John Schmitt (with Lawrence Mishel and Jared Bernstein)
Boston Review, Summer 1999
Juliet Schor is to be commended for tackling tough issues and pushing forward the frontiers of economic analysis. Such exploratory work necessarily moves the debate beyond established research and policy discussions, so there is no value in extensive quibbling over the evidence for or against her story line. Rather, we will identify areas of agreement and disagreement and areas where further exploration is needed to satisfy our skepticism.
Schor's main thesis is that we need a new "politics of consumption" because "the new consumerism" that arose in the 1980s--"a rapid escalation of desire and need"--is causing stress, harming the environment, and weakening the public sector.
We agree about the importance a vision focused on "quality of life" rather than "quantity of stuff." So in our work at the Economic Policy Institute1, we stress changes in "living standards" rather than income per se. Although we see a strong connection between improved living standards and higher income, we know that income is not a complete measure of "economic well-being," let alone a complete measure of living standards or quality of life. And we certainly agree that justice requires a vastly more equal distribution of income, wealth, and power, both domestically and globally.
We agree, too, that the typical American (by which we mean the median household or family) "finds it harder to achieve a satisfying standard of living than 25 years ago." Incomes have been relatively stagnant since 1973 despite a greater share of family members working--and working more annual hours--in the paid labor force. This stagnation is the result of slow productivity growth and a phenomenal growth in income inequality. These income trends, along with the erosion of employer-provided pension and health insurance coverage and high involuntary job displacement, have induced stress and insecurity, exacerbated crime, and widened a maldistribution of health outcomes. Some of these trends have ameliorated in the period of low unemployment since 1996, but we fear they will return as unemployment returns to more familiar levels.
The causes of the productivity slowdown are not well known but the growth of income inequality has been primarily driven by the growing inequality of hourly wages. Wage inequality, in turn, has been driven by a redistribution of power achieved through such laissez-faire policies as globalization (foreign investment, trade, and the sensitive issue of immigration), deregulation, deunionization, a weakened social safety net, and a lower minimum wage in the context of relatively high unemployment (especially in the early 1980s, when much of this redistribution took place). A related phenomenon has been a significant redistribution of income from wage to capital (profit and interest) income.
We agree with Schor that current policies and market forces do not adequately protect the environment nor adequately support public investment (infrastructure, education) or social insurance and transfers. The public sector, "government," has been under a widespread, intensive assault for several decades now. However, we would not want to over-dramatize the outcome of this struggle, as the public sector's share of national resources has remained relatively constant. Moreover, the attack on government is the product of many factors, including a general decline in voters' faith in the effectiveness of government, stagnant pre-tax incomes (making taxes more of an issue), and an aggressive ideological and policy assault from business and the well-off (who need fewer public services). We disagree with Schor in that we do not see a role for a new consumer mentality, independent of the factors just described, leading to the squeeze on government and a shift in spending from public to private goods. It is notable that the GOP has gotten little political traction for its tax-cut agenda in the last few years as incomes and wages have been rising across the board.
It is also hard to see a new consumerism as responsible for the loss of leisure. We agree that there has been such a loss. But it is principally driven by more women working, and more women working full-year and full-time. It does not reflect a general rise in average weekly hours, as we would expect if a new-consumerist urge to spend was driving leisure down. This greater (paid) work effort is part of a decades-long increase in women's labor force participation, reinforced by feminism and male wage deterioration. The growth in women's paid work hours has been greatest among lower- and middle-income families and not among the well-off.2 (We suspect this does not correspond to a "new consumerism," since these are the families where male wages and family incomes have fared worst. In fact, in the absence of wives' increased contributions, the income of these families would have fallen, instead of merely stagnating.)
Nor is it clear to us that the leisure problem is primarily due to employers blocking options of workers--failing to provide a sufficiently flexible range of labor/leisure packages. True, employer policies do not appropriately correspond to the preferences of workers regarding the extent or timing of work. Nevertheless, there does seem to us to be a basic American cultural preference for income over leisure (certainly relative to Europe), as witnessed by the eagerness for overtime and the willingness of workers to accept less paid time off (e.g., vacations) rather than wage reductions during concession bargaining in the 1980s. So, it is values and economics at work here.
IN SOME CASES, our response to Schor's arguments is more simply skeptical (or perhaps not adequately informed). One is that "consumption is part of the problem," meaning that the new consumerism is an independent force exacerbating inequalities. We presume that this notion goes beyond the obvious point that a maldistribution of power, wealth, and income leads to a maldistribution in consumption, and that when the well-off gain excessively, one finds ugly, excessive spending. It is also true that vast inequalities exacerbate the risks in not clinging to or getting one's progeny onto the same or higher rung of the social ladder. But we need to hear more about how materialistic consumer attitudes, independent of income and wealth, affect inequalities. We are also dubious that more income, once above the poverty level, "is relatively unimportant in affecting well-being," or that economic growth over the last few decades is associated with declines in well-being.
We are also skeptical that there is a set of consumer values, called "new consumerism," that arose in the 1980s and that have a qualitatively and quantitatively different impact on the economy. We note that this has been a period of historically slow consumption growth in the United States and other advanced countries (except among the very well off in the United States).
Schor usefully asks whether those of us who emphasize renewing growth and greater equity would find achieving a $50,000 income for the typical family sufficient, or is it necessary to go towards $100,000? Where is the end of this process, she asks? Fair enough. The answer is "it depends." If income growth comes from people working much longer and harder, the gains may well not be worth the effort. But if productivity growth (defined as getting more from the same human and material inputs) fuels income growth, then there is no problem with expanding income or the standard of adequate income. Similarly with growth that results from enhanced human skills or better equipment. Nor are we sure it is problematic if the share of the population working continues to increase. Furthermore, it is not obvious that we face resource constraints that require us to limit, rather than to shape, growth. Environmentally destructive growth where the vast majority do not see income growth is clearly problematic. But that hardly describes all economic growth.
We too are troubled by a phenomenon closely related to a "new consumerism." This is the continued "marketization" of all aspects of life--the extension of the market into new spheres. Commercialism runs amuck, evidenced by commercials before you watch a movie (arriving in the late 1970s) and while you watch a movie (the ubiquitous practice of product placement). The amassing and use of personal data by marketeers not only erodes privacy but increasingly reduces us to a singular consumerist role. Making individuals subject to more risk via downsizing, via the privatization of social security, and via other erosions of the social safety net only compounds the problem.
Thus, there is a need to establish policies which "keep the market in its place" and which shape market practices (e.g., employer policies) to accommodate personal lives and provide retirement, health, and other security.
Part of the struggle Schor calls for goes beyond this and amounts to a "culture war" against materialism. To accomplish this, however, we will have to confront current and growing inequality, lest we ask those with a beleaguered living standard to reduce their consumption. But if combined with such confrontation, this culture war is well worth fighting: it would require that we articulate a vision founded on decent political values and establish mechanisms for the economy to reflect those values. Leisure for all!
1 See our book, The State of Working America, 1998-99, by Lawrence Mishel, Jared Bernstein, and John Schmitt. An Economic Policy Institute Book (Ithaca, N.Y.: Cornell University Press, 1998).
2 See Table 1.17 in the State of Working America, 1998-1999.