I see what you're saying but people won't stand for it. I work too hard for you to ask me to consume less and I'm not alone. If you want people to consume less you have to do something about the fact that Americans work longer hours and more days than anyone else in the world.

Destor, I agree with you when you say: "Americans work longer hours and more days than..."
I have just completed a 10-week school term in which I worked, not 400 hours (or 40 hours per week), or even 450 hours (45 hours a week).... but, rather, 722 hours I can document (or 72.2 hours per week) -- which did not count over 170 additional hours I did, in fact, work but did not bother to document.
Here's where I differ from you, with all due respect -- I did not work these extra hours to consume more; rather, I worked these hours -- which were a bait and switch exercise above and beyond my contract, to: a) protect the hours that had meaning to me in the classroom; and, b) to prove, however neurotically, that I was a team player.
Nonetheless, whether it is a matter of principle to protect our right to consumerism, or a matter of false pride to protect our image of ourselves as meaningful contributors, the fact is that we are killing ourselves at the altar of false gods.
So when Mr. Mason says: "This shift, from consumption to savings, will be wrenching and painful for America, and for much of the rest of the world..." I have to agree, even though I think it begs the question of motivation, or even result.

Excellent post on a topic that is important if not all but ignored. Definitely rec'd!

Ultimately, we are too much like the sweet-craving diabetic who, rather than try to treat his disease, does instead scramble to figure out how he can eat more doughnuts without suffering the consequence.

Two points:

1.) Assumption of more and more consumer debt has disguised a great deal of the upwards transfer of actual wealth. So long as the consumer was able to put a BMW in the garage and gain a mortgage for a McMansion, he could be deluded into thinking this economy was working for him every bit as well as it served the monied class.

2.) It's all about sustainability. The really complicating issue in trying to find a remedy to this economy is fixing its fundamental sustainability.

You are right that we cannot sustain a domestic economy founded on consumer debt. It becomes ever so much more impossible when we try expanding this economy on a global scale. We've already seen calls for American workers to take drastic reductions in wages/benefits to remain "competitive" within the global market. As average wages go down, only an increase in consumer debt will maintain or grow markets. The problems we now face are simply exacerbated.

My head spins as I try to determine all the ways in which our present economic system simply doesn't work; the many ways in which it is simply unsustainable. I am not intelligent enough to know what the solutions might be, but I do know that the present course of injecting more money/insulin into the system only postpones the overall crisis in health that must be confronted - regardless of how many "doughnuts" we must forego in the meantime.

Consumption isn't "excessive" except in this very narrow sense: the future of "the job" is more and more worry about being laid off and dropping into the abyss of superfluousness, as workers can always be found to replace you. Because the workers who have been replacing you are not being compensated nearly as well as you used to be, they cannot afford to buy the stuff you used to make, so you still have to be egged on to buy it in their stead. Hence "Super Bowl commercials" and such. You are still required to fill your role as "consumer" until the whole Ponzo jig is up. In this way you are asked to exceed your abilities to pay so that the wealthy can grow wealthier as the value of labor is further diminished to almost nothing.

Productivity growth is such that not as much labor is needed to make and grow stuff. Thanks to productivity growth, we could probably work 20 hours per week at a full time job if the benefits had been distributed to all. Instead the benefits of increasing productivity mostly went to the wealthy, spreading a lively terror among the workers of the world.

The big-picture crux of the problem is only tangentially related to debt, consumerism, or stagnant real-wage growth.

The fundamental problems are the reality of a finite resource-base (i.e. planet earth) and inadequate technology to efficiently leverage those resources in support of a massive human population.

These in turn lead to a simple, undeniable reality: We currently cannot support a meaningful level of existence or lifestyle for all humans, which in turns leads us to the whole ball of wax...

You are only as "rich" as those around you are "poor". The reason that some of us can afford high-end sports cars and McMansions (e.g. unbridled consumerism) is the exact same reason why some of us cannot.

Galileo used to engage in a technique he called "thought experiments". When unable to carry out an actual experiment due to some seemingly insurmountable physical, financial or temporal constraint, he would simply ask himself "What would happen if I *could* do the experiment?" It is useful here for us to conduct a thought experiment of our own...

Say tomorrow we wake up to find every single dollar, every asset, every bit of commonly accepted "wealth" were somehow magically redistributed in a precisely even fashion amongst every human inhabitant on Earth. What would this mean? If everyone on earth had, at the same instant, exactly $100 - no more, no less - how much would a seller charge for a loaf of bread? What about a Mercedes S-class? Or a new refrigerator?

The "End of Affluence" is far too imprecise. What we are seeing is not the end of affluence - but rather the continual transfer of affluence from ever more people to ever fewer. Under the constraints of limited resource utilization, the only way for the rich to get and stay rich is to live with poor who cannot afford what they can.

Hence, we are "...in the midst of a global economic shift...". But it is a shift that is very far from being 'new'. It spans the course of human history.

The only semi-permanent solution is ever-increasing technology. Technology that allows for more efficient resource utilization. With each new (and sadly infrequent) major technological breakthrough, so too comes a limited period of increased utilization efficiency, and relative "affluence" for all. Though even this is a red herring, as ultimately our capability to innovate will continually be outstripped by our carrying capacity.

There are only so many resources to go around, and those who can afford them can do so only because others cannot.

I am relatively new to blogging, and to TPM, but I am so impressed with the smart, thought-provoking and civil (!) comments here. I wish some of you would come post such gems on my own site!

As Thera points out, there are so many elements of this thread it is difficult to deal with them all. But let me try to respond to some of them.

First of all, I hasten to point out that I certainly do not favor the immiseration of the U.S. worker and consumer! My post was simply pointing out what is already happening, and bound to continue. I absolutely agree with Destor, Purble, Bluebell and others the the American worker has gotten the shaft over the last decade or so. Indeed, this is a central premise of my book. For most Americans, real wages have remained stagnant since the 1970s, and the only reason that HOUSEHOLD incomes have increased is because more of the family members (especially women) are now working. The only real INCREASES in incomes have been among the richest fifth of the population, and especially among the richest 5 percent. (If I could figure out how, I could post here a copy of Figure 2.1 from my book on "Average Household Incomes of Rich and Poor, 1967-2006". They are flat fro all groups except the very top ones).

This leads to another point made by SleepinJeezus, Zeno, Tiggers, Dorn and others that what this country needs is wealth redistribution. I also agree totally with that. Compared to the other rich countries in the world (i.e. the 30 or so OECD countries), the U.S. has about the most unequal distribution of wealth and incomes, and the highest rates of poverty. In my book, I point to the multiple dimensions of inequality in the U.S. as a principle factor in U.S. domestic and international decline. It damages our education system, our health care system, our political system, and our image abroad.

Eds and others point to the need for more investment in education, technology, infrastructure, etc. to help rebuild the U.S. I also agree with that. But we should not delude ourselves into thinking that the U.S. educational system is the best in the world, as you so often here politicians saying. We may have some of the best universities in the world. But on average, and by almost every comparative measure, the U.S. educational system is pretty dismal, and U.S. students at all levels fare poorly in comparisons with, and in competition with, those in other countries.

So I agree with just about all of you that consumption is not the CAUSE of all of our problems, and that there are many solutions besides simply cutting back on our spending. My argument is that this cutback is inevitable, given the hole we have dug ourselves into. And while we need wealth distribution and much more spending on health care, education, infrastructure, innovation, etc., this is going to be very tough in a situation where the government is bankrupt and the economy is in steep decline.