Archive | August 2016

Bruno’s thoughts on the consumption-based society

Bruno Guerin-Boutaud (class of 2016) has raised some very thought-provoking points about consumption. I have always taught that consumption, as the largest item in aggregate demand, is important to an economy. This year’s graduates will remember (and this year’s 12th graders will soon learn) that the marginal propensity to consume is the crucial variable that determines the size of the multiplier.

Bruno is concerned that basing the economy on consumption does not work well because it “makes people dependent on goods and dehumanizes them”. He does, however, realise that if we try to limit consumption (perhaps just to the goods that are necessary to survival), it needs to be replaced with something else. Otherwise aggregate demand and thus economies will collapse.

I agreed that some people, such as writers or readers of poetry, hikers in the countryside, gardeners etc., live much more meaningful lives and are much more humane because they are not dependent on the consumption of non-necessity goods. However, such people will usually have had a high level of education and comfortable lives. On the other hand, lower-income people do still need and want goods, particularly if their level of education is low and they cannot take delight in activities such as reading books and looking at flowers. Therefore, I argued that we cannot aim for a society that is not based on consumption until we have been able to educate everyone to a reasonably high level and have been able to ensure that everyone’s basic needs (food, clothing, housing) are ensured. I cannot foresee such an outcome occurring in my lifetime. But for those of you who are teenagers, perhaps it will occur in your lifetime and you can look forward to it.

In response, Bruno decided that “ despite some abuses of consumption (for example, people being dependent on new, luxurious goods), the consumption society works reasonably well. Therefore there is no point in completely changing it”.

He did however argue that some issues should be fixed. For example, in addition to improving the availability and quality of education so that people are less addicted to consumption, he would like to “reduce “the fear of not having enough”, improve childhood conditions, and increase the passion for art and nature”.

Bruno also points out that a major factor in making people dependent on the consumption of goods is “the lack of humanity in companies. It leads some workers to feel used like animals and thus leads them to think only about the reward: the money they will receive as wages. That behavior then leaks on to their children creating a vicious circle”.  Therefore, he argues very strongly that there should be efforts made to bring “more humanity into the management of firms”. Currently, he is considering how this could be done.

Students who are now in 12th grade and 11th grade: do you think that you or others are addicted to consumption and that consequently society has less humanity than it should have? If so, do you have any suggestions as to how this situation could be improved?

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A new academic year

Welcome to the 11th graders (Class of 2018) who have started studying economics for the first time ever and congratulations to the 12th graders (Class of 2017) who are now more than half-way through the course. The end is in sight.

I hope that you will find some of the resources on this blog useful. But the most useful resource is the world around you. There will be a lot of interesting events this year that have economic implications–for example, the results of the US presidential election in November; the effects on Britain, on Europe, and on the global economy of “Brexit”; and the developments in Japan as PM Abe and the Bank of Japan try to ensure that the economy keeps moving. So pay attention to the real world.