Bad consumer
Tuesday, October 7th, 2008 at 4:43 amSo, consumer confidence is down and people aren’t spending as much, which is only going to make the world financial situation worse.
I’m not sure that I’m pulling my weight as a consumer. In fact, I’m sure I’m not. For instance, I’ve got a skin care regime that comprises, in its entirety, a 50c bar of antibacterial non-soap and $3 goat’s milk moisturiser. And it works. I’ve been wearing the same pair of secondhand R.M. Williams boots for 15 years. Or is it 20?
Stu is worse. I hope he won’t mind me divulging here that he wears his jeans until they literally fall apart. He’s been wearing the same pair of Blundstones for so long that I think there are relict organisms living in the corners of the seams.
We’re not completely incorrigible consumers. We do buy plane tickets (mainly cheap ones to nearby places) and computer stuff — those are our major expenses other than rent, bills and groceries. We indulge in fancy tea — but it lasts a long time. We eat out, but not very often at high-tone places. I rent a piano. I buy sandals fairly frequently, but only because shoes made in Thailand are inclined to fall apart within weeks if not days (but they’re cheap). I buy art supplies. Stu buys computer games and beer. But we don’t spend as much as we could if we tried. We certainly don’t borrow on our credit card. We’re not the consumers that late capitalism would have us be.
I can’t help wondering — along with a whole lot of other people — whether there is not something fundamentally broken about a system that requires people to work like crazy in order to spend like crazy to keep businesses going to keep people employed and working like crazy — or should that be, to keep stock prices at an overinflated level? There’s got to be something broken about a system that requires people to borrow like crazy, or to neglect saving, in order to spend, etc.
Though, if it is broken, Lord knows what the fix might be. Communism doesn’t work. Regulated capitalism? Capitalism based on reality? I wish I had a better grasp of economics. I wish the financial sector had a better grasp of economics. I wish we could have an economic model that serves the real, diverse needs of people — including the need for leisure — rather than the present model, which just provides a lot of stuff. That’s three wishes. Genie, where are you?
October 7th, 2008 at 2:38 pm
My first thought is that the current system might work if we got rid of this ridiculous tendency to borrow. (My only debt is a student loan, and that’s in an ISA gathering money; as long as the interest on the ISA is more than the interest on the loan, I’m good, and if that situation changes I can always pay it back. Credit card debt is something I never, ever intend to get into; as my credit card’s limit is a mere £500, credit card debt seems unlikely.)
My second thought is that perhaps this is an inevitable tendency, in which case we’re back to the problem of fixing the system or changing the system — and I got nothing there.
Though I do wonder if we could stabilise at a lower borrowing rate. I think the French borrow much less than the British, and it seems to be working well for them. (There was an article about this on the BBC website a week or two back, can prob dig it up if you’re interested.) I certainly intend to be very careful with borrowing; but I’m privileged enough to have that choice, whereas other people can get stuck in a financial corner much easier than me.
It’s all quite head-clutchingly difficult, really.
October 8th, 2008 at 5:03 am
I’m in the same position as you with a student loan. If I ever earn over a certain amount, and I go back to Australia, I’ll have to start paying it off through the tax system.
I’d be interested in reading that article. Thinking about previous generations, my grandparents certainly weren’t well off, but they didn’t get into debt. They went without things they wanted, or slowly saved up for them. As for mortgages, no bank would have lent them — or my parents — the sort of mindboggling sums that banks have been lending willy-nilly to everyone lately.
This sounds harsh, but as I see it, you can’t expect to live a champagne life on a beer budget. Social security has to be there to make sure that people have food, accommodation and healthcare no matter what — and if people are borrowing to meet those needs, then things are well and truly rotten (of course, in the US, healthcare is rotten) — but beyond that, in my opinion, living on credit is a choice. What strikes me as grotesque is the willingness of banks and credit companies to lend to people who can’t really afford the loan.
Fixing the system might involve reintroducing old-fashioned regulations on lending institutions. I just read that Iceland is in a bust after a credit-led boom. I don’t know whether any credit-led boom is infinitely sustainable. I think history shows that the bubble always bursts.