This week, the United States is celebrating their national holiday, or rather that of the American Dream in its most mercantile, superficial — and bloody — incarnation. Black Friday is the day which unofficially kicks off the holiday shopping season. Each year, huge sums are spent in a variety of stores which attract clients with ridiculously low prices on selected items. Last year, around 247 million people spent a total of nearly 60 billion dollars.
Two things in particular stick out concerning these competitive shopping sessions. First, it’s just how efficient the marketing is in crystallizing the sense of urgency and ephemerality (great bargains, limited number of items, unusual opening hours, etc.). Secondly, north of the border, we are struck by the crowd’s often wild, and sometimes violent, behaviour when trying to maximize savings. Remember in 2011 when a man died as people stepped over him? In 2012, gunfire was exchanged over a parking space. Behind these dramatic news stories stand Americans who see their purchasing power erode just as their consumption expectations are increasing.
That’s trickle-down consumption. Economists looking for signs of trickle-down economics — i.e. wealth accumulating in the hands of the wealthiest somehow leading to redistribution — analyzed economic data and found a very different reality, and a much less optimistic one. First, and no big surprise there, the disparity between the rich and the poor shrinks most when the state redistributes wealth, not when the responsibility is left in the hands of individuals or businesses. Secondly, it’s the consumer habits of the richer households that impact on those whose are not as affluent, not their prosperity: we tend to emulate the behaviour of those who have just a bit more than us.
Researchers talk of an “economic arms race“: to affirm and maintain a social status, or to reach a higher one requires the capacity to spend (on properties, trips, equipment, schools, etc.), often beyond one’s means. The cost of living in the good neighbourhoods is rising, giving the kids the best education and extracurricular activities requires more and more investments, etc. Society also encourages us on this mimetic odyssey by offering “cheap” “deluxe” products. Take for instance the 2008 housing bubble. Or a $200 Playstation 4 on Black Friday. Consumer credit is the solution, whether or not the product fits within our means.
It’s important to keep in mind that the flashy promotions are hooks to lure in consumers. Once inside the store, they are likely to be tempted by other products they did not know they needed beforehand or to lower their expectations. Furthermore, stores often offer deals on products that they wanted to get rid of (poor evaluation, older generation, etc.). In other cases, the discounts are minimal or inexistent.
Moreover, businesses which enable this buying frenzy often have poor working conditions and wages so dismal they mirror the ephemeral Black Friday’s low prices. Take Walmart, whose store managers have organized a food drive for the benefit of their own employees. Though surely fraught with good intentions, this initiative mostly proves just how insufficient the multinational’s wages are. It also brings to mind the hotline put in place by McDonald’s — which will not be offering any bargains next Friday — to help its employees find community or government assistance so they can make ends meet.
The fact that the state needs to supplement the income of the working poor is comparable to an indirect subsidy to the aforementioned businesses. It’s made necessary by the fact that the minimal standards are so minimal that they hardly allow people to get out of poverty, even when they are working full time. Nonetheless, these businesses are turning out profits, whether it be Walmart, McDonald’s, or Target, three mass consumption giants known for their anemic wages. In Walmart’s case, a study even suggested that if it stopped driving share prices, it could raise hourly wages by more than $5 without reducing its profits or “compensating” with price hikes.
In the meantime, it’s worth remembering that the low prices paid in stores that justify their low-wage policy by these very same low prices come with an extra charge for consumers: they pay via their taxes for programs to compensate for the low-wage policy. Without a social safety net and community solidarity initiatives, many wouldn’t have the “means” to work, without enough money for housing, food, or transportation. If we were being cynical, we could even say that the low wages keep the employees dependent upon the stores where they work. With little money for personal expenses, might as well maximize one’s purchasing power by taking advantage of one’s own exploitation, right?
When the news turns to Black Friday and talks about how popular it is, about the enormous sums flowing into the American economy in less than a day, and you get a bit jealous of the promotions you won’t be able to get a hold of, stay calm: Boxing Day is only a month away. It’ll then be our turn to try and emulate consumption beyond our means by trying to compensate for our stagnate wages while multinationals’ profits continue to increase.
This article was written by Eve-Lyne Couturier, a researcher with IRIS, a Montreal-based progressive think tank.
Photo: Mahat Tattva Dasa/flickr