The third of the "Five Limits" is consumption. Here is the very heart of Industrialism. Without an ever expanding debt-driven consumption, Industrialism would collapse. Billions of dollars are spent each year to keep consumption high and advertising is the engine that drives it all. Our consumption patterns have sometimes been compared to "addictive behavior" and reflect the fact that psychological factors are at the root of our predicament.

Excerpt from Juliet B. Schor "The Overspent American: Why We Want What We Don't Need"
(Harper Perennial, 1998) pp. 3-7

In 1996 a best-selling book entitled The Millionaire Next Door caused a minor sensation. In contrast to the popular perception of millionaire lifestyles, this book reveals that most millionaires live frugal lives - buying used cars, purchasing their suits at JC Penney, and shopping for bargains. These very wealthy people feel no need to let the world know they can afford to live much better than their neighbors.

Millions of other Americans, on the other hand, have a different relationship with spending. What they acquire and own is tightly bound to their personal identity. Driving a certain type of car, wearing particular designer labels, living in a certain kind of home, and ordering the right bottle of wine create and support a particular image of themselves to present to the world.

This is not to say that most Americans make consumer purchases solely to fool others about who they really are. It is not to say that we are a nation of crass status-seekers. Or that people who purchase more than they need are simply demonstrating a base materialism, in the sense of valuing material possessions above all else. But it is to say that, unlike the millionaires next door, who are not driven to use their wealth to create an attractive image of themselves, many of us are continually comparing our own lifestyle and possessions to those of a select group of people we respect and want to be like, people whose sense of what's important in life seems close to our own.

This aspect of our spending is not new - competitive acquisition has long been an American institution. At the turn of the century, the rich consumed conspicuously. In the early post-World War II decades, Americans spent to keep up with the Joneses, using their possessions to make the statement that they were not failing in their careers. But in recent decades, the culture of spending has changed and intensified. In the old days, our neighbors set the standard for what we had to have. They may have earned a little more, or a little less, but their incomes and ours were in the same ballpark. Their house down the block, worth roughly the same as ours, confirmed this. Today the neighbors are no longer the focus of comparison. How could they be? We may not even know them, much less which restaurants they patronize, where they vacation, and how much they spent for their living room couch.

For reasons that will become clear, the comparisons we make are no longer restricted to those in our own general earnings category, or even to those one rung above us on the ladder. Today a person is more likely to be making comparisons with, or choose as a "reference group," people whose incomes are three, four, or five times his or her own. The result is that millions of us have become participants in a national culture of upscale spending. I call it the new consumerism.

Part of what's new is that lifestyle aspirations are now formed by different points of reference. For many of us, the neighborhood has been replaced by a community of coworkers, people we work alongside and colleagues in our own and related professions. And while our real-life friends still matter, they have been joined by our media "friends." (This is true both figuratively and literally - the television show Friends is a good example of an influential media referent.) We watch the way television families live, we read about the lifestyles of celebrities and other public figures we admire, and we consciously and unconsciously assimilate this information. It affects us.

So far so good. We are in a wider world, so we like to know that we are stacking up well against a wider population group than the people on the block. No harm in that. But as new reference groups form, they are less likely to comprise people who all earn approximately the same amount of money. And therein lies the problem. When a person who earns $75,000 a year compares herself to someone earning $90,000, the comparison is sustainable. It creates some tension, even a striving to do a bit better, to be more successful in a career. But when a reference group includes people who pull down six or even seven-figure incomes, that's trouble. When poet-waiters earning $18,000 a year, teachers earning $30,000, and editors and publishers earning six-figure incomes all aspire to be part of one urban literary referent group, which exerts pressure to drink the same brand of bottled water and wine, wear similar urban literary clothes, and appoint apartments with urban literary furniture, those at the lower economic end of the reference group find themselves in an untenable situation. Even if we choose not to emulate those who spend ostentatiously, consumer aspirations can be a serious reach.

Advertising and the media have played an important part in stretching out reference groups vertically. When twenty-somethings can't afford much more than a utilitarian studio but think they should have a New York apartment to match the ones they see or Friends, they are setting unattainable consumption goals for themselves, with dissatisfaction as a predictable result. When the children of affluent suburban and impoverished inner-city households both want the same Tommy Hilfiger logo emblazoned on their chests and the top-of-the-line Swoosh on their feet, it's a potential disaster. One solution to these problems emerged on the talk-show circuit recently, championed by a pair of young urban "entry-level" earners: live the faux life, consuming as if you had a big bank balance. Their strategies? Use your expense account for private entertainment, date bankers, and sneak into snazzy parties without an invitation. Haven't got the wardrobe for it? No matter. Charge expensive clothes, wear them with the tags on, and return them the morning after. Apparently the upscale life is now so worth living that deception, cheating, and theft are a small price to pay for it.

These are the more dramatic examples. Millions of us face less stark but problematic comparisons every day. People in one-earner families find themselves trying to live the lifestyle of their two-paycheck friends. Parents of modest means struggle to pay for the private schooling that others in their reference group have established as the right thing to do for their children.

Additional problems are created by the accelerating pace of product innovation. To gain broader distribution for the plethora of new products, manufacturers have gone to lifestyle marketing, targeting their pitches of upscale items at rich and non-rich alike. Gourmet cereal, a luxurious latte, or bathroom fixtures that make a statement, the right statement, are offered to people almost everywhere on the economic spectrum. In fact, through the magic of plastic, anyone can buy designer anything, at the trendiest retail shop. Or at outlet prices. That's the new consumerism. And its siren call is hard to resist.

The new consumerism is also built on a relentless ratcheting up of standards. If you move into a house with a fifties kitchen, the presumption is that you will eventually have it redone, because that's a standard that has now been established. If you didn't have air conditioning in your old car, the presumption is that when you replace it, the new one will have it. If you haven been to Europe, the presumption is that you will get there, because you deserve to get there. And so on. In addition to the proliferation of new products (computer cell phones, faxes, and other microelectronics), there is a continual upgrading of old ones - autos and appliances - and a shift to customized, more expensive versions, all leading to a general expansion of the list of things we have to have. The 1929 home I just moved into has a closet too shallow to fit a hanger. So the clothes face forward. The real estate agents suggested I solve the "problem" by turning the study off the bedroom into a walk-in. (Why read when you could be buying clothes?) What we want grows into what we need, at a sometimes dizzying rate. While politicians continue to tout the middle class as the heart and soul of American society, for far too many of us being solidly middle-class is no longer good enough.

Oddly, it doesn't seem as if we're spending wastefully, or even lavishly. Rather, many of us feel we're just making it, barely able to stay even. But what's remarkable is that this feeling is not restricted to families of limited income. It's a generalized feeling, one that exists at all levels. Twenty-seven percent of all households making more than $100,000 a year say they cannot afford to buy everything they really need. Nearly 20 percent say they "spend nearly all their income on the basic necessities of life." In the $50,000 -100,000 range, 39 percent and one-third feel this way, respectively. Overall, half the population of the richest country in the world say they cannot afford everything they really need. And it's not just the poorer half.

This book is about why: About why so many middle-class Americans feel materially dissatisfied. Why they walk around with ever-present mental "wish lists" of things to buy or get. How even a six-figure income can seem inadequate, and why this country saves less than virtually any other nation in the world. It is about the ways in which, for America's middle classes, "spending becomes you", about how it flatters, enhances, and defines people in often wonderful ways, but also about how it takes over their lives. My analysis is based on new research showing that the need to spend whatever it takes to keep current within a chosen reference group - which may include members of widely disparate resources - drives much purchasing behavior. It analyzes how standards of belonging socially have changed in recent decades, and how this change has introduced Americans to highly intensified spending pressures.

And finally, it is about a growing backlash to the consumption culture, a movement of people who are downshifting - by working less, earning less, and living their consumer lives much more deliberately.

* Highly Recommended *

"One Market Under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy" Thomas Frank Doubleday 2000

"Can't Buy My Love: How Advertising Changes The Way We Think And Feel" Jean Kilbourne Simon and Schuster 1999

"Culture Jam: How to Reverse America's Suicidal Consumer Binge - And Why We Must" Kalle Lasn Quill (Harper Collins) 1999

"Land of Desire: Merchants, Power, and the Rise of New American Culture" William Leach Vintage Books 1993

"Coercion: Why We Listen To What 'They' Say" Douglas Rushkoff Riverhead Books 1999

"The Overspent American: Why We Want What We Don't Need" Juliet B. Schor HarperPerennial 1998