Barbara Kiviat, one of Time magazine's Curious Capitalist correspondents, says American retailers aren't doing the country any favors by engaging in aggressive discounting. In fact, the author posits, it would be an act of almost patriotic proportions if merchants raised the cost of goods sold to the consuming public.
The rationale goes something like this:
- Americans' inability to spend within their means has created mountains of debt, resulting in financial disaster for many in recent years.
- Cheaper prices cause Americans to purchase a bunch of things they don't need. Making things worse, they often make these purchases on credit even though repayment may be an iffy proposition. Ms. Kiviat points out that consumer spending rose 0.7 percent in October compared to September even though personal income was up only 0.2 percent.
Ms. Kiviat dismisses the view of life that she/he with the most toys wins. In fact, she points to statistics from the Self Storage Association to point out that we don't have room for all the stuff we currently own (BTW - see classic George Carlin routine on stuff with link below). The U.S. went from 300 million to 2.4 billion square feet of self-storage space between 1984 and 2008.
Groups have sprung up around the country to spread the word that more possessions do not lead to greater happiness.
"We have this cycle we've developed -- work intensively, buy more, repeat," says Carolyn Danckaert, director of home and communities programs for New American Dream, a responsible consumption group. "At a certain point, the accumulation of stuff starts to drive your life."
Discussion Questions: Do you see the country going into an extended period of reduced consumption? Do you agree with the Time magazine author that there would be advantages for the country in such a scenario? How would retailers be affected in such an environment?