Sunday, January 11, 2009

March 2007: Consumerism

March 24: Earlier this month, Presidential candidate John Edwards was quoted saying that Jesus would be disappointed with the selfishness of Americans. His exact quote was from a interview was:
I think that Jesus would be disappointed in our ignoring those around us who are suffering and our focus on our own selfish short-term needs, I think he would be appalled, actually.

There was a lot of buzz about this quote mostly from the seriously Christian taking offense to anyone saying that Jesus was be disappointed in or appalled with them. In response to this quote, the media was rife with statistics about how generous Americans were. We give the most of any country in terms of both foreign aid and private charitable donations: over $260 billion in 2006 which was a 6% increase over 2005.

I had a different take on Mr. Edwards’ comments. I was thinking about writing about Consumerism this month. I saw his quote more in this light and took it as a sign that Consumerism should, in fact, be my topic for the month.

What is Consumerism and why am I motivated to address it? Both are good questions.

According to the American Heritage Dictionary ( there are three definitions:
1. The movement seeking to protect and inform consumers by requiring such practices as honest packaging and advertising, product guarantees, and improved safety standards.

2. The theory that a progressively greater consumption of goods is economically beneficial.

3. Attachment to materialistic values or possessions: deplored the rampant consumerism of contemporary society.

This letter is definitely not about the first definition. That is often associated with Ralph Nader the consensus founder of this kind of Consumerism. I want to write about a combination of definitions 2 and 3. More specifically, I would amend definition 2 to read as such:

Consumerism is the theory that a progressively greater consumption of good is economically beneficial to a point. Beyond this point it may becomes economically destructive.
Basically, I think Capitalism and Free Enterprise can make peoples lives better. This much is clear in the US. We have very affordable and abundant food. We have very affordable consumer goods and conveniences. In this sense, from my local viewpoint, definition 2 is definitely accurate. Businesses flourish while the constant innovation of products and services with a relentless pursuit to make these products and services more and more affordable is definitely beneficial for the economy. It has been beneficial to me.

Or is it?

The cost of many goods for hours worked has been on the decrease for years. Goods and services of all kinds are abundant. People benefit from this kind of Consumerism but not all people. If one takes a global view, it might be argued that people in the US consume too much. The subsequent conclusion is that the US consumes too much at the expense of the rest of the world. We think our lives are normal. Others look at us like we are overly attached to materialistic values and possession; basically definition 3.

March 25: In researching Consumerism on the internet, there seem to be two kinds of schools of thought. One school takes a hard line against Consumerism and the wanton consumption of goods, primarily in the United States. The other is a more scientific economic analysis of consumption.

The first is exemplified by a Venice, CA based muralist, Rip Cronk, in an essay found at
Consumerism is the myth that the individual will be gratified and integrated by consuming. The public fetishistically substitutes consumer ideals for the lost acculturating experiences of art, religion and family. The consumer sublimates the desire for cultural fulfillment to the rewards of buying and owning commodities, and substitutes media-manipulated undulations in the public persona for spiritual rebirth. In the myth of consumerism, there is no rebirth or renewal. And there are no iconic symbols to evoke transcendent truths.
I liked Mr. Cronk’s essay. He is the kind of idealist that would have appealed to my back in my university days. I would have truly enjoyed his attacks on corporate greed, capitalism at its current extreme, and erosion of values based on higher humanistic aspirations in our modern time. I wonder if there were ever a time when the general populace was not simply trying to get by and get whatever they could, whatever they could afford to live and then to make life easier.

I think however Mr. Cronk is wrong. The idealized world he advocates is probably not attainable. He wishes that everyone shared his views and priorities. That is simply not true.

On the other end, there is the United Nations Develop Programme Report from 1998. At the time of this report, the following statistics were presented to exemplify the inequity of consumption on a global basis.

Inequalities in consumption are stark.
Globally, the 20% of the world's people in the highest-income countries account for 86% of total private consumption expenditures — the poorest 20% a minuscule 1.3%.

More specifically, the richest fifth:
- Consume 45% of all meat and fish, the poorest fifth 5%
- Consume 58% of total energy, the poorest fifth less than 4%
- Have 74% of all telephone lines, the poorest fifth 1.5%
- Consume 84% of all paper, the poorest fifth 1.1%
- Own 87% of the world's vehicle fleet, the poorest fifth less than 1%
To me, these statistics were quite revealing. I could see where John Edwards might make the comment he did regarding our selfishness and focusing on our own short term needs. Certainly, from the perspective of nations, the United States is consuming the lion’s share of these goods and resources.

I could not find an update of this report. While 1998 is a long time ago, I imagine the statistics will not have changed much. In reading the above statistics, I was reminded of Vilfredo Pareto (1848-1923). Pareto was a sociologist, philosopher, and economist. He was born in Paris to an Italian father and a French mother. He lived most of his life in Italy.

Pareto is best known today for the so called 80-20 rule. He had observed in Italy, during his day, 80% of the income went to 20% of the population. Pareto conjectured that income is distributed logarithmically as follows:
log N = log A + m log x

In this equation, N is the number of workers, households, earning over x. A and m are constants. (OK… I have always wanted to write an equation in one of my e-letters).

The Quality Guru, Joseph Juran, noticed this 80-20 rule applies on a much wider scale. He named and applied this Pareto Principle to quality improvement, 80% of the problems are due to 20% of the causes. But, the rule seems to broader. 80% of sales come from 20% of your customers. If you consider the consumption statistics quoted from the UNDP report, the same applies. 20% of the population consumes a disproportionate amount. It is not always 80-20, but it is not a bad rule of thumb.

March 26: So, what does this mean?

If the Pareto Principle generally applies, there will always be the haves and have-nots. The haves will be around 20% and make about 80% of the income. Consider societies that were founded on and based on “total equality,” communist and socialist countries. Certainly, the Soviet Union, Cuba and China are horrible examples. They were examples of the 95-5 rule. We can add most countries of Latin America to that mix today and the same would apply. In every society, rank has its privilege. I would argue that when one tries to force or enforce economic equality, 80-20 moves in the wrong direction.

Maybe, we should just let free economies flow and the second dictionary definition of Consumerism is correct:
The theory that a progressively greater consumption of goods is economically beneficial.
Maybe, over time, economies will balance out. With the globalization of production i.e. manufacturing moving to China and India, the global employment and wage base will increase making for a better life for all. This is theory, in any case. Eventually, the wages and subsequently the buying power would reach some equilibrium and workers around the world would make about the same. Life would be better for the Chinese and Indian workers but probably not as good for European and American workers.

Unsure when or even if this equilibrium would occur, I truly believe the Pareto Principle would hold. 20% of the earners would have 80% of the income. Why? Managing, leading, and running organizations, governments, factories, corporations, etc., requires greater skill and acumen than sweeping the floors. People will compete for those positions, those positions of power, and therefore expect to, demand, and most likely get paid more for their efforts.

Does simply being American justify living better then someone born in India or Africa? Yes and no. It really should not be a factor. In an ideal world, we should all come into this life with equal chances of having the same basic quality of life and the same opportunity to achieve and excel. It is a good ideal. I have this ideal. I hold it dear, but realize that it is just an ideal. Reality is more about stratification. Stratification comes from ability and environment. Ability is ones skills to learn and put that learning into practice. Environment is where and which economic strata you are born into. Face it, if you are born with Down’s Syndrome in the poorest village in Africa, your chances for making the 20% is overwhelmingly less than if you were born into a family that was sitting on a net worth of millions of dollars. Less dramatically, we begin in the early years of schooling to differentiate and stratify students in terms of reading and math abilities. It is not an equal system.

March 28: To me it is a matter of facts. The fact is that we consume a disproportionate share of goods per the UNDP report. I believe that is not an innate selfishness but due to an economic stratification per the Pareto Principle. We are simply fortunate enough to live in a wealthy country that affords us the ability to purchase and thus consume disproportionately.

When John Edwards made his statement there was a strong backlash as mentioned above. There were reports that no other country gives as much government aid and private donations to global charities. While I believe it to be true, I also thought about a Biblical reference to Luke Chapter 21 verses 1-4 where Jesus noticed the rich putting donations into the temple treasury. While they put in large sums of money, it was not proportionate to a widow who donated two coins… all she had.

Thinking of the Biblical story of the widow and her last two coins or mites, raised a question. Which country gives the most money as a percent of the wealth GDP? Thanks to the wonders of the internet and the Google search engine, I went to and accessed their report International Comparisons of Charitable Giving. In it, they compared country giving as a percent of GDP and the US topped the chart at 1.67%. The UK was second at .73%. So, while the US consumes the most, we also give the most in both gross dollars and percent of GDP.

What is the manifestation of this disproportionate consumption? Too things come to mind: obesity and too much stuff. Americans are definitely fighting the battle of the waistline. We hear about our corpulence in the news media all the time. But we will not address that in this letter.

Do we have too many things? Too much stuff? Absolutely! We have the bulk of the income and most everyone that is gainfully employed works for enterprises whose sole focus is on getting us to consume more and more, to buy more and more. To get us to buy more of their stuff, manufacturers and retail outlets try to make it more and more affordable. The more affordable it is, the more we can buy.

There are two problems with all this buying. If the purchases are consumable, like food, we probably consume it which leads to the aforementioned weight problem. If the goods are more durable, we have to store the things we buy. Take clothing for example, we I was growing up, I had three coats. I had a light jacket for cool days. I had a heavy winter coat and a dress/raincoat. That was it. Today, I have about ten light jackets, three or four wintry coats, and two dress coats. Why so many? They are readily available and, if bought properly, much less expensive today than back then.

I can go to TJ Maxx and buy slacks or shirts for about $10-30 a piece. As a result, I buy too many of both. They are so cheap, I now debate whether it is worth dry cleaning them or just wearing them a bit longer and then tossing them out and buying new ones. As I have too many jackets, coats, pants, suits, shoes, belts, sweat shirts, sweaters, sweat suits, wind shirts, polos, t-shirs, sport coats, suits, ties, socks and underwear, the question is where to store them all? The answer is anywhere and everywhere.

Consider the following which I may have already used as an example in another letter. Growing up, we were a family of five. We each had our clothes in the closets of our respective bedrooms and our coats all in the foyer closet. No problem. Today? Only my parents live in the same house. Amazingly, all the closets are full but with only their clothes. There is even an extra closet off the foyer to hold the overflow of coats. This is amazing and not confined just to my parents. Almost everyone my age tells the same story. Clothes are so cheap, so abundant, and we are coaxed so much to consume more… that we do.

If you do not believe this anecdotally, let’s look at the booming self-storage business in the United States. Self-storage is basically the rent-a-garage type businesses that over the past twenty or thirty years have popped up everywhere.

In 2005, one in eleven households owns or rents this kind of space. This is a 75% increase from 1995 when it was only one in 20 households. The current estimate is that the space is about four square feet per capita. These are incredible statistics.

Why do we have and need so much excess self-storage space. Quite simply: we have too much stuff. I would like to write more about this… but I have to go shopping.

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