Keef, you're not understanding some basic economics. I'm going to try to walk through it with you, but you need an open mind to hear what I'm telling you. You come off regularly as someone who has made up their mind about what's going on and where the problems are, but it relies on some circular thinking which is on display in this post.
To remind you where I've been... I've made minimum wage, and I was raised in a poor household that lived paycheck to paycheck and maintained massive credit card debt. I know the stress you're talking about below, and I've seen the silly purchases you're talking about below firsthand.
I know these people, I have lived with these people. Do not make the mistake of thinking that what I'm about to tell you is out of touch with minimum wage, or even higher wages couple with a paycheck-to-paycheck mentality.
No. I don't think consumerism is the problem, I think it's a symptom. I think in most cases, the less comfortable a person is with their situation the more likely they are to distract themselves from that by pursuing vices or making rash decisions which results in this rampant consumerism we have.
You're mistaking financial immaturity and the realities of a low ceiling for "pursuing vices" and emotional escapism. You might think that your claim is on display for someone who regularly purchases $30 of movie tickets and popcorn to go to the theater on the weekend compared to someone who buys a nice TV and stays home on the weekend. One of these people is pursuing vices to escape their lack of funds, while the other is making a more intelligent financial decision and saving for the future. Let's ignore, for a moment, that this scenario is practically outdated because Walmart (I chose that intentionally) sells TVs for next-to-nothing these days.
First, this is young vs old, mature vs. immature if you will. When you are young, and your living situation is constantly in flux, you might make much more short term decisions, like not owning an entertainment system, renting an apartment... the list is practically inexhaustible of small trades you make when you're young with a relatively low financial ceiling. The reasons for this are many but at least two of the main ones include simply not having access to a big enough budget to make more efficient financial choices, and having not been around long enough to see and recognize the patterns of high spending and low savings. If you don't have $500 for a nice TV, and you'd have no place to put it, you don't buy one. You do have $30 this friday for a movie, so you do that instead.
This is not vice vs. no vice, or distraction vs. no distraction, or stress escape vs. no stress escape. This is someone watching a movie on friday. That's it. Both people are doing the same thing, but one of them is doing it in a more sustainable and economically efficient manner.
It's easy to confuse having fewer vices and making more financially responsible decisions for making the same amount of financially responsible decisions with more options. So, for example, if your range of options includes buying a new porsche when it didn't used to include that (because you're getting older (more mature hopefully) and making more money), you might think to yourself "I'm being more responsible these days by not buying that new porsche", when you actually are doing exactly the same thing you used to do, you just didn't pat yourself on the back for not buying a new porsche when you literally couldn't.
My entertainment and luxury footprint has gone nowhere but up since I was making minimum wage, despite less financial stress (and that is not the only kind of stress, and for many people, not even the lion's share). But these days there are myriad more ways for me to be irresponsible, so I'm exercising
more self restraint than I used to.
(There's another wrinkle here, which is that the entertainment and luxury footprint doesn't scale with wealth. You have an amount of entertainment that you need/want and that amount doesn't rise proportionally with income. It's a somewhat fixed overhead which you can out-earn)
I think you're wrong about being poor driving people to make wasteful decisions because they're stressed and need an escape. Tons of middle class people and upper middle class people, and yes even rich people, are insanely stressed, to the point of depression, suicide, etc. There are real reasons to make financially inefficient decisions when you're poor, it's a very real thing, but I don't buy that it's for the reason you state.
The simple reason is because they can afford to invest and pinch pennies - they've crossed that threshold where a dollar stops being a unit of survival and starts being a unit of investment.
This is true. The more money you have, the more money you can make. Finances, like so much of life, are highly non-linear. There is, like so much of life, a financial spiral up, and there is a spiral down. I've had courtside seats for both.
The problem is a lack of reasonable wages. Most people aren't paid what they're worth and it forces them into uncomfortable living situations where next week's paycheck and next month's bills are the first things on their mind and it's very stressful.
No. This is just false. I don't even know how you could possibly substantiate what someone is "worth" and what they "ought" to be paid. I'm not sure how much thought you've given to how to actually validate this, but it's laughably hard.
Paycheck-to-paycheck is a mentality, and it can be a mentality among some of the very richest, and it can be lacking in some of the most poor. You get used to a certain amount of financial security, and you get used to a certain amount of satisfaction from new purchases. That balance can lead someone making gobs of money to spend themselves dry, and a lack of that mentality can allow someone to save thousands on minimum wage while sharing an apartment and working on a temporary desk made out of a closet door (I did not pick this at random).
It's like psychological poverty.
Psychological poverty is the paycheck to paycheck mentality. It is why lottery winners bleed themselves dry, and why rich people end up bankrupt.
If people were paid more obviously companies would simply offset that cost by raising prices, we know how this works. But that's fine, because while 10% of 100 seems like a big chunk, 10% of 1000 is low-risk in comparison. Even if prices inflated proportionally, paying people more would help ease this psychological poverty and stress. People don't think in ratios, they think in numbers, and they would see better numbers. The key is that it would reduce their desire to offset their unhappiness and lend clarity to even the most basic financial decisions, leading them to make fewer high quality purchases rather than more frivolous and wasteful purchases. This instantly saves them money, provides a sense of security and quality to life, and would overall lift the psychological situation of society and improve saving and investment habits and reduce frivolous consumerism. The market would respond by offering fewer but higher quality and more expensive products with higher margins, rather than bargain-basement high-volume crap that creates a Walmart-style race to the bottom. And in this type of market environment, smaller companies tend to see more success and corporations are forced to rework their business model away from the race to the bottom. It's not a coincidence that stagnant wage growth graphs itself very nicely against the rise of corporatism, share price obsession, and CEO bonus pay. Our market is ill and I think the main reason is simple: People don't get paid what they're worth. Wage slavery is killing the mental health of society, killing net worth, increasing debt, and spreading corporatism everywhere.
This is circular. Rising wages do no good when prices rise. To give you an example of this, a new car in 1970 cost $3,500. The median annual income was just shy of $10,000. Wages have come up, prices have come up. Did we magically start saving?
- What you describe (rising wages and rising prices) happens inevitably, and it does not result in saving. Also it shouldn't, the numbers don't matter.
- Your consumerism and lack of savings mentality is present in high earners as well as low, and lacking in high earners as well as low.
- It is not possible to define what someone is "worth".
- Wealth is highly non-linear, you can make much more financially advantageous decisions if you have money than if you do not. It does spiral.
- Stress and psychological problems abound at all income and financial levels. Some of the most emotionally unstable people I have ever met are some of the richest.
- Part of what you describe just sounds like you getting older and paying more attention to the financial big picture - wisdom and maturity.