Sunday, February 22, 2009

Is it really time to consume again?

Most of us will see an increase in our pay check by about $65 per month because of the recent stimulus package that was passed in Congress. What are we suppose to do with that money? Buy stuff. Get the American economy rolling again. In fact, 2/3 of the economy is driving by the consumer. We were told to consume after 9/11 and we kept the economy afloat during six of the last eight years because of consumer spending. That has left many with a huge amount of debt and a bunch of stuff that fills our closets, garages and storage facilities. Yet, again we are asked to jump start the economy by going out to the malls to buy more stuff. Something seems wrong here. Before you dust off your credit card and replace your computer with a new Mac, I recommend that you watch the "Story of Stuff" at This will enlighten you about how our consumer mentality is causing havoc to the world. We are on this vicious cycle of buying things and then throwing them away six months later to buy more things. This creates more land fills and uses of more of the planet's resources. In fact, I live in a state that is the largest importer of trash in all of the United States. I really enjoy that smell when I get those western winds coming across the state. It is projected that by 2050 we will run out of room in our current land fills to dump our trash in the US. We will need to export this trash, which is already happening now. We send a lot of our trash to China.

Ironically, this global recession has benefited the environment because we are consuming less, which equates to less trash and a reduction of the use of resources. This is the reason gasoline prices have dropped. We are producing less because there is a drop in demand by the consumer. In fact, it costs, $0.00, excluding fuel and handling, if you want to ship a container of goods from southern China to Europe. In the summer 0f 2007, it would cost you $1,400. According to the Economist magazine, 1/2 of China's 9,000 or so toy exporters have gone bust, shipments of Taiwan's notebook computers have decreased by 1/3 in the month of January and the number of cars assembled in America is 60% below January 2008 number. Now, part of the solution to get us out of this recession is to by more stuff. Do we really need it?

A book called Your Money or Your Life talks about how to get control of your finances. It focuses on energy levels (happiness and work). It has a graph that charts a person's level of happiness vs his or her level of income. In the graph, it logically shows that as we make more money, we become happier; however, it plateaus at a certain level and begins to drop. The result is after the apex of this happiness curve, your level of happiness decreases as you make more money. You are spending more money to live a certain life style, which requires more time to work and less time for enjoyment. The book focuses on people simplifying their lives to achieve happiness, which includes consuming less.

The point is that if we consume less rather than more, our lives will be better. We will not need as much money to meet our basic needs. This will require us to work less and give us flexibility in choosing what we really want to do in life. We can spend more time with family and friends. More importantly, it will help our environment. If we do not consume as much, we do not use as many resources and we have less garbage to put into our landfills. This is good for all of us.

We need to reevaluate our economy and our own finances. I am not asking us to become communists here. I am for capitalism. I work in the financial industry, which is the championing of capitalism. Nevertheless, now is the time to put everything on the table and determine if this model of consumerism makes sense for each of us individual and the environment we live in. Is it really sustainable? There is a breaking point where our resources will not be able to sustain our level on consumption. I would rather address the issue now before we reach that point. If we do it now, we have some time and flexibility to put in place an effective solution rather than some type of ad hoc solution like we are doing now with this global crisis.

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