The Overspent American: Why We Want What We Do Not Need

We can take your request directly over the phone. Are you overwhelmed by the day? Going deeper and deeper into eye-catching debt to finance your shopping bin. Americans work longer hours. Americans buy and buy. they work for a long time. They buy and buy. And they work, work, work harder, more stress. About 25 years ago I started thinking about work time and wondered why, given the extraordinary productivity of the American economy, people didn't work less, we had a leisure society expected for the 1970s and 1980s, a predicted four-day work week that worried people. a crisis of free time because technological advancement made labor less and less necessary to produce high levels of production, but instead, when I started looking at the figures, I noticed that not only were we not becoming a leisure society , but people seemed to be working longer hours to weigh.

From 50 to 60 hours a week, to 40 to 50 and sometimes 60, there was more and more time pressure and when I started to calculate

what

had happened to annual working hours over the last few decades, I discovered that the Working hours began to increase sharply in the 1970s. And have continued to increase since then, we now have more than three decades of increasing working hours in the United States, so people became overworked Americans. instead of idle people. What I discovered is that two main factors have led to the increase in work hours. The first is that companies began to make it increasingly difficult for unions and employees to take on productivity growth in the form of shorter hours, so they put up a lot of resistance to hour reductions.

Of course, the other side of that equation is that the union movement has become very weak in recent years. After World War II, the ERA and unions had been the main force in reducing work hours in the previous century. I realized that there was another part to this, that it was not just about

what

was happening in the labor market, but also the fact that the long working hours of the job translated into higher incomes for employees and people. went out and spent that income that we developed in this country, what I have called the work-spend cycle, which is that productivity growth turns into more hours of work, higher income, more spending, which then causes People

need

to work longer hours to maintain their lifestyle.

If you look at what happened in the 1980s, we see a dramatic improvement in the American dream, which used to be an aspiration for a comfortable standard of living for the middle class, a small house with a white picket fence, 2.2 children per car. and it has morphed into widespread desires for McMansions vehicle upgrades there has been a dramatic improvement towards an affluent lifestyle comfort is no longer enough people

want

luxury I call it the new consumerism and it involves a dramatic shift in the types of aspirations that people across the income spectrum have, this, of course, is not the first time that people have conspicuously consumed, largely opting for luxury items and so on, we have seen this happen other times in At the end of the 19th century we had spectacular competitive consumption in which the rich and the nouveau riche competed over who could have the most elegant carriages and the heaviest silk dresses, and we saw it again in the 1920s, when everyone Money that was made in the rapidly growing mass production economy was dedicated to building mansions and luxurious lifestyles, etc., for the rich.

What is new about what is happening today is that this competitive consumption has spread to the vast majority of the population instead of being limited to a small group of people. people at the top of the income scale we had the growth of a mass consumption society in which everyone participates, the first stage of a shift towards a mass consumption economy and the social processes, the emulation that accompanies it is what people used to do. what I refer to as keeping up with the Joneses and that was really a description of what was happening in the post-World War II period, as the country was suburbanizing, people were settling into those subdivisions and They looked at what their neighbors were doing next door and down the street those were the Joneses and what they saw was that they were acquiring Chevrolets and washing machines and eventually dishwashers and a whole range of middle class consumer goods and all the people emulated what they saw on the street.

Below, Lo's distinguishing feature of keeping up with the Jones era is that the Joneses and Smiths made about the same amount of money, so people emulated and copied others within their basic social group within their social class and that's because it was a neighborhood-based competition and people in neighborhoods tend to To have more or less similar status, what has happened with the era of new consumerism is that Americans across the spectrum have begun to emulate the rich, six-figure incomes, luxurious suburban homes, fancy SUVs, foreign vacations, kitchen remodeling, etc., we have moved on to a culture. of high-level emulation, the lifestyle of the top 20% has become the target for the aspiration of the 80% below them, without a doubt, the symbols of the American dream have been elevated and Americans are increasingly going into debt more to finance your purchases.

The Jones system was firmly entrenched in the late 40s and 50s and continued well into the 1970s, but then things begin to change and there are actually three factors that lead to the shift towards what I have called new consumerism and luxury. The first emulation is that women, particularly college-educated women, begin to move out of the neighborhoods where they engaged in much of the social activity that was the basis of that proximate consumption, kept pace with their neighbors, and moved out of the clutches of the Morning coffe. and the playground converses with the workplace and the workplace is a hierarchical organization where they are exposed to a much broader reference group in terms of the status of people, so they find themselves going to meetings with their boss. and their boss's boss, others who make much more money. that what they are and the conversation in the workplace, the communication about consumption in the workplace means that they are hearing about much higher consumption patterns than when they were basically stuck in the neighborhoods, the second really crucial thing that happens and underlying many of the The shift toward high-level emulation is that income distribution begins to move very dramatically toward much greater inequality.

Starting in the mid-1970s, the top 20% of the population begins to take an increasing share of the income and wealth and the 80% below them begin to lose and more, you know that every decade they are gaining a ever smaller fraction of the pie. This change was really important in establishing the top 20% as the lifestyle norm as the group to emulate because they were earning more and more income. and they were consuming it in a very visible and public way and, of course, this brings us to the very important third dimension of this process and that is the role of the media and television in particular.

The media has a very pronounced bias towards showing large-scale or rich consumption. A sitcom family that is supposed to be, quote-unquote, an average American or a regular American almost always lives $100,000 a year plus a lifestyle, meaning they almost always have a wealthy lifestyle that can only be achieved with an income in that top 20%. They live in big houses. Have two. late model cars have lovely wardrobes it's a fiction that the average of your friends from popular sitcoms is a good example of this here is a group of little kids in Manhattan who may or may not have jobs, you know sometimes they do and sometimes they don't.

And it's not a lucrative job, and yet they live in this big, fabulous apartment in New York. You simply can't afford an apartment like that in New York City unless you have a very high income. There is some very interesting research that shows that heavy television viewing has increased dramatically. Biased perceptions of what other Americans have. We are now seeing very high levels of advertising for very expensive products in media such as television. You will see ads for $50,000 vehicles, even if you are a person who only makes $20,000 a year, companies are willing. spending money to get attention, but the impact of seeing all those ads on low income people is not surprising that it makes them

want

to buy those products if you are going to have a consumer competition, the people participating in it

need

to know that. what others have and the easiest way for them to know what others have is to see it.

There are problems when you compete over things that people can't see, like the size of your bank balance, because it's easy to lie about it, it's easy to brag. that you have something that you don't have with a conspicuous consumption model, that is, with products that are socially visible, you either have the Lexus or you don't, it's pretty clear that people can almost instantly see the size of the stone on your finger. look at how big your house is, etc., so what has happened is that the types of goods that we compete for over time have gravitated towards goods that are socially visible.

I think a lot about what I call the big three: the car you drive. In the house where you live with the clothes you wear and as systems of competitive consumption spread to a wider and wider group of people, those socially visible items become increasingly important as part of a system of competitive consumption, The good where you see this in its most destructive form, of course, is the sport utility vehicle (SUV) and there are a large number of consumers who are moving towards these vehicles not because they need to use them off-road, not because they necessarily need them. fill, but because they are fashionable through Philips at one time and They are dangerous to other drivers on the road, are extremely harmful to the environment, have very low fuel consumption and contribute disproportionately to global warming, but consumers have madly rushed towards them due to their extraordinary prestige and status.

There has been another area of ​​spectacular rise and improvement: the average American home has doubled in size since the 1970s, even though there are fewer and fewer people living in the houses, so square footage per person has increased dramatically. Luxury subdivisions have been popping up throughout the year. Across the country, oversized executive-style and other luxurious homes, five- and six-thousand-square-foot McMansions are rising in subdivisions with pools and tennis courts across the country, as Americans play a new game that already can't keep up with the neighbors, now it's the Gates homes have also become much more luxurious with remodeled kitchens, granite countertops, bathrooms have become much more elegant with Jacuzzis and steam showers.

We have moved on to building three-car garages for the cars too, one for all the things that don't fit in the rest of the house eventually, however, people have acquired the houses, the cars, the jewelry, the wardrobe, the watches, etc., and the continuing pressures of advertising and marketing, and to keep up as incomes grow and wealth increases, new products are attracted to the competitive system. consumption and things that were not socially visible before are attracted and sellers and consumers make them visible, so water used to be an unbranded good, water had no status value, people took it from the tap, but the water happens to have a mark. and you get a whole range of states of water, foreign waters become the most valuable and people start walking on the street and in other public places with their labeled water bottles, cafes, other a couple of decades ago if you bought coffee in a coffee shop would come in a generic format all the coffee shops bought the same cup now all those cups are brand name and you can tell if you bought them at Starbucks or if you bought them at the old neighborhood coffee shop that still uses that generic cup sneaker is another example of a product that was previously kind of bottom line and unbranded people wore athletic shoes, it didn't have the status value that their dress shoes had for example, but once talked about came Nike Reebok.

Along the way, they turned these footwear items into extraordinary examples of status goods in which the name became absolutely everything. These are products that are produced, you know, most athletic shoes are produced with the same materials and the same factories, based on very similar designs and yet people. I will pay $100 more just to have the Michael Jordan logo what has happened in the era of new consumerism is that the brand has become the biggest favorite brands KrispyKreme Furniture IKEA TiVo jaicro I like it thanks for Cola Jaguar yes, one of those minis here walks in the mini coopers of Kmart, Walmart IMAX, more and more products have brands, the importance of consuming the right brands has become much greater in the 1950s and 1960s, there were no labels on the outside of clothing, designer labels were only on the inside starting in the 1950s and 1960s.

The 70s started with T-shirts and then increasingly many types of Clothing, shoe and accessory designers began putting their logos on the outside of products so that people could convey very clearly that they paid the status premium and bought the prestige of a product that is wonderful. studies showing that you can take the same item of clothing and therefore three different labels ask the consumer to rate these three identical items and they will rate them in quality according to the labels inside without even realizing the three items they have. What has been given are exactly the same item, what this means is that people are increasingly willing to pay money to get the correct brand.

One of the surprising things I found in doing the research is that willingness to pay for status is not something you find primarily among uneducated people—people who are tricked into paying more for a brand-name good than for something they could get. as a cheap generic, for example, but that willingness to pay for a status premium is more likely among highly educated people. I don't think you can understand the phenomenon of overspending in America without understanding the role of denial in that most American consumers live in a fog when it comes to their spending and that fog is very important in reproducing the spending life, for example, the vast majority of Americans don't know where their money goes, they don't have budgets, and even those who do don't pay attention if you ask American consumers how much credit card debt they have.

They have the average answer is less than half of your actual debt my credit card debt is 15 to 18 probably around $1,500 it would definitely be less than 5,000 and like $1,000 than around 40,000 and this process has really sped up between young people, credit card companies have aggressively targeted students in recent years by offering them free plane tickets home for Thanksgiving if they sign up for a card that offers credit cards to students who They are out of money and even out of work, and today there are an increasing number of college students graduating with sizable balances on their credit cards. a dramatic social irrationality at the center of a competitive consumption system, what people seek is to do better than the other, but if the other also increases their consumption at the same time, everyone will remain in the same place, but in the current conditions .

All over the world we were having to work longer hours, go into more debt, erode our savings to keep up with this dramatically escalating consumer standard, and yet we are getting nowhere, so expanding reference groups collided beginning in the 1970s with the growing disparity in income and also the slowdown in income growth and the result was what I call the aspiration gap, the difference between what people want and what they can afford, plus Half the population of the richest country in the world now says they can't afford to buy everything they really need and it's not just the poor, they have more than a quarter of all households whose annual income exceeds 100,000 dollars a year and say they can't afford to buy what they really need, the growing aspirations gap has led Americans Households to borrow at unprecedented levels during the 1990s.

Consumer debt, mainly in credit cards, but increasingly in mortgage debt, reached higher and higher levels. Savings plummeted as the national savings rate reached zero and even negative figures in some years and has remained in the zero range for quite some time Consumer bankruptcies began to increase in 1980 there were about 200,000 consumer bankruptcies per year by 2002 that number had reached 1.5 million. One of the most surprising figures to emerge in the late 1990s is that 60% of American families only have enough savings to last them for a month or less if they were to lose their jobs, we truly live on the edge when it comes to financial security, the average American worker now puts in nine more weeks a year than your Western worker.

European counterpart, meaning we could stop working at the end of October and take the rest of the year off if we were working at the same level as our Western European counterparts. The increase in work time is reflected in a variety of other In addition, there are more Americans than ever working as a fraction of the population. More people have second jobs. People are more likely to work overtime. More young people have jobs. We have truly become workaholics. Societal pressures on private spending are also eroding. public spending as the aspiration gap widens and people find it harder to fund rising consumption norms, we have had a fiscal revolt in which people are increasingly unwilling to fund schools, parks, arts and culture and other public goods with which we do not compete in private consumption. is displacing public goods and the displacement of public goods arose our higher quality of life, it undermines our communities, our connections to each other and that, in turn, reinforces people's sense that private consumption is both more important and We tend to measure our well-being. being by the annual income of the GNP, but if we look at broader measures that analyze our social health, it turns out that they have diverged more and more from income in the last thirty years, starting in the mid-1970s, income and Social health began to go in opposite directions: the intensification of the cycle of work and expenses has led people to have less time for their family and friends and to decrease the quality of family life.

The more time parents spend with their children, the less discretionary purchases they make for them, the further parents are from their children. more they make up for it by buying toys, videos and luxury items for themselves consumerism becomes a substitute for human connection environmental degradation in the last thirty years is unprecedented if we look at marine life forests systems habitats ecosystems climate change throughout A variety of indicators our consumption patterns are having dramatic impacts on all natural systems around the world. We all know that SUVs pollute much more than cars, but what we tend to forget is the fact that every product we consume has an environmental impact, whether it is the pesticides we use. cotton t-shirts species of birds that are destroyed to grow coffee on plantations the thousands of toxic chemicals in our consumer durables Computers Cell phones If all this consumption made us deliriously happy, that would be one thing, but in reality what we found is that After intense desires to acquire goods, Americans are throwing them away at record prices, a trip to the landfill in any prosperous American city will tell this story of disgorgement, product after product, Americans are literally drowning and stuff, sometimes you feel like: wow I have too much stuff and you don't know where it all came from you don't even remember why you bought it sometimes you just live to buy new stuff even though we're building walk-in closets at record prices or adding garages to store all our stuff , we also rent storage facilities to take care of excess possessions at prices never seen before, instead of the society of leisure, a reasonable pace of life and the balance that so many Americans say they want, we feel ourselves living on the unbalanced edge and With pressures to work and spend like we've never felt before, people often ask me how to get off the consumer escalator, how to escape the cycle of work and spend, the first step is to start controlling your spending desires.

You can stop go to the mall instead of opening the catalog when it arrives in the mail, throw it in the trash, don't browse online shopping sites if you want to make a big purchase, spend a week sitting on it before taking the plunge, eliminate the advertisement. stop reading fashion magazines, this goes beyond an individual process; After you stop going to the mall, you also have to convince other people in your family, your friends, and people in your community to start acting differently; One response from a growing number of Americans has been Reject the work cycle and spend down Reduce your consumption Work less Even adopt principles of voluntary simplicity Policy changes at the national and global levels are also essential to move beyond work and spend.

Millions of Americans would prefer to work fewer hours but don't. They have no flexibility in their jobs that allows them to reduce hours, they often have to leave their jobs and that is a cost that not many of us can afford. We need to open up those corporate policies to give people the right to work less to give. people better holidays healthier working lives we need a progressive consumption tax that imposes higher burdens on people who buy expensive, statically improved and typically more environmentally degrading versions of products; In contrast, the lower cost versions of products, the generic ones, the unbranded ones, the reduced versions would pay less taxes or perhaps receive subsidies in the same way that we subsidize hybrid cars and some energy efficient products, let's also subsidize products that undermine the status system and tax those who promote it.

The power of the consumer system today largely flows through Symbolic, we see those symbols and luxury goods and feel that we must have them to be socially validated human beings. Our identities are so deeply wrapped up in the products we own and use to get out of work and spend that we need to deconstruct those symbolic meanings. We need to look carefully at the messages coming from Madison Avenue. Much of what we're told is that exclusivity is the cool value we want to strive for, but it's not a better value system that affirms our commonalities. It's more about connecting with other people than having more than what they have and what they can't afford.

We don't need the purveyors of consumer culture to connect us to each other and we can make those connections ourselves.