Here's a question: What if, just maybe, it's our way of life itself that's a bubble?
Authors: Umair Haque
30 May 2012
To illustrate why I ask, consider this set of questions: How's your house price doing? Where would your 401K be, if central banks withdrew life support for banks? How steep is a college education this year (hint: on average, 10-15% more than last year)? How are weekly grocery and gas prices doing? Where are commodity prices — not to mention gold — headed? Bubble, bubble, toil, and trouble: these days, it seems, everywhere you look, there's a bubble inflating — or popping.
I believe the mini-bubbles above are different ripples in what might call the surface of a superbubble: an opulence bubble. Here's what I mean by opulence bubble: our conception of the good life, as I've discussed with you, has been centered on what I call hedonic opulence — having more, bigger, faster, cheaper, now. But we might be finding out, the hard way, that the pursuit of lowest-common-denominator industrial age stuff might have been steeply overvalued, in terms of its social, human, and financial value. And now, it's coming back down to earth.
Here's what I don't mean by opulence bubble: that global GDP's going to collapse tomorrow, and continue to crater for decades, until we're back to hunting with stone axes and singing by firelight. Nor that we should aim to stop growth dead in its tracks, and preserve ourselves in a perma-cocoon, with shades of the Amish, where life in the distant future is, well, exactly the same as it is today.
Rather, what I mean is that "more, bigger, faster, cheaper" doesn't necessarily add up to or equal "better, wiser, smarter, fitter, closer." Examined closely, relative to GDP, living standards already did collapse: examined closely, measures of gross industrial output decoupled from still deeply flawed but perhaps slightly more meaningful measures of human welfare, like the Index of Sustainable Economic Welfare and Genuine Progress Indicator, which have at best sharply lagged, or at worst flatlined, for decades. (And lest you pooh-pooh these updated conceptualizations as the utopian visions of idealists, remember that the Measure of Economic Welfare, for example, was conceived of by no less than Nobel Laureate James Tobin.) Concisely: the opulence bubble says that stuff probably yields sharply diminishing returns in human terms. It means that we can pursue Olympian levels of output, live in skyscraper-sized McMansions, drive Sherman tank-sized SUVs, glued to Jumbotron-sized 3D TVs — but it's at best unclear whether and at worst improbable that doing so will power any lasting marginal boost in our capacity to live meaningfully well, especially when you factor in the hidden costs and unintended consequences of doing so. All the above, without a wholer definition of prosperity, might just turn us into less into all-powerful demi-gods than zombified, hurf-durfing couch potatoes.
Consider a series of today's mini-bubbles in turn, and how they've been swollen by the frenzied quest for opulence. Higher education has become an almost farcical expression of opulence: you go less for what you learn, than to buy a credential, live in a plush dorm, and get your party on. Commodities prices are spiking because China's chasing opulence like Charlie Sheen chases ladies of the night. Gold? Well, because the master of the universe and the house-husband alike are hedging against currency collapses from nations whose backs have been broken on the wheel of debt-driven opulence. Then there's housing (the mere word "McMansion" says it all), and perhaps the ultimate mini-bubble: debt itself, which Robert Reich, Joe Stiglitz and I have argued was piled up not just in the pursuit of designer aquariums and $300 shoes (made in a sweatshop for three dollars), but, more vitally, because median incomes have stagnated for decades.
The plain truth might be that we're living beyond our means because our way of life atrophied our means. And it may be that way we live, work, and play requires deep transformation — if we're to upgrade our means to live, work, and play better tomorrow.
The biggest unintended consequence and hidden cost of the pursuit of opulence might not be outside us, but inside us; might not be poisoning the skies, emptying the seas, or even fracturing societies, but withering and blighting human potential itself, what an economist with a heart might call a negative consumption externality of the soul: that it rots a society from the inside out by imploding the institutional capacity, organizational ambition, and personal hunger to take on tomorrow's greatest world-changing challenges, solve really big problems, and work on the stuff that matters most. From an economic perspective, opulence might mean something like: "This nation of tanned, toned, comatose vegetables is choosing to cash in its chips and spend them on the VIP Cabana at the pool, where they can be fed $10 soy-chai-mocha-lattes by legions of McVassals — instead of forging the path towards a better tomorrow."
So here we stand, amid the creaking, hissing ruins of opulence. We can find shelter here, discover somewhat less shaky dwellings to inhabit, and probably eke out a few decades more (though each will probably be less stable, secure, and comfortable than the last) in the still-warm, familiar embrace of yesterday's good life. But the truth is that doing so might be something like hiding. Something like disappearing, vanishing, receding, shrinking — declining.
Or we can step out of the tired, toxic comfort zone — and create the future.
Umair Haque is a panellist on The Work Foundation 2012 Annual Debate.
This piece originally appeared on HBR.org
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