On the basis that the majority of people seem to save c5% into long term savings and the frugal / FIRE community seems to aim for c50% savings rate, the effect of everyone going frugal overnight would surely be incredibly dramatic. Apple, Burberry, LVMH, Ralph Lauren, Coca-Cola, Starbucks etc could conceivably go out of business within a year if the will and signalling from consumers was strong enough, along with the fall out in all their associated companies across the world. There would be less impact to the likes of Unilever and that type of company – but they are more diversified, utilities – as we’re all turning the heating down now, car makers – though again they are more diversified across the budget to luxury spectrum of brands with companies that provide the essentials maintaining a reduced but broadly similar business.
If we start this revolution in the States the stock market would be 75% of the way to hell in a budget handcart given that’s the approximate level of consumer spending over there as a proportion of the economy.
So, six months in to the new order what does it look like? Stock market screwed, mass unemployment, Governments under pressure and the cost of (budget) beans, guns and ammo potentially moving up at a rate of knots, so, not good.
What happens if this revolution were to take place slowly? Well, on one hand you could say – nothing. For every creditor in the world there is a debtor – the net world debt levels are theoretically nil so if you generally reduce the level of consumption across the board then we would place our planet on a more sustainable footing and we would potentially lead more “happy” lives once the general population realised this was the way forward.
Clearly the two extremes are just those, extremes. They aren’t going to happen because we're all different and a small little thing called human nature, which has taken us from mid-table food chain mediocrity to all conquering king / tyrant, unassailable at the top of the pile. We are driven by whatever force to push the envelope. Attempts to conform behind one benevolent state hand hasn’t happened because of it and at the moment, the only thing which represents a true world religion is capitalism. We trust in the mighty dollar and the benevolent, accommodating hand of the Fed chief, forgiving us our sins of over-indulging in debt and the power of the free markets to move us to utopia.
This has actually worked out pretty well so far in the West to be fair, health, education and all the stuff we take for granted! Not that you would think it if you read the newspapers, but who would actually want to give up the drive of capitalism that has improved our sanitation, knowledge of disease and ill-health. What did the Roman's do for us? The same capitalism that allows us to talk face to face over the internet for free with loved ones thousands of miles away, that we can do what we can do with the computer in our pocket is astounding. It’s capitalism which allows you to buy complicated bits of kit at a reasonable cost to power your home from sun and wind power, something that would be unthinkably expensive 15yrs ago.
It’s not all good and this brings us back to the point at hand – we consume too much of little intrinsic value, leading us into too much consumer debt and as a result lead longer more miserable lives, whilst having the additional cost of the exploitation of millions to provide trinkets for our passing amusement.
So does the world need to be less consumerist? Yes and no, to provide a good economists answer! On a base level, a reduction of wasteful consumerism is over-due, however, does everyone have to subscribe to Mustachian M.O.? No, I shouldn’t think so, because that treats us all as the same and we’re clearly a diverse bunch who want to do different things in different ways.
Some people like their jobs, for example. More controversially still other people love their jobs and can’t imagine doing anything else (and well done them for finding that role). Should people who love their jobs and take immense satisfaction save and invest enough and then quit? No, of course not, those people should share their knowledge and expertise and enthuse the next generation whatever field it’s in, apart from banking obviously, seeking to help push us towards that better future that the system we have (for better or worse) allows them to pursue. I don’t think many people want to take the Luddite route to turning the clock back on innovation in computing, health or even the cost increasing health and safety rules that stop asbestos being used in buildings or dodgy horse meat sausages, so in the paraphrased words of Churchill, capitalism remains the least worst option.
Other’s desperately want out, off the grid and out of the clutches of said Man and these guys are socking away 75%+ of their savings to achieve it. But I don’t think they should seek the conversion of the masses just yet as otherwise you will get scenario 1 at the top. Others, like myself, would like more time to myself, financial security moving to independence and so sit somewhere in the middle.
So therein lies my way forward: Self-knowledge and self-awareness. What motivates you? If money were no object what would you do? As money is still a bit of a necessity what are you going to do to change your situation? Do you want to leave an indelible marker on the world, or only the lightest of touches? Marketing tells us we can solve all manner of problems by buying consumerist tat. I say that only honest answers to the above questions can really provide happiness whatever form it takes. I think that if we get those answers right then people will be happier and will consume less generally and allow people to move up Maslow’s slippery pyramid, it doesn’t mean you have to stop buying your favourite brands or looking a certain way, just do it knowing it’s what actually makes you really happy, chances are it’s not.