Economy in conflict: Sustainability vs. consumerism

It seems the larger economy is suffering from the effects of a contradiction. We know, for example, that something like 60% or 70% of our economy is a direct result of citizens opening their collective wallets and plunking a greenback or two on the counter so that they can walk home with something they feel they so desperately need to own. Each purchase, in and of itself, is rather insignificant, but when you tally the amount paid across the nation by millions of people each and every day, pretty soon you're talking real money.

The person to whom we give those greenbacks is going to spend them somewhere else, and the money sloshes back and forth as a result of people bringing value to the marketplace in the form of salable goods and services. This goes on in an endless chain of events.

It’s the growth in our aggregate spending that’s going to take us back to the booming economy we so love and worship. The whole idea is obviously linked to what we’ve come to regard as a higher standard of living relative to some places in the world.

On the other hand, sustainability is the new buzzword. We’re besieged by passionate campaigns that implore us to conserve, recycle, reuse, repair, and engage in other acts that minimize mankind’s degradation of the environment, both local and global. This is highlighted at the local level by an article titled “Venture: A capitalist who says don't consume.”

With a continuing uncertainty about our own revenue sources and investment portfolios, rational humans tend to scrimp and save more than they’d do if feelings about the economy were just a bit more optimistic.

This all sounds like some sort of feedback loop, what economists illustrate by means of superimposed supply and demand curves.

The big question concerns what happens when this principle is applied to the industrial market, rather than individual households.

What’s your opinion?

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Comments

  • I am no economist. Even worse, I am an engineer. But it seems to me that "plunking a greenback or two on the counter so that they can walk home with something they feel they so desperately need to own" is a bit like the company that spends all of its income expanding its capacity without any thought of developing new products, process improvements or cost reductions. Soon enough, they will be driven out of business by their competitor who wisely invests a reasonable amount of their income on engineering and R&D to develop new products, make process improvements or reduce operating costs. In the long run, the second company will provide more jobs. True consumerism is about spending money we don't have on things we can live without. The opposite is saving some money for a rainy day or better yet investing that money in our industries. If we all did this, in the long run we would all have a higher standard of living. So I disagree with the principal that spending is the best way to stimulate the economy. It is short lived. Hopefully we have learned something from the last 70 years of rampant consumerism. In the long run, it doesn't maintain our high standard of living.

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