I would have more sympathy for criticism of consumer culture were it not for the people who voice it — usually the type who owns a second home in Tuscany but is horrified that their cleaner has two televisions.
I would have more sympathy for criticism of consumer culture were it not for the people who voice it — usually the type who owns a second home in Tuscany but is horrified that their cleaner has two televisions.
As for the anti-materialist stance of Lord Layard, who believes your iPad creates unhappiness in those who cannot afford one, this may be true. But then the same logic must also apply to owning a peerage, which may arouse feelings of inadequacy in humbler social scientists styled ‘Professor’ or ‘Dr’. Lord Layard is strangely silent about this.
But the most important rebuttal of anti-consumerist sentiment comes from Elizabeth Warren, a left-of-centre academic in the US. Her response to critics of rampant consumer extravagance was to show that, in reality, consumer spending wasn’t rising much at all. Evidence she uncovered on the spending habits of the median US household largely debunks the widespread belief that overspending is on the rise.
Often it’s the reverse. In 2005, typical Americans spent 20 per cent less on food than they did in the early 1970s. Spending on clothes declined by over 20 per cent, and on furniture by over 30 per cent. On major domestic appliances (washing machines, fridges, etc) it is down by well over 40 per cent. Warren writes:
Computers add another $300 to the annual family budget. But… the extra money spent on cable [TV], electronics and computers is more than offset by families’ savings on major appliances and household furnishings. In fact, when all the numbers are added up, an increase in one category of spending is generally offset by a decrease in another. On average, a family today spends more on airline travel than it did a generation ago, but less on dry-cleaning. More on telephone services, but less on tobacco. More on pets, but less on carpets. All in all, there seems to be about as much frivolous spending today as there was a generation ago.
Hard to believe, I know — which is why it’s so important. Because, in discussing rising household debt, it has become common practice to point the finger of blame at rising consumer extravagance, when in fact ‘extravagance’ may not be growing at all. What we are seeing is not so much greater spending but the visible signs of a free market providing more, better things at a lower cost.
So if it’s not ‘too much shopping’ that’s screwing us into debt, what is it? Warren’s findings seem to show the major causes of indebtedness in the US are higher taxes and property prices.
Every time we accuse consumers of ‘extravagance’, we are allowing government to duck the blame for the real causes of debt: not only tax, but also encouraging an insane bubble in property (e.g. making London a bolt-hole for every crooked foreign tax-dodger on the planet, forcing honest, indigenous, taxpaying advertising executives to live in the suburbs).
Yet, as the range of consumer goods broadens, the vilification of consumerism may worsen — for it is easier to be disdainful of people when they buy things you don’t buy yourself. The consumer economy then soon becomes a victim of its own success, inspiring more resentment. ‘People are buying too many nice things at Tesco, so why not tax them and spend the money on the NHS?’ A better question might be ‘How come my local Tesco is open 24 hours a day but my local NHS CAT-scan machine closes at 5pm?’
But at least taxation benefits someone. It’s the property boom that depresses me. For what was the ultimate point of all the globalisation, offshoring, outsourcing and technological innovation over the last 20 years if all the savings are mopped up by the rising cost of buying a house?
Rory Sutherland is vice-chairman of Ogilvy Group UK.
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