# Is Consumerism Consuming Us?
**URL:** https://boards.straightdope.com/t/is-consumerism-consuming-us/749943
**Category:** Great Debates
**Created:** [March 23, 2016, 1:16pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943 "2016-03-23T13:16:58Z")
**Posts on this page:** 20
**Page:** 3
### Author:  [@Voyager](https://boards.straightdope.com/u/Voyager)
#### Post date: [March 24, 2016, 8:10pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/41 "2016-03-24T20:10:21Z")
> [@psikeyhackr](#):
>
> So you are just noticing this?
>
> [Economic Wargames](http://www.spectacle.org/1199/wargame.html)
>
> Engineers making a plane do 2,000 mph in 1964 but we keep redesigning cars while the entire economics profession fails to discuss what we lose on the depreciation of that junk every year.
>
> 20th Century technology used to invent a new kind of slavery that just happens to wreck the planet. đ
>
> psik
Not quite.
From [here.](http://www.kbb.com/car-news/all-the-latest/average-length-of-us-vehicle-ownership-hit-an-all_time-high/2000007854/)
> [@](#):
>
> The latest data compiled by global market intelligence firm R.L. Polk & Co has found that Americans are now holding onto their new vehicles for a record 71.4 months. On the used vehicle side, that interval has risen to 49.9 months, a figure that also represents a new high mark. Collectively, the ownership period currently stands at 57 months, up from about 38 months back in 2002.
In the '50s people bought cars every two years, and style details were heavily advertised. I remember tailfins. I suppose car companies still advertise based on style, but Iâve seen fuel economy and quality played up far more.
Iâve had my Prius for six years, and it is about good as new. That was sure as hell not true with cars I had in the '60s and '70s.
---
### Author:  [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)
#### Post date: [March 24, 2016, 8:42pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/42 "2016-03-24T20:42:26Z")
That site also says, âThis âgame theoryâ seems to be stuck in academic never-never land and is rarely mentioned in the real world.â
[Game theory](https://en.wikipedia.org/wiki/Game_theory)
> [@](#):
>
> eleven game-theorists have now won the economics Nobel Prize. John Maynard Smith was awarded the Crafoord Prize for his application of game theory to biology.
That number may not have been true when the article was written in 1999, but the quote was just as much nonsense.
If you want to read more of Dal Timgarâs nonsense, he reproduced that entire article [here at the Dope](http://boards.straightdope.com/sdmb/showthread.php?t=29693). As you might guess, his knowledge of economics was exactly as bad as that article made it out to be.
---
### Author:  [@psikeyhackr](https://boards.straightdope.com/u/psikeyhackr)
#### Post date: [March 24, 2016, 8:46pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/43 "2016-03-24T20:46:42Z")
> [@RickJay](#):
>
> Youâve been saying this for years and yet economists really do know what depreciation is.
>
> Stuff wears out. Cars actually wear out more slowly than most things, so Iâm not sure why youâre particularly interested in that - food wears out REALLY quickly. Everyone knows.
I never said economists did not know what depreciation was. I said they do not compute and report Demand Side Depreciation. It is easy to look up Net Domestic Product but how often is it mentioned in the Media compared to Gross Domestic Product?
Get an Economics 101 book and look up NDP. It gets about half a page in a 400 page book. But the NDP equation only accounts for Supply Side Depreciation, which is what I have been saying. Food is not a durable consumer good. A Durable Consumer Good is defined as lasting 3 years or more.
psik
---
### Author:  [@psikeyhackr](https://boards.straightdope.com/u/psikeyhackr)
#### Post date: [March 24, 2016, 8:58pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/44 "2016-03-24T20:58:24Z")
> [@RickJay](#):
>
> Youâve been saying this for years and yet economists really do know what depreciation is.
>
> Stuff wears out. Cars actually wear out more slowly than most things, so Iâm not sure why youâre particularly interested in that - food wears out REALLY quickly. Everyone knows.
I never said economists did not know what depreciation was. I said they do not compute and report Demand Side Depreciation. It is easy to look up Net Domestic Product but how often is it mentioned in the Media compared to Gross Domestic Product? It is increasing GDP that is called Economic Growth.
Get an Economics 101 book and look up NDP. It gets about half a page in a 400 page book,if it is there at all, sometimesitis not. But the NDP equation only accounts for Supply Side Depreciation, which is what I have been saying. Food is not a durable consumer good. A Durable Consumer Good is defined as lasting 3 years or more. But that is kind of the point. If 10,000 Americans spend $3 each on hamburgers that is $30,000 added to GDP. If 2 Americans spend $15,000 each on cars that is $30,000 added to GDP. But those hamburgers will be gone in less than 24 hours. The cars will probably still be in use 5 years later. The cars will still be part of the wealth of the country. But by not computing and reporting the depreciation of all durable consumer goods the economics profession is implying that cars are consumed like hamburgers.
psik
PS - a 5 minute edit limit is ridiculous
---
### Author:  [@XT](https://boards.straightdope.com/u/XT)
#### Post date: [March 24, 2016, 9:22pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/45 "2016-03-24T21:22:29Z")
> [@Voyager](#):
>
> Not quite.
>
> From [here.](http://www.kbb.com/car-news/all-the-latest/average-length-of-us-vehicle-ownership-hit-an-all_time-high/2000007854/)
> In the '50s people bought cars every two years, and style details were heavily advertised. I remember tailfins. I suppose car companies still advertise based on style, but Iâve seen fuel economy and quality played up far more.
> Iâve had my Prius for six years, and it is about good as new. That was sure as hell not true with cars I had in the '60s and '70s.
Also crash safety has gone up as well as reliability. No idea what point psikeyhackr thought he was making wrt comparisons between cars now and in the past, or why itâs such a shock that car companies continue to refine their designs year after year. Were we supposed to just pick a time in the 60âs and say âwell, thatâs enough design workâŚthis is the ultimate and weâll just make cars to this pattern from now on!â?? That would kind of suck, much as I love muscle cars from the late 60âs and early 70âs. Though they LOOK good, when you look at them mechanically today they suck for things like suspension, drive train and even engine efficiency for weight to power. Which is why a lot of folks today do resto-mods instead of just straight restoration if they actually want to drive the things.
---
### Author:  [@Voyager](https://boards.straightdope.com/u/Voyager)
#### Post date: [March 24, 2016, 9:35pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/46 "2016-03-24T21:35:01Z")
> [@XT](#):
>
> Also crash safety has gone up as well as reliability.
Yeah. Old cars are dangerous. Old cars pollute. California has a program to buy old cars from people. Old cars use more gas.
I remember paying for tune-ups and doing some myself. A bet a lot of car owners today donât even know what one is.
Not everything is getting worse.
---
### Author:  [@RickJay](https://boards.straightdope.com/u/RickJay)
#### Post date: [March 24, 2016, 10:23pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/47 "2016-03-24T22:23:44Z")
> [@psikeyhackr](#):
>
> I never said economists did not know what depreciation was. I said they do not compute and report Demand Side Depreciation. It is easy to look up Net Domestic Product but how often is it mentioned in the Media compared to Gross Domestic Product? It is increasing GDP that is called Economic Growth.
As a shorthand, since-number measure, it works reasonably well. No economist actually thinks GDP describes the entirely of the concept of economics. You may wish to look up the concept of âstraw man argument.â
---
### Author:  [@psikeyhackr](https://boards.straightdope.com/u/psikeyhackr)
#### Post date: [March 24, 2016, 11:43pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/48 "2016-03-24T23:43:29Z")
> [@RickJay](#):
>
> As a shorthand, since-number measure, it works reasonably well. No economist actually thinks GDP describes the entirely of the concept of economics. You may wish to look up the concept of âstraw man argument.â
Sure, we just get this:
> [@](#):
>
> What is GDP and why is it so important to economists and investors?
> By Investopedia Staff
> A:
>
> The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a countryâs economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year.
>
> Read more: What is GDP and why is it so important? | Investopedia [What Is GDP and Why Is It So Important to Economists and Investors?](http://www.investopedia.com/ask/answers/199.asp#ixzz43rnGpdfD)
I will concede that the GDP is a Strawman as long as we are never told how much of it goes to only replacing crap that we need just to stay in the same place. đ
Saturating a market might mean a decline in sales thereby reducing GDP. It would be like my not buying another car if I already had 3 that could last 50 years.
psik
---
### Author:  [@monstro](https://boards.straightdope.com/u/monstro)
#### Post date: [March 24, 2016, 11:43pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/49 "2016-03-24T23:43:40Z")
> [@heavyduty1](#):
>
> We have reached a point where we owe more than we produce, or can produce. We pay interest on interest for things purchased which we no longer want or need, yet we continue to shop for more stuff.
>
> Moreover, many of us choose payment plans which begin after we receive the stuff, and we end up paying for much of this stuff long after it has lost its usefulness, or its allure.
>
> Isnât it time to get off this Not-So-Merry Go-Round?
The people who buy stuff on credit are only trying to resemble the people who donât.
Irresponsible spending habits are the symptom of societal ills, not the cause. People spend too much for the same reason they eat too much or drink too much. Stuff fills a void. Stuff masks anxieties and insecurities. Stuff makes the pain of life (temporally) go away. Take away the voids, insecurities, and the pain and maybe people wonât seek out things so much.
---
### Author:  [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)
#### Post date: [March 25, 2016, 1:42am UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/50 "2016-03-25T01:42:53Z")
> [@psikeyhackr](#):
>
> I never said economists did not know what depreciation was. I said they do not compute and report Demand Side Depreciation. It is easy to look up Net Domestic Product but how often is it mentioned in the Media compared to Gross Domestic Product? It is increasing GDP that is called Economic Growth.
Were you the one asking this on [Quora](https://www.quora.com/Is-Demand-Side-Depreciation-relevant-in-economics)?
> [@](#):
>
> Is Demand Side Depreciation relevant in economics?
> Machines wear out. The Laws Of Physics cannot tell the difference between a machine that is a Capital Good and one that is a Consumer Good. In the computation of NET Domestic Product supply side depreciation is subtracted. But economists have ignored Demand Side Depreciation for 60 years.
>
> There were 200,000,000 cars in the United States in 1995. Some estimates say there are 800,000,0000 cars in the world today. The new car purchases get added to GDP every year but they all wear out and depreciate over time.
Guess what the answer was. Give up?
> [@](#):
>
> Actually itâs interesting; because when calculating GDP, demand side depreciation doesnât actually matter. This is partly because of what GDP was defined as:
>
> GDP or Gross Domestic Product is the total production of a geographical region within a specific period of time. So what happens is stuff that consumers already own (or, in other words have already spent in previous years); actually donât enter GDP calculations. It will enter the Gross National Wealth calculations though. (GNW in the US is somewhere along 57.3 trillion dollars, about 3.8 times its GDP)
>
> So the answer is yes, demand side depreciation matters quite a lot to economists and economics. It is ignored in GDP calculations. But then GDP calculations isnât the entire discipline of economics.
>
> Many microeconomics (and macroeconomics) models take depreciations into account when creating demand theories (or as technical jargon goes: utility optimization problem of consumers.)
>
> In summary: Demand side depreciation is very important to economics, especially at a micro level and has been studied extensively in the past 60 years. Itâs not included in GDP calculations because GDP isnât trying to measure that.
---
### Author:  [@psikeyhackr](https://boards.straightdope.com/u/psikeyhackr)
#### Post date: [March 25, 2016, 5:10pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/51 "2016-03-25T17:10:37Z")
> [@Exapno\_Mapcase](#):
>
> Actually itâs interesting; because when calculating GDP, demand side depreciation doesnât actually matter.
My but you are brilliant.
If you look at the equation for NDP it is obvious that depreciation is subtracted after GDP is computed. The response was STUPID!
psik
---
### Author:  [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)
#### Post date: [March 25, 2016, 7:07pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/52 "2016-03-25T19:07:40Z")
> [@psikeyhackr](#):
>
> My but you are brilliant.
I didnât say that quote. It was the person on Quora, as should have been very clear. The rules here are dead set against people attributing quotes falsely.
---
### Author:  [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)
#### Post date: [March 25, 2016, 11:13pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/53 "2016-03-25T23:13:46Z")
> [@Exapno\_Mapcase](#):
>
> We need Amateur Barbarian back to address it, since this was his hobbyhorse. Maybe if I say his name three times:
>
> Amateur Barbarian
> Amateur Barbarian
> Amateur Barbarian
>
> Letâs see if that works.
**[Nope.](http://www.renegadeconsumer.com)** đ
---
### Author:  [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)
#### Post date: [March 25, 2016, 11:32pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/54 "2016-03-25T23:32:40Z")
Wait. Was that Beetlejuice? I thought I heard something. Must have been the wind.
---
### Author:  [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)
#### Post date: [March 25, 2016, 11:50pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/55 "2016-03-25T23:50:30Z")
> [@psikeyhackr](#):
>
> My but you are brilliant.
>
> If you look at the equation for NDP it is obvious that depreciation is subtracted after GDP is computed. The response was STUPID!
>
> psik
psikeyhackr,
Iâm going to consider this inadvertent. But know going forward that quotes are sacrosancy here in Great Debates. Do it again and youâll earn a warning.
---
### Author:  [@Hellestal](https://boards.straightdope.com/u/Hellestal)
#### Post date: [March 26, 2016, 6:43pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/56 "2016-03-26T18:43:42Z")
> [@psikeyhackr](#):
>
> If you look at the equation for NDP it is obvious that depreciation is subtracted after GDP is computed. The response was STUPID!
What seems âobviousâ from an apparent mathematical calculation is not necessarily the case.
If you look up the Accounting Equation, you will get this: Assets = Liabilities + Equity. It might seem similarly âobviousâ to you that the way to calculate a companyâs assets is to total up all their liabilities and all their equity. Thatâs what the equation says, right?
But if youâre starting a new company and youâre doing the books for the first time, the more practical calculation is to sum up all of the assets that the company holds (which is a clear number), along with all the debt that it owes (another clear number), and from the difference of those two figures, youâll find out how much equity the company has. The original accounting treatise, written by the father of double-entry accounting Luca Pacioli, advised exactly this process for any already existing firm that wanted to begin using the new Venetian method of bookkeeping for the first time. So what might look like a clear mathematical process is no such thing. The power of algebra lets us turn things around. So no, we donât calculate assets by summing liabilities and equity. At least, not normally.
And it just so happens that something similar is going on with Net Domestic Product calculations.
If you want to calculate GDP, there is more than one way to do that. One way is to calculate all the wages that workers earn (adjusting for taxes and transfers), along with ânet operating incomeâ of business, _and then adding a factor for depreciation_. We can write out that equation, a little bit simplified for convenience: GDP = Compensation of employees + net operating surplus + depreciation.
Do you see that equation? In order to calculate GDP according to this method, _you have to add depreciation_ to the other terms. That is the actual way the figure is derived with this method: the income method. In order to derive the GDP term, you add all those other terms â including depreciation â together. We can do a little bit of algebra now, just like we did a little bit of algebra with the Accounting Equation. We can move depreciation to the other side. And what we get is: GDP - depreciation = the rest of those terms.
Another way to label the rest of those terms is Net Domestic Product.
You can take GDP and subtract out depreciation, or you can just add the rest of the terms together without depreciation. Theyâre the same thing. If I were going to explain to someone what Net Domestic Product is, I would do the same thing that all those simple explanations on the internet do. I would say that you start with GDP (because people think they think know what GDP is) and then subtract out depreciation. But if I were going to try to teach people how to _calculate_ NDP from first principles, I wouldnât do it this way, because you canât actually calculate GDP from the income method without _first_ figuring out what NDP is. The actual way to calculate GDP in this manner is to first calculate NDP and _then_ add depreciation. What seems âobviousâ is not so obvious once we learn how the actual figures are constructed.
And really? NDP is not so important. Itâs interesting to think about, from a certain perspective, but itâs not a commonly used measure because it leaves out a lot of important things. (This yet another story that comes from the philosophy of the national accounts when they first devised.) Even GDP has some very important limitations.
The point of the national accounts is to add up to GDP, not NDP. Despite its limitations, GDP is the interesting figure. NDP is more a historical curiosity, and it happens to be just one step along the way to actually calculating GDP using the income method.
I would advise more care before claiming someone elseâs response is STUPID. Itâs better to understand a topic _before_ criticizing other people.
---
### Author:  [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)
#### Post date: [March 26, 2016, 10:40pm UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/57 "2016-03-26T22:40:33Z")
Thanks, Hellestal.
---
### Author:  [@psikeyhackr](https://boards.straightdope.com/u/psikeyhackr)
#### Post date: [March 27, 2016, 12:08am UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/58 "2016-03-27T00:08:00Z")
> [@Hellestal](#):
>
> What seems âobviousâ from an apparent mathematical calculation is not necessarily the case.
>
> If you look up the Accounting Equation, you will get this: Assets = Liabilities + Equity. It might seem similarly âobviousâ to you that the way to calculate a companyâs assets is to total up all their liabilities and all their equity. Thatâs what the equation says, right?
>
> But if youâre starting a new company and youâre doing the books for the first time, the more practical calculation is to sum up all of the assets that the company holds (which is a clear number), along with all the debt that it owes (another clear number), and from the difference of those two figures, youâll find out how much equity the company has. The original accounting treatise, written by the father of double-entry accounting Luca Pacioli, advised exactly this process for any already existing firm that wanted to begin using the new Venetian method of bookkeeping for the first time. So what might look like a clear mathematical process is no such thing.
>
> I would advise more care before claiming someone elseâs response is STUPID. Itâs better to understand a topic _before_ criticizing other people.
When you start up a company for the first time are all of the Assets new? What if some of them are used? Doesnât the asset start off with a depreciated value?
The problem is we never get start up an economy. It was going before all of us were born. A PhD economist named Raymond Goldsmith pointed out that the depreciation of durable consumer goods was ignored in 1952. He died in 1988. The economics profession has not been saying anything about Demand Side Depreciation in all of that time and they do not suggest that accounting be mandatory in our schools. Double-entry accounting is 700 years old. Donât we have the computers to handle it?
It looks like the system is designed to keep most people ignorant and running on a treadmill. Donât banks that give car loans and used car dealers have to cope with that depreciation? Most of the time economists mention depreciation it is about the depreciation of money.
Before 1900 consumers did not buy cars, air conditioners and televisions. So this is a 20th century issue. Adam Smith and Karl Marx were no involved but they are who we hear about when economic arguments come up. What did Keynes say about Planned Obsolescence?
psik
---
### Author:  [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)
#### Post date: [March 27, 2016, 2:01am UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/59 "2016-03-27T02:01:09Z")
> [@psikeyhackr](#):
>
> Adam Smith and Karl Marx were no involved but they are who we hear about when economic arguments come up.
[List of Nobel Memorial Prize laureates in Economics](https://en.wikipedia.org/wiki/List_of_Nobel_Memorial_Prize_laureates_in_Economics)
---
### Author:  [@Hellestal](https://boards.straightdope.com/u/Hellestal)
#### Post date: [March 27, 2016, 5:10am UTC](https://boards.straightdope.com/t/is-consumerism-consuming-us/749943/60 "2016-03-27T05:10:29Z")
> [@psikeyhackr](#):
>
> When you start up a company for the first time are all of the Assets new? What if some of them are used? Doesnât the asset start off with a depreciated value?
If the asset starts out âusedâ, then you record in your books the _current value_ of the used asset.
Assets that have depreciated somewhat in value from their original level still have positive value. That is precisely why they are still assets recorded on the books, instead of trash in the dumpster. You can find an approximation for the current value of used assets by looking at how similar used assets are bought and sold in secondary markets. This is not always easy to do for esoteric objects, but the concept is straightforward.
Itâs important to note, though, that a balance sheet lists a stock of assets. GDP does nothing of the kind. GDP is a flow, not a stock.
> [@](#):
>
> The problem is we never get start up an economy. It was going before all of us were born. A PhD economist named Raymond Goldsmith pointed out that the depreciation of durable consumer goods was ignored in 1952. He died in 1988.
He mightâve been right about that in 1952 (making the heroic assumption that you have correctly conveyed his idea).
He would not be right about that today.
Depreciation of consumer durables is an extremely important topic. Any proper macroeconomic model will disclose its method for incorporating both the stock of consumer durables, as well as how said stock is calibrated to depreciate over time in the model.
> [@](#):
>
> The economics profession has not been saying anything about Demand Side Depreciation in all of that timeâŚ
Youâve made a few assertions in this thread that are patently untrue.
This is one of them.
You could have taken a mere sixty seconds on Google Scholar looking up âdepreciation durable goodsâ and you wouldâve gotten hits. Itâs not a lot to ask. Honestly, it isnât. Hereâs a paper from 2003 ([pdf](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.196.7393&rep=rep1&type=pdf)) about using the stock of consumer durables compared with nondurables to create a model for asset pricing. I link to it in particular just because itâs one I read relatively recently, but it works like any other: the stock of consumer durables declines from depreciation, and increases from new purchases. As it happens, you can find many more such papers if you actually go out and look first instead of your current technique of complaining about topics you demonstrably do not understand.
> [@](#):
>
> Most of the time economists mention depreciation it is about the depreciation of money.
As with your comment above, this is also patently untrue.
Only a fraction of economists focus on international exchange rate appreciation and depreciation. Most economists deal with narrower issues, either the macroeconomy considered at the country level or microeconomic issues, and in the clear majority of cases when âdepreciationâ is mentioned, the topic is the loss of value of the stock of available goods. If you think otherwise, then whatever previous exposure to economic ideas that youâve had has been terribly skewed.
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