Why We Want What We Don’t Need

The Overspent American: Why We Want What We Don’t Need

Consumer Protection Hub (2018)

Film Review

This documentary, narrated by Juliet Schor (author of the 1999 book The Overspent American: Why We Want What We Don’t Need), examines the political, economic and psychological forces responsible for compulsive consumption in all developed countries.

The most important factors Schor identifies are

1. The movement of women (starting in the 1970s) out of economically homogeneous neighborhoods into the workplace – exposing them to lifestyles  (cars, homes, clothes etc) of coworkers across the economic spectrum. This would lead to expansion into the working class of competitive consumption. Previously “keeping up with the Jones’s” was mainly limited to affluent neighborhoods.

2. The rapid increase in income equality that began in the 1970s. Corporations strenuously resisted efforts by workers to benefit (through increased wages and decreased work hours) from widespread productivity gains. Instead Wall Street helped fuel competitive consumption via usurious consumer credit (ie credit cards).

3. The tendency of TV dramas and sitcoms to portray $100,000+ annual incomes as average and normal. Schor offers the portrayal of Bill Cosby’s family as typical African Americans and Friends characters as typical mid-twenties roommates (there’s no way the characters depicted could have afforded Manhattan apartments).

According to Schor, the net effect of these influences has been growing demand for mcmansion-size homes, gas guzzling SUVs, brand name athletic footwear and casual apparel and niche coffee.

Satisfying these cravings has led to massive personal debt levels (approximately 50% of US GDP), grueling work schedules, virtual disappearance of family life and growing unwillingness of voters to be taxed for education, parks, libraries and other public services.

The self-help recommendations Schor gives for curtailing compulsive consumption habits are

1. Controlling your irrational desires by limiting mall visits, surfing Internet shopping sites and exposure to catalogues and fashion magazines.

2. Making a conscious choice to downshift to a lifestyle that reduces your consumption (eg Voluntary Simplicity*).

3. Demanding corporate and regulatory policies that allow people to work shorter hours.

4. Lobbying for a progress consumption tax (aka luxury tax).

5. Learning to recognize and question advertising messaging.

6. Learning to connect with people and community rather than competing with them.

*Voluntary Simplicity, or simple living, is a way of life that rejects the high-consumption, materialistic lifestyles of consumer cultures and affirms what is often just called ‘the simple life’ or ‘downshifting.’


A New Economic Model to Save the Planet


Plenitude: The New Economics of True Wealth

by Juliet Schor

Penguin Press (2010)

Book Review

The main premise of Plenitude is that neoclassical or free market economic theory falls short in addressing the global economic crisis because it fails to account for the negative ecological impacts (aka externalities*) of markets. The author Juliet Schor proposes a new economic model which addresses both environmental impacts and inequality.

Schor’s new “plenitude” model builds from ideas on downshifting and simplified living she introduced in her 1998 book The Overspent American. It’s based on four main principles.

The first involves a new allocation of time away from the market economy and a reduced reliance on money to meet individual needs. By Oct 2009, eight million jobs had disappeared in the US alone. There’s no way these jobs will ever be restored. However by reducing their hours of work (either voluntarily or involuntarily), people can make a conscious trade-off of money for time. With more time, households can increase their social networks and supports and find new ways (other than money) of procuring consumption goods.

The second principle involves diversifying away from the traditional economy by “self-provisioning,” growing and making things for ourselves instead of paying other people to do it. Schor sees distributed production facilitated by 3D printing** as a big part of this process.

The third principle is what Schor calls “true materialism,” an environmentally aware approach to consumption in which people are more aware of the ecological impact of their purchases. Rather than sacrificing a comfortable lifestyle, this might mean paying more for better quality clothes, shoes and consumer goods.

The fourth principle is restoring our investment in one another and our communities. Especially in times of crisis, these connections, sometimes referred to as social capital, are every bit as important as money or material goods.

Government Interventions Required

Despite numerous examples Schor gives of individuals, groups and cities that have already transitioned to the new model she proposes, new government policies will be essential to ensure the planet reduces its carbon footprint in time to avert ecological catastrophe.

Unlike French economist Thomas Piketty, author of the bestseller Capital in the 21st Century, she specifically opposes after-the-fact taxation to redistribute market income. She rightly points out that it fails to increase new wealth. Instead she would support a proposal put forward by Peter Barnes to set up a Sky Trust similar to the Alaska Permanent Fund. The Sky Trust would tax corporations on the carbon dioxide emissions (and possibly their destruction of habitat and discharge of toxic chemicals) and return the revenue earned as a dividend to citizens.

Secondly she calls for the adoption of social program (single payer health care, support for child care and tertiary education and reliable pensions) common in other industrial countries. She cites studies the common misperception that Americas work the longest hours in the world to acquire more consumer goods. The real reason they stick with jobs with impossible long hours and stress is because that’s the only way they can pay for health care, child care, college and a secure retirement.

Third she calls for a change in intellectual property laws to facilitate sharing new techniques and technologies) permaculture, agroforestry, biodynamic farming, cob, earthen and strawbale home construction, alternative technology, renewable energy systems) that enable more efficient use of resources.

Fourth she sees an essential government role in cleaning up toxic waterways and brownfields and restoring forests, which are also fundamental steps in restoring true wealth and reducing inequality.

Finally she would call on government to abandon their growth at all cost policies. She blames the financialization of the US economy for the pressure for constant growth. Although the sale of financial products produces no new wealth, it requires a continuous increase in economic growth to pay shareholders and bondholders.

Reigning in the Financial Sector

The main weakness of Plenitude is Schor’s failure to propose specific policies to reign in an out-of-control financial sector. In European parliaments, the main policies being explored include ending the ability of banks to create and control the money supply (restoring this function to government)*** and a financial transaction tax.****

*In economics, an externality is a consequence of an industrial or commercial activity which affects other parties without this being reflected in market prices, such as rainforest destruction.
** 3-D printing is a manufacturing process that builds layers to create a three-dimensional solid object from a computer model. Video of houses being printed in China:

***See The IMF Proposal to Ban Banks from Issuing Money
**** A financial transaction tax is a levy placed on financial institution for specific types of monetary transactions.

The Addiction of Compulsive Consumption

overspent american

The Overspent American: Why We Want What We Don’t Need

by Juliet Schor (Harper Perennial 1998)

Book Review

The Overspent American is a study of the psychological and sociological factors that drive Americans’ compulsive consumption. In the mid twentieth century, we all believed that a big boom in mechanization and productivity would translate into a significant increase in leisure time. Instead the 21st century found Americans working harder than ever. Growing income inequality, with a bigger percentage of our work product, going to corporate profit, is a big part of the answer. Another important part is compulsive spending patterns that have trapped Americans into in painful desire-debt-spend-overwork cycle.

In many, compulsive spending is an addictive behavior. Many shopaholics regret their purchases once they get them home and never use them.

According to Schor, around 80% of Americans feel that US society is too materialistic, while simultaneously under-estimating their own compulsive consumption and indebtedness. In 1998 (when Schor published The Overspent American), 80% of Americans had personal debt beyond their home mortgage. Across the entire population, average debt was the same as average annual income.

Schor’s purpose is to examine why the promise of greater leisure time due to greater mechanization and productivity never materialized. In 1998, when she wrote the book, Americans were working twice as hard in the fifties. In her few, this is only partly due to corporate exploitation. Many Americans are forced to work more hours than they would really like owing to the compulsive spending parents, especially if they get hooked into the desire-debt-overwork cycle.

Competitive Consumption

I had always blamed Americans’ obsessive consumerism on their constant bombardment, by the media, with psychologically sophisticated pro-consumption messaging. According to Schor’s and others’ research, the problem is far more complex.

Overspending, according to Schor is based in competitive consumption, i.e. the achievement of social status based on what you spend, rather than what you earn. It’s a very old phenomenon. Adam Smith mentions it in Wealth of Nations.

Schor’s research primarily concerns the middle class. Individuals with a strong working class identity tend to be less susceptible to competitive consumption pressures, in part because they have little or no discretionary income and limited access to credit and reject bourgeois ideals in favor of non-consumerist values (eg solidarity).

She also examines two specific groups that are oblivious to competitive consumption pressures. I found this particularly valuable in understanding my own lack of desire to consume and acquire material goods.

Defensive Spending

According to Schor, middle class Americans spend defensively for fear of losing status. The fear of falling behind and ceasing to be middle class became particularly intense in the 1970s, when US companies first began shutting down and moving overseas. Between 1980 and 1995, the upper 20% of the US population experienced an increase in income. Everyone else got a reduction in income. By 1996, the middle class was noticeably shrinking, despite the entry of women into the workforce.

People who were downsized between 1980 and 2000 incurred massive debts to preserve their middle class status. Unlike the fifties, middle class spending expectations no longer revolved around comfort but around conspicuous consumption of luxuries. If you couldn’t afford a four bedroom house, two cars, cable, a VCR, microwave, blender, coffee maker, computer, printer, expensive vacations, massages, personal trainers, lavish gifts at Christmas and other special occasions (one third of which gift receivers neither want nor use), you borrowed money on your credit cards to pay for it. Once you maxed out your credit cards, you ceased to qualify for middle class membership.

The Effect of TV

I was very surprised by the lack of hard research that TV ads stimulate consumption in adult spenders. In Schor’s studies, she found that consumer desires were mainly generated to by exposure to the lifestyles of a reference group, ie the group closest to us in the social hierarchy (workmates, family, friends). Where TV (and films) most influence spending is by offering an inflated view of how other Americans live and what they buy and own. This occurs because the vast majority of TV characters are upper middle class. With growing social isolation, TV itself serves as a reference group for many people.

Downshifters and Simple Livers

Schor classifies people who are resistant to compulsive consumption pressures as either downshifters or simple livers. I found the distinction she makes to somewhat arbitrary, especially when she refers to Quakers, Shakers, Transcendalists and hippies as downshifters. By her own definition, I would tend to call all these groups simple livers:  they resisted material accumulation out of moral conviction and were supported by a reference group that shared these values.

According to Schor, downshifters are more likely to be individuals who have given up compulsive consumption due to a debt crisis or intense work stress. They would prefer to have more money and time, but are forced to opt for time due to some personal crisis. Between 1990 and 1996, 20% of Americans downshifted voluntarily. Twelve percent did so involuntarily due to job loss or wage cuts.*

Simple livers reject the notion that material goods determine status. They set a low level of sufficiency income (some set it as low as $6,000 – 15,000 a year). Beyond this level, spending is no longer positive because it creates clutter, harms environment and alienates them from their peer group. They reject the notion that material goods determine status.

Voluntary simplicity circles first started in the Pacific Northwest in the 1990s. Thanks to immense popularity of The Simple Life by David Shi and Your Money or Your Life by Vicki Robin and Joe Dominguez, they are now widespread across the country.

*Thanks to ongoing recession, in 2014 the percentage of Americans involuntarily downshifted is nearly 50%.
**According to Schor’s classification system, I’m a simple liver. It’s something that seemed to come naturally because my parents were non-college educated simple livers who rejected conspicuous consumption in favor of non-material values. Most people in my current reference group (the Green Party) are also simple livers.