Is the consumer really king? The path to sustainable consumption.

In the United States, and in much of the world that shares aspects of US Business culture, it is common to say the consumer is king.  Politicians of parties across the ideological spectrum speak about consumer sovereignty as if it is an ordained right.  Neo-classical economists blithely assume the conditions of perfect markets in their theories and models, and proclaim that the consumer is always sane, always correct – and that the actions of many consumers will serve the larger social good.  The development of capitalism created the conditions for the development and distribution many innovations that have improved the lives of people around the world.  Just think back to the world that your grandparents grew up in, where people who owned an icebox and a radio were considered middle class.

However, today global consumption is on an unsustainable path of growth.  Global populations inexorably increase, energy resources decline and become more expensive to obtain by the day, and the ability of the biosphere to sustain the throughput of resources that our consumption requires is diminishing.  How did we get here?  If the consumer is king, and can do no wrong, how did we move onto this unsustainable path?  First of all, regarding consumer sovereignty, it is inaccurate to lay the culpability for purchasing decisions entirely on the lap of consumers.  Marketers are adept at creating needs and wants where they did not exist before.  We consumers apply meaning to, and use our purchases as a sort of language, or shorthand, to denote status.  Governments subsidize and incentivize certain behaviors, like the pervasive subsidies in energy industries.  Governments even encourage consumption through monetary and tax policy.  So the idea that the consumer is king is problematic.  So, the question remains, how did we get to the point where consumption is unsustainable?

We have long treated the resources that come from the Earth not as finite commodities, but rather as our dominion.  For example, we charge homeowners for the extraction, delivery, and disposal of potable water, but we do not consider the water itself a finite resource.  We have only recently considered what it takes to maintain healthy watersheds, to ensure sustainable water supplies.  However, water is essential to the manufacture of most consumer goods.  How can the price of those goods not reflect the value of the finite resource, fresh water?  When water supplies dry up, water will have to be obtained in the energy intensive process of desalination.  Fossil fuel energy supplies, like water, are finite resources.  We humans are not good at planning for the long term of future generations.  The concept of the Seventh Generation, which originated in The Great Law of the Iroquois, asks whether the decisions made today will benefit descendents seven generations into the future.  A home products company that aims to inspire that kind of long-term thinking adopted the Iroquois principle in their name.  However, Seventh Generation is a rarity in the business world today.  The assumption by many in society today is that resources will never decline, that we will always find a new source or supply to maintain our exponential growth.  That thinking is leading us on a path toward decline.

Can we create a new prosperity, one that is sustainable?  To do so we will have to consider resource use from a perspective of our collective future, and beyond our individual perspective.  For some people, that may mean sacrifice.  Both father and son President Bush declared that “The American way of life is not negotiable” when considering how to confront climate change.  The problem is that the American way of life, as it stands today, is just not sustainable.  Both the government and communities of individuals must create policies, incentives, and actions to promote a new kind of consumption, and a new consumer mindset. We must strive for quality, minimize throughput of resources, and consider the entire life cycle of products, ensuring that materials can be reused or recycled.  We must design our communities so that we plan for the long term, and think generations ahead, planning for a future with expensive energy and finite resources.  Many of the consumption decisions we make on a daily basis are habits that people don’t consider – we need to design products so that consumers are aware of both what the product provides, and what the cost is.  However, it is not enough to buy ‘green’ products, we must reconsider what we really need.  To create a sustainable consumption, we will all need to tread carefully and purposely into the future.  Otherwise, we consumers will find ourselves unprepared for the future we create.


Do Americans respect Islam?

Are we at war with Islam?  George W. Bush, author of the “War on Terror,” said this about some American statements critical of Islam, way back on November 13, 2002, after a meeting with UN Secretary General Kofi-Annan:

“Some of the comments that have been uttered about Islam do not reflect the sentiments of my government or the sentiments of most Americans. Islam, as practiced by the vast majority of people, is a peaceful religion, a religion that respects others. Ours is a country based upon tolerance and we welcome people of all faiths in America.”

The current controversy over the so called “Ground Zero Mosque” shows that the sentiments of a vocal minority of Americans are not so welcoming of Islam.  They may claim that they only oppose the Islamic Center being built on “hallowed ground,” but you see Americans protesting mosques all over the country.  Is that just NIMBY?  Or, do they have a problem with all Mosques and Islam?

When you have Christians in Florida creating a Burn the Quran day on September 11, it is hard not to see a War on Islam from this vocal minority.  The danger of this rhetoric is that it may be feeding the radical minority of jihadist Muslims from groups like Al Queda.  By grouping those extremist few with the global Islamist whole, the rhetoric may be helping the radicals recruit and fundraise.  The Wall Street Journal, bastion of Rupert Murdoch, seems to agree.  They quoted independent terrorism consultant Evan Kohlman of Flashpoint Partners saying “We are handing al Qaeda a propaganda coup, an absolute propaganda coup.”

In the same breath, those that view President Obama as a secret Muslim without a birth certificate feed into the same rhetoric.  It shows an America that is intolerant of religious freedom, despite our Bill of Rights and our Constitution.  This whole “controversy” is a disgrace.  David Brooks has an excellent column today in the New York Times, where he talks about the “underlying” problem in America:

“In this atmosphere, we’re all less conscious of our severe mental shortcomings and less inclined to be skeptical of our own opinions. Occasionally you surf around the Web and find someone who takes mental limitations seriously. For example, Charlie Munger of Berkshire Hathaway once gave a speech called “The Psychology of Human Misjudgment.” He and others list our natural weaknesses: We have confirmation bias; we pick out evidence that supports our views. We are cognitive misers; we try to think as little as possible. We are herd thinkers and conform our perceptions to fit in with the group.  But, in general, the culture places less emphasis on the need to struggle against one’s own mental feebleness… There’s a seller’s market in ideologies that gives people a chance to feel victimized…To use a fancy word, there’s a metacognition deficit. Very few in public life habitually step back and think about the weakness in their own thinking and what they should do to compensate. A few people I interview do this regularly (in fact, Larry Summers is one). But it is rare. The rigors of combat discourage it.  Of the problems that afflict the country, this is the underlying one.”

Unfortunately, American attitudes towards Islam are often wrongheaded.  Before the Iraq War, most Americans did not know the difference between a Shiite and a Sunni, let alone a Sufi Muslim.  We tend to view Islam through the lens of the Iran Hostage Crisis, Al Queda, and the violent historical intersections between the minority of extremist Muslims and American foreign policy.  If we are really so serious about the Constitution that we inherited, and the freedoms encapsulated in the Bill of Rights, we need to reaffirm those freedoms by respecting Islam and the Muslim community in America.


Uncle Sam wants YOU to consider the world your grandchildren will inherit

Happy Independence Day, America!  Seeing all of the American flags that blanket Bristol, Rhode Island in preparation for the 225th parade tomorrow (the oldest in America), I can’t help but think back to the days after 9/11, when George W. Bush addressed the nation, and told us to join together and consume:

“When they struck, they wanted to create an atmosphere of fear.  And one of the great goals of this nation’s war is to restore public confidence in the airline industry.  It’s to tell the traveling public:  Get on board. Do your business around the country.  Fly and enjoy America’s great destination spots.  Get down to Disney World in Florida.  Take your families and enjoy life, the way we want it to be enjoyed.”

Americans always go big.  We consider conspicuous consumption to be a sign of success, of generosity, of having achieved something.  Of course, with the dust of the fallen Twin Towers still in the air, Bush asked us to go to Disney World.  The debt-fueled consumption binge of the last decade is now past due, as seemingly half of America has defaulted on debt in a significant way.  However, the bigger picture goes beyond the economy that is dependent on continued exponential growth. The problem is that growth cannot continue to grow endlessly; we humans are reaching the limits of what this planet can provide, and like Icarus, we may fly too close to the proverbial sun.

Sustainability has become a buzzword in corporate America, but it means more than using green products.  The fact is that we waste too much energy and minerals.  Many of the products we buy are designed to fail so that we will go out and buy another one.  Now, that lack of quality may help create jobs in China, but that just wastes resources.

It wastes water, for one.  Fresh water is a resource that we all take for granted; do you know how much water goes into a hamburger?  I bet you would be shocked.  Second, we have a finite amount of energy and mineral resources, and we remain in denial about the need to shift to alternative energy resources.   The Energy Returned on Energy Invested for oil, coal, natural gas, and most common minerals continues to drop, which means that each new unit of resource will require the use of even more energy.  Once upon a time oil had an EROEI  of close to 100-1; now we get only three barrels for every one barrel we use in the extraction process.  That problem will only get worse. Additionally, those finite energy resources are destroying our climate by increasing the concentration of greenhouse gases.

On this July 4th, I wonder why conservation, efficiency, and sustainability can’t be considered patriotic.  See, our grandchildren and great grandchildren will inherit the world that we leave to them.  We can have one last big party, or we can give them an opportunity to flourish as well.


Japanese in political paralysis – is this our future?

Japanese Prime Minister Hatoyama will be the 4th PM in 4 years to resign.

After conceding in the matter of the Okinawa Marine Corps Air Station, and going against a campaign promise, Japanese Prime Minister Yukio Hatoyama will resign before November elections.  After only eight months of service, the embattled Democrat becomes the fourth Prime Minister to resign in four years.

The last successful Japanese Prime Minister was Junichiro Koizumi, who was known as a maverick of the Liberal Democrats (who lost their long held grip on power last fall).  Koizumi privatized the post office, and became the first PM to deploy the Japanese Self-Defense Forces overseas, to Iraq.  Since Koizumi resigned in 2006 at the end of his term, with the Liberal Democrats holding a historic majority, politics in Japan fell into paralysis.  With the newly elected Democrats, who now hold a significant majority in Parliament, already faltering in their promise to reform the entrenched political order, rife with corruption, the selection of the next Prime Minister will be crucial.

I worry that here in the United States, if we as Americans are unable to reconcile our desire for government services with our dislike of paying for those services with taxes, our political order will fall into the same type of paralysis, with neither the Republicans nor the Democrats able to find consensus and take action.

The short term deficits are overblown by critics of the President.  Iraq, Afghanistan, and the Stimulus expenditures are not the problem in the longterm, but critics look at tax receipts that have fallen due to the recession and blow the short term deficit out of proportion.

The long term deficit is the concern.  Even the Tea Party, who wants small government, seems unwilling to deal with Social Security and Medicare.   Eventually (sooner rather than later) we will need to confront this, and either raise taxes, cut entitlements, or both.  Economists believe that we have a long-run fiscal imbalance of 6% GDP (1 Trillion).


Indeed, the world is ruled by little else.

Economist Milton Friedman

John Maynard Keyes wrote in 1945 that “the day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems – the problems of life and of human relations, of creation and behavior and religion.”  In the United States, we have pursued a policy of unquestioned growth and expansion, following the recommendations of prominent economists with an ardor that borders on religiosity.  However, the economic problem, as Keynes described it, has not taken a back seat, but rather has the developed world in the grip of a severe recession.

In the United States we have always looked to economists for the magic to make our economy go.  Milton Friedman, winner of the Nobel Prize in Economics, believed that a free market economy could expand and prosper with minimal government interference. Alan Greenspan, an admirer of Friedman, was revered as an enabler of unending growth during his service as Chairman of the Federal Reserve; he received the Presidential Medal of Freedom, the inaugural Harry S. Truman Medal for Economic Policy, the inaugural Thomas Jefferson Foundation Medal in Civilian Leadership, and was named both a Knight Commander of the British Empire and a Commander of the French L’Egion D’honneur.  Presidents from Ronald Reagan to George W. Bush all trusted Greenspan with the keys to the economy.  During the same time period, Bill Clinton, a Democrat, trusted economist Larry Summers’ advice that deregulation of banking and finance would also lead to continued growth; that was the height of Milton Friedman’s influence.  Barack Obama appointed Summers to be Chairman of his Economic Council despite the fact that his policies were partly at fault for the current economic crisis.  Why do all of these Presidents, from Reagan on the right to Obama on the left, put so much faith in these economists?  Keynes, in The General Theory of Employment History and Money (1935), addressed this question.  He wrote that:

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.”

The economic policies of the United States have become more and more complex since Keynes’ time.  Over the decades, as the United States left the Gold standard, and created a dynamic economy reliant on the growth of consumption and continuous expansion, we have relied and trusted economists to make it all work.  Most Americans who do not work on Wall Street have trouble understanding even some of the basic terminology and concepts used in finance today.  Many of us learned what a Collateralized Debt Obligation was last year, and discovered how debt was securitized in such complex ways that even some of the old hands in charge of major firms didn’t really understand.  Americans trusted economists to drive our growth, and while many don’t understand the problems we face, they expect economists to create a deus ex machina to miraculously get us out of the recession and onward to unending growth.


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