Friday, November 16, 2007

Consumerism

I am writing this out of sheer desperation of doing something different for the day, apart from browsing, refreshing inboxes, and surfing channels. It has really been killing :D

The fear is officially declared. Americans are spending less due to various things credit turmoil and rising oil costs being at the forefront. There is no dreadful event as this one - Americans spending less. Worldwide companies, governments, and now a days even ordinary people are worried about this phenomenon and this clearly sucks.

Here is a sect of people who are over draft on their credit, and enjoying a quality of life better than majority of people across the world. And the people supplying Americans are worried, working hard, in order to give these people a over decent life. (much more than they deserve)

With almost no savings and drawing heavy personal debts on undervalued assets, the life enjoyed by the people here is unrivaled. Their consumption cannot be satisfied. They never have heard of conservation, efficiency and similar words. This leaves the whole burden on the companies to innovate incessantly to produce products which can be suited to this consuming behavior and indeed achieve sustainability too.

Lets talk about the energy crisis. With crude kissing $100/barrel, what should be the focus ?
The Energy efficiency bill has so much hurdles getting approved. Everyone blames the Auto and Oil companies for this. But I think deep under its the attitude of American consumers which drivers the Auto/Oil companies not to think of Efficiency.

Now this has given some explosive growth to alternative energy systems in the US, ranging from Solar to biofuels. Somewhere it is wrong economics and somewhere else its rattling the food markets. But who cares of millions of hunger stomachs across the world, compared to vrooming SUVs across the roads of the US. Even people like Mr. Vinod Khosla is pitching so hard for Bio-fuels ignoring the fact that Bio fuels like oil is a global market and will disrupt food markets across the world. Well who cares? When bio-fuel is pitched it is all about energy security, farmers in the US, Green House Gases etc. Who cares what happens to other parts of the world.

Americans are overdrafted and its high-time they spend less and concentrate on savings, efficiency, preserving etc etc etc as there is not enough money to lend more for bad assets.

Spending without having money is stupid, but this country is currently having a gala time.

4 comments:

DhiOnlyOne said...

Well, this argument of saving more than spending (or spending less than your income) is not quite held as a good theory by many economists.
Saving more implies lesser outflow of money which otherwise would have lent itself to creating and running enterprises which in turn would have contributed towards productivity improvement on (probably) essential commodities. One never knows really. However, no country (in today's age of globalisation) can have a clear structure of income vs. savings in isolation. Think of the entire world as having one economy. In that perspective, the American expenses form a fraction of the sum total of expenditure. They are currently enjoying their over-drafts and high credits solely due to the US being able to woo investors. Agree though that this sort of a long term creation of plastic money could lead to higher inflation and bringing the dollar down. 1:00 am and economics is not really my forte.

richie said...

Dhi:
There are economists on both sides of the fence and probably on it too :).
But the assumption that money saved, is money not used to improve production, need not be true right.

One of the questions could be 'how' the money is invested and not 'who' invests the money. You can save, but whoever you save it with, can invest.
The money can be to improve local production, fund infrastructure projects... and more kacchax :).

zeeds:
GM, Chrysler, Ford are losing money /marketshare big time alva?

GD said...

Dhi - South Korea, Japan, and some european countries do experience high consumption without overdraft. Agree about the intricacies of Income-saving equation, but US is heavily tilted and all forces act to maintain this imbalance.

Will there be a dollar crisis? Too many stakeholders isnt it for that not to happen (Middle East/West, China, Asian countries holding high reserves)

Richie:-

GM, Chrysler, Ford are losing market share agreed, but some of their gas guzzlers are still the best sellers ansotte e.g.Ford F150 truck... i think cars/sedans alli apart from mileage, quality issues have also contributed to their demise alva?

But lets look beyond auto. Highest consumption in everything which adversely effect environment right from electricity. I think the amount of paper I use in here in 4 months has been the same in my 26 years of living in India :-)

richie said...

zeeds:

For pickup trucks case, I can only hypothesize that the Japanese entered the market late.

Fully agree about the wasting paper part :).