Economics Is Hard


I’m a big fan of our consumer society; to me, it’s a no-brainer.  Ever since the Phoenicians discovered that people were willing to trade silver for a useless purple dye, the obscene amounts of cash produced by conspicuous consumption have propelled our world.  Today, we live in a benevolent society because we generate enough coin to pay for it.  In fact, our society is so benevolent tons of people (including me) can earn money from just bitchin’ about it!  The thing is though, since buying crap is so fundamental to our world’s well-being, one would think we’d treat the whole business with the care and consideration it deserves — but we don’t.  In fact, we go about it in such a dysfunctional fashion it’s a wonder we’re not still riding donkeys and grinding our own flour.

Let me show you what I mean:

Watch people buy clothes sometime.  Is it the right colour?  Is it the right style?  Is it too short?  Is it too long?  Is it on sale?  Do they have it across the street?  Does it come in beige?  Can I get it in tweed?  How do I wash it?  Does it match my eyes?  Does it make my ass look fat?  And this goes on for hours, sometimes days, even weeks — before we whip out the credit card.  Here’s the deal, folks: clothes are transient.  When we’re young, we outgrow them; when we’re old, we outlive them. The truth is, 90% of all the clothes we buy eventually just end up in the back of the closet, waiting for the next charity to come along.

On the other hand:

We spend a third of our life in bed, doing various activities — excuse me! — sleeping, reading, watching TV.  And how do we buy a bed?  We sit on the edge of it and maybe bounce our bums a couple of times.  Perhaps we lie down (fully clothed, flat on our back) to see how it “feels.”  Now, how the hell can you tell how a mattress “feels,” lying there like a sarcophagus?  You can’t!  Yet nobody shows up at a store with a pillow and their pjs and says, “I’d like to test-drive that blue one over in the corner.  Could you dim the lights and come by in a couple of hours and give me a shake?”  On average, before they buy it, people spend less than 8 minutes of full body contact with the most essential piece of furniture they’re ever going to own.  8 minutes?  I can’t even fall asleep in 8 minutes!

So what have we learned?  People are illogical, their buying habits are stupid, and anyone who says they understand economics is lying.

Black Friday: Who, What and Why?

black fridayToday is Black Friday, the ultimate orgasm of North American conspicuous consumption.  By close of business today, millions of people will have spent billions of dollars on tons of crap they couldn’t possibly need.  Not only that, but consumer debt will take a measurable leap skyward, as most people will be spending credit card money they don’t even have.  And why do we do this?  Because we have to.

It’s very fashionable these days to decry our consumer society, but I’ve noticed that the same people who are always yipping about how “Money can’t buy happiness” usually have an abundance of both.  Obviously, money can’t buy happiness — but let’s get real — it certainly takes the sting out of any bad mood I’ve ever had.  Likewise, it’s pretty hard to be genuinely joyous when your only leisure activity is lying awake at night, worrying about how to pay the rent.  I’ve been rich and I’ve been poor; take a wild guess which one I prefer.

Let’s put this thing into perspective.  Black Friday isn’t about money or shopping.  It’s way more primeval than that.  Black Friday is the hunt.  Trust me, if you scratch the 21st century off those folks camped out in front of WalMart, you’ll find a pack of spear-waving Cro-Magnon, on the prowl for mastodon.  They may have traded in their pointy sticks for an American Express card, but so what?  Grog the Caveman, wearing a sabre tooth tiger pelt, and Morgan the Media Consultant, playing with the latest iPhone, are basically the same person — separated by a few millennia of history.  It’s all about prowess.  Both of them are telling the world, “Hey!  I am a successful Homo Sapien.”

Across the length of human history, the rules haven’t changed that much.  We might all mouth the civilized platitudes (“Money isn’t everything,” etc.) but at the end of the day, successful people usually find a way to tell the world about it.  Whether it’s a solid wall of sound stereo system or an ancient, esoteric salad ingredient, the rest of us know who’s making their way in the world.  And that’s why Black Friday exists.  Bargain hunting is hunting, and loading a 60-inch TV into the back of your SUV is no different from dragging a woolly mammoth back to the cave.  So conspicuous consumption be damned!  Shop ’til you drop, North America!  It’s in your DNA.

How Josiah Wedgwood Created Black Friday

Today is Black Friday.  It’s the day when half of America lines up for hours, searching for an incredible bargain, and the other half waits impatiently to sell it to them.  To some, this is the seed of greed in America; to others, it’s capitalism at its finest.  Regardless, unless you flunked math, history and economics in high school, you know that without our much maligned consumer society, our world would look markedly different from what you see out your window.  And most of us would have neither the energy nor the leisure to wax critical on the whole process.  However, did you ever wonder why people buy so much useless junk and literally kick other people out of the way to get at it?  The answer’s quite simple, really: Josiah Wedgwood had smallpox — and survived.

History does not always run on big events.  For example, one of the reasons Drake, Hawkins and rest of Elizabeth I’s Seadogs kicked the snot out of the Spanish Armada in 1588 is their cannons were shorter.  Thus, they could reload faster and, therefore, held superior firepower over their Catholic adversaries.  A much overlooked detail, to be sure, but absolutely critical to the history of Europe and the world.

Likewise, Josiah Wedgewood’s bout with smallpox as a child, insignificant as it might be, was a decisive event that changed human history.  When Josiah recovered, he was apprenticed to his elder brother as a potter, but because his legs were still weak from his illness (a condition that lasted his entire life) he couldn’t work the foot-powered potter’s wheel for long periods.  Thus, he spent just as much time designing pottery, working with glazes and selling his wares as he did actually making them.  Unhitched from the daily grind of producing pottery, Josiah had time to figure out how to effectively sell it.

The story is long and quite complicated, but here is the gist of it.  Josiah’s business career coincides with the early rumblings of the Industrial Revolution.  James Watt’s steam engine was putting people power out of business and creating a whole new class of folks unfettered from the land.  This new urban class of managers, foremen, clerks, artisans etc. etc. were stuck in the “middle” — between the obscenely rich aristocrats and entrepreneurs and the virtual slaves from the mines and the factory floors.  Plus, unlike their parents, who had been practically self sufficient, without land, this new “middle” class had to buy every necessity of life rather than produce it for themselves.  Essentially, Josiah’s pottery works had been handed a huge new consumer demographic that nobody had seen before.

Obviously, all these new people moving into the urban centres of Britain needed plates, cups, jugs etc. but that’s just the nuts and bolts part of the story.  What separates Josiah Wedgwood from every other guy with a lump of clay was his understanding of the market.  He realized that this new middle class was not living hand to mouth.  They had a modicum of leisure time and disposable income.  He also saw that they were willing to use this income to distinguish themselves from the poorer urban masses.  More importantly, even though they didn’t really have the coin for it, they wanted to emulate the social superiority of wealthy aristocrats and the new-fashioned nabobs of trade and industry.  Josiah simply thought outside the 18th century box and cashed in on this middle class social climbing.

Basically what he did was create unique pieces for his wealthier clients — and then mass produce less expensive knockoffs for everybody else.  Suddenly Harvey and Maud, the uppity couple from Pembroke Lane, could eat off plates and saucers just like King George III’s wife, Queen Charlotte.  Wedgwood even called it “Queen’s Ware.”  His Jasperware was elegant, expensive and exclusive, but anybody with enough shillings could afford a posh replica.  Plus, Wedgwood treated his clients as if they were upper class, by bringing the marketing tools of the aristocracy down to the middle class.  He used illustrated catalogues just like exclusive art dealers.  He had salesman who came to your home, written guarantees and free delivery.  Not only that, but he also produced objects of art.  Before Wedgwood objet d’art were the exclusive province of the upper class who could afford to squander money on trinkets and antiquities.  After Wedgwood, everybody had household ornaments.  He made Etruscan busts and Grecian urns that were well within the price range of even the most modest home.  The thriving middle class, striving to keep up appearances, bought this stuff by the wagon load.  Even today, his powder blue and ivory white Greek motif plates are recognized around the world, and many of us have these useless pieces cluttering up our shelves and coffee tables.

Josiah Wedgwood was the first person to sell the sizzle instead of the steak and make you pay for the garnish.  He understood how the middle class ego worked and, frankly, it hasn’t changed in over 200 years.  Those people who lined up this morning for the 80 inch television set aren’t buying solid walls of entertainment; they’re buying a physical expression of their success.  By recognizing this need and filling it, Josiah Wedgwood single-handedly create our consumer society in the late 18th century.  It’s been going strong ever since.  Today’s madness at Target, Kohl and Walmart is just the latest incarnation of two centuries of marketing.