The Agenda

Downshifting

In the summer of 2008, I wrote a short essay for The Spectator on the new hippie moment. It ended with the following prediction:

[O]ne can’t help but admire the Harrises, and other families who’ve chosen to ‘downshift’ their consumption, for putting their money where their mouth is. Whereas others on the liberal Left rue consumerism and inequality, they almost invariably expect the government to step in and solve the problem by, for example, hiking taxes on the rich. You’d think we were children who couldn’t help but work longer hours or buy expensive new automobiles in lieu of darning socks and eating thin gruel. What if the real inequality problem isn’t a technical problem? What if it really is a moral problem? Not moral as in ‘envy is a corrosive thing, so get over it’. Moral as in no tax hike will prevent people from building overlarge houses or custom cabinets at the expense of spending time with family and friends. A culture that is plagued by materialist excess won’t be cured by taxes. It can only be cured, if at all, through a revival of postmaterialist values — that is, a revival of hippie values. Assuming Barack Obama is elected and he doesn’t achieve paradise on Earth by 2012, it is easy to imagine a new generation growing cynical about politics and, like the hippies, deciding to beat the system in their own idiosyncratic ways.

I’m by no means convinced that consumerism and inequality are the worst things in the world, or that we are hurtling towards environmental doom. But wouldn’t it be nice if all those who believed these things to be true moved to bucolic communes where they’d busy themselves with handicrafts instead of tormenting the rest of us?

In a sense, the Occupation represents a rebuke to my prediction. Yet there is another intriguing data point featured in the latest issue of The Economist – the results of a survey by Princeton economist Angus Deaton:

 

Those surveyed were asked to assess the overall state of their lives, as well as answer a series of questions about how frequently they had experienced various emotions, ranging from worry to stress to happiness, in the course of the previous day.

You could be forgiven for assuming that Americans would have become increasingly dissatisfied with their lives over the course of that three-year period. Collapsing asset prices, including unprecedented drops in the value of housing, Americans’ biggest financial asset, meant that three-fifths of households in America saw their wealth decline between 2007 and 2009. More than a quarter lost more than half of their wealth. America’s average annual unemployment rate zoomed upwards, too: it went from 5.8% in 2008 to 9.3% in 2009 and 9.6% in 2010.

Yet the picture that Mr Deaton pieces together from the daily snapshots of Americans’ state of mind is a more nuanced one than this litany of woes would imply. Americans’ evaluation of their own well-being fell quite sharply between the last quarter of 2008 (with the first drop coming soon after Lehman Brothers collapsed) and the beginning of 2009. It then soared briefly around the time President Obama was inaugurated, before declining again. But by mid-2009, despite rising joblessness and diminishing wealth, people’s subjective assessment of how well their lives were going was not just broadly stable but at levels well above those recorded during the depths of the crisis, and higher even than they were in January 2008. Such effects varied by age and income level. The negative effect of the financial crisis in late 2008 was twice as pronounced for poorer people’s assessment of their well-being than it was for the rich. The oldest people in the sample were not only the most satisfied in general, but also the least affected by the mayhem around them.

My unconfirmed suspicion is that a large number of middle-income and upper-middle-income households are downshifting their consumption, taking more pleasure in family and friends, and expecting less from the prospect of material gain. One of the implications is that the breadwinners in these households might increasingly choose leisure over market income, which might in turn lead to an erosion of the tax base. If we do not reform public pensions and entitlements, this will prove problematic: some number will, having embraced a postmaterialist sensibility, be much happier; another group of people will find their tax burden increase sharply, thus encouraging them to join the postmaterialist vanguard; this in turn will further threaten the interests of those who rely most heavily on public pensions and entitlement programs to maintain a comfortable standard of living.

 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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