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Being frugal is going to kill the ecomony

January 18, 2009

Here’s my first post of the weekly thing I’m going to try doing.  Today: Limiting our spending and how it effects the greater economy.  Oh noes.

I’m all for DIY; in fact, more people should be doing the things they can instead of paying someone else to do it.  It’s (more or less) global opinion that Americans are fat and lazy, uncultured, incompetent, etc., etc.  I don’t think these opinions are always justified, but looking around I find it easy to see where these ideas come from.  When your whole society is structured around convenience, why would you break the norm and make life harder for yourself?  If you don’t know how to do something on your own, why learn when you can open up the Yellow Pages, find what you’re looking for, make a call or two and have someone at your house doing it for you in a few short hours?

It makes sense: We’re all basically lazy, and I think this even applies to other animals as well.  Have you ever watched a show that highlights wildlife species in their natural habitats?  Every one I’ve ever seen, or at least the ones that I can remember, show the animals in a playful mood once in a while.  And carnivores, even though they spend a fair amount of time locating, tracking, and hunting their prey, will devour carcasses they come upon; if there is lots of meat they’ll come back to the same one for days.  Why make a new kill when there is perfectly good meat to be had here?  It’s a lot more enjoyable to play anyways.

The difference is, First World humans are at an unnatural level of lazy that’s simply at odds with reality.  Throughout human evolution our lives depended on being able to do things—that’s a huge part of adaptation.  Early people couldn’t order in or call a plumber; they killed and collected their own food, prepared it and ate it, and if something was wrong with their surrounding ecosystem, they died.

All of these consumers could praise themselves for their newfound frugality in the midst of an economic downturn. But every step they take toward self-reliance — each shrub they prune themselves, each cupcake they bake from scratch — hurts the people and small businesses that have long provided these services professionally.

These small, service-oriented businesses are run in storefronts on urban streets and in suburban strip malls, or sometimes just out of pickup trucks. Responsible for roughly 18 million jobs nationwide, according to 2006 Census Bureau data, these companies have long been seen as engines of America’s economic growth. Yet after years of explosive expansion, many beauty salons, dry cleaners, landscapers, dog walkers, nanny services and restaurants experienced slower sales growth or even decline in the final months of 2008.1

Yes.  Duh.

Yes. Duh.

So here’s the dilemma: Do we do more things on our own, so we’re not as dramatically affected by a failing economy? or do we pump more money into that failing economy, hoping that our dollars will pump it full of life?

Ben Stein, and indeed most economists, seem to be telling us to spend our little hearts out:

People are planning not to spend. They’re not spending.

This is not a good idea.

For those of us who still have our jobs, who still have a few nickels to rub together, we should be buying like mad.

Look, we’re faced with John Maynard Keynes called “the paradox of thrift.” If everyone is cheap and thrifty and doesn’t spend, the economy slumps and everyone is poorer, not richer.

This really isn’t rocket science. It’s part of what caused the Great Depression.2

Here’s my take on things:

The economy was destined to fail because it was built upon so many things that weren’t real or that couldn’t be sustained.  Now it’s come out that all of our money is fake, and it’s also coming to light that a lot of business practices simply can’t go on  any longer.  I think the dilemma above is a false dilemma; it’s not that the economy will die if we don’t spend, but that economy will change.  And you know what?  I think it needs to change.  Actually, I think I’ll go further than that: It needs to change because it can no longer be what it was.

So I’m all for more people becoming do-it-yourselfers, because the business model of the last several decades either doesn’t work anymore, or it won’t work very much longer.  Cut your own hair, fix your own porch, plant your own gardens, cook your own food, and teach yourself how to do whatever you want.  I’d love to see people making more of their own clothes even!  We’ll be stronger as people, and, dare I say, as a society as well.

Notes and Links

  1. Outsourced Chores Come Back Home at nytimes.com
  2. Stein: We Should Be Buying Stuff Like Mad at cbsnews.com

Link Aggregation

(When I do this I’m going to try to keep it to ten or less links each week.)

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One Comment leave one →
  1. March 19, 2009 9:24 am

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