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Consuming Is Not Mindless Buying Of Stuff. It Is Social Co-ordination Through The Exercise Of Choice In The Marketplace.

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The writer of a recent Forbes article doesn’t want consumers making their own choices about what to buy and how much to buy. Instead, he provides a plan for consumers to avoid what he calls excess consumerism. In other words, what the writer suggests is essentially that “excessive consumption” is terrible for you and everyone else.

To put the matter mildly, the concept of “excessive consumption” has no basis in how flesh and blood people operate in the real world. This view of excessive consumption does not account for the fact that people’s goals are not focused on buying stuff. They are making individual choices using their own income and making their own decisions to fulfill their own needs and wants. They are not seeking the judgment or moral approval of Forbes writers.

One thing is for sure, and that is people prefer to obtain what they want now rather than later. Real people have time preferences – this statement is far from new. Each of us has time preferences, and we express these preferences in the market, where we make decisions on how we spend our time and income. For example, if I asked you to choose between taking $50.00 today or $50.00 in two years, which option would you choose? If you had the option to purchase bread for $1.50 today, would you buy the same loaf of bread tomorrow for $3.00? These examples clearly show that people make their choices to satisfy their want-satisfaction under personal time preferences. Unfortunately, the idea of consumerism, or excessive consumption, posed by the recent Forbes article clearly shows a widespread misunderstanding of how real people operate in the marketplace.

The Consumer Confidence Report finds consumer confidence has improved since December 2020, including a reported uptick in January 2021, and stated that “Consumers’ expectations for the economy and jobs ……..advanced further, suggesting that consumers foresee conditions improving in the not-too-distant future.” This is good news for consumers and producers. Consumers are confident in the market conditions for consumption, and guess what – the customer still rules!

Let us face it, the idea of excessive consumption in the aggregate is all wrong. Those who support the notion of excessive consumption do not see human behavior as it is but rather how they think it should be. What is essential for a functioning marketplace is not buying more than a Forbes writer believes that one may need, but how people choose to buy more or less of what they want. The market process is about consumers making personal choices using their own time and income to buy what makes them happy and is useful toward their goals. What is wrong with that? I love coffee, and I tend to buy coffee from different places, and I buy beans to make coffee at home. Should a coffee shop owner tell me that I can buy only one bag of coffee because three bags of coffee is excessive? This is true of most things like shoes, streaming movies, and exercise downloads. What may be more for one person can very well be less for someone else.

You see, when it comes to consumption, people tend to pick and choose for themselves what is excessive and what is not. The Forbes writer’s proposition is: what is excessive to me should be excessive to everyone else in the world. However, excessive consumption cannot go beyond what is produced—as we all know, there is scarcity.

Like most people, I want to buy what I deem useful, necessary, and has value. For one thing, consumers are not bumbling idiots – they have goals in mind as they shop for items. Consumers are attentive to prices, needs, timing, and market conditions related to their situation. As long as excessive buying does not harm others or is illegal, they should enjoy an economic system that produces material goods for consumers’ purposes and enjoyment. My enjoyment is a hot cup of joe, and you enjoy power tools or clothes. We can enjoy these things because we earn income to buy them, and they bring joy.

Let us get to the point; consumers who “buy excessively” are, in reality, exercising their freedom in the marketplace. Consumers can determine on their own to either buy fewer or more significant amounts of bread; however, if they buy fewer amounts of bread, they will cause the incomes of wheat producers to fall. On the other hand, consumers who purchase more video game downloads raise the incomes of people employed in that industry. Moreover, the opposite effect happens when consumers are told not to make their own choices in the marketplace. Do not buy more than two cups of coffee a day as that is excessive. Ha!

We must remember that production takes time. Rome was not built overnight, and neither were the items bought in-person or online by millions of people every day. That means if less is purchased, less will be produced in the future.

Producers and manufacturers determine what to make more or less of based on market demand. Demand begets production. The market provides for those willing to buy, and people who are not willing to buy do not stimulate production. Producers accommodate mass demand with scarce resources. Consumption is a balance of scarcity and abundance, and the outcome creates more choices for consumers. You see, economic thriving does not revolve around buying stuff, it is the outcome of consumer choice.

On the whole, excessive consumption may not fulfill a Forbes writer’s desires, but it may bring true happiness for some people. People who buy – whether excessively or not – fulfill their economic role of supporting business owners and their local community. To assert that consumers should stop “excessively” buying products assumes away the prospect that people do not change shopping patterns or increase family sizes over time. I was always told that you do not bite the hand that feeds you. The market is the only social place where the coordination between consumers and producers can facilitate goals and mutually beneficial choices for everyone involved via the buying process. These “excessive” purchases fuel the economy, which helps all people flourish and live their best lives.

The Insidious Social Breakdown Caused By Government Adoption Of Keynesian Policies.

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When we talk about the state of the national economy, we tend to focus on consumption. We talk about standard of living, which is a consumption measure. We want it to grow – we want people to consume more. We talk resentfully about the income and wealth of entrepreneurial titans like Jeff Bezos, and we are thinking about their enormous consumption possibilities. It causes us envy, because consumption is our measure of success.

Similarly, we think in policy terms of redistribution of wealth and income, through all kinds of welfare programs. These are designed so that poorer people can consume more.

This consumption compulsion has two major sources. One is John Maynard Keynes, whose General Theory insists that it is the total consumption by the population that drives the economic growth, economic success and economic well-being of a nation. He pulled this notion out of thin air and brought no economic reasoning to support it.

The second is governments, who gleefully seized on Keynes’s novel theory, recognizing that, by promising people more consumption (and doing so under the guise of sound economic planning), they could buy themselves votes and popular support, while claiming the support of recognized economic theory.

A new book (The Once And Future Worker by Oren Cass) suggests that this focus on consumption produces detrimental economic and social results, and actually destroys the foundations of a strong society.

The result of preferring consumption as a focus of policy instead of production is to deprive producers and over-reward consumers. Wage levels have been stagnant, millions have left the workforce because it is unrewarding, productivity growth declines, families become unstable (unemployment or intermittent employment is often a cause), and communities crumble when their productive assets, such as factories, lose viability and are not strengthened or replaced. Polls begin to indicate that producers – workers – are, “in general, dissatisfied with the way things are going in the United States at this time” (Gallup’s phraseology). 

Half of Americans born in 1980 were earning less at age 30 than their parents had made at that age. And there are “deaths of despair” – mortality rates have risen since the turn of the century for middle aged white Americans, driven by higher levels of suicide, liver disease and drug overdoses for those without a college degree.

In making GDP growth and rising consumption the central objective of public policy, government is focused on “a truncated and ultimately self-undermining concept of prosperity”, says Cass in a summary of his thesis. Workers have no standing in this view of the economy. Neither do families and communities. When jobs vanish, government offers a welfare cheque and expects recipients to be grateful. Towns without jobs are just places people should leave behind. Various forms of retraining are offered – arrogantly – without asking whether this is what people want and whether the training will work. Maintaining a healthy, inclusive society is not the goal.

What if people’s ability to produce matters more to them than how much they can consume? What if the export of our productive capacity to foreign countries has left us with fewer chances to create well-paying, productive and meaningful jobs for Americans? A labor market in which workers can support strong families and communities is the central determinant of long-term prosperity. When people can build on a foundation of productive work, they can find purpose and and satisfaction in providing for themselves and producing for others. Prosperity is the emergent property of a virtuous cycle in which producers are awarded respect, dignity and gratitude for what they do.

In economics, this shift of focus from consumption to production is captured in Say’s Law. As Per Bylund explains: production precedes consumption.

We work to produce, in order to serve others, and to serve ourselves, both with the rewards the market provides and the pride and self-esteem we derive from our productive labor.

Yet government policy works in the other direction. Taxation and regulation reduce the demand for work in the economy. Health care and higher education are subsidized, while energy production and manufacturing are penalized. Capital moves to the tax-favored and regulation-favored sectors and out of others. Excessive environmental regulation escalates and penalizes industry, even though there is little marginal impact on air quality or climate conditions. 

The supply of work is heavily biased by our education system; “college or bust” results in a workforce of “busts” ad an oversupply of useless college graduates. America needs a co-equal vocational track that prepares students to move into the labor force, with priority over the college track. 

Immigration policies can result in an oversupply of incoming low cost labor at the expense of domestic workers. We must make sure that immigrants bring skills we can’t supply from the domestic labor market. International trade is evaluated by its effects on consumption; looked at through a production lens, we see that it reduces domestic capacity to produce and allocates capital away from important American industries, building industrial ecosystems and supply chains outside the United States. 

The prioritization of globalization, GDP growth and consumption growth, and higher education leaves behind many American workers. The leftist elites will not tolerate “any deviation from the borderless, green, multicultural, college-educated, ….consumption-oriented society”. Anyone who does not agree is labeled ignorant. The left has no concern for the quality of our society. Oren Cass suggests that we start to get serious about valuing work and productivity, rather than consumption and ideology.

 

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