It was very quiet, the sound of drumming rain stilled for a time, when Koko and I went walking this morning on seriously saturated soil. The clouds were arrayed in layers of white and gray, with a patch of orange near Waialeale offering the only hint that the sun was on the rise.
Ran into my neighbor Andy, whom I hadn’t seen in a while, given that our walking schedules have been erratic of late, and he mentioned he was going to see Jefferson Starship perform tonight. It seems expensive ticket prices have kept him from attending rock concerts since, best as he could recall, he saw the band perform when it was still called Jefferson Airplane.
Apparently the rest of the nation is now catching up with Andy’s cutting edge cost-consciousness as it embraces the so-called “new frugality.”
“Consumerism being driven into retreat “ read the headline on an AP story in today’s Honolulu Advertiser, prompting me to wonder: Wow, can that really be true? Is it possible that materialism and consumerism have been felled not by a revolution — bloodless or otherwise — but a recession, a splash in the face with the cold water of reality?
According to the article, the shift is more profound, and fundamental, than simply pinching pennies for a time:
"It is a whole reassessment of values," said Candace Corlett, president of the consulting firm WSL Strategic Retail. "We've just been shopping until we drop and consuming and buying it all, and replenishing before things wear out. People are learning again to say, 'No, not today.'"
Timothy Duy, an economics professor at the University of Oregon, is convinced "the economy is moving away from consumerism." Just how far remains to be seen, but a recent Pew Research Center survey found that more than half of Americans say they have cut back in the past year and about half agreed that people "should learn to live with less."
People are not only buying cheaper, they're buying less, said Joachim Vosgerau, an assistant professor of marketing at Carnegie Mellon University's Tepper School of Business who specializes in consumer behavior.
And crucial for this trend’s longevity, it’s now reportedly entering the realm of hip:
Corlett said one recent WSL Strategic Retail survey detected a "saving is cool" culture developing, with more than half of those polled agreeing they take pride in the ways they've found to save money. "The longer this (downturn) lasts, the more entrenched it will become," Corlett said.
This screeching halt in spending is playing out locally with a number of luxury projects slowing way down, according to an article in Pacific Business News that blogger Aaron Stene kindly sent my way.
Among the Kauai casualties are the 1,010-acre Kukuiula project, reportedly “one of the largest residential projects under way in Hawaii,” where construction has been scaled back, and the $1.4 billion Kaua‘i Lagoons resort project, where the PBN’s report of a construction halt was later rephrased as a “construction realignment” in The Garden Island. The paper quoted Ed Kinney, vice president of corporate affairs and brand awareness for Marriott Vacation Club International and the Ritz-Carlton Club as saying:
“We’re talking about taking the opportunity, based on the economic conditions, to suspend vertical operations,” he said, adding that Marriott was continuing with sales operations without interruption.
Translation: you can still buy, even though they’re not building.
I’ve also heard the Kealanani ag subdivision project is in trouble — aw, shucks — following the bankruptcy of Lehman Bros., which was providing much of the financing.
It seems the dreams of a growth slowdown articulated by many have been achieved without the destruction of a hurricane.
But somehow, I don’t believe the “new frugality” is likely to survive the next boom, which is why it’s important to use this lull to reassess the general plan, renew our efforts to preserve ag land and support farming and seek ways of expanding our economy so it isn’t so dependent on tourism and construction.
The last time we had this opportunity was after Iniki, in 1992, but everyone was so focused on rebuilding and “bringing the island back” — in other words, the tourists — that in typical heads down, shoulder to the grindstone fashion, we never stopped to look at where we were headed, which is why we ended up here, with a lot of new high end real estate and a 20 percent increase in demand at the emergency food pantries.
But now that the entire nation is taking a sort of time out, we have another chance to plot a more sensible path for the future rather than grabbing at any sort of economic stimulation that drifts our way.
Sunday, November 23, 2008
Musings: Living With Less
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Re: "Timothy Duy, an economics professor at the University of Oregon, is convinced 'the economy is moving away from consumerism.' Just how far remains to be seen, but a recent Pew Research Center survey found that more than half of Americans say they have cut back in the past year and about half agreed that people 'should learn to live with less.'
I think this assessment of a paradigm shift and realignment in the economy is correct, but local economists, visitor industry reps, utilities and businesses do not seem to be prepared to accept this until a crisis in their own situations will force them to.
This is way more than some “sort of time out”. This is not a normal down turn in the business cycle.
“Oh! Bama! Where is thy bounce! We're getting tired of waiting.
But hold on... settle down... relax. Breathe deeply. Take it easy.
After demand collapses, supply collapses. Yes, dear reader, it's all part of Nature's plan. In the beginning, there is The Bubble. Then, the bubble pops. Then, people look around and take fright. They realize they've got to stop spending. So, demand collapses. Then, stocks collapse too. And asset prices fall too - especially for speculative assets. As orders and asset prices tumble... merchants and manufacturers cut back too. Jobs are lost. And then, with less income... demand collapses some more.
But then, eventually, the bubble is completely flattened. Weak companies have gone out of business. Good companies are holding on, but producing less. Many retail shops have closed. Many malls have gone out of business. Supplies of goods and services have fallen as far as they're going to fall. Then, with supplies tight, prices begin to rise again.
The whole process takes time. There are millions of mistakes in need of correction. Each one has to be marked down, written off, worked out, and forgotten. We still have to see the show trials. And the perp walks. And the kvetching... the complaining... the whining... the wimpering. The bailouts and the payoffs... The bottles of whiskey and the loaded revolvers. It's all still ahead!”
Bill Bonner http://www.dailyreckoning.com.au/so-many-things-to-correct-so-little-time/2008/11/19/
“In a finite world, we will soon find ourselves in a level or declining economy, simply because there are not enough easily-extractible resources to support growth without causing huge price spikes, followed by debt defaults, and another round of credit contraction and commodity price crashes. The only solution I can see is to develop a new monetary system that is not debt based, and is not expected to grow. Ideally, it would decline as there are fewer resources, and as the economy naturally declines.”
> People can learn to live with less -- happily. I know from experience. A few years ago my partner, Paul, and I spent a whole year not shopping. We bought nothing but necessities: basic groceries, Internet access, insulin for our diabetic cat. We forwent the rest: clothes, books, CDs, movies, restaurant meals.
...We learned that people buy to keep up with the Joneses, although it's not just the Joneses anymore. As the economist Robert H. Frank notes, the media's 24/7 surveillance of the absurdly wealthy entices us to keep up with the Zeta-Joneses and the Gateses. Frank calls this escalation of desire "luxury fever." And the delusion that we can all live like Croesus is partly to blame for the mess we're in today.
..."You never know what is enough unless you know what is more than enough," wrote Blake. <
- Judith Levine
November 23, 2008
Full text at http://www.washingtonpost.com/wp-dyn/content/article/2008/11/20/AR2008112003310.html?hpid%3Dopinionsbox1&sub=AR
Joan wrote; "But somehow, I don’t believe the “new frugality” is likely to survive the next boom, which is why it’s important to use this lull..."
Has "Logic and proportion fallen' sloppy dead"? I don't believe it is a lull but a look into the future. There will be no "next boom" because the pie never grown and more people are demanding their fair share. This is not a temporary disruption in a supply chain, but the global depletion of resources. The drop in Oil & gas prices is artificial. They are just pumping it out faster, but we're still running out). Checked the price of steel lately?
I spent the weekend putting in an over-the-counter(12ft.)lightening system using a string of 100 white LED Christmas lights that consume only 5 watts of power per hour. Lights up the entire counter. Saving? 55 watts an hour!
As Buckminister Fuller said years ago humankind must become ephemeral (doing more with less) if we are to lastingly survive on this planet. It over -- it ain't going any further. Consumerism is in it's final death throws. Those that don't "get it" yet are like those that left early, haven't arrived and don't know they aren't going to. "Go ask Alice when she was just small."
Joan wrote; "it’s clearly being used for recreational purposes, as opposed to alternative transportation, it should be wide open to bikes, horses, dirt bikes or whomever wants to recreate on it. Screw the liability worries, spare the poor rangers their poop patrol and treat it as a lesson in folks figuring out how to get along and respect one another."
Now that's right on target. I think it will be used (a lot) for alternative transportation as the energy crisis gets increasingly worse. The time wasted by the county council discussing "manure management" and "rump bags" for horses was beyond ludicrous! We need low speed (under 15-20 MPH corridors) to get around in a variety of alternative transports that can't compete with high speed Hummers and Prius' and more that a whale can compete with the Stupidferry.
The thing that concerns me about bubble-bursts and economic down-turns is that those with capital are essentially always in a position to buy up cheap assets in a flailing market. Sure, a rich guy's wealth may have dropped from 25 million to 18 million, but that's still millions more than anyone really needs and represents a lot of spending money useful for further consolidating wealth upward and leaving working class people with less.
that's still millions more than anyone really needs and represents a lot of spending money useful for further consolidating wealth upward and leaving working class people with less.
Wow, where to start. It's not like there are only X dollars in the world to be divvied up among everyone. The economy grows (and shrinks from time to time) and generally everyone reaps some increase. That is why even poor people in America today are, in a real, material sense, much better off than they were in any other past decade (they generally have cars and tvs now, and almost no one goes hungry). And the middle class lives like kings and queens compared to the middle class of any past decade.
When the economy grows, the rich might gain the most per capita in real dollars or even as a percentage of all growth. But so what. Over time, everyone gains an increase as well. So class envy is misplaced and even self defeating.
Actually, you are quite wrong about poverty in the US.
Have you been on an Indian reservation, for example?
There is indeed a not insignificant number of people going hungry, without shelter and medical care in the US.
Real income for the bottom eighty per cent in the US has stagnated and dropped over the last 30 years, while it has risen enormously for the top 1 - 20 %.
This translates into homelessness, hunger, poor health, overwork (which leads to family instability, etc.)
A rising tide does not lift all boats, unfortunately - many are being swamped.
The other factor is that much of the misery produced by capitalist accumulation is externalized to the global South - which is why lower-income people in the US are able to have cheap TVs.
This has nothing to do with envy - and everything to do with justice.
Gee I can’t imagine why the local newspaper euphuistically spun the Kaua`i Lagoons story to make it seem like “there’s no problem... we meant to do that”. Could it be that ad for Kaua`i Lagoons that’s sat to the right of every single article on-line for many months?
I continue to hear- even from one “insider”- that Kukui`ula is a lot worse than they’re letting on. I don’t have any hard evidence of a connection but I find it suspicious that this whole “slowdown”: happened days after the passage of the county’s huge CFD bond float to inject cash for infrastructure and amenities into the project- money the Kaua`i taxpayer is on the hook for should Kukui`ula go belly up
"Real income for the bottom eighty per cent in the US has stagnated and dropped over the last 30 years, while it has risen enormously for the top 1 - 20 %."
That's absolutely false. It misstates the true statistic. WAGE income has "stagnated" over the last 30 years. REAL income (wages PLUS benefits) have increased significantly over the past 30 years, as has middle class consumption and standard of living. By any true measure, the standard of living for the middle class and the poor - as groups - has improved significantly over the past 30 years.
Including benefits in Katy's statistic greatly diminishes the growth rate stagnation implied by using wage data alone. Rather than falling by 4 percent over the past 30 years, average hourly earnings have actually risen by 16 percent. Growth in the median hourly wage went from 12 percent to a more respectable 28 percent. And this is born out by average spending and consumption by the middle class, even taking into account consumer debt rates.
How do you define the "middle class"? Are you speaking about the middle 19%? Or the bottom 80%?
Anonymous is correct. It's well settled that wages have not stagnated when corrected for benefits and other in kind forms of income.
Katy also commits another common error. Even if she were correct about the failure of middle class incomes to increase over time, she fails to take into account the incredible mobility in the economy. The bottom quintile of earners, which Katy probably imagines to be workers hopelessly entrenched in poverty, is actually comprised in large part of young workers and includes college students.
Obviously young workers and college students will be at the bottom of earnings. But, also obviously, they have great upside potential. Longitudinal studies have shown in fact that more workers in the bottom fifth of earners will at some point in their working careers be in the top fifth than will remain in the bottom fifth.
People who share Katy's outlook have a tendency to see the economy in static terms. The real world dynamism of the economy undercuts much of the left's critique.
1) RE the above, ~ "standard of living"....an important concept; cant have the discussion without it
2) "should Kukui`ula go belly up"...the other DMB projects have a pretty god track record...they will be fine in the long run. the other poipu operations...ouch
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