Friday, November 24, 2006

Another One from George

Saw another article from George Soros. Think he raises valid points about consumerism and the desire to 'feel good' without confronting reality. Alot of what he says about the USA is applicable to Singapore and the UK and other similar socieities.

Are We A Feel-Good Society?

Although it predates 9/11, America’s turning into a feel-good
society is a relatively recent development. The epithet definitely does
not apply to the society that emerged from the Second World War. Harry
Truman was not a feel-good president. He called it as he saw it, and he
was considered typical of the small-town citizens who constituted the
backbone of America. The Marshall Plan was an act of far-sighted
statesmanship. It would have been more appropriate to describe America
as a can-do society.

Somewhere between then and now a transformation took place. Ronald
Reagan was definitely a feel-good president—and he has since been
elevated to the ranks of the saints.

His funeral was nothing short of canonization. What happened between
1950 and 1980? I am not very good at this kind of analysis, but I would
attribute the transformation mainly to the rise of consumerism and the
application of consumerism to politics. Since 1980, the unwillingness
to face reality has been exacerbated by globalization. A global economy
based on the principles of market fundamentalism is full of
uncertainties from which many people are eager to escape.* Religious
fundamentalism has also played an increasingly important role, although
I am ill-qualified to analyze it. Fundamentalist religion seems to
avoid the soul-searching that has characterized Christian religions
since the time of Jesus and appears to do everything to reward the
faithful by making them feel good.

How did consumerism come to dominate the economy?

In the classical definition of economics formulated by my professor,
Lionel Robbins, at the London School of Economics, economics was
concerned with the allocation of scarce resources among unlimited
needs.† The market dealt in commodities, the shape of the supply and
demand curves was fixed and economic theory was concerned only with
determining prices. Needless to say, the equilibrium price attained in
a perfect market, where an infinite number of buyers and callers were
competing with each other, assured the optimum allocation of resources.
This remains the credo of market fundamentalists to this day.

But perfect competition does not favor profits. It provides adequate
compensation for the use of capital but nothing more. Entrepreneurs are
motivated by profits. They have been busy inventing ever more
sophisticated ways of generating profits. Inventions have, of course,
been the driving force of economic progress. But in addition to product
innovation, entrepreneurs have found other ways of enhancing their
profits: differentiating their products from others, establishing
monopolies, advertising, marketing. These activities destroyed the
pristine purity of perfect competition. Supply and demand were no
longer independently given because demand was artificially stimulated
and markets no longer dealt in commodities but in brands. This tendency
progressed inexorably because it was driven by the quest for profits.
Firms no longer catered to needs but to desires and they manipulated
and stimulated those desires. They employed ever more sophisticated
methods of market research and motivational research. And the target of
these methods, the consumer, did not remain unaffected. It responded to
stimulation. That is how consumerism developed. It was fostered by
corporations in their search for profits.**

Gradually, the methods developed for commercial purposes found a
market in politics. This changed the character of politics. The
original idea of elections was that candidates would come forward and
announce what they stood for; the electorate would then decide whom
they liked best. The supply of candidates and the preferences of the
electorate were supposed to be independently given, just as in the
theory of perfect competition. But the process was corrupted by the
methods adopted from commercial life: focus groups and framing the
messages. Politicians learned to cater to the desires of the electorate
instead of propounding policies they believed in. The electorate did
not remain unaffected. They chose the candidate who told them what they
wanted to hear, but at the same time they could not avoid noticing that
they were being manipulated; they were not surprised when their elected
leaders deceived them. But there was no escape. The increasing
sophistication of communication methods was built into the system. That
is how America became a feel-good society. It was fostered by
politicians seeking to be elected.

Americans have plenty to feel good about. Democratic capitalism as
practiced in the United States has been highly successful. Consumerism
bolstered demand and the Great Depression has become a distant memory.
Prosperity has bolstered consumerism, setting in motion a benign circle.

The United States emerged from the Second World War as the dominant
military and economic power. That power was challenged by the Soviet
Union, but eventually the West won the Cold War. When the Soviet system
collapsed, the United States became the sole superpower. The United
States was also the main sponsor of globalization which, in turn, has
been a boon to the United States. But the dominant position of the
United States cannot be long maintained by a feel-good society that is
unwilling to confront unpleasant realities.

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