True Resilience in the Face of Disaster
- Saturday, October 10, 2009, 19:08
- Economy, Lifestyle
- 43 comments
Over a year ago, Fannie and Freddie needed to be bailed out. These are not names that we associate with Jack and Jill who went up a hill to fetch a pail of water. Fannie Mae and Freddie Mac are names synonymous with the recent global financial crisis or GFC. Unfortunately, when these two US mortgage companies went down the hill in September 2008, they were not the only ones who went tumbling down. What followed is the collapse of the banking industry in the US that sent destructive aftershocks to the rest of the financial world. The ripples were felt by investors and ordinary folks alike — loss of businesses big and small; loss of jobs; loss of homes; loss of life; etc, etc.
Here in Australia, the storm also battered, but it destroyed less. While a great part of the western world went into recession, the country seems to have survived, “riding the tsunami” as one headline put it. Although Australia’s unemployment rate worsened from 4.2 in 2008 to 5.8 (September 2009 figures), its financial indicators remain good. Economists are not attributing it to dumb luck though. It is a combination of everything from the excellent policies of the previous and current administrations (stricter banking regulations and timely interest cuts) to initiatives to stimulate every individual’s appetite for consumption. After all, isn’t the latter what Prime Minister Kevin Rudd’s stimulus package is for? Some economists are saying that the financial crisis is over for Australia. Indeed, this is a lucky country – in this round.
China helped Australia avert a recession. Australia is China’s quarry. We supply China’s voracious appetite for coal. Why does China need coal? They need it to operate the thousands of factories to manufacture goods for the rest of the world’s population. Hence, Australia’s export volumes remained unchanged while those in the rest of the region slumped.
But this is a world where nothing is what it seems. So I personally will miss the GFC. Aside from the obvious like interest rates climbing back up again, a threat of a recession makes people think twice about spending excessively. Even when there was money being thrown around by the government to encourage people to “spend for their country”, some people chose to save. People were having “staycations” instead of going out of town or out of the country to holiday and companies were discouraging staff from making unnecessary travels to reduce cost. While this is not good for the airline and travel industry, the carbon footprint worldwide was reduced. Families also got creative in finding ways to spend quality time with each other with less of the hassle.
There was a recent research in the US studying the health of people living during the Great Depression and it found that death rates dropped in the lean days of the early 1930s and increased when the economy expanded. The researchers believed that wellbeing blossoms in hard times because people were forced to cut back on indulgences such as rich foods, drinking and smoking. During these times they said, people also tend to spend more time with friends and family, in the process boosting their morale. In addition to this, because there was no overtime at work and less stress, people slept better. Meanwhile, years of strong economic growth equalled worsening health with many of the biggest lifestyle-related killers, heart disease and cancer, bearing down on us. On the other hand, if one was lucky enough to have saved up for the rainy days or did not get retrenched or lose money, the financial crisis was a great opportunity to take stock of life and try to live simpler — at least until good times roll in and everyone rolls out the barrel again. Unfortunately for those victims of the crisis who went through horrible times, it will be hard to see the silver lining in the short run.
The recent financial crisis is of course, not the first one and it won’t be the last. We have it every now and then. A lot of factors contribute to it, and even experts in finance and economics can’t seem to predict when these things strike despite a dedication to analysing years of data. They all appear as shocked as we are when it happens. Even Her Majesty, Queen Elizabeth had to ask, “How the heck did this thing happen?” (in the Queens English of course!) In the early 1980′s for instance, the effect of the Iranian Revolution was a significant increase in the price of oil causing an energy crisis. I don’t have to tell you what lack of oil can do to a planet which nowadays can’t seem to continue circling without it.
Now that everyone realised that greed was to blame for the recent financial crisis, the real question is, can we actually avoid the same situation in the future? What is the real picture anyway? Will there be a sequel to the movie Wall Street? Or have we had enough of Gordon Gekko in real life that we wouldn’t want to see him on the big screen anymore? Will Michael Douglas look too old to reprise his role? I wouldn’t want to watch Charlie Sheen anymore though.
The answer to the first question is no. Greed is part of human nature; people will always struggle to fight the need to want more and want now. Just about everything that causes pain and misery is because of the need for instant gratification. It doesn’t help that our senses are being bombarded by visions of bigger and better stuff. Even the former US Federal Reserve chairman himself, Mr Allan Greenspan, said that “Unless somebody can find a way to change human nature, we will have more crises”.
“People are victims of clever marketing” my husband has always told me. I guess he is speaking from experience. He is not the most materialistic of men, but years ago I left him to mind the kids while I went out and when I got back home, he excitedly told me that he just ordered a whole set of The Muppet Show on VHS. It was from one of those ads on TV with a 1-300 number and he was convinced that it was a good deal because it was a limited offer and that “supply won’t last”. Being a fan of the show myself, I was happy about the purchase, except, I have to say, that to this day we’ve only had time to watch one tape. Meanwhile, the technology has moved on and the set is now stored in the backyard shed filed under “extinct”. Eventually, it will have to be discarded to create more space for other stuff that we thought was a good idea to buy but ended up hardly using. I often wonder how much discarded stuff ends up on landfills or in the case of third world countries, just get tossed wherever – contributing too to environmental degradation.
While I’m a great admirer of technology and the innovations that contribute to improving efficiency and our standards of living, I believe we need to constantly ask ourselves how much of the stuff in our household we really need. How flat does our flat screen TV have to be before we can say “Ok, this TV will last for years before I buy a new one”? Unfortunately, they used to say that plasma was the future, and then we were convinced LCD is better but now they are saying LED is best. How about we wait a while longer until the manufacturers make up their minds before we change our set? Do we really have to be up to date with our gadgets anyway? Do we really have to have what the neighbors are having? Perhaps it would help if we imagine a scenario where we have to evacuate our house and just have a few minutes to grab the things that really matter to us.
Our quest for more of the good things in life is slowly contributing to environmental catastrophe. Indeed, over-consumption is not really helping make people’s lives simpler. It seems to make them even more complicated because man has moved beyond basic necessities to items that are not really that important – stuff that were once considered to be luxuries. Globalisation, and the consumerism it spawns, may be creating economic growth in the developing world but it is, at the same time, also creating victims among those (the poor) most vulnerable to the effects of environmental degradation.
Once we have totally rebounded from this crisis, we as consumers can still turn things around by being a bit more enlightened in the way we regard our own self-interest. We basically need to ask ourselves some simple questions before we buy. What are the impacts of the process of its production on the environment, our society, and on individuals? How are the products and resources we consume actually produced and distributed? Is it energy efficient and of good quality? We can’t really change the way we are designed to want things but we can put more conscious effort towards being more ethical and aware of the impact of our actions.
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Imelda has written 1 stories on this site.
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43 Comments on “True Resilience in the Face of Disaster”
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Greed not only describes the overweaning desire to acquire and consume more, it can just as well describe the effort to acquire those things by the easiest means possible. The financial crisis that started in the States was one big web of half-assery, and at the center of it was a huge population of people who thought they found a way to buy three and four hundred thousand dollar homes on a Wal-Mart budget. When the monthly bills finally caught up with them, the whole rotten structure fell apart rather quickly.
It’s a lot simpler here. Greed expresses itself as the assumption that the OFW remittances and FDI will just keep on rolling in, so savings rates are low. Greed for profits makes banks unwilling to extend credit – which they can justify by the low savings rates – so they turn instead to SDA’s that artificially inflate their balance sheets. But no credit means no development – inadequate infrastructure, substandard housing, insufficient services – so that all it takes is something relatively mundane (for this part of the world, at any rate) like a couple of tropical storms to plunge the entire country into chaos.
[Reply]
Imelda Ignacio Reply:
October 13th, 2009 at 2:50 am
I’m just wondering how the Philippines can survive without the remittance from all the OFWs. This is another crisis that the government needs to avert. Workers have become some kind of commodity that can be traded overseas and measures have to be taken to prevent their hard earned money from turning into stone. Hopefully, the recipients or family members will try their best to invest them in education and profitable livelihood. It would be sad if they just fall victim to consumerism just because they think they now have the power to buy stuff..
[Reply]
The key insight here is to see that the GFC is an unforeseen disaster just like the flooding that destroyed Manila in the wake of cyclone Ondoy. While Filipinos see their ability to “cope” with disaster as being “resilient”, what I consider to be true resilience is what was described here, in the way successive policies and measures were implemented and built upon one another to create the capability to side-step, bend with, and absorb the shockwaves that hit the Australian economy as the effects of the GFC rippled into the region.
More importantly, the return to more relatively frugal habits presents an opportunity for a people who responded well to the financial crisis to further strengthen their ability to face future crises that are most certain to come.
The kind of resiliency that enabled Australia to weather the financial crisis relatively well was built over several governments. That is the kind of long-term foresight that is required in the Philippines to build its own resiliency (in the real sense of that word) into its own society — whether it is the kind of resiliency that copes well with what Mother Nature or the kind of resiliency that allows us to prosper within a Global Financial System that cannot be tamed by “expert” forecasts.
[Reply]
A financial disaster is very much like the flooding disaster the Philippines experienced with Ondoy and Pepeng recently. Just like any disaster, it was unexpected. The heavy rainfall that resulted in flooding Luzon and the northern part of the archipelago have wreaked havoc just the same – loss of businesses big and small; loss of jobs; loss of homes; loss of life; etc, etc. And just like any other disaster, it doesnâ��t just happen overnight. The past and the previous governments in the Philippines should be accountable for the lack of superior infrastructure and the indifference and apathy of its citizens to the environment and poverty.My personal opinion on the attitude of the Philippine government is that, they have gotten used to being bailed out by the Americans or relief international agencies. They are ill prepared for such a catastrophe and show no qualms about calling for help. The real question for the Philippines is when is the country going to become self-sufficient? When is the country going to have pride in being able to save itself or be able to prevent such disasters from occurring again? Or when will we see the day when the Filipino people can relax on a rainy day knowing that the infrastructure surrounding their homes and businesses will hold up.
[Reply]
I blame the 1950s and Edward Bernays for making a society with lots of consumption and low resilience. Bernays was the publicist who taught the government and the corporations to control people by satisfying their carnal desires with consumer goods. Then, with the US being the only unscathed country after World War II, they proceeded in the 1950s to make themselves the chief world power, not just through military strength, but through culture and business. And this proved more effective than what the Romans or Genghis Khan ever did.
Thanks to the consumerist culture spread throughout US territories, the Philippines readily took this culture as well. People believed in instant gratification and thought that the time of prosperity will “last forever.” Credit cards became abundant, consumer goods became a symbol of even the moral status of a family (contributing to the Prosperity Gospel baloney amongst Protestant evangelism), and cars became a staple of American life, increasing the need for gasoline. This in turn led to the US looking for oil in the Middle East, starting with the overthrow of Mossadegh-era Iran.
Today, this culture contributed to the downfall of America. Bush himself encouraged Americans to borrow against their credit level, contributing to increasing debts. Businessmen wanted big money, and made it their lives’ goal. Once the economy imploded, the fruits of their mistakes finally sprouted, and they reaped it. This 2008 crisis is even worse than the Great Depression in the sense that instead affecting just America, it affected the whole world. Consumerism undid the American country.
But combine this American attitude of consumerism with our relatively higher rate of poverty, lower rate of education and anti-intellectual, Catholic-influenced culture, it was the recipe for disaster. Some of you may recall grandparents or parents who encourage you to buy American-made food and goods, and even want you to go there and pursue the American Dream. They will tell you to look for a good job at a good company (usually managed by the Gordon Gekko type), earn lots of money, buy lots of luxury products and buy your own house and car (or usually the car first), instead of invest it in a business or another profession based on what you really love.
Add to that the BABY BOOM mentality; people believed that with the prosperity they were enjoying now, many children would not be a problem. They never envisioned hard times ahead, simply because they did not want it. Now we see how a boom in babies created a boom in needs, but the resources to support them barely boomed. Then came the fallacious thinking of, “don’t think about it so it won’t happen to you.” That has been proven wrong many times. Material prosperity became an objective of Filipinos as well, but compared to Americans, it was more beyond their means. Thus, Filipinos began to try and live beyond their means, to try and live up to the consumerist lifestyle that marked that image of prosperous, “happy” families. Starting with the 1997 Asian crisis, and leading to Ondoy, reality sunk in; we can’t make that American consumerist style a goal anymore. In fact, no one should have.
We have Spanish rule, Catholic influence and anti-intellectualism to thank for how our country is today, but I believe a large part goes to Edward Bernays as well. Bernays’ legacy undid America, too. Consume, consume, and be a good little puppy. It’s time to break out of the 1950s and Bernays’ influence.
[Reply]
Imelda Ignacio Reply:
October 12th, 2009 at 4:55 am
You hit the nail on the head. They said globalization will solve world poverty but unfortunately, what we got is global financial crisis. American consumerism was the model adapted by most. It was and is still is, so enticing. Advertising sold the concept. It feeds on human weakness. People felt good when they purchased something. Material things tend to boost people’s self-esteem, at least for the short-term. Then when self-esteem gets low again, they can simply go back to the mall, never mind that what most of what they buy is something they don’t really need.The wealth though from all the buying and selling is not distributed evenly. The world’s richest still occupy a big chunk of the consumer group leaving the poor still unable to afford even the most basic needs. And all this over-consumption is just putting a strain on the energy and natural resources, not to mention all the discarded goods are adding to the pollution. When citizens of the third world countries try and emulate a western lifestyle, the result is devastating. This is because the over-indulgence is combined with over-population and lack of basic infrastructure for everyone.We need a new model to sustain world ecomony. Something that does not promote over-consumption. “He who buys what he does not need steals from himself”. Unknown Author.
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uncle pinoy Reply:
October 12th, 2009 at 5:13 pm
Why don’t we try communism?
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Chino F Reply:
October 13th, 2009 at 12:23 am
That’ll bring the country to the dogs.
What is needed is to limit the power of corporations but let them keep functioning. The problem is when corporations are able to control the government. That’s how America is now.
Imelda Ignacio Reply:
October 13th, 2009 at 2:58 am
Communism is an extreme ideology wherein there is a collective control of possessions. Each individual’s wants and desires cannot be controlled by another individual or group of people. Greed, which is a human flaw will still prevail and leave some if not most, oppressed and in despair. This situation will also create a black market.The world needs a stricter regulation on credit to control over-consumption.
Chino F Reply:
October 13th, 2009 at 5:43 am
Another tendency in communism is for the ruling government to become a dictatorial oligarchy. North Korea, Stalin-era Soviet Union, China and Vietnam were like this. However, they (except North Korea) eventually succumbed to American business imperialism. But even NoKor is going to give soon. Communism really won’t win. You gotta hand it to America’s consumerist culture and businesses; they’re better than any army.
uncle pinoy Reply:
October 13th, 2009 at 11:05 am
@imelda: I am curious: what, in quantitative terms, is over-consumption?
@chinoF: Thanks for your comments. I have 3 questions though, if you don’t mind:
1) What corporate powers need to be limited?
2) How are corporations controlling govenment?
3) Obama has placed a lot of restrictions and controls on private corporations yet the US economy is still in a rut (with no upswing predicted in the near future). Why hasn’t Obama’s control of private corporations produced economic prosperity?
Thanks, in advance, for both your answers.
Chino F Reply:
October 13th, 2009 at 12:35 pm
Uncle Pinoy,
1. I’m no economist, this is not my cup of tea, but I suggest stronger enforcement of ethical rules like those that would prevent Enron’s cheating. Another is what Imelda stated, credit regulation. Perhaps transparency laws could help keep corporations wary.
Also, I don’t believe government is the only one to control corporations. People can do so by not buying goods or consuming certain products, etc. For example, if many people decided to reduce obesity and would buy less sugar or sweets, these companies have no choice but bear with it. Of course, this is a theoretical.
2. Under the table stuff like in this country. I believe some corporations bribe US congressmen and politicians, and others have personal connections, like Dick Cheney and Halliburton/KBR, which purportedly influence government decisions. Or they just put their people in office – I think George Bush is an executive in the oil industry.
3. a. Obama’s just settled in and it will take time;
b. Perhaps the steps in place now have not exactly hit the causes of the problems;
c. Refusal to comply with the Obama administration’s controls;
d. Or it’s just so bad, it’s really hard to recover.
I speak as a layman and not as an expert.
uncle pinoy Reply:
October 13th, 2009 at 5:45 pm
I understand perfectly where you’re coming from, Chino F. I’m not an expert either, but to be sure there is room for improvements to our Corporation Code.
I asked specific questions because it is easy to point to corporate, government abuses or self-greed as the causes of our problems. But then we’re not really looking for anwers which is the purpose of benignO and BenK’s blog. I hope you don’t mind if I react to your comments. In some cases I merely corrected your impressions on issues.
1. You mentioned enforcement of ethical rules – that’s good. There are existing rules and laws that regulate corporations (like the Corp Code and many special laws; in the US they passed the Sarbanes Oxley in 2002 in reaction to the Enron debacle). They are also required to make quarterly reports to the SEC and adhere to by-laws approved by their shareholders. In short, there are enough laws to protect shareholders and the public. If enforcement is the issue, then that is a government problem – the corporation is not inherently the problem. The corporation is not a monster that has to be tamed. In fact, it is said that it is government is a necessary evil that has to be constantly reined in.
A corporation is a group of investors (people) who band together for the purpose of pursuing a legitimate business for profit (there is nothing wrong with profit). The concept of the corporation was invented so that capital can easily be raised for investment and change of ownership can be effected without disruption of the business.
2. You mentioned bribery of government officials. Individual people, partnerships, and even foreign governments can bribe as easily as corporations. Maybe your bogeyman isn’t really corporations but rather moneyed entities. And even then, why is the entity that bribes demonized but not the government official who accepts it?
3. I’m not quite sure if you listed a choice of multiple answers or all of those were your answers. If the former, then may I venture a fifth choice: e) controlling corporations the way Obama (or any government for that matter) does not produce economic prosperity.
Obama has been president for 10 months and has passed his stimulus bill early this year which he promised would turn the economy around in the 2nd quarter and provide “shovel-ready” jobs. The country has lost 5 million jobs since Obama took office. Of course we could blame Bush for that, but Obama’s campaign promised a turn-around (remember Hope and Change?). We recall the urgency with which he passed the stimulus bill in February 2009 so that jobs can be provided right away. Many Americans now doubt if he really is qualified for the job. He reneged on his promises of troop withdrawals from Iraq and Afghanistan and closure of Gitmo. Was he wrong in promising troop withdrawals? People are now thinking, is his control of private corporations (GM, Chrysler, insurance companies and banks) not a good thing after all?
Now, my friend, to my point:
Jobs are the way to alleviate poverty and to prosper the economy. Imagine if the 10 million unemployed Filipinos have jobs: they buy goods and services that put money in the local economy; they can put their children through school; they no longer need government hand-outs which would save gov’t money; and since the tax base is bigger, the government actually can collect more in income taxes.
But how do we provide jobs? More importantly, who create jobs? Government cannot create jobs. Jobs are created not as a public service (like gov’t does) but as an adjunct to capital to make even MORE capital. Hence, it is the private enterpreneur, the corporations, the businesses that create jobs.
How can government help these companies create jobs? By cutting taxes. The money that would otherwise go to government (as taxes) would be used by these businesses to invest in equipment, materials and LABOR! In short, less government interference (i.e. taxes, over-regulation) spur economic growth.
Just my 3 cents. Thanks for this pleasant exchange, Chino F.
Imelda Ignacio Reply:
October 13th, 2009 at 9:29 pm
@Uncle PinoyFirst, let us define the meaning of the word consume. Consume means to use up or to expend. Consumption is the act of consuming.Over-consumption is a situation where the act of using up or expending food, goods or products is in excess of what an individual or a whole society needs. It can be said that if humans keep engaging in over-consumption, it is unsustainable.The financial crisis is an example of where over-consumption can lead to. Some societies have accumulated too much debt by extending credit to those who do not have the means to pay for all the goods that they have bought. People would not be in so much debt if they did not over-spend. People have moved on from basic needs to luxury items and it is the corporations who benefit most from the spending spree of each individual. This means that the poor have not benefited from all this consumerism. Again, this situation might eventually lead to conflict between the social classes.Likewise, over-consumption can lead to the depletion of the worldâ��s natural resources. Just the manufacturing of products alone already use up a lot of fossil fuels. New Scientist magazine states that the world’s richest half billion people – that’s about 7 per cent of the global population – are responsible for 50 per cent of the world’s carbon dioxide emissions. Meanwhile, the poorest 50 per cent are responsible for just 7 per cent of emissions. One American or European is more often than not responsible for more emissions than an entire village of Africans.
uncle pinoy Reply:
October 14th, 2009 at 12:14 am
Thank you for your reply, Imelda. I agree that the present financial crisis is partly due to over-consumption. But let’s be a little more specific as to its cause and why “over-consumption” by itself is not to blame.
In 1995, Bill Clinton proposed amendments to the Community Reinvestment Act which made it easier for people to get house loans despite being credit risks. Crafting the whole endeavor as giving minorities and poor people a chance to own their own homes, it was a popular undertaking and the Congress (with the prodding of a pro-Clinton press) went along with it. While the banks were wary about this policy of being forced to lend to credit risks, Attorney General Janet Reno warned that she would personally investigate banks that turn down minorities. To make the policy more palatable to the banks, Clinton empowered Freddie Mac and Fannie Mae to secure these “shaky” loans.
Here is where over-consumption comes in: because home loans were practically being given away, many who otherwise could not afford a single house, bought several for investment purposes. This, in turn, caused housing prices to skyrocket artificially. There was no real money backing up the value of the houses other than speculation and bank loans. In 2003, Bush called on Congress to check the housing securities in Freddie Mac’s and Fannie Mae’s portfolio, which met strong resistance against Sen. Dodd, Rep. Barney Frank and the Democrats. Charges of racism against Freddie Mac’s black CEO Frank Raines and minorities (who abused these home loans) sent Bush and his cohorts retreating. In fact, as late as February 2008, Sen. Dodd said that Freddie Mac and Fannie Mae were “fundamentally strong”. When the housing bubble finally burst as few months later, these unsecured securities that were sold to international markets lost value causing the global financial crisis.
So you see, Imelda, it was not “over-consumption” per se that resulted in the financial crisis. Left alone, the banks would have turned down these speculative borrowings that caused the housing bubble. It was when government tried to do something good (i.e controlling banks’ lending practices) that these things began to happen.
Also, I agree that people who cannot afford to buy luxuries, shouldn’t. But for those who can afford the luxury, who are we to tell them that they should not “over-consume”? If Bill Gates can afford to buy 10 Ferraris, what is that to me? If I get envious, then that’s my problem – I shouldn’t get envious. I should work hard and invent something so I can afford 10 Ferraris.
And what do you and Chino F have against corporations, Imelda? Corporations provide jobs that makes it possible for a person to have money. Do you know that when you and four of your friends register with the SEC to start a business, you become a corporation? Does that automatically make you a bad person? And corporations do not force people to buy their goods and services. Corporations provide goods and services that people DO want.
If you don not want corporations to provide goods and services, then who or what entity will? Government?
Again, thanks for being patient and reading this.
Chino F Reply:
October 14th, 2009 at 3:05 am
Let me react, Uncle Pinoy:
1. You have a point against corporations not necessarily being evil. However, I think it the big corporations – big business – are doing much of the damage. I point out the big corporations, especially those that wield a lot of influence and power, such as oil, sugar and military industries, that are the harmful ones. Sugar industries for example are thought to be suppressing studies that sugar is a big contributor to obesity. Oil industries may be suppressing alternative fuel adoption and studies. Well, who knows. Perhaps more regulations on how the big companies handle their money should be passed, those that are more specific and show some favor on small business. Perhaps laws that favor small business while helping less big business would help.
Actually, when you look at my post, it’s more like I blame the public relations or advertising industry for inducing people to yearn for the expensive life. Then this leads to extensive borrowing what one may not be able to pay later on, or consuming the wrong way. I would also blame this for the obesity rash the US is suffering (and what I’m suffering, hehe). But I guess the people themselves share the blame for going ahead with this kind of life even if they know it isn’t good for them. I won’t deny it either… I am guilty of living this lifestyle with my costly hobbies.
2. You’re right that politicians deserve some of the flak when their patron corporations bribe ‘em. But unlike here in the Phils where it’s open knowledge, it’s much more hidden in the U.S. I do know Dick Cheney is being publicly criticized for having a role in the Halliburton/KBR scandal. I believe that some politicians and Bush went to war in Iraq to find some business for these companies they have connections with. There might be more, I haven’t looked through US media that much.
3. Control of private corporations is just one step Obama’s trying, since he probably thinks that led to the downfall of the economy. Perhaps it’s not the right step. Perhaps the kind of controls used were not appropriate. Perhaps something else needs to be done, like regulate people’s borrowing or consuming. I still think it’s too soon to say whether Obama succeeded or failed. I won’t judge it yet.
On over-consumption, I wish to comment, let’s just say that American culture became “live beyond your means” thanks to some corporations’ and advertising’s pushing, in addition to factors you mentioned. Even the Phils has this attitude, being a heavily US-influenced country. Maybe another way of saying it is misguided consumption? But I do believe over-consumption is happening too.
About the Soylent Green-era warnings, and their modern incarnations, I don’t think about them stressfully, but they’re certainly something to keep in mind. Even if those predictions you mentioned didn’t hit, they were based after all on very good observations. Even if carbon emissions may not be causing global warming or climate change, I say it’s still harmful and something should be done.
At least in this discussion, we see that nothing is that simple. And I appreciate the discussion. The more details we get on, the more we learn.
uncle pinoy Reply:
October 14th, 2009 at 12:53 am
And oh, just a pahabol on the issue of depletion of natural resources and carbon emission:
Back in the 1970s, there were studies by the United Nations that the Amazon forest was being destroyed at a rate of something like 1,000 acres a day, or some astronomical figure. The study said that by 2000, there would not be a single tree standing in the Amazon. I remember making artwork as a grade-schooler for UNICEF to protect the trees.
The name of the book and author escapes me now, but the thesis in the early 1970s was that the world population then (maybe about 3.5 billion) cannot be sustained by the planet, hence, the widespread famine and starvation in Africa, India and China (yes, China). Thirty-five years and 3 billion people later, we’re still here albeit there is still starvation in Africa (india and China are now industrial powerhouses and can feed their population). The 1973 movie The Soylent Green about cannibalism in 2020 was a big movie hit back then.
On carbon emissions: I really doubt if this global warming (if indeed it is warming) is man-made. i don’t mean to sound facetious, but I think it’s caused by the sun.
These doomsayers have caused the world to live stressfully in the past 30-40 years with their dire warnings in the 70s and it’s nothing at all like they said it would be. I wouldn’t get too stressed out about their warnings now.
[Reply]
Imelda Ignacio Reply:
October 14th, 2009 at 3:13 am
@uncle pinoy
There is nothing like hearing both sides of the equation. Your replies are very enlightening. Especially when you said that it is the government who forced banks to lend to credit risks. This only means that it is just right for the government to bail these banks out of trouble. I’m pretty sure it wasn’t long before the banks themselves saw the opportunity to make more money from the loans generated. This also confirms what I wrote about originally that Australia’s past and previous excellent policies (stricter banking regulations) contributed to their resilience during the financial crisis.
Your explanation above also confirms that people will just follow what the norm is. If they get an unsolicited offer of credit from their banks in the mail, majority won’t have enough discretion to think of the consequence when they end up not being able to pay. They will actually feel great receiving a line of credit.
I have nothing against corporations. I have something against false advertising though. Particularly when they say 24 months interest free on goods bought today. Problem is a lot of people don’t even realise that the interest charges start on the day they bought the goods not on the 24th month. You see not everyone has the same level of education and not everyone exercise the same level of prudence.
I have nothing against people like Bill Gates who can afford to buy anything he wants. I have a problem with people who sell the idea that the only way to be happy is to acquire more material things without working as hard as Bill Gates. This is the concept that advertisers have been selling.
Nowadays there are actually corporations who have shifted their focused from just increasing shareholder profits to running the business while trying to improve environmental and worker conditions. It’s a small step but hopefully the trend will catch on.
With regards environmental degradation, I think the evidence in the recent disaster in the Philippines speak for itself; the accumulation of garbage in the cities have clogged the sewage system and the cutting down of trees in the hills have contributed to the flooding after a heavy downpour.
in our office changes in management are quite frequent. everytime we get a new chairman, president or manager we can be sure changes will be implemented. unfortunately, of all the changes that i have seen none have been truly meaningful. what’s worse is that the very few effective policies already in place almost always end up being scrapped to make way for new ones introduced by the new bosses. this has practically become a tradition in our organization. a new boss comes in and starts changing whatever he/she fancies without even looking at the merits of the existing policies. (the funny thing is — and this has always been the case — the first thing that gets changed whenever we get a new boss is the arrangement of all office furniture. even funnier is the manner by which this is pursued. it’s as if it was such a big thing when we don’t even have that much stuff in the office.)
i think this is pretty much the case with the government. there is hardly any continuity of policies that produce real results hence true resilience as you described here is not achieved.
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Imelda Ignacio Reply:
October 13th, 2009 at 4:16 am
Your office is indeed a microcosm of what’s happening in the country. The people who are in power are just focussed on petty things and on how they can win the next election. There is hardly any long term plan or blueprint for the future. There is indeed no continuity of policies from the previous administration to the next. Projects that have long term benefits for the next generation are put to a halt if it doesn’t benefit the incumbent.
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Filipino Culture Reply:
October 13th, 2009 at 3:27 pm
This is due to Pinoys’ focus on PERSONALITIES instead of institutions. This is partly the reason why DYNASTIES are so prevalent in the Filipino political landscape. One oft-repeated justification for this stultifying and non-talent-rewarding practice is that it “ensures” the continuity of policies and practices.
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@ uncle pinoy
If I may jump in to respond to your question:
I don’t think there are any hard figures that tell us when consumption is excessive. But there are several principles at work around which the concept of “consumption” may be regarded:
(1) Consumption as driver of economic indicators
Exchanging goods for profit (i.e. trading in the original sense) adds value to the product of an economy (as measured by, say, the GNP or GDP). Every dollar earned in a transaction adds to the GNP. A person who buys a sack of rice for $5 then sells it for $8 adds $3 in “value” to the economy.
So in a sense, when lots of people are buying and selling in large quantities, as when “consumption” is said to be “healthy”, it is good for economic indicators because those activities contribute “value” to the economy.
But then, what exactly is the substance behind that “value” I described above. Does the $3 in “added value” to the economy in that sack-of-rice transaction I used in the example above actually represent something tangible actually produced out of that transaction?
Multiply that a thousand fold into the aggregated way we measure “economic performance” and you will see that economies that merely exchange goods and gain profit but add little actual substance to what’s been exchanged can have as much chance to look good statistically as those economies that actually produce tangible stuff.
(2) Consumption in terms of what motivates it
Just because something is cheap or free, doesn’t mean we should wantonly consume it. Chairs and tables were once highly prized because the labour that went into building them was very tangible — you either built them yourself or you bought them from the village furniture maker who you personally know. Today, chairs and tables are manufactured by the millions in highly mechanised factories somewhere in China. They can be bought for just a hundredth of the cost of the furniture that our great grandparents used.
Whereas our great grandparents cherished their furniture and used them for years (even passing them to the next generation), we see ours today as mere fashion statements at worst. They last a few years and even if they are still good enough to use, we don’t think much of disposing of them to buy a the latest trendy set when it suits us. That’s because we can. But the question is, should we?
Today’s chairs and tables come cheap because our financial/monetary system tells us they are cheap. Trouble is, the financial system has been found to be incomplete as a scorekeeper of value and cost. It fails to account for the cost to the environment that our ability to manufacture stuff by the millions. Our ability to manufacture in great quantities is enabled by our dependence on fossil fuels. Compare that to a time when no such machinery existed and people had to hand-make stuff only in quantities that meet their needs. Worse, because these millions of tables and chairs are “cheap” we dispose of them in larger quantities after shorter and shorter times of use.
So are we really improving our lot overall? Or are we simply improving the efficiency at which we consume?
Conclusion:
It’s not about the figures because they have proven to be misleading. It’s more about how we apply basic principles when we evaluate how much consumption is too much.
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uncle pinoy Reply:
October 13th, 2009 at 6:19 pm
Thank you for that explanation, Benign0. It is always good to learn new things. However, it does not answer my query.
I was reacting to Imelda’s point (in several posts) that :
“I believe we need to constantly ask ourselves how much of the stuff in our household we really need. How flat does our flat screen TV have to be before we can say “Ok, this TV will last for years before I buy a new one”? Unfortunately, they used to say that plasma was the future, and then we were convinced LCD is better but now they are saying LED is best. How about we wait a while longer until the manufacturers make up their minds before we change our set? Do we really have to be up to date with our gadgets anyway? Do we really have to have what the neighbors are having?
“[Consumerism] feeds on human weakness. People felt good when they purchased something. Material things tend to boost people’s self-esteem, at least for the short-term. Then when self-esteem gets low again, they can simply go back to the mall, never mind that what most of what they buy is something they don’t really need.
xxx
“We need a new model to sustain world ecomony. Something that does not promote over-consumption.”
I take that to mean that we shouldn’t consume so much because that is not good for the global economy. She proposes the adoption of a system that does not promote over-consumption. And since this is a “solutions blog” I was curious if she had a “threshold” upon which this proposed system (maybe of government) can say “Ok, that’s enough. You’ve consumed too much.”
Ergo, my amended question: Can you ballpark what you mean by over-consumption? Thanks!
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HusengBatute Reply:
October 13th, 2009 at 11:47 pm
In my case, I would ask myself, honestly, “is this a need or is this simply a want?” Our man-made institutions such as the gov’t can only try to make sure that resources are shared justly and equitably among us constituents. It’s beyond their ability to determine accurately each individual’s needs overall. Besides, that would sound like some kind of totalitarian, socialist, or communistic economic system which curtails human freedom and personal development and happiness, if all these things still need to be dictated to us (i.e. against the principle of subsidiarity.)
We all have different ways of weighing or determining our options in terms of whether, for instance, this is the right time to get a brand new or better TV or not. It’s just that our priorities should be clear to us–what our short term requirements as compared to our longer term requirements are.
Economics may also be a call to virtue. We need to make sure that our obligations are met (e.g. bills are paid on a timely basis, etc) and that in the process of acquiring things, we don’t violate anyone else’s rights. Sometimes we may subject ourselves to personal discipline then reward ourselves with a treat later-on for, say, a hard days work. Even if we may have money to spend, we may want to exercise prudence or frugality in our spending. The bottom line is not to allow extraneous forces such as marketing and sales gimmicks, envy, greed, and so on to overpower us. We should be masters of ourselves, i.e. exercise self-restraint or self-control from time to time.
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Imelda Ignacio Reply:
October 14th, 2009 at 3:57 am
HusengBatute, I like the words you live by.
@ uncle pinoy
Trouble is, u.p. that the amount of stuff people can ‘afford’ nowadays has grown. Take airfare, for example. Whereas in the past, frequent air travel used to be accessible only to relatively wealthy people. Now with budget airlines and all, even lower middle class people in advanced societies are able to take overseas holidays more than once a year, or fly for domestic travel instead of taking the roadtrips that used to be more of the norm in the past.
More people are able to afford cars now. And you can see households with an almost one-to-one ratio of vehicles per household member even if one would have sufficed. The decline of public transport in many U.S. cities, particularly in California is the result of the lobbying power of the auto industry which practically coerced politicians to channeling funds into road building rather than on public transport infrastructure such as rail. More affordable cars resulted in the public caring less about the decline of public transport services.
I have nothing against rich people being entitled to luxury. But I have an issue with ordinary people being led to believe that they too are entitled to unnecessary stuff. Corporations have all but convinced people that they can have things right here and right now. Even IBM (or is it SAP) goes by the corporate motto “The Power of Now”. There is something not right about a society that believes in that philosophy. There is a price to pay for getting things fast and cheap. And we are seeing the effects of our fast and cheap way of life today.
Was it right for us to multiply to the numbers we have today? The U.S. for example is fed using super-species of corn that is grown using artificial fertilisers that are manufactured from fossil fuels and the runoff of these fertilisers is contributing to the degradation of water supplies. The sheer size and production volume of U.S. farms are made possible by industrialised farming techniques and machinery that burn large amounts of fossil fuel as well.
These farming technologies did contribute reducing hunger in the U.S. but then it also contributed to an increase in population to the point of complete dependence on almost irreversibly petroleum-fuelled agriculture. Softdrinks and other sweetened drinks are cheap because they are sweetened using byproducts of industrial corn production (fructose I think it is).
It’s like the way computerisation promised the advent of the paperless office. But look around you today. People are not only printing and copying documents more, we are also starting to get addicted to colour printing which consumes far more and produces larger volumes of waste products (cartridges, etc.).
There’s your over-consumption Mr. uncle pinoy — indeed, but one aspect of it among many more. It’s not something we can pinpoint to one entity in our civilisation. It is the heart of the very nature of our civilisation itself.
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Hello benign0,
Let me zero in on what you wrote:
“But I have an issue with ordinary people being led to believe that they too are entitled to unnecessary stuff. Corporations have all but convinced people that they can have things right here and right now.”
Then who is to blame here? The Corporations for trying to sell their products through marketing? The ordinary people for being gullible enough to buy things that they don’t need? Or both?
Benign0, let me be clear – I have no issue that there is indeed over-consumption. I totally agree with you and everyone that it exists and that it can become a problem. But I worry more when people want to come up with a system that controls human behavior and curtails their freedom to consume what they want. I totally agree with what HusengBatute wrote earlier (which Imelda apparently also agrees with) that it is up to the individual to determine what is over-consumption to him and to him ALONE. When people, or worse, government, tell me “Well, uncle pinoy, even if you can afford it, you can’t have a Maserati because a 2nd hand Toyota will be sufficient for your needs.” If you allow that, then maybe I can tell you what soda you can and can’t drink because you don’t need that much sugar in your system, etc. Where does it stop?
I also have an issue when people, or again government, tells a Corporation (who wants to make profit – again, profit is not evil) that it can’t try to convince people that they need their products. It is like telling a street vendor to cover up his goods and to shut up when people come by because he might convince the passers-by to buy his products that the passers-by don’t need anyway. Eh di huwag na siya magbenta. The same with the corporations, they might as well all close down.
Thanks again, my friend.
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benign0 Reply:
October 14th, 2009 at 8:12 pm
No one element in the overall economic system is to blame, uncle pinoy. As I said in my earlier comment:
In other words, what we see is the emergent behaviour of the whole system. All the individual properties and characteristics of each individual component come together to contribute to an overall set of behaviours and properties that don’t necessarily link back in a straightforward manner to any particular component.
But then there are basic relationships that we can isolate (but not necessarily use as an oversimplification of the issue), such as what Imelda Ignacio and Chino point out:
(1) corporations’ goal is to make a profit and enrich its shareholders;
(2) consumers want nice things and status on top of the basic necessities they need to live; and,
(3) corporations respond to what consumers want and consumers respond to how corporations influence their tastes.
The challenge for us is to see this vicious cycle of consumption for what it is and somehow step out of it to the extent that we do not subsume ourselves into the behaviour of the system excessively.
To some extent, there are already regulations in place to curtail corporate power (e.g. false advertising laws, disclosure requirements, etc.) so that the thin line between influencing and misleading in their marketing campaigns is not crossed.
There are no such regulatory frameworks to govern consumer behaviour, and corporations are getting more creative at designing their ad/marketing campaigns to work around regulations or exploit loopholes. So the onus is on us as individuals to develop a more ethical regard to the way we consume.
There is no grand conspiracy here to bring down big corporations. Only a call for a bit more thinking applied to the way we consume.
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uncle pinoy Reply:
October 14th, 2009 at 11:57 pm
No grand conspiracy to bring down big corporations, benign0? Maybe not, but I am reacting to these statements, my friend.
Chino F on October 14th, 2009 at 3:05 am
“I think it the big corporations – big business – are doing much of the damage. I point out the big corporations, especially those that wield a lot of influence and power, such as oil, sugar and military industries, that are the harmful ones.”
Chino F on October 13th, 2009 at 12:35 pm
“I believe some corporations bribe US congressmen and politicians, and others have personal connections, like Dick Cheney and Halliburton/KBR, which purportedly influence government decisions. Or they just put their people in office – I think George Bush is an executive in the oil industry.”
Imelda Ignacio on October 13th, 2009 at 9:29 pm
“People would not be in so much debt if they did not over-spend. People have moved on from basic needs to luxury items and it is the corporations who benefit most from the spending spree of each individual. This means that the poor have not benefited from all this consumerism. Again, this situation might eventually lead to conflict between the social classes.”
First off let me say that I admire Imelda and Chino for their passion and activism. I believe their motives are pure, and I respect their opinions. However, I think some of their premises are erroneous and it would be a disservice to them if i do not disabuse them of the errors. Chino, for instance, was honest enough to say that he does no know about corporations but writes about what he understands and read about them. And that’s fine. My exchange with him was to explain what a corporation does. To his credit, he read it and seems to have understood.
My issue with Imelda was her “need[ing] a new model to sustain world economy. Something that does not promote over-consumption”. Which sounded to me like advocating a system of governmental regulations to control freedom to consume. Now that she has clarified herself below, then I have no problem with her.
And I’ve never had problems with your posts here, benign0. i just think sometimes, and I mean this very respectfully, you’re off-tangent. Again thank you for the opportunity to discuss with you all.
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Imelda Ignacio Reply:
October 14th, 2009 at 8:14 pm
@uncle pinoyJust to confirm with you after having reviewed what I wrote, I am against curtailing freedom to purchase goods. I think I�ve stressed this a few times above.Since the financial crisis was basically due to people living beyond their means, the simple solution would be to just ask people to pay for what they need by cash. I know this would never happen but if we practice this, this would natural correct the system in the long run. I good way to start is to limit people�s credit line.
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uncle pinoy Reply:
October 14th, 2009 at 11:09 pm
Ah, finally a common ground. I wholeheartedly agree, Imelda. In fact, banks already do that. (limit credit lines) They will look at how much you earn and have actuarial tables to determine how much credit to give you (credit limit). Remember, banks want to be repaid – it doesn’t help them if you go bankrupt. But when government interferes and tells the bank to lend you more (so you can buy a house), as i explained earlier, then the proverbial s### will hit the proverbial fan.
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Imelda Ignacio Reply:
October 15th, 2009 at 4:03 am
This has been a good discussion indeed. I just have to share this newslink for info -http://www.smh.com.au/business/blame-financial-crisis-on-corporate-greed–rudd-20091015-gz5p.htmlIt just somehow validates what I wrote.
Chino F Reply:
October 15th, 2009 at 4:39 am
A bit more reaction:
You have a point on government contributing some of the problems. I read Bush encouraged people to borrow more and more during his term, and this contributed to the financial mess of the US. Obama inherited a really big headache.
On bank limitations on credit lines, I find that a necessary step to make sure the bank stays intact and operational. The US crisis proved this. I don’t think credit line limits necessarily curtail freedom to buy. For one thing, credit unrealistically encourages consumption without money on hand. I for one prefer to stick to cash as king, and buy only what my pay dictates.
And I see this from the above scenario: much of what really influences things and the decisions made happen in the informal sphere, rather than the formal. The formal sphere finalizes decisions and actions, but most of the thinking and planning happens in the informal sphere. People sign laws in sessions, but much of what leads to these laws id discussed over tea and toast. Same with purchase decisions, credit limit setting, and others.
I enjoy the discussion too. Makes us Google for more information.
in addition to what uncle has said about freedom to choose, it must also be said that lower prices allow for higher consumption. thats a good thing.
the key problem here is debt that allows individuals to borrow based on beliefs about future income. these beliefs can be wrong. if everyone is wrong at the same time, its trouble…
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Why do we see government as a benevolent entity when we can plainly see that our political leaders are corrupt to the core? A big portion of the taxes that you and I pay go to the pockets of these politicians. For instance, it is common knowledge that DPWH is corrupt to the core, yet why is it that we get all jacked up at the private contractor when it is the politicians (aka government) who award projects to private contractors in order to receive kickbacks?
We accuse big corporation of bribing government officials – but it is patently obvious that government officials extort money from business (including big corporations). What is the salary of the average government executive? Php30,000 – Php50,000 a month? With a family (and maybe a mistress or two) where does he get the money to sustain that lifestyle?
We’ve made excuses for our favorite politician’s (like Obama’s) glaring and obvious failures, yet we are quick to point out the evils of corporation which we cannot substantiate. Big Corporations cannot tax you. Big Corporations cannot put you in prison. Big Corporations cannot force you to military conscription. Big Corporations cannot take your private property. Big Corporations cannot curtail your freedom of speech. Government and politicians CAN and they DO.
I am no apologist for big business. If Big Corporations do anything illegal then they should be prosecuted.
Always look at politicians and government with suspicion. Whether it be Noynoy, GMA, Erap, Villar, Bush, or Obama. We should not fall for their platitudes. They throw out words like “social justice”, “fairness”, “equality” and cheer when they say that they will go after greedy corporations and the fat cats, instigating a class war. That kind of talk has been going on for years but has it made life better for us? We were told in the 1980s that if we have land reform, we will eradicate poverty in the provinces. Has it?
And their social programs don’t work. Look at the GSIS and the SSS. It’s bankrupt! Think about it, the SSS and GSIS are nothing more than giant Ponzi schemes and we think they’re good programs. They’ve become a piggy banks from which the politicians steal! And how do they replenish the GSIS and SSS? By taxing us more! Ponzi scheme. And it is forced on us through taxes.
If we’re to be wary about anybody, we should be wary about government. My proposed solution: Shrink government. And with an upcoming cha-cha, we have the opportunity to do this.
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Imelda Ignacio Reply:
October 15th, 2009 at 10:46 pm
@uncle pinoy You have a point; each entity, whether it’s the government or the private sector is just looking out for themselves. More often than not, the government just wants the high approval rating of their constituents. They put the blame on someone else with every opportunity they get for whatever situation they are in. Meanwhile, corporations are always after their bottom line and pleasing their stakeholders. This is the reason why I am always advocating the need for each individual to assess their own situation and look out for themselves too because if there is one thing that this financial crisis has taught me, neither the government nor the corporations seem to have any control over anything. â��Things are often not what they seemâ�� are the words I live by.
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uncle pinoy Reply:
October 17th, 2009 at 12:58 am
Thank you for that thought, Imelda.
Actually, there is a HUGE difference between corporations and government: Corporations have no control over you. You can refuse to buy whatever they’re selling. Whereas, Government has a lot of control over you. It has the the power to take your money, your liberty and your life. So who should we be watching more?
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Chino F Reply:
October 16th, 2009 at 9:15 pm
Would you support the parliament model, Uncle Pinoy? I’ve heard arguments for this. Or at least the electorate model.
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uncle pinoy Reply:
October 17th, 2009 at 1:00 am
Yes, Chino F, I would. A parliament with less members than the 200+ congressmen and 24 senators that we have now. A parliamentary system would also provice (check me on this) that cabinet members be members of parliament too. This would make for a smaller government, which is good because that would entail less taxes on us.
Good thinking, my friend.
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Chino F Reply:
October 17th, 2009 at 3:11 am
That’s what I thought when you said “shrink government.” Incidentally, I also heard this from a friend last night when we ate out. He also says the electorate system will ease the burden on the people and eliminate worries on all the dagdag-bawas. Just vote the rep and let them reps fight over the elections. I’m open to the idea.
Here’s an interesting article with more insights into how Australia got through the crisis:
http://www.bnet.com/2403-13239_23-352693.html?tag=homeCar
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