Consumption @ MindSay

Yves Smith  (http://www.globalstrategywatch.com/independent-insight/990e5c20df26aa346d093495f659e026/) writes, “I've been meaning to discuss how increased income disparity is bad for economic growth, because in the end you wind up with insufficient labor income to fund consumption . . . and too much capital chasing too few investment opportunities. . . . It turns out I was beaten to the punch by nearly 50 years [since]. . . former Fed chairman Marriner Eccles . . . links the consumption shortfall directly to a shift in wealth towards the top. And some of the other patterns of the Twenties, such as debt-fueled growth, are worryingly familiar.” Strange how Robert Reich and other economists should be pointing this out now, especially since the shift in wealth towards the top and debt-fueled growth have been going on for at least three decades. What good are  economists who don’t raise policy issues before their disastrous effects happen?

 

What Fed chairman Eccles described are simple mathematical results. An economy, regardless of the economic theory that governs it, consists of workers employed by enterprises that produce goods and services for sale either domestically or internationally. The value of the products and services sold must equal the sum of the wages paid to workers, the overhead of the enterprises, and their profits. If all the products and services are sold, the sum of the incomes of the buyers must equal or surpass the value of the products and services, for if the sum is less, the products and services could not have been bought (unless the shortfall were met by borrowing), in which case the economy would have to shrink. If the shortfall were met by borrowing, the future incomes of the buyers would have to be sufficient to both buy additional products and services and service the debt. The result is that in the absence of growing wages, buyers will eventually reach a point where they can neither continue their levels of consumption nor service their debt, and the economy ceases to function.

 

The American economy has been characterized over the past several decades by policies that were bound to produce this result. First American companies shifted a great deal of manufacturing offshore. Second, they created conditions designed to hold down wages. Third, they made borrowing easy but expensive.

 

The first of these made consumption the economy’s driving force (perhaps 70% of the economy is consumption driven.) If the borrowing had not been made easy, consumption, and the economy as a whole, would have collapsed because of the restraint on wage growth that resulted from the second policy. But given that restraint, the debt assumed by consumers had to eventually reach a level that made it unserviceable. The only possible result of these policies is an economic collapse.

 

That economists could not have foreseen this consequence is incredible.

© 2008 John Kozy

So someone sent me a link to this website today:

 

Running the numbers

 

The premise is that pictures are more powerful than numbers. We might hear that it takes 8 million trees each month to create all of our mail-order catalogs, but actually seeing a visual representation of the immensity of that number may make people think twice about a society of consumption and waste.

 

Here's a taste from the website:

 

Depicts two million plastic beverage bottles, the number used in the US every five minutes.

 

Partial zoom.

 

Detail at actual size.

 

Apparently you can see the real thing at the Lintel Gallery in New York from June 14th through the end of July.

 

It makes me dizzy to look at the pictures.

The United States, with a population of 301 million, makes up 5 percent of the global population, which is now at approximately 7 billion. Yet this country consumes 23.7 percent of energy generated and consumes 26 percent of world oil production, at more than 20 million barrels of oil per day. U.S. gasoline consumption accounts for 11 percent of world oil production. Depending on OPEC and when you ask, daily world oil production hovers between 73 and 74 million barrels.

We the people can no longer afford to wait for someone to save us from ourselves.  Our commitment to more continues to lessen our chances of survival.

Now is the time for all good men (and women) to come to the aid of their planet. Now is the time for all good people to say no to Madison Avenue and the temples of consumption. Wal-Mart, Kmart, Costco, Best Buy, and idiot presidents who tell you to go out and shop in support of war are not looking to the future outside of quarterly profit projections.

We can no longer afford the conveniences that litter our homes, pushing us deeper into financial and ecological debt, and threatening our communities. We just can’t. And no amount of Pollyanna thinking, or faith-based denial, will alter the inconvenience of the climate change.

In other words, we’re toast.

(Bob Nanninga - from "one nation under gluttony, avarice, sloth")

 

>.)

No, it's worse.

We've heard the cries of "WOLF!" before from enviornmentalists, predicting doom and depletion of our coveted natural resources - oil being chief among them. We've managed to keep pace with the United States' torrid consumption, but most people had failed to factor China into the mix.

A country with a full 1/6 of the worlds' population, China had been making serious waves the past decade with their explosive economic growth. Over the past two decades, China has averaged a growth in economy of 9.5%, an astounding number that far outpaces the growth of the United States which averages 3-4% on good years. Couple that factor with a population that is nearly quadruple our present levels, and it's no wonder oil prices have rocketed to record highs.

The Unites States is currently the leading consumer in oil, having been replaced by China as the leading consumer in grain, meat, steel, and coal. The United States is easily being surpassed by China in technology sales, computer ownership, and even fertilizer use.