Tag Archives: Environment

A New American Sense of Responsibility?

Posted on August 20, 2008 | 2 comments

Over the past few months I have seen more and more data indicating that Americans are cutting back their consumption in the face of the deteriorating economic situation. Retailers, restaurants, car companies, airlines – it seems as if everybody is feeling the pain. Just last week the Wall Street Journal called the trend “U.S. Retools Economy, Curbing Its Thirst for Oil.”

I am wondering if maybe this trend will last beyond the current economy and represent a new, or renewed, sense of responsibility in America. The past few decades have been an orgy of consumerism in America (and much of the developed world, but I’ll focus on America simply because I know it best), as people lived beyond their means, purchasing things they didn’t need and couldn’t afford. Possibly the best quote I have heard on this trend came from Art Wong, a worker at the port of Long Beach, who was on NPR’s Marketplace:

You know, we’re being stretched, and I turn to my kids every so often and I ask them, how many more pairs of jeans do they need? How many more handbags can they buy? And how much room do they have in their closets? And they keep going, and they keep buying, and the port keeps seeing more and more cargo coming through here.

This consumption frenzy brought with it a number of problems. There were environmental considerations, both from the production of consumer goods and from the gasoline sucked down by the SUVs that were a major outlet of purchasemania. There were price dislocations from people purchasing items (homes, Tiffany bracelets, fancy meals) that they couldn’t afford. There were macroeconomic impacts as we financed our purchases with overseas capital. Finally, I think there were moral and psychological consequences (not surprising to regular readers of this blog) from an entire population giving up on any sort of self-restraint or thought for the future.

With gas prices above $4 per gallon and economic growth stagnating, our reduced consumption is not surprising. But maybe, just maybe, this decline in purchasing represents a broader change, a sense that untrammeled consumerism is simply unsustainable. Perhaps people were jolted awake by the impact on the environment, or the national security ramifications of our addiction to oil, or the deflation of the housing bubble. Are Americans now looking beyond their own material wants?

Maybe, and maybe not. Perhaps there is no broader sense of responsibility, but rather the inexorable force of economics. Maybe people still don’t care about the environment or national security, and all they really want is a bigger Jet Ski, but they simply no longer have the money to satisfy their wants. That is certainly what the economists think. “We’re going back to the good old days of living within our means,” said David Rosenberg, chief North American economist for Merrill Lynch. Adds another:

“We’re seeing the birth pangs of a new economic structure,” said Neal Soss, chief economist for Credit Suisse First Boston. “The next year or two or three will be about the transition to a new equilibrium. Consumption by households will grow more slowly than their incomes, which is the exact opposite of the last 25 years when consumption grew faster than incomes.”

Although I would prefer to think that we are getting more responsible, and that issues larger than our checkbook are driving these new spending patterns, I suspect that A) the economists are right; and B) it may not really matter. Even if economics are behind the change, those economic conditions show no signs of changing in the near future, or possibly the medium future. There is even a theory that this shift is permanent, and that America’s days of being an economic powerhouse are over. “The world has become multipolar,” according to UC Berkeley economist Barry Eichengreen. “Our dominance will decline.” Jared Diamond, of Guns, Germs & Steel fame, even says that the developed world only has 30-50 years of first world living before we outstrip our own resources.

Either way, this change in spending, this “retooling of the economy,” looks like it will be with us for a while. This has tremendous implications for companies that sell to consumers. Think about:

  • Utilities dealing with decreased demand for energy
  • Car companies finally forced to produce smaller cars
  • Construction with a focus on energy efficiency and green materials
  • Appliances that are cheaper, smaller and use fewer resources
  • Consumers actually turning down credit card offers because they aren’t buying things
  • Retailers changing their product assortment
  • Discounters (Wal-Mart) gaining market share at the expense of stores that catered to the overreachers (Neiman-Marcus)

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Convenience Consumption

Posted on August 6, 2008 | 4 comments

Many people are familiar with conspicuous consumption, Thorstein Veblen’s brilliant term from Theory of the Leisure Class for describing how upper classes consume as a way of displaying wealth.

But it seems like now we are seeing a new form of consumption where people are consuming for convenience instead of conspicuousness. Of course, people have always paid for convenience – that’s why last minute plane flights are so much more expensive than advance fares – but the convenience consumption I’m seeing has certain differentiators:

  • there is a cost to society
  • the gain in convenience is marginal
  • the consuming seems driven by appearances as much as convenience.

Bottled water started me on the path to this theory, like a spring feeding a Fiji bottling plant. The growth in bottled water consumption in the U.S. has been dramatic, growing to 9.4 billion gallons and $12.6 billion in 2008 from 4.7 billion gallons and $6.1 billion in 2000. On a per capita basis, this represents growth to 29 gallons per year from 13. That’s a lot of water. Everywhere you go, people are swigging from plastic bottles of water: in the car, on the bus, walking down the street.

The cost of all those plastic bottles, however, transcends the $1.50 that the consumer paid. Only two out of ten water bottles consumed in the U.S. are recycled, with the rest going to the dump. That adds up to 38 billion bottles tossed into landfill every year. In addition, it takes 17 million barrels of oil to produce the water bottles consumed in the US every year. Finally, it takes thrice the clean water put in every bottle just to produce that bottle. Combine the garbage generation with the natural resource consumption, and drinking bottled water clearly has a cost to society.

Carrying your drinking water in a bottle is convenient, but not significantly more convenient than getting water at your destination. This is America, where virtually all tap water is safe to drink, and virtually all houses and offices have sinks with taps. It is challenging to imagine a circumstance where an urban or suburban American is more than 30 minutes from a source of clean drinking water.

So why the billions of bottles of water? Proper hydration has clear health benefits but I question that as the root cause. It feels more like people want to show – to themselves and to others – how busy they are. Realistically, nobody is so thirsty on their bus ride to work that they have to drink water from a bottle. We can all wait until we arrive at our office and fill our water glass then. But drinking from a bottle demonstrates to our busmates how busy we are, and how hip to hydration.

If nobody is so thirsty that they have to drink on the bus, much like nobody has such an important phone call that they can’t delay it while waiting in line at Starbucks, why are we doing both? By paying for unnecessary convenience, we can demonstrate to the world how much we NEED that convenience, how important we are. The parallel to Veblen is clear. But in a green world, conspicuous is out, convenience is in. In the modern world, you prove your worth not by owning a mansion in Newport, RI, but by being so busy that you need to drink, talk and eat on the run.

If I’m right about convenience consumption, what are the implications for the future? I predict that food will continue to be conveniencized. There is already Go-Gurt and Lunchables for kids, but I think that package food for adults on the go will continue to expand. Because lord knows, when people are hungry they have to eat…NOW! And if it’s gourmet, that’s all the better, since after all, we live in Veblenland.

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Eventually We’ll All Be Environmentalists

Posted on July 22, 2008 | 1 comment

Environmentalism is generally represented as some version of dichotomy: conservative v. liberal or business v. environmentalists or republican v. democrat. Probably the most common characterization is that corporate executives don’t want to spend money to clean up while liberals want businesses to be clean and green: in other words, profit v. the environment

This dichotomous presentation has historically made sense, and if you look at environmental battles in the past, this is how the lines have often been drawn. For examples, see loggers v. the spotted owl or coal mines v. health advocates.

Health advocates, however, are the crux of a coming change. As the environment degrades and as science discovers more links between pollution and health, environmentalism will be seen less as an earth and animal issue and more as a human health issue. Many companies are perfectly happy to prioritize profits above trees or animals or scenic views, but they are much less likely to put profits ahead of human lives.

As the science become clearer and activists get better at using that science, the link between corporate actions and human health will become more explicit. This will cause corporate chieftains to look at things differently: they are, for the most part, decent people, and they don’t want to kill or injure other humans. And even those chieftains who might choose profit over the lives of others (they’re the ones who make great movie villains) certainly don’t want to get caught valuing money over human lives – that would be bad for business.

To use a concrete example, coal mining creates pools of toxic sludge. In West Virginia, some of these pools sit near schools. One mine, owned by Massey Energy, has a 2.8 billion gallon sludge pool sitting 400 yards above an elementary school. If science were to demonstrate that the fumes from this pool are damaging to the health of the school kids, I reckon that Massey CEO Don Blankenship would look into doing something about it. Mr. Blankenship probably doesn’t want to kill kids, and he definitely doesn’t want the world to know if he does kill kids.

Moreover, as global warming become more widely accepted as fact, this problem will hit closer and closer to home for corporate chieftains. Because if the climate starts to change, it won’t be random kids being hurt; it will be the chieftains’ kids, or grandkids. And NOBODY wants to hurt their own grandkids.

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