If we don’t learn to live frugally, we might not live at all
Mishaal Al Gergawi
Last Updated: August 21. 2008 9:09PM UAE / August 21. 2008 5:09PM GMT Send to friend
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The world is not sustainable with six billion people. OK, I have your attention. I don’t mean that statement literally, so I will paraphrase. The world is not sustainable with six billion people aiming to live as well as the average west European does. We cannot all live, eat, drive and – most importantly – shop as the average west European does. I say shop because the root of the problem is with shopping.
I have just spent a week attending a design course, and I have had various conversations with people connected with the course about what it means to design and for whom, for what purpose and, most importantly, in what way.
In one of our discussions, someone said that 50 years ago when his grandparents bought a kitchen they used it for life, and when they bought a car, they only sold it if they needed the money.
This is not to disregard the massive technological advances that we made in the second half of the 20th century but rather an indictment of the astonishingly parallel tracks of consistent development of features and usability on the one hand, and the consistent drop in quality and durability across the board in goods produced – or “built-in obsolescence” as it has been termed .
There is no conspiracy theory here; in fact it’s quite simple. If it ever could, the genius of capitalism has shot itself in the foot. What this all comes down to is summed up in the expression “passing the buck”. And here’s how it works: someone thinks up a great product; someone with money agrees. Together they produce and market this new product and make some money.
Someone else with even more money thinks that they can still make profit out of the product, so they buy the rights to it and redevelop it with slight alterations. And this continues until the product is branded and sold in each and every way possible.
Along the way, an investment banker convinces the rights owner at the time to sell the company’s shares in the public market, citing “broader access to liquidity” and “maintaining an optimal capital structure”.
Let’s pause for a moment and look at a fundamental difference of the level of pressure under which a publicly traded company exists compared to that of a privately held one. When buying shares in a company, one is paying in advance for all the information that is publicly available about that firm’s current and potential performance, which is known as “priced in information”.
Prices of those shares will not go up substantially unless there is some kind of surprise in the performance of the business – also referred to as “beating market expectations”. Enter “The Market”, think of it as a high maintenance husband that requires a new dish for dinner every evening – a good meal just won’t impress him any more after it has been served up once or twice.
And so, going back to the publicly-held company, it is forced continually to find ways to beat market expectations and make more money – the market’s expectations being exclusively monetary, I might remind us all.
So innovation, quality or any other attribute have no value unless it means more sales. Enter “turnover”. Turnover is what these companies have opted for. The new business model is to have a lower profit margin but higher sales. This way you create higher profits and the share price continues to rise and so you satisfy “The Market” – and at some point your investment relations director gets some sleep.
The fashion clothing chain Zara has a policy of changing its window every two weeks – they have a new collection every month – while many car makers require at least two servicing trips a year where they will definitely change your oil and much else. The only reason we are creating technologically more advanced yet less durable products is the curse of turnover.
And if we want to develop a lifestyle that accommodates all six billion of us, then we’re going to have to start asking ourselves how to live again. We must resurrect frugality. Defined as:
•Acquiring goods and services in a restrained manner.
•Resourcefully using already owned economic goods and services, to achieve a longer term goal.
Frugality is living well yet without excess. If the urban world does not start making the transformation, then the bulk of the planet’s six billion people, who live in rural China, India, Russia, and – to a certain extent Africa and Central Asia – will not forgive us and will be ruthless in their insatiable thirst for what in essence is a lifestyle they learned from us and which ultimately we could not let go of.
To end this on a dramatic – yet warranted – note: if we don’t start to live more frugally, if we don’t rise to the environmental challenge, we could provoke the first civil world war, and even spell the end of mankind.
Mishaal Al Gergawi is a graduate of the American University in Dubai and the CERAM European School of Business |
