What If Everyone Suddenly Became Frugal?
What if a well-meaning alien race from the planet Cheapos came to earth and hypnotized everyone so that every single American stopped buying useless junk and started to live way below their means? Here are some things that I think could happen if the denizens of the United States became tightwads over night. The effects will be global, and they are not all good.
1. Mass job cuts here in the States and globally -- It's a fact that a lot of countries depend on the consumption of Americans to keep their own economies humming along nicely. If a massive amount of Americans suddenly stopped spending, businesses will close because the demand for many goods and services will be greatly reduced.
2. The Amount of Garbage Will be Greatly Reduced -- This is a no brainer, less consumption means less garbage. Almost everything we buy comes with a bundle of packaging that becomes garbage and the Environmental Protection Agency estimates that Americans produced more than 250 million tons of garbage in 2006. If Americas cut down consumption by 40 to 50% perhaps the amount of garbage would be reduced accordingly.
3. People May Eat Less -- This is debatable, but generally cooking at home is cheaper than eating out. Restaurants tend to give portions that way too big for one meal, but we still wolf it down because we paid for it. If people cook at home they're able to control the portions and ingredients much better and possibly become more healthy in the process.
4. Everything May Become More Affordable -- Since frugal people only like bargains, stores and companies may find that they would need to cut down prices further to attract any buyers. Maybe cheapskates like me would be able to haggle in a Walmart and get shirts for 25 cents!
5. The Stock Market Will Take a Dive -- In the news today there was a report about how the consumer confidence index is down considerably for the month of December and the market took a dive. I cannot fathom where the market will go if 300 million Americans suddenly consumed considerably less. Profits will fall and investment values will drop accordingly.
We are encouraged to spend because the American economy depends heavily on consumer spending. This is why sometimes people like me who advocate frugality are marked as anti-America and flat out unpatriotic. It is highly unlikely that America will voluntarily become a frugal nation after years of indulging in purchasing anything and everything, but there comes a day when many people are forced to be frugal because they would be all spent out. If people are suddenly cheap because they are absolutely broke, then they are in no better situation than being brainwashed than a bunch of extraterrestrials! Don't panic! If everyone becomes frugal gradually, I believe we can build real wealth both personally and as a nation.