The sizes get bigger, the discounts get bigger and so do our credit card debts. The imminence of sales promotions is deranging, so much so that we find ourselves buying discounted unicorn slippers on Amazon using our "0% APR for the first six month" credit card in the middle of the night while the $3.07 in our checking account glares at us. Not only that, we also buy the matching unicorn socks to get the incremental benefit of "free shipping" because we'd rather take a ride to unicorn-land in our unicorn slippers and matching socks than pay the $4.75 shipping charge (read premium, not cost). But the big question remains: DO WE NEED THEM?
Today's American consumer is clouted by sales promotions; discounts, coupons, rebates, loyalty programs, premiums and free products with every purchase have become a norm. What seemed like strategies to incentivize customer retention have turned into the pathway to American problem of overconsumption. Now, why is understanding the promotional patterns of retail (or non retail) establishments important to the overconsumption phenomenon? The reason is these patterns are indicative of the larger consumption-driven American economic model, which can also be called 'capitalism on steroids'.
At a macro-economic level, if one decomposes the American Gross Domestic Product, the bulwark, approximately 71%, constitutes consumer spending. And what that means for an economy as big as the U.S. is that it is exhausting its resources at a velocity exponentially larger than its creating alternatives, resulting in a. an ever restless consumer who is living beyond his means and b. an irreversible resource depletion. According to a report by WorldWatch.org, the U.S. though home to less than 5% of global population, uses about a quarter of the world's fossil fuel resources.
In his acclaimed book, "The United States of Excess: Gluttony and the Dark Side of American Exceptionalism", Robert Paarlberg, a Professor of Political Science at Wellesley College and Adjunct Professor of Public Policy at the Harvard Kennedy School, asserts that America stands out as a "gluttonous over-consumer of both food and fuel" because of its "distinct endowment of material and demographic resources, its unusually weak national political institutions, and a unique political culture that celebrates both individual freedoms over social responsibility, and free markets over governmental authority". In simpler words, what this means is that the American economic model is structured so that it incentivizes maximum consumption with minimum repercussions.
What economists have readily stated about the American state of overconsumption is that it's driven by the cannibalization of savings by consumption, and that the antidote to the problem is in creating balance among the two. With interest rates at their lowest, there is a strong disincentive to save money. So we buy, buy and then buy some more, until the difference between need and want fades into oblivion.
How exactly can one remedy the penchant to more, more and more? On a macro-economic level, the authorities, the Fed, need to take steps that rejuvenate American stockpile of savings, raising interest rates being among them. On a more micro-economic level, the answer lies in changing the narrative that buying begets contentment. The American consumer (including myself) needs to stop acquiescing to the comforting narrative that material goods help fill the void of non-material desires. Because in the end, as cliche as it sounds, you can't buy happiness.
