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The More Things Change, the More They Remain the Same: The Poverty of Affluence in 2016
One might think that as an author I would be delighted when virtually everyone with whom I have discussed this new edition has said that the book is even more relevant now than it was when it first came out. Instead, I find that continuing relevance deeply troubling. I had hoped that by now we would have made real progress in addressing the problems that are the book’s central focus. Instead, the worrisome trends that concerned me have persisted and even accelerated. My main consolation is that they remain solvable, if only we can better understand the real sources of satisfaction and well-being in our lives and the ways that certain features of the consumer society we have constructed actually end up undermining those sources of well-being. It is toward that better understanding that this book is directed.
In taking a close look at where our way of life brings satisfaction and where it yields disappointment, I aim to clear some space for new thinking about what I regard as the two defining challenges of our time—accelerating inequality and potentially disastrous assaults on our planet’s environment and climate. Effectively addressing both these challenges has been impeded by a set of widely held assumptions about what constitutes the good life, the well-functioning economy, and “success.” In pursuing in single-minded fashion the aim of maximizing economic growth, we have paid insufficient attention to the question of growth in what.
Not all additions to GDP yield equal increments in human welfare, and some indeed create threats to that welfare. In the calculus of many economists, more is almost always better, and just what gets produced and to whom it goes are matters best left to the market to decide; as long as output is increasing, and especially if jobs are being generated, the economy is deemed to be healthy. But in making wise choices both about our individual lives and about the policies and directions we should promote as a society, these questions of “what” and “to whom” are crucial.
So too is the related question of what kinds of jobs the economy yields. There is abundant evidence that unemployment is one of the most powerful sources of human misery, and enabling people to have a productive role in the life of the society must be a central aim of any humane and effective economy. But the assumptions that have guided our approach to creating jobs have skewed our efforts in this regard in ways that have left many people working at jobs that feel meaningless, pressured, or both, an experience evident not only at the bottom of the income distribution but often, in this era of 24/7 expectations, at the top as well. In pursuing the good life in the way we do, many people’s lives end up not so good at all.
I am a psychologist and a practicing psychotherapist, so my thinking is strongly anchored in attention to how people actually feel about themselves and their lives and to the ways in which we can misrepresent those feelings to ourselves and becloud the consequences of our actions and choices. In this I depart significantly from the assumptions of standard economic theory, which depicts us as supremely rational decision makers with perfect knowledge of our true needs and desires. But I am not the kind of psychologist who explains everything as just the result of how your mother treated you growing up. I believe it is important that we look just as closely at the social institutions and economic realities that frame (and often constrain) our choices and at how in our daily give and take with others, we mutually shape each other’s perception of what is desirable, normal, or natural. As I discuss in the chapters that follow, even the experience of satisfaction or pleasure is often far from simply given in the experience, but rather is powerfully shaped by the stories we tell each other, a matter not lost on advertisers or marketers.
What we want, what we expect, what we “need” is profoundly shaped by what others around us do and say, as others are reciprocally influenced by what we do and say. We don’t live our lives in a vacuum, and our desires do not just well up from within like bubbles in champagne when the cork is popped. We do not just tell the market what we want; our desires are very largely shaped by what the market offers. Corporations employ large staffs of marketers for a reason—to instruct us in what we should want, to influence what we want.
These influences on what we buy or aspire to do not mean that people are just sheep. But neither are we lone wolves. We are social beings, and our desires are not a product of some purely internal set of preferences that are simply “revealed” in our consumer choices. We all have real and genuine (indeed, sometimes fierce) inclinations; we are not straws in the wind. But with the exception of absolute biological necessities, our desires and inclinations are not immutable; they evolve through our encounters both with the social and economic realities we confront and with the thousands of messages we receive each day—not just from ads that are consciously designed to affect those desires but from informal exchanges with friends, neighbors, and colleagues in interactions that we do not necessarily realize are shaping how we think of the good life. When we do not appreciate the power of all these social messages—when we take our present aims as just “natural” and given—then it can appear that it is simply our desire for an enjoyable and satisfying life that is putting us on a collision course with ecological disaster, that the planet is at war with human nature itself.
This book points us toward a rather different—both more hopeful and more differentiated—way of thinking about our social and ecological challenges. It is not uncommon for those who share my concern about the dangers of climate change and environmental degradation to argue that the only way we can avert a deadly day of reckoning is by “tightening our belts” and giving up many of the comforts we have gotten used to, as well as the expectation of still further comforts and pleasures as the economy grows. In contrast, my argument here is that success in making the changes that can diminish our impact on the environment and increase social and economic equality does not depend on our accustoming ourselves to a less ample and satisfying way of life but on our understanding better what actually does make our lives feel ample and satisfying.
As I attempt to show throughout this book, and as much research done since the book was first written further shows, the ways we have thought about and pursued economic growth, while causing great harm to both the environment and the social fabric, have not in fact brought much increment in contentment or satisfaction as compensation. As I elaborate in my discussion of the “cotton candy” effect in Chapter Three, there is paradox and contradiction in our pursuit of the consumer way of life—many of the things we buy seem at the time we buy them, and even for some period of time afterward, to be making our lives better, and yet, if we add up all these seeming increments in well being and look at how our lives feel before and after we have gotten a bunch of the things we dreamed of having (whether it be a bigger house, a better car, the latest iPhone, or whatever the aspiration is that fits your budget and your social circle), the increases in happiness or satisfaction melt like cotton candy, leaving no trace of anything that has nourished or enhanced our sense of our lives. One important reason for this is that in the pursuit of these material gains, we often must work long hours, be on-call for emails or texts from the office, and in other ways disrupt what much research has shown to be the real sources of an enduring sense of well-being—relationships with family and friends, participation in and a sense of belonging in a community, leisure to enjoy hobbies and passions, engagement in spiritual or other commitments that give life a sense of meaning and purpose.
The accumulating evidence that many of the aims around which we have organized our lives do not really lead us toward satisfaction in the ways we have assumed they do might seem to be depressing news. But what it also means is that addressing the challenges we face is not the zero sum game we sometimes think it is. Understanding more clearly what actually enriches our lives can point us toward a way of life that is at once more satisfying and less damaging to our planet’s ecology and climate.
The imperatives of life in the consumer society impede both our understanding of the discontents we vaguely sense and our ability to visualize alternatives. Indeed, as it is one of the central aims of this book to elucidate, the ways our society has channeled our desires lead us to try to quell those discontents by doing more of the very things that have created them in the first place. Without fully articulating this to ourselves, we very largely aim to buy our way out of the discontent, to garner higher incomes, bigger houses, nicer cars and better gadgets, all the while feeling these are simply “natural” desires because all our friends and neighbors are doing the same thing. And what we then fail to notice is that all the sacrifices we make in family time and leisure in pursuit of the “more” to which we aspire, all the ways that we accept the pressure, the competitiveness, the 24/7 availability to boss or clients, and the continuing score-keeping that such a way of life entails, are very largely the cause of the discontents we are trying to quell, and that still more of the same is just that—still more of the same.
When the challenge of addressing climate change is framed in terms of “belt-tightening,” it can have the counterproductive consequence of making denial more likely, or of promoting its equally maladaptive cousins, minimizing and temporizing. It is hardly surprising, after all, that calls for what sounds like a decline in the pleasures life has to offer would be a message most people would find unwelcome. Nor should we be surprised that, as a consequence, even many people who strongly believe that climate change is a genuine threat nonetheless end up in an essentially dissociated state of mind, in which they verbally acknowledge the reality of the danger while largely continuing in the ways to which they have been accustomed. The reasonable sounding language of moderation, tradeoffs, or cost-benefit analysis may then serve as the vehicle for warding off too acute an experience of the contradiction.
To be sure, the efforts we have thus far made, both as individuals and as a society, should not be dismissed or undervalued. But continuing to think of what is required as giving up our pleasures and comforts—and failing to see how the treadmill way of life of the growth economy actually undermines our sense of satisfaction and well-being—has placed limits on how effectively we can respond to the challenge we face. Buying hybrid cars or compact fluorescent bulbs or promoting international treaties or cap and trade schemes that limit carbon emissions, even if those limits are far too permissive, are certainly better than doing nothing. But our efforts have been constrained by an assumption (sometimes explicit, sometimes unstated) that they should not be of a magnitude that they interfere in any way with the overriding goal of economic growth. That is, efforts to address climate change—converting to wind or solar energy, for example—have basically been undertaken only to the extent that they are perceived as not interfering in any significant way with economic growth. Hence, without full articulation or awareness, these efforts are essentially placed in a position of secondary priority and may end up as too little too late.
Further, in these calculations, growth is again almost always thought about in terms of the total aggregate output of the economy. Little attention is paid to whether the fruits of that growth end up reaching the majority of the population (see my discussion of inequality below) or whether they provide much benefit to those most in need. On top of this—and most germane to the central point of this book—this way of thinking is based on flawed assumptions about the relation between economic growth and the actual experience of well-being of real human beings. It pays much more attention, that is, to how much is produced than to what is produced, to whom it mostly goes, and whether it actually makes us better off.
What Has Changed Since This Book Was First Written? What Has Remained the Same?
This book first came out in 1983, and I began working on it in the late 1970s. Obviously, much has changed in the world and in American life since that time. Some of the changes have been highly salutary, and some have been problematic, further exacerbating trends that I already viewed with considerable concern when I began my writing and research. On the positive side of the ledger, there have been significant advances in civil rights and social acceptance for a range of groups in our society, although clearly there remains much still to be done. In the world at large, hundreds of millions of people have been brought out of poverty, one huge positive effect of economic growth that must not be ignored if one is to fairly evaluate the complex mix of benefits and costs of a growth oriented economy and way of life. Additionally, some of the changes in our way of life that I advocated in the first edition of the book—including some that seemed at the time like pie in the sky to some readers—have begun to go mainstream. Bike lanes have proliferated in our cities and suburbs and, although commuting to work by bike is nowhere as prevalent in the United States as it is in places like Holland or Scandinavia, this healthy and environmentally friendly mode of transportation is gaining increasing adherents in America as well. Electric cars are increasingly appearing on our roads, and likely will be still more prevalent in coming years as the infrastructure for them is further developed. Ride sharing schemes and other instantiations of an economy built around sharing and not just owning have gone from exotic hypothetical consequences of increasing computer power to mainstream targets of entrepreneurial activity.
Indeed, the very meaning of cars in our lives has begun to change very significantly, I discuss in Chapter 3 the role of cars as dream machines in the American psyche and elsewhere discuss the lure of annual model changes and the role they played in creating a need for a new car even when one’s old one was functioning perfectly well. Obviously the marketing of cars and the attempts of advertisers to weave fantasies around them have not gone away. But younger readers might be surprised by the degree to which cars once looked so strikingly different each year than they did the year before or by how much of the American psyche was taken up in wondering what the next year’s models would look like.
At the same time, nothwithstanding these and other salutary, many of the social and environmental problems that originally motivated me to write this book have persisted or even worsened. Even here, it is important to acknowledge that some of the environmental concerns I discussed in the book have been addressed responsively and effectively. We can point with satisfaction, for example, to toxic waste sites that have been cleaned up or to meaningful reductions in acid rain and in certain forms of air pollution. Indeed, in my own corner of the world, I can, with some amazement, note that the once notoriously polluted Hudson River is a place where people now swim and kayak. But new instances of environmental despoliation continue to become evident, from massive oil spills, to pollution of drinking water from coal mining and processing, to the increasingly massive threat of radical changes in our planet’s very climate. And the dark side of the emergence from extreme poverty of hundreds of millions in China, India, and elsewhere is that breathing itself is a health risk in cities like Beijing and New Delhi. I asked in the first edition of this book what would happen if the billions of people in China, India, and other then poor parts of the world began to drive cars and in other ways live like Americans and Western Europeans; for better or worse, it seems we are about to find out.
We Are Both More Affluent and Less Affluent Than We Were When This Book Was Written
In further considering what has changed and what has remained the same since this book first came out, I am struck that it is meaningful to say that America was both more affluent and less affluent then than we are now. The ways in which both of these seemingly contradictory claims can be true at once is at the heart of the book’s message.
We were more affluent then in the sense that a higher proportion of the populace saw themselves as living a comfortably and securely middle class life style or viewed such a way of life as within reach. This was a view prevalent not only among college graduates but for many blue collar families as well. The “American Dream,” was under duress, but it still very largely defined the aspirations and expectations of most Americans. In contrast, in discussing the terminology used by candidates for the 2016 presidential election, the New York Times reports: “The once ubiquitous term ‘middle class’ has gone conspicuously missing from the 2016 campaign trail, as candidates and their strategists grasp for new terms for an unsettled economic era. The phrase, long synonymous with the American dream, now evokes anxiety, an uncertain future and a lifestyle that is increasingly out of reach.”1 Thus, in a significant way, something has gone awry since the time this book first appeared.
This does not mean that there were no clouds on the horizon then or no economic anxieties or discontents. Far from it. After more than a generation of steadily rising real wages, which created an expectation for those who grew up or came to adulthood in this era that continuing increase in economic well being from year to year was virtually a law of nature, the income of the average wage earner began to plateau. On top of this, an OPEC oil embargo led to long lines at the gas pumps and contributed to troubling levels of inflation that were not yielding to the usual remedies. Moreover, economic challenges from Japan were creating somewhat similar kinds of concerns that the rising economic might of China is creating today. So we should not look back at the time this book first came out with rose-colored glasses. Many of the same anxieties we are experiencing today were already emerging.
But there were important ways in which, for all the anxiety, most people in America viewed the future with more hope and confidence than is common today. Although the flatlining of average real wages that we have now lived with for forty years had already begun, it was largely viewed as a temporary, if distressing, setback that could not hold back the inexorable tide of history. To most people it was still inconceivable that their children’s generation would not do as well as theirs—indeed, that their children’s generation would not do better. What we now (often balefully) call globalization had already begun, but it was not as pivotal a fact of economic life as it is today. The outsourcing of American jobs to India, China, and other low wage countries abroad has accelerated enormously in the last thirty years, and it has changed the very structure of expectations for many in America. Ours is the first generation in living memory in which many people expect their children to be less well off than they are.
So when I say that we were more affluent at the time this book was being written, I am referring to our feeling more affluent then, having more confidence that although the economy inevitably goes through ups and downs, over the long haul good jobs would continue to be available and most people’s lives would keep getting better and better. That confidence, and the feeling of well-being it generates, is an important part of any reasonable conception of affluence. When I simultaneously say that we were less affluent at the time this book was written than we are now, I am referring to a different facet of what it means to be affluent—how much “stuff” people actually have. Indeed, a central focus of this book is the difference between the two, the ways in which, in a growth-centered society, we can have more and not really notice that we have more—or feel any better for it.
How are we better off materially now than we were at the time this book was first written? Consider, to begin with, the homes in which we live. In the year this book was published, the median square footage of American homes was 1565 square feet; by 2010 it was just under 2170, an increase in home size of close to forty percent.2 In addition, not only are our homes larger, but if we look inside those homes at what products the people living in them own, we find a wide range of products that did not even exist when this book was written—large flat screen TVs, DVRs, personal computers, iPods, iPads, smartphones, etc., and often more than one of each.*
So in many respects, the average American today has considerably more than his or her counterpart at the time this book was written. Yet the sense of plenitude that one might expect from such material advances is largely lacking. A sense of anxiety and decline instead seems closer to the norm. Thus, it seems, one thing that has not changed is the state of affairs I described when I first wrote this book—a “sense of deprivation amidst a stock of possessions that once would have seemed like plenty.”
This discontent and anxiety at the same time that people have greater stocks of material goods than ever before is not simply a perverse refusal to acknowledge what we have or some morally culpable sense of entitlement. It reflects in part the very dynamics of a growth-centered economy and way of life. As I discuss in some detail later in this book, growth-oriented societies run on discontent; it is their most basic fuel. But the distress reflects as well real changes in the structure of American life. Many families have more “stuff,” for example, but are legitimately worried if they will be able to afford sending their kids to college. Private college tuition has gone up precipitously while the average family’s income has not even remotely kept pace, and our system of affordable high quality state universities and colleges is being increasingly both starved out and priced out in a political climate inhospitable to the public funding necessary to maintain their excellence and affordability.
Adding still further to the discontent, many families have only been able to afford those larger homes that I referred to earlier by living further and further from where they work, requiring long commutes that cut down on family time or time for relaxation and recreation. Study after study reveals long commutes to be one of the life circumstances most conducive to discontent and unhappiness. But caught up in the psychology of “more is better” or “bigger is better” that is central to a growth economy, many people make choices that do bring them “more,” but at a price in well-being that they have not anticipated very well.* (In chapter five I will discuss in more detail the psychology of “more” and its embedding in what can be called a culture of quantity.)
Accelerating Inequality
Perhaps the most significant change in our society contributing to the anxiety and discontent I have been discussing is the corrosive increase in inequality. In the U.S., a study by New York University and Bard College economist Edward Wolff found that the top one percent now has as much accessible wealth as the bottom ninety-five percent combined. And, as another mark of the extraordinary inequality that presently marks our society, if one compares the wealth of that small group at the top to the wealth of the bottom forty percent (almost 130 million people), that small group at the top, astoundingly, has more than 150 times as much as the combined wealth of every single person in the bottom forty percent put together.3 Moreover, most of that wealth is still further concentrated among the top one-tenth of one percent. A 2014 study by Emmanuel Saez and Gabriel Zucman for the National Bureau of Economic Research found that the top one-tenth of one percent had the same net worth as the bottom ninety percent of the population combined.4
This degree of inequality is not just “the way things are” or a necessary consequence of a thriving market economy. Rather, it is a phenomenon that has been rapidly accelerating in recent years. The percentage of national wealth held by the top one-tenth of one percent has tripled since the time I first began writing this book.5 This tiny fraction of the population at the top of the pyramid of inequality now holds a full twenty-two percent of all the wealth in the entire country. And as an indication of even more extreme acceleration of inequality as we move closer to the present, Bloomberg Business reports that, “In the U.S., ninety-five percent of post-financial-crash wealth generated (i.e., since 2009) went into the bank accounts of the richest one percent.”6
Reflecting the depth of concern about these trends, a 2015 New York Times/CBS News poll found that a significant majority of Americans—including not only Democrats and Independents but almost half of all Republicans polled—viewed inequality as an urgent issue for American society. Summarizing the results of the poll, the Times reported that “The percentage of Americans who say everyone has a fair chance to get ahead in today’s economy has fallen seventeen percentage points since early 2014. Six in ten Americans now say that only a few people at the top have an opportunity to advance.” A striking feature of the findings was that even among higher-income respondents, the majority stated that money and wealth should be more evenly distributed and that, “Across party lines, most Americans said the chance to get ahead was mainly a luxury for those at the top.”7
Although the problem of growing inequality is worldwide, it is especially severe in the United States. When I first wrote this book, I stated that the fruits of increased productivity were more evenly distributed in the United States than they were in Europe.8 This is no longer the case. Indeed, inequality is now greater in the United States than it is in most other advanced industrial countries. But it is certainly also true that inequality is dramatically evident throughout the world. Bloomberg News has recently reported that the world’s eighty-five richest individuals control as much wealth as the three and a half billion poorest people in the world combined.9
This massive inequality has many consequences and implications. Bearing particularly on the main themes of this book is that our economic system no longer does a very good job of allocating the fruits of increasing productivity. “The economy” may be growing, but for millions of individuals and families, their own incomes or sense of well-being are not keeping pace. “Growth” per se is thus not much of a solution to their thwarted aspirations when the dictates of the market direct the wealth that is generated to the few rather than the many.
To be sure, both logic and data suggest that all other things being equal, there is more for all when the pie is growing and distribution is not just a matter of fighting for a fairer share in a zero-sum game. But very often all other things are not equal. As I discuss throughout this book, in gearing up to promote growth as an overarching priority, we generate unanticipated and unacknowledged side effects that render the human impact of that growth much less benign than we have thought. Relentlessly seeking “efficiency” in order to be able to generate more and more economic output, we cede our moral sense (and sometimes even our common sense) to the market, and treat the increasingly unequal distribution it yields as if it were a phenomenon of nature rather than a consequence of human choices.
The Emergence of Behavioral Economics
According to the assumptions of mainstream economics—the assumptions that very largely guide our society’s social and economic policy—rising inequality should not have much of a negative impact as long as the economy is growing: A rising tide is presumed to lift all boats; if those at the bottom or the middle have just a little more than they had before, it shouldn’t matter that those at the top have a lot more. It is the absolute amount people have and the absolute amount they gain, not how it compares to others, that is presumed to determine their “utility.”*
This idea (along with a number of others also central to mainstream economic theory) is so counter to the experience of virtually everybody who is not an economist that I have repeatedly found that when I mention it to people, they are sure I have gotten it wrong. “They can’t think that!” is the modal response. But as Richard Thaler, the 2015 president of the American Economics Association, puts it, the model still most commonly used by economists “replaces homo sapiens with a fictional creature called homo economicus,” an emotionless hyper-rational being whom he likens to the Vulcan Spock in Star Trek. Thaler is a leading figure in a reform movement in economics that aims to ground the discipline not in fancy equations that only work if one assumes that people manifest improbable levels of rationality and cognitive capacity, but in observations of the ways people actually do behave in the decision situations that constitute the subject matter of the field. This movement, generally called behavioral economics, is marked as well by attention to the findings of psychology and the other social and behavioral sciences, aiming to forge a more comprehensive, interdisciplinary approach to understanding economic behavior.
Behavioral economics scarcely existed at the time this book was originally written, and the term itself had not yet entered our vocabulary. Viewed retrospectively, this book can be seen as an early entry into this interdisciplinary realm, one starting from the direction of psychology rather than economics. In particular, it approaches economic questions from the vantage point of clinical psychology, a perspective in which emotions, conflicted desires, and the complexities of subjective experience figure much more prominently than in the more cognitive perspectives that have thus far been the primary source of psychological inspiration for behavioral economists.
When this book first came out in 1983, I began it by noting that we are used to thinking of economic concerns as eminently practical and rational matters. Much of the book is devoted to questioning that assumption and to highlighting the ways in which our thinking about money, goods, and the psychological and ecological costs of our way of life is characterized not only by a lack of the rationality assumed by mainstream economic theory but by a range of ways in which we keep ourselves from noticing our dissatisfactions or understanding their causes. In a sense, the entire economy is organized around distracting us from these perceptions and understandings It is, therefore, an encouraging sign that at the very heart of the discipline whose ideas and assumptions have so powerfully contributed to the problematic path on which we find ourselves, a revolution has been brewing.
Rationalist economic theory has provided the intellectual foundations for a way of thinking in which whatever results from unhindered market exchanges is the ultimate arbiter of what “ought” to be: Each exchange is presumed to be engaged in by extraordinarily canny, self-aware individuals who know perfectly what will benefit them; so if they could have done better, they would have. Thus, from this vantage point, the market inevitably yields the best result available for free men and women; each has as much as he or she possibly could have, short of holding a gun to the head of others. In propagating the fiction that people make rational, flawless assessments of what is in their best interest, standard economic theory applies a patina of justice to unjust social relations and a patina of sanity to collectively insane ways of treating ourselves and our planet. In challenging that fiction, behavioral economics offers us at least a potential way off the treadmill.
It is certainly much too simple to equate standard economic theory with the status quo and behavioral economics with challenges to that status quo. There are many economists who operate from some version of the standard rationalist model who are deeply concerned about both inequality and the environment, and whose work is rooted in trying to tweak and harness market forces to address these issues more efficiently and with fewer unintended consequences. Moreover as a means of taking into account the impact on others and on the environment of market exchanges which, from a narrow vantage point, simply seem to benefit both parties, the concept of “externalities” is a long-established tool of economic analysis. But the concept of externalities is aptly named, because its focus is indeed external to the primary assumptions of a model of market exchanges between rational (and prescient) individuals. It also seems rather feeble when stacked up against the ferocious momentum of a market economy in which every day literally billions of individual decisions to buy and sell things generate the collective consequence of changing the very climate on which the well-being of all those buyers and sellers depends. In implicitly ceding our decision making about major social and environmental challenges so largely to the market, we essentially cede as well some of our capacity to solve those challenges.
Behavioral economics does not in itself provide an alternative model for organizing our society or for generating more socially just or environmentally benign outcomes. Indeed, most behavioral economists retain their parent discipline’s emphasis on the power of the market to efficiently sort things out. But behavioral economics introduces new questions, new ideas, and new data that have the potential to challenge the moral foundations of an economy that provides such strikingly disparate outcomes for different people. Given the mounting evidence that people depart substantially from the remarkable rationality assumed by standard economic theory and that we are not very good at anticipating what will make us feel good about ourselves or our lives,10 it is increasingly difficult to maintain that those outcomes simply reflect the free play of witting choices by fully informed agents who can calculate precisely what is best for them. Behavioral economics also offers new analytic tools that can better enable us to design our institutions and what Thaler and Sunstein11 call our choice architecture so that the presentation of the choices available to us better serves our needs. Viewed in its entirety, the development and accelerating progress of behavioral economics since the time this book first came out represents a hopeful sign in the midst of (and as a possible counter to) some rather discouraging social and ecological trends.
Changes in Our Work Life and the Challenges of Distribution
In the way we usually conceive it, work is something we need to do in order to produce the things people need. But increasingly, work is itself what we are most concerned about producing. The people we celebrate are not those who hammer the most nails or pick the most grapes or write the most lines of code; it is the people who create jobs.
How did the order of things get reversed in this way, and especially, how did it happen without our really noticing that we had turned things on their heads? Do we work in order to produce? Or do we, these days, produce in order to have work for people to do?
It is not a simple either-or matter, of course. Our economy is not simply a “make-work” economy, a mere excuse for generating jobs, whatever they might be. Work is still clearly needed to provide us with the goods and services we want and need. But it is nonetheless instructive to reflect on how absurd would be the image of our hunter-gatherer ancestors trying to figure out how to get people to eat more woolly mammoths in order to keep hunters busy hunting; or a “baron’s council of economic advisors” in the middle ages trying to figure out how to entice everyone on the manor to eat more bread and cabbages in order to keep peasants busy planting. The work was just there, and people needed to do it.
Over the last few centuries, as we have evolved from an agricultural to an industrial society, these relatively simple contingencies have become increasingly complicated. The range of goods and services we are able to produce, as well as their quantity, have expanded to a degree that would once have seemed unimaginable. But our ability to provide people with the work whose income provides access to that immense stock of goods and services has followed a more jagged course. Today, in the very parts of the world where this historical process had brought the most broadly positive results—what we generally call the industrialized or developed world—there is increasing anxiety. Jobs seem scarcer, and especially good jobs. The expectation of continuing progress, in the lives of each of us and over the generations, is less confidently assumed. And it is becoming increasingly apparent that there are significant side effects—both on the environment and on the social fabric—to an economy so dependent on growth and “creating” jobs. To address these interlocking anxieties and challenges, we need a fresh understanding of the role of work in our society and our lives. Work today is as important for providing a rationale for distributing the output of the economy as for producing it; and understanding of the differing implications of these two functions of work is critical.
“Job creation” and “growth” have become the tired platitudes of our age, the all-purpose answer for politicians of every stripe. But in the twenty-first century, this approach to meeting our need for jobs and income runs up against the very physics of our planet. We are more and more forcefully confronted with the damage we have already done and continue to do each day we proceed in our present fashion. Our prodigious productive capacities have brought us enormous benefits, but the price has been much higher than we had understood. Continuing to spew pollutants into our soil, air, and water and carbon into our atmosphere is an unsustainable course, and aiming to further increase our production, as the “jobs growth” strategy requires, is even more so.
To be sure, in principle, we can expand our capacity to produce desired goods and services in ways that do not damage the environment, and indeed new research and new technological advances are pointing us toward non-polluting modes of production and non-carbon-based energy sources. Someday we may well reach a point where we can have continuing growth without damaging the very environment on which our ability to enjoy the fruits of that growth depends. But for now, the insufficiently appreciated imperatives of the growth economy impel us to grow in any fashion, regardless of the environmental consequences, so long as jobs result from that growth.
As I shall shortly discuss, there are other ways to address the need for jobs and income besides sheer growth in output, ways that actually enable us to live far richer and more satisfying lives even as they avert the damage we inflict on the Earth. But to make room for these alternative strategies, we need to better understand how the dynamics of our present approach to providing people with jobs keep us on a treadmill in which growth at any cost, rather than green growth or smart growth, continues to be the order of the day.
At the time I am writing these words, for example, we are witnessing a growing conflict between federal initiatives to require cuts in carbon emissions at power plants that burn fossil fuels and the impact of those initiatives on the jobs of people who mine coal or work in those plants. This is, under our present assumptions and arrangements, a tragically zero-sum game. The proposed environmental initiatives are urgently needed and by no means extreme or radical. But the impact on these workers is nonetheless severe. In our opposition to the hypocrisy of the mine owners, who after decades of giving short shrift to both the safety and the economic well-being of the miners, now present themselves as the vocal champions of their welfare, those of us committed to the cause of the environment and battling climate change must not forget that the workers do face very real suffering. Their opposition to changes that are absolutely essential but that will impact them so powerfully and painfully is perfectly understandable.
As we make further efforts to rein in carbon emissions, but struggle to do so within the very system that enabled them to become such a problem in the first place, we are likely to come upon more and more of these agonizing zero-sum dilemmas. Our present habits of thought do not leave us well equipped to deal with them. In order to fashion alternatives that enable us to meet our needs in a more environmentally responsible way, we will need to rethink the assumptions that have created a damaging tunnel vision.
One particularly significant obstacle to our envisioning alternatives to our present course is our continuing fixation on the forty-hour work week that emerged as a standard fairly early in the last century and has remained largely unmodified since then. For about 150 years, the number of hours people worked a week progressively declined, from eighty hours or more a week at the dawn of the industrial era, to sixty (a much sought after ten-hour day with a day of rest each week), to today’s widespread standard of thirty-five or forty. But that progressive decline in hours spent on the job stalled almost a century ago. The forty-hour week had already been established in several major industries when Henry Ford adopted it, with great impact, for the workers at Ford in 1914, and it was incorporated into New Deal legislation in the 1930s;12 but since then, there has been little further progress in reducing working hours, or even much significant advocacy in this regard. We have simply come to accept forty hours as a “normal” full-time job (and, indeed, for many today, a considerably longer workweek prevails).
This failure to move beyond a standard of full time work that derives from the previous century impedes our ability to develop environmentally sound policies in providing work for all who seek it. Under our prevailing assumptions, in order to provide work to a growing population in an era marked by worldwide competition for jobs as well as technological advances that make fewer workers necessary to produce the same quantity of goods, we are pushed to keep creating new jobs in order to keep people working. As a result, the effort to generate jobs becomes driven rather than reflective, and prospects for environmentally sound growth give way to “growth at any cost” growth.
In contrast, if we began a transition to a standard workweek of, say, twenty or twenty-five hours a week, the same given amount of work would provide jobs for many more people, thereby reducing the need to grow in order to provide people with jobs. Such a course would also, as a consequence, reduce the pressure to keep producing more and more that leads to compulsive and reckless growth, growth that has no time or patience for green growth.*
It is, after all, not growth per se that is the problem but compulsive growth, growth-at-any-cost growth, unreflective growth. The transition needed to meet our needs while safeguarding our environment does not in any way imply a stagnant economy. Rather, it points toward an economy less in thrall to what are by now dangerous and outmoded versions of growth, versions of growth driven by an urgent need for jobs rather than by the genuine value of and desire for the new goods and services that are generated. Perhaps we need to modify our dialogue to articulate our goal as an economy of improvement rather than one of growth. Sometimes that improvement fits the growth framework of ‘more” (more people on the planet with access to electricity or running water) but often it is a matter of better rather than simply more (electricity generated by solar or wind rather than coal, cars and devices that work more reliably rather than more of them per se, etc.)
Further pointing to the importance of a shorter workweek in averting an environmentally disastrous compulsion to grow at any cost and in any fashion is a phenomenon that has been particularly marked since the time this book was first written—the extraordinary and continuing advances in computers, robotics, and artificial intelligence. As a consequence of these advances, whole new categories of human work are likely, over time, to be replaced by algorithms and computer-guided machines. The process has already begun, and there is reason to think that it will significantly escalate in the coming years. Driverless cars, for example, are already on the roads of California in Google test cars that have driven millions of miles, At the same time, there are currently over three-and-a-half million truck drivers in the United States, and in thirty-two states truck driving is the single most widely held job.13 It is also one of the declining number of jobs in which people with a high school education can still earn middle class incomes. As self-driving vehicles begin to appear on our roads—and while there is debate about the time scale, almost no knowledgeable observer doubts that this will happen—the need for all those hours of truck driving will diminish very sharply.
The process of replacing human work with machines has, of course, occurred throughout history, but the revolution in computer technology and artificial intelligence in our current era is viewed by an increasing number of experts as a game changer. Extrapolating from trends already strongly evident, a flood of influential books and articles have pointed to a day, not so far away, in which smart machines will replace millions upon millions of workers, not just in the blue collar sector but in such previously unlikely realms as law, medicine, journalism, and education.14
These predictions, to be sure, have not gone unchallenged.15 In contrast to those experts who argue that accelerating developments in robotics and artificial intelligence are creating a totally unprecedented state of affairs, there are others who take the position that after an initial panic by those with vested interests and settled ways, new technologies always end up creating more jobs than they replace. When cars replaced horses and buggies, blacksmiths were thrown out of work, but many more found work as auto mechanics, in tire factories, and, now, programming the computers that govern much of the modern car’s functioning. In this sanguine picture, every generation has its doomsayers, and every time history has proved them wrong.
But in an era where computers themselves are now employed in the process of further enhancing computer power, with the newly supercharged computers that result in turn put to the task of still further increasing that power in a continuous process of exponential acceleration, the prediction that technology will not fundamentally change the old patterns is on less certain ground. Moreover, it is important to notice that advocates on both sides of this debate in fact agree that we are experiencing extraordinary advances in our capacity to have machines do what people once did. The growth advocates simply predict that other jobs will replace those that are lost. But, as I have been discussing, even if the search for those “other” jobs, newly “created” jobs is successful, the results can be far from benign.
In contrast, if we adapt to the windfall of productivity that the new smart machines will offer by enjoying it, taking its fruits in greater leisure and shorter working hours, the work which will still require human skills and human input can be shared by many more people. Seeking instead to create millions of new jobs at the old forty hour standard will create the intense pressure to grow that leads to heedless rather than beneficial growth, a situation we already know places severe strains on our air, water, and climate. The price of “succeeding” in replacing all of those jobs with new ones may be even higher than that of failing. The pursuit of a shorter workweek is not some radical idea that has never been tried. It was for much of the modern era the thrust of history, a powerful force that for millions of people contributed to making life better in the twentieth century than it was in the nineteenth and that could make life better in the twenty-first century than it was in the twentieth. Somewhere in the last century, after having successfully reduced the standard workweek from eighty to sixty to forty hours a week, we lost our momentum, and we have been stuck around forty for a very long time. Many circumstances converge on the wisdom of resuming this stalled historical trend.
The Question of Distribution
A significant reduction in the typical work week would give us leeway to make the necessary changes to achieve a dynamic yet sustainable way of life, reducing the compulsive pressure to grow that threatens the very viability of our planet. It would enable us as well to assimilate the extraordinary technological advances of our era so that their primary impact is experienced as enhancing our lives rather than threatening our jobs. And, very importantly, it would provide a path toward a way of life that was less pressured and harried, more rewarding and enjoyable.
But for reduced working hours to become an accepted and pursued social goal, we will need to address an important challenge: How will we ensure that reduced working hours do not mean a reduced standard of living; that working (say) half as much does not mean having only half as much access to the goods and services the economy provides? There would be little enthusiasm for a shift to shorter working hours if we do not clearly address this issue.
In thinking about this question, it is useful to begin by looking back at the history of the progressive reduction in working hours that for so many years characterized the dynamics of industrial societies. This significant reduction in the workweek over the years did not lead to a decline in living standards, even though it meant people were working less. Quite the opposite. The reduction in working hours was more than compensated for by technological advances that enabled workers to turn out more product per given hour of work, and thus the decline in working hours proceeded side by side with an increase in living standards. (When Ford adopted the forty-hour week at his company in 1914, he doubled workers’ pay at the same time).
It is conceivable that even more could have been produced if people continued working sixty, seventy, or eighty hours a week,* but in essence workers took some of the fruits of increasing productivity in time rather than only in material goods. Time is a much more scarce and precious commodity, and it is consistent with the central theme of this book that, at our society’s level of economic development, our once again beginning to take some of the dividends from increasing productivity in time will be much more humanly satisfying than just being able to buy more and more. Indeed, as noted in the witty quotation I cite in Chapter Seven from Swedish economist Stafford Linden, there are limits to our very ability to consume; consumption takes time, and time is the very commodity we deprive ourselves of in our otherwise ever expanding economy.
Nonetheless, it is important to understand that a significant reduction in the standard workweek—especially when it is a response to technological advances that enable much of the work formerly done by people to be effectively done by intelligent machines—need not mean that the populace now enjoying shorter working hours will lose access to the package of goods and services to which they had become accustomed. But for this to happen, we will need to rethink some of our familiar assumptions.
Useful perspective on some of the rethinking that could lead to maintaining current standards of consumption while reducing the workweek is provided by returning to the example of the truck drivers whose jobs may be threatened by the adoption of driverless vehicles. It remains important to notice that if this happens, the amount of goods being delivered will not diminish one iota. The driverless vehicles will be able to deliver the exact same amount of goods as before (indeed, more, because they will not need to stop for sleep, food, or bathroom breaks). The question then is how to enable the people who once drove trucks to have access to the goods they once delivered. The same total supply of goods will still be there, so in principle the former truck drivers could continue to consume the same share of that total without anyone else having less.
Framing it in this way, of course, does not take into account that we are not comfortable with just “giving” it to them, and they would likely not be happy with simply getting a “handout.”* Thus, ultimately, the challenge remains one of helping them find alternative jobs—and an important purpose of transitioning to a shorter workweek through most of society would be to make that easier to accomplish. But such a shift to new lines of work for millions of people is no small matter. The purpose of my odd thought experiment—asking why, if the same stuff is still there, they can’t continue to get the same stuff—is to invite us to step back from our familiar assumptions and confront anew questions we had long thought were settled.
Much the same questions just raised about the delivery of goods can be asked regarding their manufacture. There is a similar prospect in this realm of intelligent machines taking over more of the work once done by people—and we can include here as well medical diagnoses offered by computers, programs that generate wills or tax returns, online search sites for booking flights and hotels, and other such substitutions of technology for human work that we are already seeing emerging. Such technologies do not totally do away with the need for doctors, lawyers, accountants, or travel agents—and as discussed earlier, they can potentially create the need for whole new categories of work. But they certainly disrupt the professional lives of those who had previously been doing what the program now does. And once again, we confront a situation (especially clearly evident in the manufacture of actual physical products) in which the same total output is available to the public even if the same input of labor is not required. Thus, here too the problem can be translated into one of finding a way to get the very same product to the very same set of people.
Casting the question in this very basic, concrete, and purposefully naive way has the potential to make room for fresh ways of thinking about access to the economy’s output and about the foundations for an economy organized around goals other than the frantic, environmentally hazardous pursuit of growth. It enables us to view the problem less exclusively as one of increasing production and points toward the task of creatively devising new rationales and strategies for distribution.
None of this means that we do not need to be concerned about ensuring that people can find jobs. Loss of income is not the only reason that unemployment is consistently found to be one of the most stressful experiences a person can undergo. For many people, their jobs are a central source of meaning, identity, and belonging. What people see as threatened by the prospect of unemployment is not just their access to material goods but their place in society and their way of life.
Indeed, it is the very importance of maintaining high levels of employment that leads to my interest in the shorter workweek as a key element in a way of life that is sustainable on both human and environmental grounds. Reducing the standard workweek would enable more people to have jobs for any given level of demand for work, and it would thus enable more jobs to be available without requiring that the demand for work continue to grow unceasingly, as in an economy characterized by the imperative of growth. If full time work became consensually understood as twenty hours a week, that would begin to be experienced as the norm, and people working that number of hours would experience themselves as full stakeholders, just as people who today work forty hours do not see themselves as working part time just because people once worked sixty or eighty. But this would still leave the question of how to ensure that as working hours diminished across the society, people’s material standard of living did not diminish as well.
It is instructive to note that we are already confronting a version of this challenge right now. Even without any reduction in the standard workweek, the share of economic output going to the people doing the work has been continually declining for some time. In 2013, Steven Greenhouse reported in The New York Times that “Until 1975, wages nearly always accounted for more than 50 percent of the nation’s G.D.P., but last year wages fell to a record low of 43.5 percent.”16 Two years later, Derek Thompson in The Atlantic noted that the share of U.S. economic output paid out in wages is “at its lowest level since the government started keeping track in the mid-twentieth century.”17 Thus, even apart from the challenges that would be posed by a concerted effort to bring down the standard number of hours in the workweek, there is already much reason to rethink the way the fruits of the economy are distributed. The goods and services that people want are still getting produced; they’re just not as effectively getting to the people working to produce them.
A wide range of factors have contributed to changing the dynamics that determine wages and pay scales so that they no longer keep up as readily with advances in productivity as they did in the past. Among the most obvious are the decline of unions and the powerful impact of globalization. Important as well are the accelerating technological changes discussed above, which enable employers more readily to replace human labor if it becomes too expensive. These and other influences place great pressure on wages, and they create serious challenges at a time when a conversion to shorter working hours may be a key tool in maintaining the availability of jobs while averting the dangers of climate change. In order to ensure that such a transition does not mean a decline in living standards, we need to consider a broader spectrum of ways in which to enable people to have access to the output of the economy.
Some of the answer to developing means and rationales for distribution in these new circumstances entails reworking and expanding upon policies that are already in place, such as minimum wage laws, earned income tax credits, and the provision of public goods that are available to all regardless of income. Public schools, highways, parks and playgrounds, and police and fire protection are among the most familiar and least controversial of these public goods—services and amenities available to all regardless of income, and thus seamlessly enabling those with lower incomes from their jobs to share in the quality of life that derives from a successful economy. But these examples do not exhaust the ways that public goods can enhance people’s lives without the stigma of special programs targeted only to the poor or disadvantaged. Free public universities (not so radical an idea; the university at which I teach was for more than 130 years free for all New York City residents) or free mass transit or bike sharing programs are additional examples of how public goods can complement income in providing access to the opportunities that the society offers. Other kinds of public goods that would further extend opportunities for enjoyment and advancement are not hard to imagine.
Such programs and policies would rely on still another venerable and long-standing feature of our society, the progressive income tax.* Taxes have probably been viewed negatively since the very first tax was levied at the dawn of history, but they also are the foundation for a panoply of services, programs, and amenities that we take for granted but would hate to be without. Anti-tax attitudes have been amplified in our current era by the unfortunate and misleading depiction of many civilizing features of our body politic as “entitlements,” a term that—because of the way that our brains work—almost inevitably evokes associations to people who feel “entitled” in the negative sense of that term. Shifting our emphasis from so-called entitlements to public goods can help generate an understanding that the spending enabled by taxes is not necessarily taking from some to give to others but rather a matter of contributions from all that are available to all. Basing those contributions on the ability to pay has been a longstanding principle of our system, and there is little indication that it has the impeding effect on the economy that some have claimed. We have prospered as a society when progressive tax rates were considerably higher than they are now.
One particular form of public good needs to be mentioned separately in the context of a proposal to encourage greater access to jobs via reduced working hours rather than maintaining an urgent necessity to grow at any cost. Health care systems in which coverage is strongly dependent on funding from employers are a significant obstacle to enabling more people to be employed through reducing the workweek. Even now, the added cost of employer-funded medical coverage is an obstacle to hiring by employers—as well as a detriment to the competitiveness of American companies compared to companies in countries where the cost of medical care is not a direct expense of the employer. If we were to approach the challenge of employing more people via the route of each person’s working fewer hours, the costs of funding health care through employer payments would become even more of an obstacle. People working twenty hours a week would obviously not get sick only half as much as people working forty, so hiring twice as many people for half as many hours would double the employer’s healthcare costs, creating a chilling effect on hiring. Thus in order to ease the path for shorter workweeks it will be important to uncouple healthcare coverage from employment and to treat medical care as a public good, a right of citizenship available to all in the same way that schools, parks, or police protection are available.
Other proposals to address the increasing disconnect between companies’ earnings and the incomes of its employees point to measures that would permit workers gradually to accumulate shares in the companies in which they work and thereby to share in the profits their work generates.18 A related but different approach would focus not on shares in the particular company in which one worked but in the overall economy. Here, the income from one’s work would be supplemented by the issuance of shares to every citizen in some broad-based investment vehicle such as an S&P 500 index fund. These shares, financed through some form of taxes, could be issued to everyone at birth and be held in escrow to increase in value until the person was of age to take possession or, in other versions, would be issued in some amount to all citizens annually. In this way, each person would both benefit from and have a stake in the overall performance of the economy.
Particularly intriguing to explore as a means of enabling more people to benefit from the success of the companies they work for is the idea of requiring the total compensation of the CEO and other top executives of publicly traded companies to be limited to some multiple of the total compensation of either the median or lowest paid employee of the company. The ratio of CEO pay to that of the average worker has increased 1,000 percent since 1950.19 Yet back then, when the ratio was only about twenty to one, the economy seemed to run just fine. Indeed, it was just a few short years before we were described as The Affluent Society.20 If we were to legislate some limit to the ratio today, it could have a number of important and beneficial consequences. Particularly important to understand is that the essential impact of such a policy would not be a “leveling down” caused by placing a ceiling on the top earner’s income, but a ratcheting up of the incomes of everyone else working in the firm. There would be strong incentive for the CEO and other top executives to reverse the recent trend for wages and salaries to reflect a smaller share of the company’s sales and profits. In order for the CEO’s income to go up, the incomes of the people working in the firm would need to also go up. Consequently, everyone working in the firm, from top to bottom, would have a stake in the success of the company, because that success would be the foundation of their gains.
We presently operate on a rather perverse incentive system, because, although in one sense there is enormous incentive for CEOs to strive for success in their work—the rewards are in the multimillions—in another sense, we essentially evaporate any real economic incentive. By paying CEOs and other top executives so much, we create an income structure in which they essentially have no economic need. Their only incentive is pure ego. Placing serious limits on the possibility of the CEO’s income to grow unless the income of the people who work in the firm also grows would create powerful incentive for him (and it is still preponderantly men who occupy that role) to lead the company in a direction in which it thrived. He would actually feel some need for the stock options that could boost his overall earnings (though it is important to note, that, consistent with this proposed arrangement, those options could only be available to the CEO if they were available to all the employees in the firm, and the amount of the options available to the CEO would be a fixed ratio of the amount issued to the median employee). This would still be capitalism and private enterprise. But it would be capitalism in which the incentive structure made it in the interest of the CEO for everyone else who works in the firm to do well.
Conclusion: The Poverty of Affluence in 2016
In this book I raise serious questions about a way of life so thoroughly organized around the intertwined ideas of growth, accelerating material consumption, and “creating” jobs. I began with concerns about the ecological consequences of this way of life, but as a psychologist, whose daily work offers me a kind of access to people’s intimate subjective experience that is not available to economists, sociologists, climate scientists, or others who have focused on similar concerns, I gradually became aware of what could be seen as still a further cost of this way of life—but a cost that could also offer a crucial handle on how we could extricate ourselves from the trap in which we are caught: The growth-oriented consumer society doesn’t really bring us the satisfactions or contentment we are led to think it does. Thus, we do not really need to give up the good life to protect the earth; indeed, we need to find it.
This does not mean that growth bears no relation to our deepest psychological needs or to the way our brains are wired. We would not have developed a growth oriented society if it did not. But the very ways in which growth seems wired into us are also the foundations of why growth doesn’t work to bring us the better life we turn to it for. I take up some of these issues in my discussion of adaptation level in Chapter Two and in various discussions in Chapters Six, Nine, and Ten. Throughout the book I highlight the irony that the very ways of thinking that enabled us to generate prodigious growth in our material standard of living have also made it difficult for us to feel much satisfaction in the world we have wrought. As I put it in Chapter Two, “In America, we keep upping the ante. Our expectations keep accommodating to what we have attained. ‘Enough’ is always just over the horizon, and like the horizon it recedes as we approach it.”
Many of the roots of our understanding of the mystifying frustrations of this way of life, as of our understanding of its ecological consequences, can be traced back to the fascinating and fertile decades of the 1960s and 1970s. At various points in the book, I discuss this period of intense cultural ferment and social experimentation. For some readers, these discussions will bring back complex and emotionally resonant memories. For readers who did not live through that time, they will serve as a useful immersion in an era that has shaped much of the world we know today and as an opportunity to consider where its ideas and cultural innovations have continuing relevance and where they must be reworked or regarded as detours or dead ends. It was a time that was anything but dull, and so in partially encountering the present through its lens, the reader is likely to experience an enlivening polyphony.
In reissuing the book at this time, I faced the choice of whether to make changes in the text at certain points to accommodate to developments between the time the book was originally written and now. The most obvious potential targets for change reflect the way that over time inflation changes the meaning of different dollar amounts. In Chapter Five, for example, in examining the distinction between the price of an item and its value, I discuss the experience of reading my New York Times at a local coffee shop and the greater pleasure I get from reading the paper than from the bitter cup of coffee, despite the latter costing more. In that example, I mention the price of the Times as thirty cents and of the coffee as forty-five. Inflation has rendered those numbers strange to read today, but I think the point should still be very clear.
Similarly, on page fifteen, my discussion of how inflation can change the subjective experience of a given income has itself become subject to the impact of inflation since the time the book was written. In the example, I state that,
A salary of, say, $30,000 doesn’t buy what one grew up thinking $30,000 would buy, yet psychologically at such an income one expects to live at “a thirty-thousand-dollar level.” One forgets that the job one holds paid only $15,000 when one’s image of what $30,000 would be was being shaped, and that one’s buying power is greater than was the buying power of one’s equivalent back then. Instead, mesmerized by the numbers, we are struck by how little “thirty thousand” is.
To readers in 1983, the number 30,000 would have designated a reasonably comfortable middle-class income. Today the number has a very different meaning. Yet again, I think that in the context of the argument, the point should remain clear.
At a different location in the income distribution, the reader may similarly be surprised at my reference in Chapter 12 to a million dollars as a very high level of pay for the chief executive of a major corporation. Today, most CEOs receive major multiples of that. Yet again, the point holds even with different numbers as the markers. I quote in the same chapter Paul Samuelson’s comment from the same era that, “If we made an income pyramid out of a child’s blocks, with each layer portraying $1,000 of income, the peak would be far higher than the Eiffel Tower, but almost all of us would be within a yard of the ground.”
Thinking just of the specific examples I have just described, they would have been relatively easy to update by changing the numbers. But inflation did not affect every kind of price or income to the same degree, so deciding on what numbers to substitute for what throughout the book was not such a simple and straightforward matter. Moreover, numbers were not the only referents that one might consider updating for a contemporary readership. References to cultural and political figures of the time, some of whom remain of enduring interest and others of whom have receded into semi-obscurity, represented an even more difficult challenge. Indeed, even the phenomenon of inflation itself turns out to be historically specific. Despite the powerful ways that, over the years, inflation has changed the meaning of the numbers designating salaries and prices—thus creating a source of confusion for a contemporary reader of the sort that I was just addressing—it is also the case that for many readers it may be the discussion of inflation itself that is disorienting.
I began writing this book at a time when runaway inflation was a very serious concern and a prime focus of economic anxiety. In contrasting the period of experienced prosperity and confidence in the future that had reigned for several decades to the upsurge of economic anxiety that was prevalent in the late 1970s and 1980s, I referred regularly in the book to such experiences as “the increased preoccupation with economic concerns that inflation has spawned.” I could be confident, at the time the book was written, that readers would know exactly what I was referring to. Today, economic anxiety and preoccupation is no less than it was then; perhaps it is even greater. But that anxiety is not linked to runaway inflation, which has not been experienced in the United States for several decades, but to a variety of other experiences that leave people concerned that they will not live as well as their parents did.
Here again, I am confronted with the question of whether to change some details to make clearer the continuing relevance of the issues being addressed. That is a tempting course in some ways, but it raised for me a concern that what might emerge would be a patchwork of some items or passages changed significantly, some changed in small details, and others left as is, a hybrid that was neither the original book nor a new one. In the end I opted to trust the reader’s ability to respond to the book as it was written, rather than trying to doctor it for a new audience. The dynamics of the economy and the experience of living in the consumer society remain very much the same, and I decided that respecting the integrity of the book as it was written and enabling readers to encounter it on its own terms was the best course. This new introduction is meant to serve as the bridge between the time the book was written and now. And I hope, in what I have just written, to inoculate the reader against any confusion that might arise from specific cultural referents reflecting the time when the book was first written or particular illustrative numbers that are different from those one would use today. The points remain very much the same.
Much of this book is about the vicious circles in which living in a growth-focused consumer society ensnares us and the insights and actions necessary if we are to extricate ourselves from their dynamic pull. I have spent most of my career explicating the ways that human problems organize themselves in this vicious circle fashion, both in the clinical realm, where I have applied this understanding to the development of personality and the challenges of effective psychotherapy,21 and in the larger social realm, where I have tried to elucidate how race relations in America, and by extension international and interethnic tensions around the world, show a similar vicious circle structure.22 In my focus in the present book, I aim to show how intersecting dynamics in our economy and our lives as individuals impact the larger ecological balance that supports both. In what follows, I spell out how reciprocally reinforcing features of our economy and our culture shape our perceptions of the good life and how life in the consumer economy generates desires that almost inevitably outrun what is attained. Especially central to the analysis is examination of the ways that attempting to quell our discontents via the means encouraged by the consumer society instead regenerate those discontents, leading us on a path that takes us further from the real sources of security and satisfaction and, at the same time, impacting the climate and the environment in alarming ways.
In my work as a psychologist, I have learned that any effort at change in human behavior must be rooted in finding the small seeds of new possibility that can almost always be found sprouting in the midst of the dominant pattern that occupies our attention. The tangle of individual, social, and economic forces I explicate in this book is powerful and pervasive, and in its insistent self-perpetuating momentum it is daunting. But my aim in writing the book is not to write an epitaph for our civilization. It is to point us toward an understanding that can be the foundation for new possibilities and new directions. Some possible kernels of those new possibilities may be emerging in the attitudes and habits of the generation we have come to call Millennials, those who came to adulthood in the present century. Increasing reports have appeared suggesting that Millennials are less preoccupied with buying things than other recent generations, whether homes, cars, or other accouterments previously thought essential markers of success and the good life.23 They are also more likely than previous generations to prefer living in places that are walkable and/or have good public transportation,24 patterns which place less severe strain on the environment and the climate. Whether these departures represent the beginnings of a genuine shift in our way of life or temporary accommodations to a difficult economy is a subject of debate and remains to be seen. But if this new edition of The Poverty of Affluence can in any way contribute to solidifying these encouraging signs of change, I will be especially delighted to be reaching a new generation with its message.
* Strictly speaking, personal computers were already being sold, but relatively few people yet had them; and none of them connected to the internet, which also did not yet exist.
* In standard economic theory, such miscalculations of what will bring us satisfaction or well-being (“utility”) are treated as essentially impossible (see Thaler, 2015). I will be discussing below the emergence of behavioral economics, in which the limits of human capacity to make rational decisions about the myriad choices life offers us are much more realistically considered.
* See, in contrast, the work of Robert Frank, one of the leading economists to challenge the assumption that only the absolute quantity of goods matters and that comparisons with others are irrelevant.
* The reader is likely to be wondering at this point what will happen to incomes if working hours are reduced. I shall address shortly the issue of incomes and access to goods in a world of shorter workweeks.
* It has been argued by a range of experts on the topic that in fact, one reason business leaders became receptive to the reduction in hours was that they recognized that productivity did not increase with much greater working hours because workers who were tired, bored, or angry did not work all that well or efficiently.
* Unemployment insurance is a response already in our society’s portfolio, but it is temporary, stigmatizing, and generally maintains only a portion of the previous consumption.
* I do not mean by this to suggest that income needs to be the central focus of taxation. Cornell economist Robert Frank for example, has offered detailed and thoughtful proposals for a strong emphasis on progressive consumption taxes as a better alternative. And numerous economists on both the left and the right have advocated various forms of carbon taxes, which would have the virtue of promoting cleaner energy and contributing valuably to addressing climate change.
ENDNOTES
1. Amy Chozick, “Middle Class Is Disappearing, at Least From Vocabulary of Possible 2016 Contenders,” The New York Times, May 12, 2015.
2. United States Census Bureau, “Median and Average Square Feet of Floor Area in New Single-Family Houses Completed by Location,” https://www.census.gov/construction/chars/pdf/medavgsqft.pdf
3. Edward N. Wolff, “Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze,” Working Paper No. 502, The Levy Economics Institute of Bard College, June 2007, p. 11.
4. Emmanuel Saez and Gabriel Zucman, “Wealth Inequality in the United States since 2013: Evidence from Capitalized Income Tax Data,” National Bureau of Economic Research, Working Paper No, 20625, October 2014.
5. Ibid.
6. Christina Larson, “The World’s 85 Richest Are Now Worth as Much as 3.5 Billion Poorest,” Bloomberg, January 20, 2014, https://www.bloomberg.com/bw/articles/2014-01-20/the-worlds-85-richest-now-worth-as-much-as-3-dot-5-billion-poorest.
7. Noam Scheiber and Dalia Sussmana, “Inequality Troubles Americans Across Party Lines, a Poll Finds,” The New York Times, June 4, 2015.
8. Paul Watchel. The Poverty of Affluence (New York: The Free Press, 1989), 68.
9. Larson, “The World’s 85 Richest Are Now Worth as Much as 3.5 Billion Poorest.”
10. Daniel Gilbert. Stumbling on Happiness (New York: Vintage, 2007).
11. Richard H. Thaler and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness (New Haven: Yale University Press, 2008).
12. Ford Motor Company, “Henry Ford’s $5-a-Day Revolution”, Ford, January 5, 1914, http://corporate.ford.com/company/history.html; Jonathan Grossman, “Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage,” Monthly Labor Review, U.S. Department of Labor, June 1978.
13. Truckinginfo.net, “Trucking Statistics: U.S. Statistics,” http://www.truckinfo.net/trucking/stats.htm; Michael A. Miller, “Post-Job World Requires Big Thinking, Part I Of II,” Long Island Weekly, September 16, 2015, http://www.longislandweekly.com/post-job-world-requires-big-thinking-part-i-of-ii/.
14. See for example, Erik Brynjolfsson and Andrew McAfee, Race Against The Machine, (Digital Frontier Press, Lexington, MA, 2012); John Markoff, “Skilled Work Without the Worker,” The New York Times, August 19, 2012; Derek Thompson, “A World Without Work,” The Atlantic, July 2015.
15. See, for example, Scott Winship, “For the Last Time, Robots Do NOT Cause Unemployment,” Brookings Economic Studies Bulletin, July 16, 2013; Mark Mills, “Robots Do Not Create Unemployment,” Real Clear Markets, September 2, 2014.
16. Steven Greenhouse, “Our Economic Pickle,” The New York Times, January 13, 2013.
17. Thompson, “A World Without Work,” The Atlantic.
18. See, for example, Joseph R. Blasi, Richard B. Freeman, and Douglas L. Kruse, The Citizen’s Share: Reducing Inequality in the 21st Century, (New Haven: Yale University Press, 2013).
19. “CEO-To-Worker Pay Ratio Ballooned 1,000 Percent Since 1950: Report,” Huffington Post, April 30, 2013, http://www.huffingtonpost.com/2013/04/30/ceo-to-worker-pay-ratio_n_3184623.html
20. John Kenneth Galbraith, The Affluent Society (Boston: Houghton-Mifflin, 1958).
21. See, for example, Paul Watchel, Relational Theory and the Practice of Psychotherapy (New York: Guilford, 2008); Paul Watchel, Therapeutic Communication: Knowing What To Say When, Second Edition, (New York: Guilford, 2011); and Paul Watchel, Cyclical Psychodynamics and the Contextual Self: The Inner World, the Intimate World, and the World of Culture and Society, (New York: Routledge, 2014).
22. Paul Watchel, Race in the Mind of America: Breaking the Vicious Circle Between Blacks and Whites, (New York: Routldege, 1999).
23. Josh Allan Dykstra, “Why Millennials Don’t Want To Buy Stuff,” Fast Company, July 12, 2013, http://www.fastcompany.com/1842581/why-millennials-don’t-want-buy-stuff Darren Ross, “Millennials Don’t Care About Owning Cars, And Car Makers Can’t Figure Out Why”, Fast Company, March 26, 2014, http://www.fastcoexist.com/3027876/millennials-dont-care-about-owning-cars-and-car-makers-cant-figure-out-why; Jordan Weissmann, “Why Don’t Young Americans Buy Cars,” The Atlantic, March 25, 2012, http://www.theatlantic.com/business/archive/2012/03/why-don’t-young-americans-buy-cars/255001/; Brad Tuttle, “The Great Debate: Do Millennials Really Want Cars, or Not?,” Time Magazine, August 9, 2013, http://business.time.com/2013/08/09/the-great-debate-do-millennials-really-want-cars-or-not/.
24. G.M. Filisko, “How Millennials Move: The Car-Less Trends,” National Association of Realtors, August 2, 2012, http://www.realtor.org/articles/how-millennials-move-the-car-less-trends..
