Here’s a legitimate concern that someone recently raised as they came across my recent TEDx video. The basic premise that I advocate is to spend less and thereby invest more to become financially independent (all the while becoming happier and healthier in the process). The viewer seems to agree that this could work for any individual. However, when applying this position on a large scale societal basis he realizes a legitimate concern:
Greed is Good – Isn’t it?
“U can’t consume mindfully while expecting ur investments to yield returns… all investments yield returns based on ever increasing consumerism!”
In essence, he is echoing the phrase made famous in the 1987 Movie Wall Street by Gordon Gecko that ” Greed… is good.”
In case you did not follow, here’s the concern. If everyone is spending less then we have a problem. That problem is known as the “paradox of thrift“. This idea made famous by John Maynard Keynes goes like this: Since one man’s spending is another man’s income, if everyone is saving more of their income, then demand for goods is reduced, which means incomes go down and, paradoxically, savings takes a hit.
It’s a concern that may have entered your mind too.
Obviously in an 18 minute TEDx talk, the time constraints are such that I can only lay out the basic argument. Some important discussion has to be compromised and this is one of those. I do however, address this very concern in Health in Flames (see chapter 12). I quote myself below about the consequences of a large-scale reduction in mindless consumerism:
“One could not be faulted for thinking this would amount to some severe economic contraction, large-scale unemployment, and a loss of much of our current economy has to offer thanks to our excessive level of consumption.
Would the Economy Shrink or Expand?
On the contrary, I would argue that certain industries would contract, and other ones would spring up and thrive… There would be fewer people working in the oil and gas industry. Health care expenses would drop significantly, and we wouldn’t need as many insurance specialists, health care administrators, coding specialists, and possibly, in time, not as many mental health counsellors, doctors, nurses, and pharmacists because there is less need. Given the drop in demand for process food, there would be fewer workers in the food industry… There would be fewer automobiles being sold. We could go on and on across various industries, and in many cases, we would see a significant contraction in the labor force.
What would we be doing all day? If everyone were to become financially independent, wouldn’t we all just be sitting on the beach with our feet up? That would be an economic disaster! Indeed it would be. We all have a short time on Earth. Most of us presently live with a very narrow set of experiences, largely revolving around work and home. Routine is important but so is variety. If our days our spent repetitively doing the same thing over and over, life becomes monotonous, and frustrations inevitably follow. This is as true for the person stuck in a job working all day as it is for the person sitting around all day doing nothing….
When we are freed from our eight to five office jobs, some of us… will start new adventures that we could not even think of when we were tied to our desks. What we’ll see is growth in certain industries even if there is contraction in others.
A New Motive for Work
One of the problems with capitalism is that since the underlying motive is making money, there are vast needs that are not met because there is not much money to be made in those areas. We’ll thus see solutions built for the world’s problems instead of solutions made for problems that only exist in order to milk as much money out of consumers as possible. One person will discover a new vaccine that finally puts an end to malaria. Another will discover a new way to purify or desalinate water. Someone will create a vacuum cleaner that sucks up carbon dioxide… There will always be the junk that we tend to spend so much of our money on today but just so much less of it.”
I argue that the high savings is more of a threat if people “are simply stuffing their money under the mattress. If instead, one were to invest that savings in a bank or in the market, that money would be used to fund growth. In other words, if we are saving more and actually investing that money, presumably banks are able to lend more of their capital to help newly created businesses flourish. In this case, even though the economy has contracts in some areas, it expands in others. Overall, the output need not be less, especially given the billions or perhaps trillions of dollars to be made in developing new industries such as renewable energy.”
A Keynesian Solution
I then pivot to discuss Keynes’s own solution for what was happening during the Great Depression. “…spending by the government or increasing exports can help offset the potential consequences of a high national savings rate…”
Could Economic Contraction be Good?
Even if I were to concede the point and agree that the economy would contract, I would still argue that we would come out ahead: “On the other hand, if we end up consuming less, and as a result, less is produced, that is a good thing since thereby supply and demand meet a new equilibrium. In the end, we may have to work fewer hours to satisfy our demand without sacrificing our happiness. Hurray! What’s the downside?”
Mindless Consumerism Detracts from our Well-being
Let’s think back to our Hunter-gatherer ancestors once again to re-center ourselves. Not to romanticize the past but in a very real sense, they lived lives of adventure in contrast to the monotony that characterizes the lives of the vast majority in the 21st century. No, don’t misunderstand, I’m not advocating going back to those times. I’m only saying we could take the good without taking the bad. There were a couple of big problems our stone-age ancestors dealt with: a lack food and a lack of security (risks such as being eaten by a wild animal). Ask any hunter-gatherer what they need to live a fulfilling life and they would only wish for an adequate supply of food and an assurance of security.
The point is that we don’t need the myriad of “things” we spend our money which not only does not improving our health, wellbeing and happiness but actively detracts from it.
BOTTOM LINE: THERE IS A BETTER WAY!
- As John Maynard Keynes said a century ago, people of our time ought to be largely independent of our employers for our income – unfortunately, due to “mindless consumerism”, we are not.
- Mindless consumerism is the underlying reason leading to the rise of chronic disease for 3 major reasons:
- It ties us to dependence on our employers and modern day employment is a health hazard for most (in part due to the sedentary nature of most jobs).
- It has led to environmental changes toxic to our wellbeing:
- (a). We evolved in and are best suited to natural environments and instead we live in increasingly artificial environments.
- (b). Overconsumption has lead us to engineer out the need for meaningful use of our legs for ambulation.
- Finally, it transforms workers to work with blinders on – instead of working for the product or service and receiving money as a side effect, workers focus on making money and the product or service is instead the side effect. The results (with respect to health) is that “food” is no longer food but changed to maximize pleasure and extract profit in spite of the toxicity to our health.
- Based on the science of wellbeing one can derive the philosophy that once basic needs are met, “The best things in life are free” therefore —>
- Most people can live far below their means without sacrificing happiness AND by investing the rest, they can become financially independent of their employers enabling them to be —>
- Happier. Healthier. Wealthier. More engaged. Simply better.
