The South African economy (like many globally) is driven by what we spend money on, or as the economists would put it “consumer spend”. One of the many downfalls of economics as a field is how the terminology divorces us from the statistics that actually summarise who we are as people and how we behave. Take “consumer spend”, it sounds like such a boring statistic that I doubt most of us really engage with the terrifying reality that what we spend is over 60% of what drives our economy (consumer spending as a percentage of GDP is around 62%).
Well, this is how I visualise what that means. Imagine spending 62% of your time sitting on your couch eating Doritos (or whatever junk food you tend to indulge in). Sounds amazing for 1 day, maybe even for 1 week depending on how much you like Doritos but at some point, your body is going to rebel. You simply can’t survive on mostly junk. What you consume matters. So, consuming thoughtlessly 60% of the time can’t be good for anyone.
And that’s probably what our economy looks and feels like. A whole bunch of us consuming thoughtlessly most of our lives. The saying “you are what you consume” has become pretty popular as a call to action to be mindful about what we eat, or what we watch, or what we read/listen to. But how much thought do we really put into what we spend our money on, where we spend our money and why we spend our money?
We’ve called for things to be convenient, things to be cheap, things to be easy because our lives are busy and difficult (and that’s a story a lot of us tell ourselves) but do we know what we’re asking for when we ask for products or services to be convenient and cheap? Let’s first dispel the notion that “cheap” exists. It doesn’t. There is no such thing as cheap. The cost of producing goods is usually a very narrow calculation that doesn’t reflect the true cost of production.
The true cost of extracting raw materials sustainably (not recklessly); the true cost of producing with fair labour conditions (and not exploitative ones); the true cost of supporting local economies (and not outsourcing to countries that keep prices of production low with unethical practice) is not captured in the cost of production, but these are costs that have to paid by society and inevitably by the very people that have called for things to be cheap and convenient.
Economists refer to these costs as “externalities” essentially a fancy word for “someone else’s problem”. When the cost of producing is low so we can buy “cheap” things the externalities are high, unsustainably high. Perhaps we think we can continue to ignore these costs because governments and non-profit organisations will have to figure out how to address them but these costs are coming to our doorstep and they are and will continue to affect our lives.
The recent social unrest that shook South Africa reflects a hugely unequal society where inequality worsens as industry supports more in job creation offshore than it does locally. And when you ask companies why they produce offshore the answer is “customers won’t pay more for locally produced”.
So, we’ve asked for cheap, we’ve asked for convenience and essentially we’ve asked that companies produce anywhere that gives them the lowest price, regardless of whether that country condones unethical, unregulated labour practice at the cost of being able to create jobs locally. When we ask for cheap and convenient, we are complicit in the rising unemployment crippling our country.
When we keep spending based on things being cheap and convenient, we support the “easy way” of doing things. We keep putting money into companies that already have a foothold over our economy, that already have access to financing. Ironically, the companies that are consciously created, who need and deserve our financial support struggle to keep going because we don’t choose them. They aren’t cheap and they aren’t convenient.
Let’s go back to the hypothetical exercise and think about what a painting would look like if it just reflected what we spend money on? Would it look like a landfill of unsustainable products? Would it have the chemical spills of poor manufacturing practice? Would it have the big, broad, smiles of the rich minority who keep getting our money because they give us convenient products? And importantly, would you be happy walking past that painting every day and looking at it because it is a visual representation of you & what you want to support.
We’re fooling ourselves if we think that we don’t need to be mindful about how we consume. The “externalities” are racking up a very tall bill that we are already paying. We need to hold ourselves accountable for the excuses we’ve made for ourselves to not have to think about how we’re spending. By reframing how we see ourselves, we can begin changing how we spend.
A challenge we put to ourselves within our AMAZI tribe is to view ourselves as investors, not as consumers. We know that when we are mindful and purposeful about where we direct our spending, we are investing in the types of companies we believe are important: local companies, women-owned companies, black-owned companies.
Over the next few months, we’re hoping we can share more about how we can all start in small ways to stop consuming and start investing the money we spend. Because what we spend shapes and drives our economy. If we want a healthier, more equal, more competitive and sustainable economy, we need to change how we’re spending.
When we consciously move away from spending at entrenched, big companies just because they are there and they’ve always been there and we actually start investing money in local, ethical, sustainable practice that supports our local job creation, our local manufacturing, our local capacity, we will direct our money to build opportunity for more South Africans. Let’s be clear, that’s not charitable, it’s just the right way to co-exist.
That isn’t anyone else’s responsibility but ours. No matter how much the government may need to stimulate job creation and SMME growth (that’s a separate blog), our consumer spend drives what actually grows. So, if we’re not coming to the party and being conscious about what we support, there isn’t any type of stimulus that government can put in place that will actually create a healthy, thriving, local capacity.
Before you start with your next excuse to yourself about “it’s the government’s job” pause and redirect that conversation inward. It starts with a conversation that we each need to have with ourselves and ask whether leading a busy stressful life is enough of a justification to keep supporting “cheap” and “convenient”?