A Question of Economic Freedom: The Mindless Spend Trend

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We live in a time when economic freedom is considered to be an important basis for virtually all other individual freedoms as well as for personal and global prosperity. But have you ever stopped to think what forces may be influencing your personal spending choices? When we go into a store or online to make a purchase, what is it that makes us decide to spend?

In many cases, our decision will be the result of a genuine or perceived need or desire for something. The impulse to spend may itself have arisen from an advertisement, or from a range of innate inclinations—such as the motivation to give a gift. 

Whatever the origin of our decision to spend, one thing seems certain: that the final decision of when to spend—and on what—is ours, and ours alone.

But is it? While even the most persuasive of advertisements cannot extract our cash without our complicit agreement, it appears that a significant proportion of our spending is mapped out in advance with a high degree of predictability. 

It is widely known and accepted, of course, that seasonal holidays will create a spike in consumer spending. But when we stop and think about it, these are often spending events that we have been born into, as the result of what we might call the conscious or unconscious acquiescence to a sense of tradition.

While we may think that we are the gatekeepers for our own expenditure, this may be largely an illusion. It could well be the case that when we plot our annual budget over the course of a year, we find that we are actually making our most significant outlay at times that we ourselves have not determined, but that have been predetermined for us on the basis of tradition alone, and our identification with it.

The three months before Christmas, for example, is the period when many retailers make more than half of their annual sales and profits. In the United States, it has been calculated that a quarter of all personal spending takes place during the Christmas holiday shopping season, spiking on pre-Christmas discounting bonanzas such as Black Friday, Cyber Monday, Green Monday, and Super Saturday. That's a lot of our hard-earned money spent in the name of Father Christmas. Add to this Valentine's Day, Easter and Halloween, and it becomes clear that a large part of our spending is highly predetermined.

This phenomena is not just evident in the West. In China, consumers spent billions during Golden Week last year, with reported outlay ranging from $59.2 billion to as much as $180 billion. Golden Week is a national holiday that allows people in China to take seven consecutive days off from work or school. This week-long holiday has its origin in one day, October 1, 1949, when the People's Republic of China (PRC) was inaugurated. On that day an official victory celebration and ceremony was held in Tiananmen Square. Mao Zedong, a founding father of the PRC, raised the first Communist national flag of China before thousands of people at the square. 

To this day portraits of Mao are still displayed during this season. Once established, the holiday was extended to a full week in a bid to boost domestic spending—which it has—as an estimated 593 million Chinese people opted to travel during that week last year. Of that number, an estimated six million headed overseas to spend approximately $7.2 billion.

Regular, predetermined spending gluts are certainly useful for boosting the economy and for government budget planning. In the UK, for example, 5 percent of all Gross Domestic Product (GDP) is expected to come from retail sales each year. Thus we find religious, national, ideological or other traditions forming a part of the functioning of the same system—of which government is also a part. We accept this because we know no other way; these institutions are passed down through the generations. In fact, we are carried by the wave of this infrastructure from the time we have our first piggy bank. 

Nevertheless, there is an inherent irony. For a society that so highly regards individuality and self-determinism, it seems somewhat incongruous that our spending habits are predetermined by generations of tradition—tradition which, in some cases, we may not ever have stopped to question.

How much might our spending habits change if we were to examine our traditions more closely and choose them more mindfully? How much might our lives change?

Daniel Tompsett

 

 

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Tags: traditions, holidays, global economy