Black Friday is a huge event in American life. Roughly one out of every two American citizens - an estimated 172 million people -- went shopping on Thanksgiving holiday weekend last year. Facing the greatest economic crisis in living memory, shoppers charged gates and malls across the country in 2008. Things turned ugly, and a Wal-Mart contract worker was trampled to death in Long Island.
Despite casualties, the massive sell-off seemed to work, as many retailers sold enough to survive into 2009. Promises were made to avoid shopping deaths in the future.
Yet Black Friday 2008 never actually finished. Desperate retailers have continued to mark down everything from TVs to luxury brands in an unprecedented wave of discounting that has redefined the marketplace. Consequently, it is Wal-Mart, dollar store chains, and the Communist Party of China - all purveyors of cheap stuff - that are today's winners, outperforming nearly everyone else, at a time when even governments and consumers themselves are overspent and showing profound signs of weakness.
Fears that surround Black Friday 2009 aren't just about shopping riots. Indeed, with much of the economy on markdown, America's very future is at stake. Can shopping save the nation?
Shopping has been good to America, yet it is becoming increasingly difficult to replicate the prosperity of the mid-2000s. Indeed, America's failure to bounce back in the face of crisis has everything to do with the fact that an estimated 68 per cent of all economic output is tied to consumer activity.
Like Wal-Mart, we don't actually make much of our own stuff anymore. Since the 1960s, America has discovered ways to create new prosperity through the development of an advanced service economy that leveraged technology, finance, affordable energy, cheap offshore labor, cheap transport, and abundant consumer credit. And with the bulk of its economy still directly or indirectly linked to consumption, America leads western nations in its dependence on consumers, and by default, it holds a deep structural dependence on affordable products, resources and services. By 2005, retail and wholesale trade accounted for 35 percent of America's GDP, employing 1 in 5 American workers.
This is a problem in the 21st century. Our economy is a magnificent but deeply flawed experiment that threatens to de-leverage itself unless we engineer new ways to infuse it with new spending. Consequently, America has already spent hundreds of billions of public dollars on buy-outs, stimulus packages, and cash for clunkers, in an effort to prevent further crisis.
The real issue is that too much public money has been invested on saving the current economy, not transforming it into something more sustainable. America's stimulus binge certainly helped save Black Friday 2009 by pushing just enough cash in the economy to stabilize retail sales for the all-important holiday season. But once the money is spent, we will still face many of the same difficult issues, such as chronic unemployment, depleted household equity, and tightened credit markets. Unless America is willing to liquidate billions in further bailouts and stimulus every several years, and even if China is willing to backstop this kind of profligate spending, today's status quo will not find stability because consumers themselves have become a threatened resource.
The very notion of a return to normal - a recovery to the flush growth of the mid-2000s -- seems a little far-fetched in light of several other trends. Ours is the century where reduced access to affordable energy will deeply penalize nations who are inefficient and wasteful. And more than any other, the dominant Wal-Mart model of progress is energy intensive: petrochemicals for plastics and textiles, container ships, trucking fleets, urban sprawl and minivans filled with loot. It's not a model that lends itself to $150 a barrel for crude oil, a reality that many agree will be part of our next decade, along with new costs associated with climate change and carbon pricing. Wal-Mart will not be the only one deeply challenged by the gradual demise of affordable resources.
Similarly, the nation that has most profoundly subsidized America in recent years with cheap offshore labor is rethinking its commitment to free-market globalization. As President Obama recently discovered, China's and America's interests are diverging. And even though it was American dollars extracted through the greatest surge of exports ever seen in human history that funded China's rise, the Middle kingdom is now pushing back: increased minimum wages, currency manipulation, growing protectionism, and a diplomatic bravado that seeks to show America who's boss. Wal-Mart itself knows where its future prosperity lies, having recently announced that by 2010, Wal-Mart International will account for the bulk of the company's new store square footage within the developing markets of China and Brazil.
Ten per cent unemployment, one in seven mortgages in foreclosure, and estimated government deficits totaling $9-trillion over the next decade - these are not the signs of a flourishing superpower. Indeed, as China rises and America becomes the world's leading debtor nation, America's continued pursuit of mass consumerism as the keystone of its economy is the very picture of an empire in decline.
Part of the solution lies in simply stating the obvious: we no longer afford yesterday's growth. The prosperity of tomorrow lies in fortifying local economies, improving household income security, skillfully managing deglobalization, as well as eliminating wasteful subsidies and bailouts. Common sense dictates diversification and sustainability, not highly leveraged shopping economies and stop-gap public spending.
On this great day of shopping, there are many choices, but few so critical as our response to the uncertain future of consumerism and globalization. Our dependence on cheap stuff has not been without benefit, to be sure, as many Black Friday shoppers now enjoy goods and technologies that were previously inaccessible. But if we cannot find ways of creating new value, and new stability, then our economy will increasingly resemble just another troubled retail chain in a discount price war, one that desperately devalues itself and eliminates jobs in a last-ditch attempt to survive.
Unless our quest for cheap becomes a quest for value, it's Black Friday forever, a race to the bottom where Wal-Mart's fortunes rise, and regular shoppers flounder.
Gordon Laird is author of The Price of a Bargain: The Quest for Cheap and the Death of Globalization, recently published by Palgrave Macmillan. www.gordonlaird.com
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