To understand economics and how the globalized world we take for granted today came about, in today’s post I would like to tell a story. It’s a greatly simplified story but the essence is quite solid, and I hope that you see how the consumer mindset took hold rather easily, derailing us from understanding ‘what we need versus what we want!’ So, if you’re sitting comfortably, let me begin on how America sold its consumer dream to the world. Once upon a time in a time not so long ago and a land between two huge oceans was a large country. This country, the USA, tried to be isolationist despite a horrendous economic depression that had socially devastated that land. Meanwhile, far across both the oceans were new totalitarian economic powers busily taking over large areas of both the east-Asian and European continents. Although the USA was not directly involved, the escalating conflicts far away did offer a unique opportunity. Business that had been stagnated by the great depression now had customers for conflict-based products from the resources that were abundant in the USA. The USA became a primary supply chain of the war effort for everyone else facing the large economic axis of powers attempting to take over the rest of the world. As often happens, even the USA had to join in the melee. After some bloody and horrific years, even the worst of wars has to end. In the glowing aftermath of the Second World War (sidenote: the only thing that seemed to be glowing were the remaining embers of the bombed out cities and towns in the countries ravaged by 5 years of total war – I digress). The U.S. soldiers returned home to the only major westernized country relatively untouched by all the war products they made over the years that rained down on the many tens of millions of people in the countries involved in the war (at this time Canada and Australia were not major players).
The great depression had ended when people desperate for employment had joined the war effort to build things and the pay had been good. So good in fact, that they had all saved a lot of money – and because of the war and rationing (even in the USA) the workers had not much to spend their money on except to fund the U.S. government (war bonds) in fighting the war abroad. The need for war ships, tanks, war planes, guns, munitions of all kinds, uniforms, and all manner of products to create mayhem in a war zone suddenly ended, and the USA suddenly found itself without customers. Great economic minds went to work. Some had to figure out how to get the war-ravaged countries up and running again for future business, while others recognized the untapped potential within the country itself. Much of the business machinery for the war effort was easily converted from war ships to merchant and cruise ships, from war planes to new commercial airline fleets, from tanks and guns to refrigerators and stoves, from uniforms to a fashion industry. Now there was money to spend on a plethora of luxury goods that flooded the stores. This quickly created a large middle class in the USA. And not only that, as the other countries of the war rebuilt themselves, the USA became a supplier to the world and helped rebuild the industries in those countries. The USA was the global economic giant for the next few decades taking over from what remained of the British economic empire for a time.
Except for a few years of affluence in the 1920’s, after that other horrendous world Melee WWI, monetary wealth in a growing middle class became a sign of affluence and status. And with it something referred to as ‘conspicuous consumption’ became the norm for most of the U.S. The U.S. went on a massive spending spree! The notion that wasting anything was a sin actually went to being a sign of social status! Advertising, which had been a low-key business before WWII, was now ramping up (think Madison Avenue) fueling consumption on an unprecedented and massive scale. In their rush for ‘the new good life’ the U.S. never stopped to think about the changes in the social systems that were now enveloping them. What had been a country of small towns and well-connected communities in the cities was about to be changed. A new way of living was being born and at first it seemed good.
Even the idea of debt was changing. Where once being in debt was a socially unacceptable thing, was now not only becoming acceptable, but expected. The older lay-away process was where you paid for something over time at the store and then only got it to take home once you had paid up the full cost. Credit cards were now being issued to allow a person to buy something now, take it home, and then pay later. Another new phenomena was also becoming obvious. Children had been work-slaves throughout history, but child labor laws in the early 1900s had abolished that. In the 1950s, the advent of ‘fast food’ and minor jobs taken on by high schoolers, there arose a new market of business – the Teen market. Middle class kids now had access to jobs and money, cars, motor-scooters, cashmere sweaters, music records driven by scandalous Rock & Roll, and it all continued fueling an independent and somewhat new kind of rebellious mindset in the younger population. James Dean’s, ‘Rebel Without a Cause -1955’ seemed to epitomize this mindset. And the middle-class adults were now taking ‘vacations’ in exotic locales well away from their home areas. More and more were travelling abroad – acting like entitled Americans had found the golden goose. (Sidenote: The term American as I and much of the world uses it generally refers to the citizens of the USA, but technically, all people on the American continent are Americans. I once heard an annoyed Canadian immigration official asking a person from the U.S. what his citizenship country was? – the man kept saying American. The official eventually said, “Look, I’m an American as well but from Canada.”)
Besides the conspicuous consumption, the other major upheaval was being spurred on by the ability of many Americans to finally achieve the American Dream and have the potential to own their own home with all the luxuries and comforts built in. Indoor plumbing, electricity, stoves, refrigerators, and all manner of technological gadgets were theirs simply for the buying. The creation of the G.I. Bill allowed those who had served in the military to get money to pay, or cover some or all the costs for schooling, training, or a house. The new middle class eagerly accepted the options and new modern prefabricated homes in large ‘housing estates’ were being built swiftly all around the outsides of most American cities. A new kind of living system was being established – suburbia! In the 1950’s and 1960’s, it is estimated that 25% of Americans that had lived in inner cities were now moving out to these new suburban designed areas outside the main city. I should mention here that this was mainly an option for the Caucasian American. Minorities were actively discriminated from many of the benefits of this new style living, and most were obliged to remain within the inner cities that were fast becoming abandoned by the business world in favor of the profits to be made in the new suburb’s. The now growing social economic status (SES) was expanding and the suburban population was now living in a suburban car culture (one had to drive everywhere to get to things, unlike old communities were everything was nearby). Many Americans now found themselves leaving tight communities for the isolation of the suburbs in their nice homes with their manicured lawns. The women (wives at home while husbands commuted to work) especially found this to be a new problem. This then spurred on a new innovation for helping women especially, find connection while driving the consumer model to new heights.
TBC…..
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