I have two points to make in response to Alastair’s most recent post — first, that I’m happy that he wrote it, because the issue of savings and culture is very important; and second, that I’m a bit dismayed about what he wrote, because I don’t it’s actually correct.
First, agreement: one of the defining stories of the coming decade will be the emergence of the American “post-consumption economy.” With the collapse of the financial service sector (a socially destructive investment model), and three decades of middle-class economic stagnation (financed by debt), and the rise of a new set of vanguard American companies with “post-consumption” ethos at the core of their business models (Google, Facebook, Netflix; indie music, film, clothing, food; sharing sites like Craigslist and Couchsurfers, etc), we’re beginning to get a sense of what this post-consumption economy might look like.
There’s reason to hope that 21st century businesses will be more ethical than 20th century businesses, which were founded on the ethos of exploitation, deception, command and control, environmental degradation, and negative-sum competition. The defining companies of the 21st century will value the production of meaningful things, and they’ll be organized more like democracies, both within their companies (re: Google’s product management process) and in relation to their customers (re: Threadless T-Shirt’s product design process).*
So that’s my first point, a general agreement that savings and culture are closely interwoven, and that it matters enough to write about. My second point is that the substance of Alastair’s post is almost totally misleading.
In short, the logic behind such arguments can be distilled into this: if greed is a virtue, then parsimony must be a vice….[But] let me just raise one simple objection from a cultural point of view. Broadly speaking, Americans just like spending money a lot more than Germans, Japanese or Chinese. This isn’t a value-judgment, but a cultural fact.
He’s conflating a lot here.
Firstly, Matt Yglesias wasn’t writing a paean to “greed as virtue,” as Alastair implies; he was correcting facts about German exportion numbers. His point was that German net exports are higher than American net exports because Germans import less stuff. He then goes on to say that this isn’t so clearly “good” (as in, better than what Americans are doing), because German savings function as subsidies to German banks, which have been reckless and greedy.
More important, though, is the point that Germany is not China, and that these two countries’ positions on savings cannot be equated. When people say that Germany “doesn’t have an economy of consumers,” they mean that Germans save 10% of their income per month versus Americans’ negative savings rate. When people say that China “doesn’t have a consumer economy,” by contrast, they mean that the vast majority of Chinese people are very, very poor, so poor that they can’t afford basic goods like running water, functioning electricity, and adequate health care — goods that anyone, regardless of culture, would spend money to buy if they could.
China’s lack of consumers is at least party explained by explicit economic decisions made by the Chinese government. For twenty years, the Chinese strategy of export-led growth has achieved economic success on the back of currency devaluation, wage suppression, and state-mediated wealth transfers to costal manufacturing monopolies. All of this has helped the economy grow, but it has also systematically undermined the average Chinese family’s capacity buy things that would improve their lives. Growth has been fast, but it’s not been widely spread.
To our post-consumption ears, it’s perhaps hard to hear; but consumption in China is an issue of human rights — or at least an issue of basic human welfare – not cultural preference.
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* If you’re interested in this question, consider reading the prophet-like Umair Haque.
Photo credit: autos4fast.com, telegraph.co.uk
