The Anachronism of Consumerism

I don’t watch much TV. Sure I stream the occasional show or two on Netflix, but traditional ad-supported television broadcasts are intolerable — particularly with no live sports to watch. What’s the point?

So I was particularly struck the other day, when a traditional TV broadcast happened to be absent-mindedly playing in the background (while everyone was on their phones) at the tone and message of the ads. Virtually every advertiser has adapted their commercials to the new Covid reality — with heartfelt thanks to healthcare workers on the front lines, feel good declarations like “We’ll get through this together,” and the occasional vendor-sponsored charitable giving program.

While I commend advertisers for trying to react to this pandemic with something positive, the ads all seemed insincere. Whatever sympathetic words, touching images, or melancholy music they used, the underlying message remained “buy my product.” Does Frito-Lay really care about front line workers unless they’re stuffing their faces with Ruffles? “We’ll get through this together… Now eat some Doritos!” My overarching knee-jerk reaction to all of it was, “I don’t want your crap!”

Coronavirus has created a shift in our perspective that is challenging long-held cultural norms. Since 1950, as long as most of us have been alive, consumer spending has been the driving force of our economy. The advent of television, mass media advertising, consumer packaged goods, credit cards, and multi-acre shopping complexes channeled all that consumption. Today, consumer spending accounts for 70% of our entire GDP, and has driven the majority of all GDP growth since 1950.

The bulk of that consumer spending is on physical goods. Whether durable goods like cars, electronics and appliances, or non-durables like groceries, apparel and cosmetics, the formula for driving that growth was the same: use advertising to incite demand, use distribution to concentrate supply, use real estate to facilitate transactions, and use credit to create liquidity.

My local Safeway pre-Covid.

Grocery stores were the temples of this American consumption machine. This was my local Safeway before Covid. That’s an approximately 12-foot temporary structure made out of corn chips and beer with an electronic talking knight holding an NFL flag. Very little of that store was allocated to selling real food. There was about four feet of shelf space for flour vs 40 feet for granola bars. Loss leaders like dairy were shoved into the back of the store forcing you to walk through an entire aisle of soda and chips to get milk. Neither grocers nor the CPG companies who supply them want to sell staples. They are low-margin commodities. The only way to grow is to come out with “new and improved” products, in glossier packaging, at higher prices with higher margins, and juice them with advertising dollars. Consumers didn’t want to buy commodities either. A 5-lb bag of Gold Medal flour doesn’t convey status the way an 82-oz Mountain Dew that LeBron James drinks does. My carton of milk doesn’t help me collect PepCoins.

Everything changed with coronavirus. Groceries look less like temples of consumer spending and more like Red Cross relief stations. While the supply of Oreos and Bud Light remains strong, supplies of meat, dairy, eggs, fruits, vegetables, flour, sugar, dried pasta and canned goods dwindled — in other words, the staples the grocery store is ostensibly there to sell suddenly ran out. As buyers, we reassessed immediately what was important.

I’m sure we’ll try to go back to the aisle caps and pyramid displays. But that model of consumerism is breaking down. Covid didn’t cause that, it just accelerated a change that was already happening. The old model depended on limited supply with the illusion of choice, control of distribution and consumer ignorance. All these levers of control have diminished. There have been dramatic shifts in spending, distribution, and communication. Brands can no longer command attention with unlimited ad spends, hostage distribution channels, and purchased shelf space. Consumers are in control. Covid has painted a clear line between what we need and what someone else has told us we want.

As we collectively try to get our economy back on-track, we need to recognize that consumer spending is no longer the answer. For the last 40 years, the dogma of both political parties has basically been that government spending is bad and should be reduced, while consumer spending is a limitless reservoir of growth and should be encouraged with lower taxes, corporate incentives and virtually free credit to stimulate it. Last month consumer spending dropped 7.5% — the largest monthly decline on record. It’s time to recognize that we’ve taken the growth strategy of consumerism to its illogical extreme. Saddled with debt, strung out on the dopamine hit of cheap goods manufactured abroad, and gouged by inflationary pricing in essential services like housing, education, and healthcare, the great American consumer is tapped out.

So how do we get our economy growing again? Easy — break the taboo on government spending. As we did in the 1860s and 1930s, it’s time to go big on government investment in our economy. And not just tax refunds for the wealthy or trillion-dollar hand-outs as last-ditch adrenaline shots to resuscitate consumers, but real, substantive spending on tangible infrastructure. In our current political theater, the “Infrastructure Bill” has become a punchline to a joke. If the trillions of dollars in Covid relief were being pumped into infrastructure investments, it would set us up for another century of growth. It’s time to put down that bag of chips and invest in our future. It’s time to build!