Brief History of Consumerism-Why You Buy

It's important to know some history of how consumerism became a priority in this country. Understanding this helps to comprehend the mess we're in today and how government policies haven't changed much since the Great Depression and nor are they likely to change.

To help combat the Great Depression, Congress, in 1933 passed the National Industrial Recovery Act. It authorized this cornerstone program of the first New Deal to include representation from the consuming public, who had been previously labeled the "forgotten men." New Dealers called for a permanent federal consumer agency to host the perspectives of the consuming public and not just Big Business.

After all, American democracy was at stake and the only way it could survive was through the quality of living of the rank and file worker.

Americans as consumers was strongly depicted in a 26-minute film produced by General Motors in 1937, entitled From Dawn to Sunset, released months after GM had signed an historic union contract with the UAW. It depicted employees in 12 plant cities serving the corporation and the nation as purchasers of goods. (keep in mind Henry Ford irritated big business just a few years earlier by paying his workers $5 a day and giving them Sunday off - unheard of at the time).

The film followed the typical day of an army of auto workers and salaried personnel showing (repeatedly) each getting their pay envelope and then, accompanied by family members, spending that money in downtown stores (no malls then), showing the pleasures of consumption. "...because America has a ready purse...the USA will enjoy a prosperity greater than history has ever shown."

In the 30s and 40s, the Progressives identified consumers as a new category of American citizenry which needed their help to "limit the dangers of an industrializing, urbanizing, and politically corruptible 20^th century America because all men and women suffered as consumers from jacked-up prices, defective merchandise, deceitful politicians, etc."

We didn't starve, but we didn't eat chicken unless we were sick, or the chicken was.

A famous quote about poverty by Bernard Malamud

The Depression and the Democratic administration's efforts to overcome it became known as the New Deal which remade the American economy. A national welfare state emerged, industrial relations were restructured around state-sanctioned collective bargaining, and the feds assumed a more active role in the economy...the times also gave rise to Unions.

Consumers as a group were becoming more active in staging boycotts against unfair landlords, grocery prices and unfair labor practices. Many of these groups were started and headed by women, who, at the time were becoming more politically aware and had a large influence on household expenditures. Everyone wanted greater access to the fruits of their labor and improved working conditions. Consumers were being recognized and many safety laws in such areas as meat, drugs, housing, etc. were enacted. Consumer magazines and "unions" were launched during these times as well as consumer cooperatives (membership in these co-ops doubled between 1933-1936 and again by 1940). The depression also saw a rise in cooperatives for electricity, petroleum, telephone service, insurance, credit unions, laundry and even medical care.

Politicians began including consumer issues in their platforms, or they wouldn't get elected. Even today, Pres. Obama is touting a plan to create a "new" cabinet level post or bureau devoted to consumers.

WWII Brings Rationing

Unlike current wars, the Second World War brought about rationing of everything from fuel and tires, to meat and butter. Citizens were issued ration books (also sold on the black market just like food stamps are today).

The United States became the arsenal to the free world and there was virtually full employment in this country; bringing us out of the Great Depression. Many women, for the first time, were drafted into the workplace.

Most citizens sacrificed to accommodate the war effort but not everyone was happy with price controls and rationing. Even during this time of mending and salvaging, Americans lived better then than during the Depression; the average factory worker saw wages rise 80% from 1939, while living costs rose only 24% (not the case in 2009 where most people see their wages drop).

Post WWII Brings Mass Consumption Frenzy

As you can imagine, wartime deprivation and rationing would lead to pent up demand from consumers and manufacturers, despite making large wartime profits, were happy to reconvert their factories into tools of mass production of consumer goods.

The May 5^th, 1947 issue of Life Magazine featured the Hemeke family and their adjustment to the postwar era...Family Status Must Improve: It should buy more for itself to better the living of others."

Mass consumption in postwar America would not be a personal indulgence, but rather a civic responsibility designed to provide full employment and improved living standards for the rest of the nation.

The unions had a field day. President of the AFL-CIO, Walter Reuther cajoled government and business that unless factories paid their workers well, no one could afford the new washing machines, autos, homes and other goods that people wanted and most followed his lead. Consumption was good for the American way of life!

Wartime thrift was now un-American. The national slogan in 1946 was "two families in every garage." Postwar population growth demanded new housing in this country and it was estimated there was a shortage of at least a million and half homes. Moderately priced homes where $100 would move a family into a new subdivision home boosted the construction industry and all of the related industries including manufacturers of washers and dryers, home décor and especially the automobile! The government spent billions creating a national highway system (which boosted employment).

My Dad always laughed about the first home he purchased. It was a 3-bedroom single story home he paid $10,000 for using his GI Bill, which offered an interest rate of less than 2%. Now, he says, you can't buy a car for that and at least, he says, he had 30 years to pay off the house and he can't figure that today, one cannot buy a garage for that amount...he's got a point.

Returning wartime servicemen found government programs such as VA and FHA home loans and the GI Bill for college rewarding and took advantage wherever possible. Vast tracts of farmland in what would become the suburbs, became tracts of slab homes; but home ownership is the American Dream.

"The economy is all about money, and politics is all about power. Nowhere does the good of the people figure in or matter."

Downtown Shopping Replaced by Malls

In the 1950s, two additional events took place, which forever changed the face of consumerism in this country. Easy credit and shopping malls.

Until 1950, most folks shopped in the downtown area of their community. It was also a place where folks gathered to discuss the issues of the day and see their neighbors. The growth of suburban lifestyles changed that and indoor malls began to appear. While new suburbia fostered racism in a sense (most new home areas were considered off limits to Blacks) so did the new regional, indoor mall, which were built to accommodate the social classes of nearby neighborhoods.

Shopping malls fostered a sense of safety, convenience, better shopping hours and they kept folks safe from inclement weather. Most were located within a short 15-minute drive or less and mass transit in this country began to vanish because of the automobile.

In 1973 a US News & World Report study found that Americans of all ages spent more time in shopping centers than anywhere else, except for work, school and home. (I was one of the original, youthful mall rats at the first indoor mall built where I grew up in Cleveland).

Originally catering primarily to female shoppers, most evolved into a family-oriented shopping experience, even catering to Dad. Marketers were pretty quick to wake up to the concept of market segmentation in order to create demand...we now see ads geared to tweens, teens, 20-somethings, and even us older fogies. McDonald's was the first to recognize the children's market and it has made a fortune off the little one's begging Mom and Dad to "take me to get a Happy Meal" and to see Ronald McDonald! (one of the reasons I won't go, too many screaming brats). As parent's loaded up their kid's schedules with all sorts of after school activities, and with Mom and Dad working more hours, the convenience factor weighed heavily in the fast food choice; despite the detrimental health effects it's had on our children.

No doubt, you've probably noted that all the fast food eateries now take debit/credit cards (Carl's Hamburgers was the first), which takes us to the next point...easy credit.

Easy Credit

Prior to the end of WWII, very few Americans used credit with the possible exception of the local grocer, who often carried accounts for neighbors during the Depression.

Most people sacrificed and saved their money to make a major purchase of any sort. Christmas clubs at banks, lay-away-plans and occasional private credit, were the few options available to anyone.

Shopping malls changed that. Initially, many major department stores, provided the capital to build malls and they were the first to begin offering store credit cards. Sears was at the forefront of this practice. Buy now, pay later became the norm.

After its successful launch, Diner's Club led the way for other credit cards such as Mastercard and Visa. Many of us, over the years, were bombarded with credit card mailings...and took advantage of them. Initially, the government helped by allowing citizens to write off the interest accrued on those cards and other credit purchases.

Living the American Dream promised by government and Wall Street beguiled too many of us into an over-extended lifestyle trying to keep up with the Jones.

Eventually, the government also dropped its law prohibiting Wall Street from selling what amounted to casino style gambling "paper". During the boom years, seems almost everyone tapped into easy credit by refinancing their homes to tap escalated equity AND then the bottom dropped out of everything.

Americans, stuck with lowered valued homes, high credit card debt and interest rates, job losses from overseas competition, lower wages, etc., were unprepared for the debt bomb, which became our current recession.

The decline of the middle class began in the mid-1970s. Government growth eats up capital which would normally be used in free enterprise. Tax policies and other government intervention allowed the inequality of income to grow enormously. Between 1980 and 2000 the top 5 percent of families increased their share of the nation's total aggregate income to 20.8 %. In 1980 corporate CEOs earned 40 times as much as the average worker - now it is over 500 times. The "G" in government was never intended to stand for growth industry.

As more US corporations sent jobs overseas, fewer Americans could buy their goods. As I wrote in the 80s, "Burger flippers can't afford $40K cars."

Think things will change? Will Americans always have a case of Affluenza if the economy should ever recover? Your guess is as good as mine.