By Tom Kando
Today, my wife and I went shopping for a new refrigerator. We got a miraculous twenty-four years out of our existing refrigerator, but it’s dying. So we drove to the usual places - stores such as Sears, Lowe’s, Home Depot, RC Willey. These are all massive, nationwide chain stores that sell furniture, appliances and other things. When you enter Lowe’s, the building is so gigantic that you can’t see where it ends. The floor is larger than a football field. Same with RC Willey.What I want to tell you about today is how things looked, while we were out shopping.
We first drove to the Galleria shopping mall. To most of the two and a half million people of the
Sacramento metropolitan area, the Galleria is probably the finest
local mall. I has about 220 upscale
stores and it was built about a decade ago.
But the Galleria is just the beginning. The growth beyond it is flabbergasting!
It is now a small fraction of the hundreds upon hundreds
of additional new businesses that stretch out to the horizon in
all directions. As we drove in search of
RC Willey, we passed acre upon acre of
new business and residential growth.
We drove through gigantic shopping areas
too fancy to be called strip malls, much more resembling veritable
shopping malls..
There were of course all the
familiar fast food chains, but also
excellent restaurants such as Pasta
Pomodoro, Chipotle and many
others. There were the giant outlets I
already mentioned, plus countless other
ones - Target, Costco, Kohl’s, Best Buy, specialty stores such as Sports
Authority, Petsmart, Petco, Barnes & Noble,
Gap, Lord & Taylor, BevMo, upscale giant grocery stores like Whole
Foods, Winco and Trader Joe’s. A dozen
Starbucks of course. Also innumerable hotels - Marriott, Courtyard, Hampton
Inn, Holiday Inn, you name it, suggesting that the area may be a shopping destination like Minneapolis’ Mall of
America.
And then, there are the vast new
residential developments - places with
names like Stanford Ranch and Sun City.
The houses look luxurious. Their sizes
probably range upward from 2700
square feet The three-car garage is becoming the norm.
This is just one of many such
areas around Sacramento. There is also Palladio,
and Town Center and Serrano, and Rancho Murieta and other ones, many of them with 16 to 20-theater multiplexes, some with their own golf courses, all built in
that festive, attractive golden Tuscan architectural style they use these
days. In the Sacramento suburbs of
Rocklin, Folsom, Roseville, Lincoln, El
Dorado Hills, Elk Grove and elsewhere,
these vast shopping, residential and
recreational areas sprung up like
mushrooms after rain - at least
until the great recession hit. And frankly, it doesn’t look like it’s
slowed down since!
I don’t get it. How is this
economically viable?
It is clear that we, Americans,
are expected to continue to consume at an insane pace. But who are the investors? Where does the
money come from for this continuing suburban explosion? Who owns these millions
of stores, shopping malls, golf courses, upscale tract houses?
Foreign investors? I suppose that’s
part of the story. According to the Wall Street Journal (June 20, 2011), foreign investment increased from $153 billion in 2009 to $228 billion in 2010 - an increase of $75
billion, or 49%. 7-Eleven is Japanese-owned, Trader Joe’s is German, Budweiser is now Belgian, Shell has always been Dutch, etc.
According to the US Department of Commerce, in 2010, the five largest
foreign investors in US companies were
Switzerland, the United Kingdom, Japan, France and Germany (in that
order). Surprisingly, China wasn’t even in the top 10, nor were any of the
filthy rich Middle-Eastern oil states.
Also, the true investment - be it
by foreign or American investors - is
primarily in the real estate, which is
then leased by the stores.
One thing is for sure: without
us little people spending money there,
the lavish malls become ghost
malls. There has got to be trickle-up,
not trickle-down.
The global economic system OVER-produces. Production is
not guided by need. It is the opposite:
consumption is promoted to match
production.
So, is everything okay this way?
Probably not. There is obviously plenty to worry about - environmentally,
economically, politically, morally. But the masses who live, shop, eat out and enjoy themselves
in these endless Disneyland-like suburbs are not millionaires. At the most,
they are upper middle class. And the restaurants are fine, the houses are
beautiful, the hotels are comfortable, and the merchandise is inexpensive. As they say, you “get value for your money.”
9 comments:
As they say, you “get VALUE for your money.”
It all hinges on the meaning of "value", don't you think?
Our sense of what "value" means has been reduced to line item entries in a double-entry cost accounting system. We lives as if every creative human enterprise can be reduced to the numerological short-hand of financial transaction -- our ROI on a refrigerator, an evening at the movies, a restaurant meal, the attentions of a healer, friendships and marriages.
We've been bamboozled into confounding values-based value with the buy-sell price of goods, services and always at bottom -- always at bottom --ourselves. We've come to live what some have aptly called, "Price tag lives."
Can value be reduced to numbers? How do we know what makes for a really "good deal?" Worth thinking about, I think.
BTW - Alva Noe ("We are not out brains") opines on the subject of "values".
http://www.npr.org/blogs/13.7/2012/10/30/163725556/arguing-the-nature-of-values
FWI - I think he missteps. My comment on is blog entry reads...
"Are there three three chairs in this room? The facts decide. Argument stops."
It should be obvious that this statement is simply wrong! The facts do not decide. We must decide.
A chair is as much a value-laden concept as our feelings about Lady Gaga, and people can, and often do, disagree as to the true value of these or those "facts". What is a chair? How is a chair? Why is a chair? How do we "know?"
Values are factual only because our facts are born in our value-laden experience. As intentional actors whose purposes are always rooted in those things we value, we go merrily about our business of creating those facts that we have come to believe serve our purposes.
Gone in the wind.
Tom- A couple of comments. You and your spouse should pick pictures that are popular. When we went to see 2016 (about Obama) it was packed as was the show immediately after it.
But second, markets actually work. The alternative, which Obama would dearly like to have, is to have the government help make consumer decisions. As you looked for the range of options in refrigerators you probably found no less than 30 combinations and a wide range of prices. That is what markets produce. Because the options are available does not mean you need to buy a new refrigerator once a week. When you allow government to be the allocator of capital you get wise consumer choices like cash for clunkers and Solyndra and of course Obamacare.
By the way, the iPhone designed in California, made in China, is one of the most popular phones in Europe.
Interesting comments.
To Marc: I am not familiar with the sources in your second comment, but regarding your first comment and the general topic of “value,” I totally agree.
Today’s almost unanimous conception of value is the free-market definition: the ratio of supply to demand is the sole and absolute determinant of value. If the Rocky Mountains were made of gold, then gold would be practically worthless, etc...
I vaguely remember some of my graduate courses in economics. We learned that there ARE alternative theories of value. An example is Marx’s (now discredited) labor theory of value.
Another one is the utility theory. The calculus to determine value should also take into account costs and benefits such as damage or positive impact upon public health, environment, psychological well-being, etc.
My point, simply (related to yours): Today’s dominant supply-and-demand definition should not be the be-all and end-all. There are many other ways to approach “value.”
This is actually also my answer to Jonathan Brown, even though my essay was not meant as another harangue against capitalism. It is a description of how I experienced a recent outing: with ambivalence. I even confess to participating in and enjoying mass consumption...sort of...
But if we are going to be polemical, then, yes, I disagree with you: Today, we vastly exaggerate the effectiveness and the applicability of “Marketism” to all areas of human life. It is more an ideology than a science.
Ultimately markets do work - you got a lot of choices where the previous product worked well beyond any reasonable expectations. What you did not mention is that the choice you made on the product undoubtedly had lots more features than the product you bought 24 years ago.
You should go back and look at utility theory - it makes some very modest assumptions - the most important one being that utiles cannot be summed - so the market constantly tries to keep figuring out how to solve YOUR needs. The reason that Marx is outdated (better said discredited) is that self interest (or as Smith said self interest rightly understood) solves both the social and individual desires. This weekend my daughter and her husband visited - she has chosen to become someone who is concerned about "organic" food. She has lots of choices that were simply not there even five years ago- she has an allergy to milk and so she bought something called Hemp Milk (and yes I did ask her if you drank it or smoked it).
Were we to use the market even more we could avoid such nonsense as Solyndra or Cash for Clunkers or even better yet we might be able to devise a series of entitlements that met people's needs without bankrupting the rest of us.
Economics is not a science in the traditional sense - the best economists blend positivist and normative branches of theory. But that does not mean that support for markets (in all their wonderful variety) is an ideology.
fastyve115Tom, A good portion of the investment capital driving this system is pension funds: 401Ks, 403Bs and managed pension funds of large private a government institutions. This capital seeks the highest return on its profit and therefore outsources much of the large-scale production runs and establishes chain stores for distribution of these mass products. To a large extent these pension funds are owned equally by Democrats and Republicans. Since they are so large and so concentrated, there are large temptations for Wall Street greed and these funds help create the 1% who sit at the top of these investment companies and the banks that lend capital to the same ventures. I agree with you that the system is unsustainable because it is a system in which the middle class (wanting retirement funds) is eliminating the middle class by putting many of the former middle class production jobs overseas and replacing them with low-paid uninsured jobs in the chain retail stores.
Hello Tom,
"We got a miraculous twenty-four years out of our existing refrigerator, but it’s dying"
Did you buy a new one? Or were you so overwhelmed that you went home with that flabbergasted feeling of how on earth is this possible.
"At least until the great recession hit. And frankly, it doesn’t look like it’s slowed down since!"
Its crazy but are we running the same way economically as the lemming does? Somehow there must come an end to this explosive growth or can we speak of a make believe recession.
I don't understand it, neither here nor elsewhere.Or is it so that our governments let this happen or could not foresee this crisis?
I live my simple life in the polder.
Suggestion for your refrigerator: try Filco or Manuel Joseph.
I thank Jonathan, Gordon, Bert and Anne-Louise.
Jonathan once again speaks out for free market principles. Gordon seems to share some of my concerns. Bert’s is a Dutch perspective, and Anne-Louise’s advice is the most useful...
...because you know what? We managed to repair our refrigerator (for $150), so we continue to postpone the $2,000+ expense for as long as we can. When the time comes, I’ll keep Anne-Louise’s advice in mind.
Just one more thought, about all this abundance and all this consumption: One of the most popular words for the past few decades has been “choice:” We live in this wonderful world full of choices.
I often joke with my wife that we are supposed to feel lucky to be living in a world with so many choices, but that I always have trouble buying and enjoying a choice. When I go to a movie or to a restaurant, or when I buy a big-ticket item like a car, I never end up buying a choice. I always end up buying a Honda, or a Ford, or a Toyota, or some other brand. Same with choosing a restaurant on Friday night. Can anyone tell me how I can buy myself a choice?
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