in preparing the kids for the practical aspects of life, such as keeping a checkbook and managing personal finance; she’s entirely correct in her assessment.  But she followed with another comment, that we aren’t preparing them to be good consumers.  It was shortly afterwards that the conversation fell victim to the press of dealing with our elementary school boys, but that particular comment has come back to me repeatedly since then. 

We aren’t preparing them to be good consumers?  On the contrary, we’ve raised them to be great consumers.  We’re doing a lousy job of being good post-consumers. 

I understand the point that she was making in the context of the talk about personal finance.  Our kids generally have a poor understanding of money and how to handle it, a function of society’s and parental inattention, as well as a purposeful effort to encourage consumerism.  How well do we live within our budget, save, keep track of our expenditures?  How do we maximize our money so that we’re being the most efficient and effective with the funds that we have available?  But the choice of the word consumer, while not meaning that that’s all that we are, is telling.  We should teach our children how to be consumers…

Shopping has become the manner of soothing our angst and alleviating our fears.  George W. Bush completely lost me in the aftermath of the 9/11 attacks when he stated that we shouldn’t let ourselves be held hostage to terror, but that we should go out and shop despite the fear.  Seriously?  When the going gets tough, the tough go shopping?  Some will say that it was just a poor choice of language, that shopping was a simple word denoting a wider spectrum of popular activities.  But I recall no language about overt public sacrifice, about what we needed as a nation to give up to pull together in common cause for what occurred and that is telling.  Where is the language about our collective values?

My sense is that we’ve fully given over to the material consumer programming pushed by the corporations, media and government to the exclusion of the non-material for life satisfaction.  To consider this, let’s look at QVC and religious affiliation as proxies for material and non-material satisfaction respectively.   QVC began as a fledgling entrepreneurial effort in 1986, two years after the start of HSN; in the earlier years, before and after it overtook the older HSN, it enjoyed growth of over 12%.  By the first decade of this century, growth had dropped to the single digits and in 2011, corporate revenues rose about 6.4% from 2010.  When you look at the QVC on-line age demographics, the largest segment is the boomer generation cohort of 55 – 64 years of age.  It’s followed by the 65 and over group and then by the second boomer cohort of 45 -54 year-olds.  The first and third age cohorts are the boomer generation in almost entirety, a generation nursed on the earliest precepts of consumerism, delivered via television and a truly flush economy.  The 65 and overs are perhaps the last wealthy generation that we’re going to be seeing, a group that does recall the lean years of the Great Depression and Second World War.  Don’t forget that the retirement assets of the boomers aren’t where they should be, particularly for the younger boomers.

On the other side of the ledger, take a look at religious affiliation, as recently viewed by Pew Research.  Remember that this is a proxy for non-material values and not necessarily a cry that you had better get thee hence to a church.  What’s notable in the survey is that the percentage of Americans who have no affiliation to any particular religion or denomination rose to fully 20% of the population; the group taking the biggest hit was the staid mainline denominations (Lutheran, Methodist and the like) cohort.  But the telling story is again within the age groupings.  About 37% of the respondents within the 30 – 49 year-old cohort had no religious affiliation; 35% of the respondents in the  18 – 29 year-old cluster had no affiliation either.  In comparing the two proxies, it would appear that the parents – the two largest QVC cohorts – were buying into the push for a consumer mentality and letting it overtake the other values historically handed down within the family.  It hasn’t been put to the statistical test, but it does make a certain sense.

The difficulty for our children however, is that the American consumer model is now dying.  Family incomes are dropping – by approximately $3000 since the start of the Obama Administration – and there’s a record number of Americans now receiving food stamps.  You can argue that the "improvement" since the financial crisis of 2008 is purely a result of repeated episodes of Quantitiative Easing with the Federal Reserve tossing cash into the system like confetti at Mardi Gras.  Many living wage jobs have been shipped overseas and will only come home with lower labor costs, meaning less money for our families, who are still working on the consumption model.  We’re simply now at the point at which we have to learn – and teach our children – that the easy personal financial choices of the past six decades are an end.  We’ve now officially entered the Post-Consumer era of American History, when the choices are harder and the opportunities fewer.  If you have any question about the validity of that statement, consider QVC once again.  In March of 2012, QVC inked an agreement with China’s national radio broadcasting group to begin a joint venture into tapping into China’s burgeoning middle class as occurred here.  The sights are likewise set on Brazil and India, two more members of the so-called BRIC group of nations, as QVC joins the rest of the corporate flock moving on to greener pastures after eating the local fields to the financial roots. 

There’s an awareness that our kids don’t have a handle on personal financial management, and that’s true.  But looking at that technical side – the use of credit and balancing a checkbook – is missing the greater point.  It’s akin to saying that we need to teach the youngsters better ways to manufacture buggy whips when every Tom, Dick and Harry is setting up an automobile manufacturing company.  It’s time to recognize where we are and move on accordingly.

If we’re going to slowly dig our way out of our collective economic hole, we’re going to have to make fundamental changes in our spending patterns, one of the principal aspects being a concentrated effort to buy local.  "Local" is a general geographic term, definable by the type of product being sold and it’s origin of manufacture.  But the more is better meme has become so entrenched in the national psyche that acting contrary to the meme can create significant internal conflict and cognitive dissonance.  It might seem easy, but breaking the consumer programming can be harder than it appears and will take a conscious effort; I experienced the discomfort with a recent purchase for an upcoming child’s birthday.

Middle is in his mid-teens and at a stage in which he’s now aware of his appearance.  That however, is butting against the fact that he’s probably not yet finished growing and I know that he’d like at least one more spurt so that he’s officially taller than his old man.  He recently asked for clothing for his upcoming birthday and the reality is that what he had last winter is going to be too short when he pulls it out for this winter.  Knowing that the article – he hasn’t had the birthday yet and I know that at least one of his friends reads this for some odd reason – isn’t going to be cheap, I began to shop accordingly.  My intent was to purchase the desired item, but one that was made in this country.  As I went shopping however, it became apparent that anything sold in any of the department stores was manufactured overseas, even if the headquarters were domiciled domestically.  Let’s be frank, the goal is to push money to the worker and not to the management.  The next step was to shift to the internet, via UPromise.  This isn’t a marketing shill, but if money is going to be spent online, I’d rather see a small segment come back to the college savings accounts.  What I learned however, was that the article is available from domestic manufacturers but at much – in this instance, twice as – greater prices.  Clothes shopping isn’t well-suited to the internet and with all of the major retail outlets pushing foreign-made brands, I suspect that there isn’t sufficient demand to allow the higher labor costs to be offset by higher volume sales. 

The upshot was the classic putting your money where your mouth is scenario.  There is a general amount that can be spent for the birthday and honestly, purchasing the domestic article would handily blow that budget out of the water.  As it is, the foreign made article available at the department store also pushes the budget but allows for the purchase of one or two smaller items.  As I stewed on the decision, the constantly reinforced more is better meme smacked me in the mental head and led to true cognitive dissonance:  birthday satisfaction or common good? 

With the end of the Second World War, there was a conscious decision by American business and the government to push much greater rates of consumer spending.  Both parties remembered how business spending collapsed during the Great Depression; that was replaced by the new Keynesian philosophy of pushing government spending, which Roosevelt embraced in his first two terms in office.  But government spending exploded during the Second World War, driving business investment and spending and allowing the American economy to again reach full employment.  The Axis’ defeat, and subsequent military downsizing, did leave the question of what would happen to the economy as government leaders believed in that quaint notion that the government’s budget had to be balanced.  The drop in defense spending did lead to a recession just as millions of American men came home…what – or who – would take it’s place?  Picture three players at a card table and two of them were working in tandem with a common strategy.  As the old axiom goes, if you’re at the table and don’t know who the sucker is, it’s you.  That third player was the American consumer, who wanted a better future after two decades of economic collapse and global war. 

Pent up demand was fed by the new instruments of television advertising and the soon-to-be created credit card and the horses were out of the gate.  If you don’t believe that the government was complicit with the business community, just look at all of the tax deductions available in the IRS tax code.  While everyone talks about the tax-deductibility of student debt and mortgage interest, most have forgotten that until its repeal in Reagan’s 1986 Income Tax Revision Plan, the average person could also deduct their credit card interest payments from their federal income taxes.  It was during the early 1980s that the government decided it needed the tax revenue more than the public policy goal of building a consumerist society and the deduction ended; the consumer mentality train was happily rolling onwards.

But while the train was speeding down the tracks at this time, foreign competition increased.  Remember how the Japanese were going to rule the world?  American corporations were losing market share and profit margin and corporations began to address at least the latter by shifting their production overseas.  Textiles left the south, shoes left New England and autos departed from Detroit.  If Americans wanted to purchase inexpensive consumer items, Walmart also began its historic and explosive growth, reimporting these departed items from far cheaper shores to an American consumer who didn’t realize that the economic ground was shifting beneath his sneaker-clad feet.  The effect was that the corporate sector switched the track beneath this speeding train, changing it to a line that was now running on an incline while the American consumer was slowly running out of fuel.  A railroad coal car might look full when it starts, but it eventually runs out of the coal. 

So that’s where we are.  The train is running out of fuel and the management is telling us to shovel for all our worth, but the fuel is depleting.  We’ve become conditioned to shoveling despite the growing realization that the only way to make the train keep running is to go more slowly and do a better job of managing what we have. 

Do I have to spend more than 96% of my disposable income in order to be happy?  Will that thingymabob make me more satisfied?   It’s a personal decision for each of us and I can now attest that breaking the mantra of six decades will require work and real readjustment of my priorities.  But it’s one that we have to begin making now.  The economic future facing our children truly is going to be more constrained than what they have now and if they don’t learn how to make more responsible choices from us while we’re not completely over the barrel, then they’ll be forced to contend with a cognitive dissonance that dwarves the discomfort which I faced. 

So what happened with the present for Middle’s upcoming birthday?  The result was a "victory" for the personal budget over common good as I went with the sale and got the price differential.  But the dissonance is still there.  I’m annoyed with myself for not recognizing the size of the price differences and accounting for it up front.  More importantly however, is the realization that there has to be purposeful conversation over the question of how much is enough? so that this little foray into globalization can have a different ending.