Saturday, May 30, 2009

Conspicuous Conservation

I've heard this phrase a few times recently and I love it.

It's a contemporary twist on "conspicuous consumption", a concept introduced by a somewhat obscure, but very interesting economist by the name of Thorstein Veblen.
Conspicuous consumption is a term used to describe the lavish spending on goods and services acquired mainly for the purpose of displaying income or wealth. In the mind of a conspicuous consumer, such display serves as a means of attaining or maintaining social status.
Veblen articulated this concept in his 1899 book, The Theory of the Leisure Class. Although the concept was invented to describe the exuberance of his day, it could just as easily apply to the decadence of the 1990's tech boom,and might be the key factor in the subprime mortgage crisis.

Wall Street ruled the 90's and most of the 2000's. People who provided very little tangible value to society were heralded as geniuses and envied by nearly everyone. The modern day robber barons spent lavishly, partied hard and projected an image of infallibility. They created an entire new market for over-the-top goods and services, which inexplicably created public fascination, rather than a public outcry. Not only were these people purchasing obscenely unnecessary luxuries, but the average citizen was watching them do it on countless reality TV shows, magazine features, and internet sites. Americans of limited means emulated these folks and soon became mired in debt. The appearance of wealth and status could be purchased via credit card loan.

That was then. Now the market is in relative shambles, millions of Americans are out of work and it's no longer chic to display one's grotesque wealth. Now, "conspicuous conservation" is the name of the game. Considerations of thrift and environmentalism are now lauded as "recession chic". Is this a good or a bad thing?

Well, from a personal responsibility and environmental standpoint, it's great (although many people are being driven to these practices not out of altruism but by trendsetting). However, from a national economic perspective it might be bad in the short term. Much of the waste that was created over the past decades of irrational exuberance funded development and created millions of jobs. It's an interesting way to think about our cyclical economy.

How does the economy get better? Hopefully not with a return to conspicuous consumption, because that model is simply unsustainable and ultimately destructive. Our current era of conspicuous conservation is not the solution either, but it might well be the first step towards one. If this economic malaise lasts for a while, and trendy frugality evolves into a legitimate practice, then perhaps we can move our economy where it needs to go, that is, shift the workforce and prioritize new and sustainable sectors.

No comments: