An Interesting Symbiotic Relationship: Spending and the Economy.

Symbiotic (pronounced - "sim.bi.at.ik"): “of a relationship with mutual benefit/demise between two individuals or organisms.”

So here’s a thought that will boggle your mind: During an economic downturn people tend to work harder at paying off their debt, putting money into savings, and curtail spending - by doing so, they contribute to and exacerbate the downward spiral of the economy.

What? Isn’t paying off debt, saving and investing a good thing? Yes, it is…but only a good thing for the individual.

The growth of an economy is dependent on consumers spending their money. If our discretionary spending was actually going to savings and investing instead of being spent on luxurious vacations, dinners out, new clothes, the latest and greatest electronics, and a whole host of other meaningless and unfulfilling products, demand for such goods and services would go down. As demand goes down, production of those goods and services goes down (or is eliminated) – then there is less need for employees to work to produce the goods and services. Business profits decrease and unemployment occurs. Ouch.

Ironically, the only thing to help improve the economic situation is for all of us to spend, spend, spend. But no one wants to do so in bad times and instead goes into self-preservation mode.

Now to stray off topic…

So what is this economic downturn telling us? I’d suggest a couple of things:

We are a society that has grown from consuming for needs to wants.
In our great prosperity as a nation we’ve gone from providing for the essentials for ourselves – basic needs like food, clothing, housing, etc., to now splurging with our excesses for our whimsical wants – fillet mignon instead of sirloin, designer jeans instead of basic denim, the tricked out 5,000 square foot home instead of a 1,200 square foot 2 bed 1 bath for two people to live in. We no longer are concerned with just taking care of the basics, but are concerned with “quality of lifestyle.” Thus our “tastes get more refined” and we spend accordingly.

Our economy is overly bloated and based in the consumption of goods to fulfill wants, not needs.
With such whimsical spending based on desire and want creates new businesses and markets to fulfill the desires of the upwardly mobile populace. What has happened; however, is that the knowledge workers don’t care to work in basic manufacturing, agriculture, etc. for it is now “beneath them” and we delegate and outsource such functions. Then when the economy turns south and spending on luxuries slows, we wake up and realize that our economy is farce and built on the fleeting back of luxury goods and there are no businesses left in our own country that can produce basic goods to fulfill wants – we’ve delegated them all away!

We are a society that is immature, lacks depth, and lacks meaning.
In the great quest to attain a level of “quality of lifestyle”, we have borrowed to achieve our fancies. We can’t patiently build savings to buy what we want because we have to have it now. Such immature spending has put us in a bad spot as a nation and we are dealing with the fallout of debt. This also highlights something much deeper. Why must we spend to appear “to have it all”? Why must we “keep up with the Joneses”? Perhaps we lack the character and personal fortitude to not care what people think about us? Perhaps we spend and consume because we don’t know who we are as individuals? Perhaps we don’t like what we see in ourselves and just cover it all up with more spending. I think “yes” to all. Additionally, I think that what we spend our money on reflects our values. Any economy that has been built on ingesting luxury goods reflects a hedonistic value system. Unfortunately as we are witnessing, hedonism results in a dead end.

It’s time to get over ourselves.

For your consideration…