Jim O'Neill Is Insane

In a November 27 London Financial Times article, Jim O'Neill, Chief Economist at Goldman Sachs said that "At its 2007 peak, US domestic consumption reached as much as 72 per cent of the country’s overall gross domestic product, which is more than 20 per cent of global GDP". He estimates that US domestic consumption is on its way down, forecasting 65% or less of GDP in a few years.

Jim O'Neill went on to recommend that "To avoid global [financial] pneumonia, what we need is shopping in Berlin, Frankfurt, Beijing, Shanghai, Delhi and Mumbai". Jim O'Neill's suggests that if China's policies continue to stimulate increased consumption and develop a formal social security system to "reduce China's huge savings rate", that if Indian policymakers boost infrastructure spending to escalating urbanization and unleash massive consumption, and that Germany celebrate the 20th anniversary of the fall of the Berlin wall by giving its people a surge in consumer spending it will help make up for the contraction in US consumption, stabilizing the world economy.

How can anyone active at ground zero of the biggest rip-off of the American people in history and an engineer in a global financial deleveraging disaster precipitated by reckless lending, careless borrowing and overconsumption tell other world governments to implement policies to keep money cheap and people borrowing so they too can financially implode be considered to be of sound mind? The man is irrational and arguably insane.

When Alan Greenspan suggested that Americans use exotic loan products to tap the equity in their homes in February 2003, the voice of America said "Whoo Hoo! Honey, our home equity is now an ATM. We can buy what ever we want and not have to save for it! It's like we're RICH!" It was addictive. It was competitive. The more you had, the more you wanted, and you could finance it all.

Consumption funding sources became so strained the American government issued the absurd 2008 income tax rebate in an effort to stimulate even more spending. Unfortunately the piper eventually gets paid. The rude awakening began on September 7 2008 when Fannie Mae and Freddie Mac went into receivership. The rude awakening turned into the nightmare of the onset of a systemic financial system failure, one that will take years to complete, on September 17, 2008 with the first requests for industry bailouts. And Americans have just barely begun to pay.

Excessive consumption has resulted in ecological devastation. The 2008 World Wildlife Fund Living Planet Report states that the world is heading for an ecological crisis far worse than the financial crisis due to excessive consumption. Humans are using an estimated 30% more resources than the world can replenish each year. The report predicts that by 2030, if nothing changes, mankind would need two planets to sustain its lifestyle. Since we don't have two planets, we have a problem.

Instead of listening to irrational and arguably insane people like Jim O'Neill, the world needs to closely examine the values and belief systems underpinning the American economic model that has failed so miserably. Excessive consumption is a moral illness. It is called affluenza; affluenza, n. a painful, contagious, socially transmitted condition of overload, debt, anxiety and waste resulting from the dogged pursuit of more.

Social pressures, advertising, culture, and government economic policies all work together to perpetuate excessive consumption. Calculated manipulative advertising and marketing campaigns, reinforced in all forms of media, are designed encourage wants and give the illusion that through consumption people can satisfy non-material wants, such as belonging and being valued. The result is a population with subjective feelings of happiness and satisfaction can be maintained only by continually ratcheting up the pleasures to be had by consuming.

This architected consumer society leads to the decline of the community as well as the isolation of the individual. The need for conspicuous consumption to demonstrate wealth, power and superiority becomes an emotional trap. Possessions and demonstrations of wealth becomes a mask to hide an inner vacuum of misery. Excessive consumption leads to people have a lower satisfaction with their lives, a greater tendency to compulsive spending, higher incidences of depression, higher incidences of self-medicating with mood-altering drugs and excessive alcohol consumption, higher incidences of overeating and obesity, and a prevalence of lower ethical standards.

Reducing excessive consumption does not necessarily mean a reduction in the standard of living. A home with sanitary running water, heating, and air conditioning is still a luxury for the majority of the world population. Having one with 7,500 square feet with packed walk-in closets, the latest in electronics, a wine cabinet, a boat/ATV/RV, a riding mower, and weekly maid service for an "upper middle class" family of 4 is absurd. How much do you need, really? And how up to your eyeballs in debt are you, really? At what point do you have enough so you aren't consumed with scratching and clawing for more?

Instead of irrational and arguably insane Jim O'Neill's recommendation spread affluenza to emerging economies, the developed economies need to lead the world in lowering consumption expectations. Yes, it will be a bitter pill to those who find their identity in materialism and those obsessed with greed. However, it's a price that must be paid, and it will be paid either now or later. Paying it now it is a small price to pay for providing a future to our children. Paying it later means we did not change our path and consequently destroyed the economy world-wide, consumed all natural resources, and destroyed the environment to where there is nothing left for our children.

Lowering consumption expectations will reduce the pressures of competing in the economy, ward off materialism and greed, facilitate a return to community, and help re-establish a healthy moral identity. Lowering consumption expectations will help shift cultural values to emphasizing who you are rather than what you own. Lowering consumption expectations to take back our communities is not just imperative culturally, is imperative to the future of our species, to the future of our world.