Early in the life of this blog, several readers wrote to me to recommend a book called Plenitude: The New Economics of True Wealth. I quickly biked to the library, checked it out, read it cover-to-cover, and found that I agreed fully with its premise. It has been part of this blog’s Book List ever since. The author Juliet Schor is a Ph.D Economist and has been teaching Economics and Sociology at Harvard and Boston College (as well as publishing major books) for over 20 years.
She is also a co-founder of the Center for a New American Dream, a group whose goals align so perfectly with my own that I felt like traveling to the Washington DC area to give them all hugs when I discovered them (through Twitter) earlier this year. More of What Matters – now there’s a great mission statement for you.
Through this New Dream connection, I was able to track down Juliet Schor herself for the following interview. We focused on the fun aspects of the big picture of social change, and the question of “What if everyone became frugal?”
Mr. Money Mustache: How did your own life lead you into this prominent role as a spokesperson for social change? Did it start in childhood or was it caused by experiences as an adult?
Juliet Schor: I was interested in activism early on. I started reading critical books when I was young and by the time I was in high school I had become an organizer for the United Farmworkers Union, the Cesar Chavez group that was boycotting lettuce and grapes, to improve conditions for migrant farmworkers. I also became active in anti-war activities in high school and started a group called Students Against the War. My parents had been politically active when they were young, although I didn’t know this until I was a teenager.
MM: I often get complaints to the effect of, “Well, if everyone did what you are doing (saving more, consuming less, and working less after financial independence), the economy would collapse.” I disagree and I think the economics would work out surprisingly well if we added more free time for all of us into the equation. What do you think would happen, and how might we make the shift over a period of time?
Juliet Schor: I’ve written about this, particularly in the epilogue to The Overspent American. If people gradually transition to less consumption, the economy will adjust. The main reason is that downshifting also results in fewer hours offered in the labor market. So demand and supply of labor are gradually reduced in tandem. That means less consumer demand shouldn’t result in higher unemployment, which is the main thing to worry about. The key here is gradual. A sudden cutback in consumer demand will lead to panic and recession. In the US, we need to consume less, save and invest more, in the right kinds of things: clean energy for one.
MM: Economists say that productivity per hour is the key to a society’s standard of living. Under a Plenitude model, if we tended to work a bit less on average, would you expect to see our productivity increase (due to reducing stress and harvesting only the best hours from the minds of workers) or decrease (perhaps due to losing some economy of scale from such massive production)?
Juliet Schor: A Plenitude model should result in higher productivity, because you are right, shorter hours tend to be associated with higher per hour productivity. People can work more intensively and with better results if they have to do it for a shorter time. That’s what historical experience shows. For businesses, it’s the per hour productivity that’s key. Costs really depend on that, because many people are paid by the hour.
MM: I find that regardless of how much my own family earns (or does not earn, depending on the year), our spending remains roughly constant around $25,000 per year. Do you find yourself maintaining a lower-than-average spending or consumption rate in your own lifestyle? And if so, do you ever notice a culture clash when visiting high-income friends and colleagues with more typical lifestyles?
Juliet Schor: I think our expenses are declining. Some years ago we stopped eating out much. We drive very old cars. We put a lot of insulation into our home, which dramatically reduced our heating bills. We are doing much less leisure travel than we used to because we are concerned about our carbon footprint. We refinanced our mortgage. Right now both children are out of the house, so that reduced our food costs. We’ve had heavy educational expenses for our children, so that’s going in the other direction. But that’ll be over fairly soon.
MM: Another criticism of moving our culture away from work-to-consume is that we would become bored and stagnate with all the extra free time. I disagree, as I find that since retiring from real work, I do a similar amount of productive stuff each day, it just doesn’t feel like work anymore. Do you think the American public could properly handle a big reduction in working hours and increase in free time?
Juliet Schor: I think it varies by group. Women have traditionally had an easier time. I think that there are sub-groups within young adults who are desperate for more time. I don’t think we’ll stagnate, but it is true that there is a skill (or art) to spending time. As the economist Tibor Scitovsky argued, we need to cultivate the skills to spend time in ways that yield high well-being. Gardening, DIY, hobbies are excellent activities for doing so.
MM: You have been encouraging us to get back into a more local, community-based economic model. I have been doing this a lot in recent years, just because it is fun. But I always assumed the national/international model is more efficient, and the local way (like keeping chickens even though they cost more than buying the best organic eggs at a store) was more of a luxury. Do you think local trade can actually improve fairness, or the unemployment rate, or some other measurable thing?
Juliet Schor: The national/international model looks more efficient than it is because it’s not paying its true costs in terms of carbon pollution, and the unemployment it leads to at home. I do think that localizing will reduce unemployment by creating more demand locally, and that in turn leads to more fairness/less inequality. In Plenitude I argued that new high tech small scale technology makes local production more efficient than in the past*. I think that’s one key to why local economies are now a viable alternative to the giant corporations and globalized structures. Their resilience in the face of uncertainties such as disasters and financial panics is another.
MM: A lot of this has to do with bringing the human race back to the rhythm of its own planet. Anyone with a scientific background can see how quickly we are tearing this place apart, but most consumers are blissfully unaware of the direct connection between shopping and destroying.
Juliet Schor: Amen. Before Donella Meadows died she and I discussed this issue of rhythms. The ecological problem can be summed up as a gap between the fast pace of the economy and the rhythms of the planet.
MM: But how much consumption is a sustainable amount? If the wealthy countries cut their resource consumption in half, or in four, would that do the trick? Or are there other quantifiable changes that need to be made?
Juliet Schor: The key right now is carbon. Rich countries need to decarbonize completely, at a rate of about 8-10% reductions per year over the next couple of decades. That’ll also reduce resource consumption, because energy demand drives the demand for other resources. That’s the goal we need to focus on.
MM: I have become a big fan of the data-driven philanthropy of Gates Foundation and others like it. But I can’t help noticing that increasing the income of less wealthy nations also increases their love of cars, fast food, trash, and all of our own problems. Will they have to go through everything we did, or is it possible for an economy to go from poor to wealthier and become ecologically friendly at the same time?
Juliet Schor: There’s no question poor countries can leapfrog as we call it, with cleaner technologies, and especially renewable energy. Rapid transit bus systems, solar and wind power, enhancing small scale food production for local use are all trends that are growing in global south countries.
MM: Finally, other than adopting a better life ourselves, what steps do you recommend that more committed people can take to help nudge the world towards the Plenitude model for living?
Juliet Schor: Right now our biggest task is to take on the fossil fuel companies who are driving the world off the climate cliff. Pushing Obama on Keystone XL is a start, and trying to prevent any new fossil fuel investment is key. Today I read a great piece in Rolling Stone about yet another Koch Brother (Billy) exporting what may be the dirtiest fuel in the world, petcoke, from the US. We need to expose and stop that.
MM: Thanks very much for sharing your time with us, Juliet! Although I take an unusual approach with this blog, coming at the issue from the backside of individualism, personal wealth, and with occasional profanity, we clearly have the same goals in mind and it is great to have you on the team. Thanks for everything you do.
*MM Comment: Juliet makes a great point here. There are several areas where localized production has become more efficient than mass-production. Solar electricity production and smaller-scale software design are two examples of things that can now be produced locally at an individual house, without the burden of transmission losses, commercial real estate leases, or pointy-haired managers and unnecessary conference calls. I can also make good furniture more cheaply than a furniture store can sell it, even at a wage of $50 per hour. With fancy things like aquaponics and 3-D printing rising in popularity, it makes sense that several more key areas of production might start to become local again.
Further Reading: A New York Times interview with Juliet from 1998. We were a nation of aspiring Sucka Consumers even way back then.. and that is before the SUV craze and the borrow-home-equity-to-buy-more-stuff crazes even hit us. Will our current economic boom be different? I’m wagering that you and I can make it so.