Over the weekend, Kim C. pointed me to an article about the dangers of thrift. There’s been a glut of these pieces lately, most of which just make me tense. They seem as if they’re cheerleading conspicuous consumption. But this one is interesting.
The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.
Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.
I like this story because it’s sober without being alarmist. It’s also interesting because it examines an actual case of consumers reducing their spending and the effects this has on a national economy. The decreased consumption isn’t the only reason for Japan’s economic woes, but it’s certainly a contributing factor.
All the same, I stand by my belief that a return to thrift isn’t a bad thing.
In the comments, Elisa from Thrive (an online personal-finance tool) pointed to an article from Flexo at Consumerism Commentary. In “The Paradox of the Paradox of Thrift”, he writes that the recession isn’t caused by a lack of consumer spending, but by a lack of financial lending. Banks are causing this crisis because they’re reluctant to lend money. Flexo’s advice:
Continue to save money and spend less than you earn. It’s not a patriotic duty to spend it on products and services you don’t need, despite what you might hear. There is no need to sacrifice your future financial well-being for the sake of the greater good. It wouldn’t work, anyway. The economy will be sorted out with or without the house you buy now rather than a year from now.
Go read the entire article at Consumerism Commentary.