Nick Benton's Corner: The New Lasting Fad of Frugality
From the Falls Church News Press, Nicholas Benton owner/editor
by Nick Benton
All those trying to jump-start the economy by infusing a renewed sense of optimism in the population point to encouraging signs that some recent polls reflect.
Americans are starting to feel a little better about the future, they report.
But is it the kind of future that will, anytime soon, resemble anything like the supposed gravy days that preceded the onset of the current steep economic downturn? The indications are that most Americans don't think so.
For example, consider the polling results published in Time magazine last week. While its polls showed 56 percent of Americans think the nation's best days are ahead, an even higher percentage, 57 percent, think it will be harder to achieve the so-called "American Dream" in the next 10 years.
Take those results together, and you get something akin to what may be emerging as Time's most likely candidate for Person of the Year for 2009, its cover story entitled, "The New American Frugality."
Suddenly, it is becoming not only necessary, but downright fashionable to be frugal. The subject of casual chatter at high-brow cocktail parties is becoming not how much someone spent on something, but how little. The less one can say they spent on an item, the more social approval and stroking is awarded.
Now, it's not some exotic, exclusive brand of snake-belly handbag that has the party buzzing, but the one who says the nice-looking accessory she's flaunting isn't even real leather, and purchased at Sam's Club for $19.
While thrift is becoming chic, what does this mean for the nation's consumer-driven economy once the easy money starts flooding out of the banking system again?
Many expect a quick return to the old days, to a recovery of the patterns of spending that kept the country's consumer economy humming for so long, the mass marketing of $300 sneakers, $4,000 sofas and $9 lattes.
But what if the nation's values have undergone a paradigm shift over the last year, and the public no longer sees itself as silly shoppers who can't wait to hurl their plastic at the latest gadget or cutting-edge fashion?
For one thing, unemployment is going to remain a nasty problem for more than just a couple years to come, and this will not only continue to suppress the economy, but even the habits of the employed and better-off. After all, when unemployment approaches 10 percent nationally, and double that in certain places, everyone knows someone who is down on their luck, and that keeps personal spending habits in check.
It may very well be that America will never return to the kind of phony prosperity it enjoyed until this latest collapse. Recall that since 2000, even while spending boomed, real estate values soared and the stock market broke 14,000, the actual earning power of the average American, in real dollar terms, declined.
With earnings down, and with national employment numbers failing to reflect the patterns of replacing career with entry level or part-time employees with fewer or no benefits, the economy rode on illusions of value contained in endless credit lines and the dream that one's home was a self-feeding money machine, guaranteed to appreciate in value to stay ahead of any spending curve.
This was not the consequence of individual greed on the part of the consumer. It was the culture of the land, fomented and encouraged from the highest quarters through every means. Go out and spend, America! It's what President Bush wanted people to do with their tax rebate checks, and to do as their patriotic duty in the wake of 911.
Now, maybe Americans have wised up a bit, awakened from what was not the American Dream but the American illusion.
Now, maybe Americans will repudiate the label of "consumer," and reclaim their rightful birthright as "citizen," instead.
But what will this mean for the wider national economy? It is a tough question, and may make it even tougher to chart a way forward after a half-century of economic dependence on consumer-mania. So, expect recovery to take awhile, and an unexpected look, as well. In the meantime, a fresh joy in the little things may be your reward.