We’re past Thanksgiving so it’s time for the annual holiday shopping and buying frenzy. My mailbox will fill with catalogs. The parking lots at the mall will be full. Department store aisles will be crowded with shoppers looking for bargains and the perfect gift. Keyboards will heat up as on-line shoppers surf for bargains. Ipods and cameras and DVD players and cashmere sweaters and power tools and books and CDs will go whistling from factory to truck to store to homes.
It’s also time for innumerable stories about how important shopping, particularly holiday shopping is for the economy. How were the numbers over the weekend? Sterling? Luke warm? Disappointing?
Eugene Robinson in today’s Washington Post sums up this view nicely  (rr) when he admits feeling guilty about not shopping:
If I don’t
patriotically spend enough this Christmas, will I be responsible if the
whole thing collapses?
Consumer spending represents
two-thirds of the economy, and the frantic month between Thanksgiving
and Christmas is prime time for retail sales — for some merchants, up
to one-quarter of their yearly total. It has penetrated the national
consciousness that how well the nation’s retailers do during the
Christmas season is seen as a powerful indicator of America’s economic
All weekend, there were breathless reports
on the news: Huge crowds waiting for the stores to open on Friday!
Disappointing sales at the end of the day, down 1 percent from last
year! A big rebound over the weekend, with total sales up 22 percent
from last year! But maybe only the big discount chains did well, and
the specialty stores are quiet as a tomb. Or maybe it’s just electronic
goods that are selling like hotcakes, and everything else is gathering
dust on the shelves. Or maybe not.
Each of us has to bear part of this burden, and I resent it.
I have good news, Eugene. You can safely put down that burden (or fail to pick it up in the first place) without guilt or resentment.
The retail sales numbers are important if you’re a retailer. Or a stockholder of a retailer’s shares.
But our well-being doesn’t depend on shoppers piling up their carts in advance of the holidays.
What are the roots of this strange belief that for our economy to be healthy, we need people to buy stuff?
Keynesian, probably. Something to do with the idea of the multiplier. That somehow, the more we buy, the more the money races around and the richer we all get.
The biggest error in that way of thinking is thinking that the economy is separate from all of us.
Suppose every American decided that life is too fast-paced, that the pleasure we get from material things is fleeting and that we all need to spend more time with our families. Suppose every American decided to look for part-time jobs with half of the hours we currently work.
The result would be an economy that was half as large as the current one. But that transformation would be good, not bad. Assuming that we indeed found that additional family time to be as satisfying as we had expected, then our economy would be healthier. We would be happier and better off.
The only footnote to this point is that if we all made this decision overnight, the transition to a smaller economy would be traumatic. But if it happens gradually, it would be fine. Having an economy half of the current size would be good if each of chooses to spend more time at home and less time in the commercial side of life.
Too many stories about holiday spending imply that spending has some sort of positive externality, that the benefits extend far beyond the buyer and the seller and that to stay home by the fire in the fireplace playing the guitar or reading to your children is somehow unpatriotic. This is foolish. Spend, if it gives you satisfaction. Otherwise, stay home and spend more time with your wife, your children and your guitar.