Overconsumption is poor form, and we're in poor shape
Talk of consuming too much may seem like an odd concept as consumers struggle to get their voice back after an economic slump. But if we're hoping for the next boom, we must also plan for the next bust. And that calls for prudence. Individually and collectively, we continue to spend beyond our mean. Some of the things we overconsume – food, for example – are the staple of daytime talk shows and late-night infomercials. But some are not so obvious. And while we've made progress on others, we can and need to do more.
A couple of things to remember before we jump into specifics. In general, if a good or service becomes cheaper we'll use more for it. And if that good or service is made cheaper through government subsidy, we'll use more of it and there'll be a debt to pay or a trade off of less of another public good or service.
Energy.
Back in 2008, one of the major political parties devised the slogan
"Drill, baby, drill!" to elicit support for increased petroleum
exploration and production. The idea was that if we produce more, the
price will fall and we'll be better off. But let's think about the law
of supply and demand for a second: drill more, price goes down, use
more, price goes back up and we're back at square one. By contrast, in a
more prudent world: use less, price goes down, buy something other than
energy with the savings or "feed the pig". And there'll be more energy for future generations.
Healthcare costs
are driven up by a number of factors: preferential tax treatment of
insurance and benefits, cost transfer from the uninsured to the insured,
constrained delivery, and insurance markets fragmented by state-based
regulators and upcoming insurance exchanges. While the Patient
Protection and Affordable Care Act (PPACA)
hopes to lessen the effect of the uninsured, it exacerbated the
fragmented insurance market and did little to rein in subsidies.
Housing is unique because of its place in the American Dream:
it's symbolic, subsidized, a store of household wealth, and promises
better neighborhoods and a better life. Owner-occupied housing is also an immobile,
illiquid asset that is prone to steep market devaluations; it reduces labor mobility
and, as a result, increases aggregate unemployment; its subsidies cause
the inequitable treatment of renters; and causes poor land use and
suburban sprawl.
Education, like housing, is part of the American Dream and portends a better life to come. But like housing it's often financed by incurring debt
that curtails future consumption. But the pain doesn't end there.
Because education is often consumed when we're young, we spend a lot on
it without extensive information on the job market and are then saddled
with a set of skills that may be ill-suited to employer needs.
Government services. We haven't had political leaders
offer an honest, rational discussion on what government should provide.
Do the wealthy need subsidized housing and health insurance? Should we
skew agricultural markets so that food prices are artificially high and
consumers – particularly poor consumers – pay more than necessary for
sustenance? Why do we allow nutrition program participants to buy junk for that lacks nutrition and hastens health issues?
And overconsumption of goods and services has a corollary: underconsumption of savings.
This post is not intended as some rant against consumerism. Rather it's
a plea for personal and public prudence. With reason, leadership, and a little hindsight we
can continue to prosper for generations to come.
