Jessica Fino 5 Dec 2017 10:46am

Debate: the economy can not be saved by spending

We asked a number of experts, professors, business groups and firms if the economy can no longer be saved by people spending more

How we shop now
Caption: The importance of spending on the economy
KYLE CHAYKA, writer, in an article for The Cut website
“We’re encouraged to build our identities on consumption, but lately capitalism seems less satisfying than ever, and not just for proto-socialists.”

MARK GREGORY, EY’s chief economist
“Consumers have been the UK’s key growth driver, accounting for over 75% of the growth in UK GDP from 1997 to 2007. But as real incomes fall, consumers have been borrowing more to keep their spending afloat. While trade, investment and public spending can help the economy grow, they cannot currently replace the consumer’s contribution to GDP. We need a more sustainable base for consumer spending. This means investment in skills, infrastructure and new technology to enhance productivity and generate rising real wages. Research shows that people on lower incomes generally spend a larger proportion of their disposable incomes, so any wage increases here are likely to boost UK growth more effectively. Higher incomes, more fairly distributed, anchored in higher productivity, will create the basis for stronger and sustainable consumer spending in future.”

“Collaborative consumption – sharing, bartering, lending, renting, gifting and swapping – redefined through technology and peer communities is enabling people to realise the benefits of access to products and services over ownership.”

LEIGH DROGEN, CEO of Estimize and Force Rank App, on Twitter

“Consumerism is dying, the Millennial generation had to cut back by necessity and found life is better without ‘stuff’.”

TREVOR WILLIAMS, professor at University of Derby and former chief economist at Lloyds Bank Commercial Banking

“The argument that consumerism is dying is based on its slower growth over the last decade or so in the mature economies. Only 10-12% of the world’s population lives in developed economies. Regarding income, the global average is around $8,000 per head compared with roughly $40,000 in the advanced countries. The developed economies’ share of global GDP has fallen from over 60% two decades ago to 40% today and global income inequality has halved. More people are able to afford middle-income consumer goods and services. Consumer spending as a share of GDP in the poorer countries is around half the 70% of the advanced economies. As global consumer spending rises towards this 70% average, a surge of expenditure will result. Hence, consumerism is not dead and will accelerate in the coming decades.”

GOLDMAN SACHS, Data Story Millennials report

“Millennials have been reluctant to buy items such as cars, music and luxury goods. Instead, they’re turning to a new set of services that provide access to products without the burdens of ownership, giving rise to what’s being called a ‘sharing economy’”

VICKY GRINNELL-WRIGHT, head of corporate engagement at A Blueprint for Better Business
“The human search for meaning, mastery, autonomy and belonging, as well as the increasing awareness of the limits to growth and the evidence of the environmental and social impact of wanton consumption, are clear. There is a retrenchment to more conscious consumption. Enlightened self-interest is leading the charge for people, in work and in life, as we reconcile the ‘system’ of which we are all part and never exempt. Consumer ‘me’ is no longer a ‘me’ that I recognise, that is easy to market to. Spending more (money, resources, social capital) is not an option in a world of finite. Brands and products must increasingly show they have more than extrinsic benefit and, on a macro level, systems thinking, circular economy and people, planet, profit thinking must prevail.”

STEVE HOWARD, IKEA’s chief sustainability officer, in an interview for NPR website
“Broadly, you saw a tremendous expansion in consumption and people’s livelihoods through the 20th century. And the use of stuff is plateauing out.”

ERIK ASSADOURIAN, sustainability researcher and senior fellow at the Worldwatch Institute

“It isn’t consumerism but the planet that is dying. Earth can no longer sustain 7.5 billion people –particularly when primed to consume far more than they need – and continuing on this path is bringing about a climate catastrophe.

“There is only one option: economic degrowth. This would include an intentional shift away from some industries and cultivation of more sustainable industries to replace them. Overall, there’d be far less economic activity. More public goods would replace private goods, more private goods would be designed to last decades, and people would live a lot more simply.

“In the US, I see a key effort being conversion of the 40 million acres of lawns (our fifth largest crop by acreage) into a patchwork of sufficiency ‘yard farms’. These will be a key provider of healthy food, community resilience and sustainable livelihoods for Americans.

“Yes, degrowth is politically daunting, but continued growth is biophysically impossible, so if we’re wise we’ll recognise that we’re better off dealing with consumerism politically, than letting Earth deal with us ecologically.”

NIKKI BAIRD, managing partner at RSR Research

“Services will have to take consumerism’s place, where consumers are spending on the combination of products and enabling services. Fortunately, Millennials are a generation primed to spend on services – already the retail industry is preparing for Millennial homeowners who don’t know how to paint walls or patch drywall or repair a toilet. Consumerism is dying, in the sense that the act of acquiring a product has been completely commoditised. What has not been commoditised is the act of using the product – and that is the shift ahead of us.”

ALI EL IDRISSI, founder and CEO of UpChoose, writing to NewCo Shift

“Our productive economy demands we make consumption our way of life. The measure of social status, acceptance, prestige, is found in our consumptive patterns. We need things consumed, burned up, worn out, replaced and discarded.”