What If Everyone Suddenly Became Frugal?

By Xin Lu on 11 January 2008 (Updated 24 January 2008) 7 comments

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.

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rstlne's picture
rstlne

Most people think that if frugality became widespread, the economy will go through a downturn and that's a bad thing. However, that kind of analysis is from the perspective of our current overconsuming and overworked society. I think if everyone became frugal, we'll end up just downscaling the economy. Because we consume less, we will also work less and have more time to spend with our families. There will be less stress and less stretching to make ends meet. Overall, I think it will be positive for our society.

Guest's picture

Less consumption means that there will be less demand for products and thus the prices will go down. So even if you earn less and make less from investing, you should be okay. It's all relative.

Guest's picture

Don't know how it is only NOW becoming evident that if US consumers are PUT into a position to not be ABLE to buy consumer goods, the MAKERS of these goods will not have any MARKETS. I think it has something to do with the inflationary philosophies of these times...more more more...I do wonder if we can balance trade deficits without a crash somewhere. The pundits must know that....But at least the frugal will be prepared for downturns...

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Davebliss

While it's true that American consumerism has been the driving force of the World economy, that it becoming less so as more and more countries begin spending the money that Americans have exported to them. The American model, however, is unsustainable, and soon our massive debt will haunt countries dependant upon the American desire for Wal-Mart specials. If America suddenly began spending less, then there would be economic upheaval, it's true, but less so than most would believe. Other consumers would certainly pick up the slack.

By spending less, Americans wouldn't need to make as much. A sudden shift in spending would result in large job losses, especially in the service industry. But by spending less, the low paying service jobs would no longer be needed to supplement income. Single income families would become commonplace, as would single vehicle families, single home families, single marriage families. Consumerism affects so many things in our lives, I'm not sure we understand just how damaging it is.

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Gman

If everybody became frugal, Corporatism would end, and we would all be free again. Without any bribe money, Corporations won't be able to control the politicians. Don't worry though, it will never happen. Buy Buy Buy!

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Venkat

All what you said would come true BUT if we buy/spend less, then Corporations will have to produce less which means that they will not need the same workforce that they have today, which means that they will layoff people in the thousands (already happening). These laid off people + the ones in fear of being laid off will buy even less AND corporations will produce less and therefore need a lesser workforce and so will layoff even more.....You get the picture.

While living within one's means is a good principle, we shouldn't go to the other extreme and become misers either. Like everything good in life and in this World, there needs to be a balance. The last 10+ years have no doubt seen too much irresponsible spending by Americans (and a lot of other countries as well) and hence this "Correction (with a Capital C) BUT let's not try and "Fix" the problem by becoming misers. We'll only be shooting ourselves in the foot by doing that.