Present Shock: When Everything Happens Now (23 page)

The economics of consumption have always been dependent on illusions of increasing immediacy and newness, and an actuality of getting people to produce and consume more stuff, more rapidly, with evermore of their time. The expectations for instant reward and satisfaction have been built up by media for close to a century now. The amount of time between purchase (or even earning) and gratification has shrunk to nothing—so much so that the purchase itself is more rewarding than consuming whatever it is that has been bought. After waiting several days in the street, Apple customers exit the store waving their newly purchased i-gadgets in the air, as if acquisition itself were the reward. The purchase feels embedded with historicity. They were part of a real moment, a specific date. The same way someone may tell us he was at the Beatles famous concert at Shea Stadium, the Apple consumer can say he scored the new iPhone on the day it was released.

Where “act now” once meant that a particular sales price would soon expire, today it simply means there’s an opportunity to do something at a particular moment. To be a part of something. Or simply, to
do
something. Just as midcentury mass-produced goods now feel historical and authentic to us, there’s a sense that reaching the crest of current innovation or style will keep us authentic to the now. It’s not the reality of a bridal display that keeps evading us so much as the standing wave of novelty and variation. Even if the
now
is standing still, what we require to be fully equipped for this moment keeps changing.

“Act now” becomes less a call to action than an ongoing call for activity. In a digitally enhanced consumer reality, we not only work to keep up with the latest products and service options, we purchase products and services that serve no purpose other than to help us better keep up. Our iPads and Androids are nothing like the productivity-computing tools on which they may once have been based but are instead purchasing platforms designed to increase the ease and speed with which we consume.

Speeding up all this consumption further is the fact that we don’t even have to take ownership of the things we consume. New incarnations of the things we buy are successively less tangible, reducing the friction associated with purchasing, using, and disposing of real objects. Instead of buying cars, we lease them. Instead of purchasing homes, we sign mortgages. As if coming full circle to the era of lords and vassals, we no longer own land at all but simply pay for the right to use it.

Likewise, music ownership used to mean purchasing a physical vinyl disk—an artifact of a live performance. Then we replaced our vinyl collections with digitally stored music on CDs. Then we began purchasing music by downloading files from the net, with no physical medium at all. And now we are purchasing subscriptions to services such as Spotify or Turntable.FM through which we acquire the right to listen to music we never own in any form. Our right to use is in the present tense only; it is a constantly expiring resource requiring ongoing replenishment.

And oddly enough, the less tangible and more digital our music and other consumption becomes, the less sharable and open source it is rendered. The record can be taped or sold, and the CD can be copied and shared online. The downloaded, copy-protected file is personally owned on one’s own personal device, with encrypted prohibitions on sharing. This is also true for literature. Books, once passed from person to person when finished, or left in a hotel room for the next guest to find, are now read as e-books, tied to a single user and device.

In this final iteration of spring-loading, consumption becomes more like attending a performance. The consumer is no longer truly consuming anything, but experiencing and paying for a constant flow of user rights to things, services, and data owned by others. In one sense, this is freeing. There’s no need to organize or back up precious digital files for fear of losing them, no books and records to box up every time one moves. Less stuff to get damaged in a fire or flood, fewer resources depleted, and not as many objects to throw away. But it is a reality in which contracts define our access, corporations invade our privacy, and software limits our ability to socialize and share.

We get so much better and faster at consuming all the time that there’s no point in actually
having
anything at all. In a certain light, it sounds almost communal. Except we are not building a new commons together where everything is shared; we are turning life into a set of monetizable experiences where the meter is always on.

TIME IS MONEY

One would think all this innovation in consumption should at the very least yield greater profits for the corporations stoking it. It turns out this is not the case. According to the financial analysts at Deloitte & Touche, asset profitability for US firms has steadily fallen 75 percent over the past forty years.
²¹
While corporations have successfully accumulated most of the financial resources out there, they don’t know how to reinvest it to make more.

So no matter how much or rapidly we humans consume, no matter how many mental conditions we are willing to acquire on consumption’s behalf, we seem incapable of making this work for business on a financial level. We just can’t go any faster. Even when we consume and dispose of resources at a pace that threatens the ability of our environment to sustain human life, we can’t consume rapidly enough to meet the demands of the market for growth.

In America, certainly, there is already more than enough stuff to go around. We have constructed so many houses that banks are busy tearing down foreclosed homes in order to keep market value high on the rest of them. The US Department of Agriculture burns tons of crops each year in order to prevent a food glut that will impact commodity prices. Viewed in this light, our challenge with unemployment is less a problem of an underskilled population than that of an overskilled one—or at least an overproductive one. We are so good at making stuff and providing services that we no longer require all of us to do it. As we are confronted by bounty, our main reason to create jobs is merely to have some justification for distributing all the stuff that is actually in abundance. Failing that, we simply deny what is available to those in need, on principle.

We cannot consume ourselves out of this hole, no matter how hard we try, and no matter how much time we compress into each consumptive act. This is because we are asking our consumption to compensate for a deeper form of time compression—one built into the landscape of economics itself. For not only is time money, but money is time.

We tend to think of money as a way of stopping time: As psychologist Ernest Becker argued in his classic text
The Denial of Death
, our bank accounts are emotional stand-ins for survival. We accumulate money as a substitute for being able to accumulate time. The time we have left is always an unknown; the money we have left is quite certain. It is solid—or at least it once was. Gold held its value over time, no matter who was in charge, what the weather did, or which side won the war. Money was valued for its durability and solidity. This was especially true after local coinage was outlawed in favor of long-distance currencies. People had readily accepted the value of their local currencies, even though they were printed on worthless foil, because they personally knew the grain stores accountable for them. Centrally issued currencies were more impersonal and had to function across much wider distances. Monarchs were not implicitly trusted, nor were their reigns guaranteed, so they were forced to include a standardized measure of scarce metal into their coins for them to be accepted.

In spite of this outward bias toward storage and solidity, centrally issued currency actually had the effect of winding up a nation’s economic mainspring. That’s the impact of simple interest on money: interest-bearing currency isn’t really just money; it is money over
time
.

Money used to grow on trees—or, rather, out of the ground. Local currencies were earned or, quite literally, grown into existence by grain farmers. Cash was as abundant as the season’s harvest, and its relative value fluctuated with the size of the crop. This wasn’t really a problem, because the purpose of money was to allow for transactions. As long as people understood what their money was worth, they could use it.

Central currency is loaned into existence, at interest. Most simply, a person who wants to start a business borrows $100,000 from the bank, with the requirement that he pay back, say, $200,000 over the next ten years. He has a decade to double his money. Where does the additional $100,000 come from? Ultimately, from other people and businesses who are in the same position, spending money that they have borrowed. Even the wages that workers receive to buy things with were borrowed somewhere up the chain.

But this seems to suggest a zero-sum game. Each borrower must win some
other
borrower’s money in order to pay back the bank. If the bank has loaned out $100,000 to ten different businesses, all competing to earn the money they need to pay back their loans, then at least half of them have to fail. Unless, of course, someone simply borrows
more
money from the bank, by proposing an additional business or expansion.

Therein lies the beauty and horror of interest-bearing currency. Interest is expansionary. As long as the economy is growing, everything works out. The requirement to pay back at the rate of interest motivates businesses as surely as the loan shark encourages his borrowers to keep up their weekly installments. Running a business and growing a business end up meaning the same thing. Even if one business pays back everything it owes, this only puts some other business into debt. As the debtor seeks to expand to meet its interest requirements, the debtor either takes territory from an existing business or finds a new territory. Standing still is to lose.

That’s why in the centuries following the implementation of interest-bearing currency, we saw such rapid and, in many cases, merciless expansion of colonial European powers across the globe. They had no choice. The bias of the money supply toward growth biased these powers toward growth, too. Interestingly, the Ottoman Empire utilized a series of noninterest-bearing regional currencies under the millet system and did not suffer the same growth requirement. While the empire still had its conquests, they were not economically required for the fiscal system to remain solvent. Sustainability was still an option.

To be sure, in the six centuries following the birth of modern-style centrally issued currencies, we witnessed expansion and advancement on an unprecedented scale. Europe colonized China, India, Africa, the Middle East, the Americas, and islands in every ocean. By the twentieth century, the United States had joined the territorial race as well. (Only France, with its limited navy, proved incapable of expanding in quite the same way, leading finance minister Jean-Baptiste Colbert to invent the concept of French luxury and achieve expansion through exports. “French fashions must be France’s answers to Spain’s gold mines in Peru,” he declared.)
²²

Once the overt conquests of nations and the subjugation of their people was no longer feasible, the West achieved the same thing through more virtual means. After World War II, the last of the European colonies—such as India and Palestine—were proving ungovernable. The creation of the World Bank and the International Monetary Fund gave Western powers a new way to expand their economies without actually taking over countries. Instead, in the name of liberating these regions, they would lend large sums to so-called developing nations, at interest.

In return for the privilege of going into debt, the borrowing nations would also be required to open themselves to unrestricted trade with lending nations’ corporations. This meant foreign companies were entitled to build factories, undercut local industry or farming, and otherwise turn these fledgling nations into colonies—now called beneficiaries. Open-market trading rules written by the bank invariably favored the foreign power. Indigenous populations grew poorer. They were incapable of competing with the corporations that set up shop and often lost access to subsistence farming due to both disadvantageous trade policies and the pollution and runoff from foreign factories. Amazingly, toxic spills and skyrocketing health issues were generally recorded as increases to the nation’s GNP and touted in World Bank literature as success stories. Violence and value judgments aside, the debt requirement was still being served, and economic expansion was allowed to continue.

A similar strategy was employed on Western consumers. The emergence of credit cards, federally preapproved residential mortgages, and other lines of credit in the mid-twentieth century served a growth economy in two ways. First, and most simply, it gave people a way to buy more stuff now than they actually had money to buy. This is pure time compression: the money a person is likely to earn in the future is packed into the present moment. Second, the creation of an indebted, interest-paying population expands the economy. Instead of just paying three thousand dollars for a new car, the consumer spends nine thousand dollars by the time interest payments are done. That nine thousand dollars goes on the books as nine thousand of projected revenue. Easy growth. The way for businesses to service their own debt became simply to pass that debt on to their customers, ideally at higher rates of interest than they paid for the money themselves.

And just as the World Bank helped struggling nations envision promising futures as participants in the First World economy, retail banks and credit companies exploited well-known temporal distortions to convince people how easy it would be to pay back loans in the future. The practice of behavioral finance seeks to exploit both the loopholes in lending rules as well as the documented lapses in people’s understanding of the consequences of their own decisions. It is not a fringe science. JPMorgan Chase has an entire U.S. Behavioral Finance Group that is dedicated to looking at investor emotions and irrationality, particularly during crises.
²³
Behavioral economists now teach at Stanford, Berkeley, Chicago, Columbia, Princeton, MIT, and Harvard,
²⁴
and have earned two Nobel Prizes in economics.