The Age of Cheap Stuff is Over

We recently came back to the States for the summer, my lovely wife and I, as we so often do. And we set about doing normal people stuff, by which I mean trying to buy a few simple things for the house. Blinds for the windows over there. A little gear for my music studio. Some exercise equipment. An outdoor furniture set. Nothing major, and nothing too glamorous — just the everyday stuff of American life.

As it turned out, this was going to be a whole lot more complicated than in a “normal” year. Supply chains, every salesman and woman of every kind told me, were backed up from here to infinity. When could I get the outdoor sofa? The exercise bike? The blinds? Well, if I was lucky, it would probably be months. And needless to say, that rendered any possibility of negotiating prices impossible, too.

Now, don’t cry for me. I’ll get by fine without all this stuff. But it’s a tiny example of a larger trend, which is already affecting us all. We might not know it yet, but the Age of Cheap Stuff is drawing to a close.

Think about how you grew up. If you were in the rich West, stuff was cheap. Really cheap. What kind of stuff? All kind of stuff. Air conditioners, furniture, clothes, shoes. Anything and everything that was a “consumer good.” You could walk into a mega-store the size of a warehouse which was literally rammed sky high with cheap stuff, unending amounts of it.

That doesn’t mean life was cheap. At the same time, the costs of the basics — medicine, healthcare, education, retirement — were skyrocketing so high they became unaffordable, which is why Americans went into debt, en masse, to have them, and now are a class of people effectively owned by their super rich. For now, though, we’re going to focus on the Age of Cheap Stuff.

When you walked into your local megastore, it reflected a certain global economy. Which had been constructed. Constructed for whom, by whom, and for what purpose? Constructed for the American “consumer,” by American elites, in order to make consumption the primary driver of the economy.

America’s economy is about 80% consumption. That’s a seriously unhealthy level. It’s like spending 80% of your life, I don’t know, eating Doritos. But so is the world’s, because American elites designed the global economy to reflect their Platonic ideal of what an economy should be.

That might all sound nerdy and abstract, so let me make it real.

Stuff wasn’t just cheap. It was artificially cheap. Very real costs were “externalized,” which is economist-speak for “left for someone else to pay.” Who? Well, let’s go through a few of them. Labour costs were artificially cheap because American companies were rewarded for “offshoring” jobs to countries where things like unions and even basic human rights didn’t really exist. The costs of carbon, it turned out, weren’t being paid at all. Then there were the poisonous effects on the natural world, whether it was water tables, or other species, or oceans. Who was paying those costs? Well, in a very real sense, the oceans, awash in plastic, the fish, choking on that plastic, the animals, being annihilated in a huge mass extinction, were.

“Externalizing” costs means that either someone else outside “the market mechanism” pays them, or no one pays them. In either case, the bill is adding up. Of those unpaid costs, or of the toll they’re taking somewhere else in the system.

That brings me back to the End of the Age of Artificially Cheap Stuff. You might think those two things aren’t connected — super cheap stuff, and “externalities,” costs other parties have to pay. That’s certainly what American economists and elites thought. They imagined that the Age of Cheap Stuff could go on forever. As in literally forever. It was the “end of history” if you asked American intellectuals like Francis Fukuyama, and the entire DC establishment which read the theories of these crackpots like manna from heaven.

For American elites, the Age of Cheap Stuff going on forever was a quasi-religious belief. It was something they believed in with a kind of religious fervor, their own secular version of paradise here on earth. That, by the way, is why American elites made no effort whatsoever to rebuild their own economy, or the global economy, both running at 80% consumption, and just 20% investment, which meant that by the 2010s or so, the globe, meaning Americans, was well on the way consuming several planets worth of stuff.

American elites peddled this dream of the Age of Cheap Stuff going on forever, a secular paradise on earth, because, of course, it kept them in power, like cheap fantasies often do for politicians. But like most fantasies, it was too good to be true.

The first set of costs that came home? Well, America’s working class woke up one day, and discovered that they were the ones paying for the Age of Cheap Stuff, too. By losing their jobs, incomes, livelihoods. Sure, it was cheaper to hire people in China and Vietnam and Bangladesh and so on — Wall St called that “labour arbitrage.” Of course, those people had almost no rights whatsoever. The stuff wasn’t cheaper because their hands worked faster or they ate less food, it was because they were worked to the bone with zero protections, really.

America’s working class had been conned out out of its jobs, livelihoods, communities, towns, by the dream of the Age of Cheap Stuff going on forever. And it was angry. But elites didn’t get it. The anger grew and grew, until it boiled over into the nationalist frenzy of Trumpism. Trump rode to power on a fascist wave — America for the real Americans. A very large part of that was disillusionment with “globalization,” which was the broken linchpin of the futile dream of the Age of Cheap Stuff. Working class Americans didn’t buy the lie anymore. They reacted to the lie in rage and envy and fury, propelling Trump to the Presidency. And becoming President, Trump did exactly what nationalists do — protectionism.

So the first way the age of Cheap Stuff is ending is political. If the bizarre dream of endless cheap stuff just means “you don’t have a job, either,” then of course it’ll just provoke a nationalist backlash. And stuff will get more expensive as nationalism takes hold. That much is true in America, Brexit Britain, India, around the world now. The dream of Cheap Stuff is dying globally.

But this is the small part of the explanation, and you probably guessed as much. What’s really bringing down the curtains on the Age of Cheap Stuff? Our planet can’t deal with it. Support it. Our earth can’t enable our addiction to cheap stuff anymore. It’s trying to have an intervention.

To understand that, just think about what effect a year of Covid has had on supply chains. They’ve been left so whipsawed they’re broken. Demand fell through the floor, so orders collapsed, plenty of supplier went bankrupt, and now the system’s struggling to be put together again.

That’s what one year of one pandemic did. It jacked up prices for everything across the economy by startling amounts. Like I said, I can’t get nearly anything I need like I used to be able to — and neither can you. “Inflation” — it’s not really inflation, which means wages rise in tandem, and they’re not — is spiking, hard.

Now imagine what climate change is going to do. It’s already making entire regions of homes and industries uninsurable. Try buying insurance for a winery in Napa Valley these days. But if you can’t insure, you can’t produce. Bang — shortage.

Temperatures are already boiling to the point that Canada and California are on fire. Now fast forward a few years. Do you really think that distribution networks built for a stable planet are going to survive tipping into runaway global warming? Are you going to be the one driving that truck through a megafire? Megadrought? Megaflood? Are you going to be the one piloting that plane or navigating that ship through a mega typhoon?

Maybe you get my drift a little bit. Let me make it more formal.

The Existential Threats of the 21st century are now accelerating. That means: getting much worse, faster. Just think about global warming, and the last few seasons. That trend is also true when it comes to mass extinction and ecological collapse and even political polarization.

Now let’s go formally through the stages of an economy’s value chains, and how those will destabilise each one. There will be huge, huge supply shocks — meaning things can’t get produced, because raw materials will be unavailable, just as insurance will be, just as entire factories and regions will go up in smoke or drown or what not. There’ll be massive shocks to distribution, too, as the planet destabilises to the point that travelling across it becomes much, much more costly and difficult, whether thanks to natural disaster or political nationalism or pandemic. All that will cause retail shocks — there will be shortages, regularly, at the store, so much so that the megastore lifestyle is almost certainly now a thing of the past. And that’s not even getting into utilities, like water, medicine, food, and housing, which are going to be hit incredibly hard, plunging into chronic shortage and unavailability.

See the picture I’m trying to paint? The Age of Cheap Stuff is over. It was a mirage to begin with. A fantasy peddled by American elites — never the sharpest tools in the shed — to cling to power. A cynic might even say: to use to dominate the globe with. Our economies and political systems and societies have been broken by our addiction to cheap stuff, ripped apart by nationalism and fascism and stupidity. The planet can’t enbale our addiction to cheap stuff anymore either, and it’s going to do everything in its power to stop us now from depleting and abusing it with abandon, as in, hurl every kind of mega-disaster it can at us.............................

If we really think about the Age of Cheap Stuff analytically for a moment, it’s probably the most staggering failure in human history. How long did it last? Maybe from the 1960s to the 2010s — about half a century. And in that half a century, the seeds were sown for the temperature to rise to heights not seen for three million years, for a mass extinction to rip on a scale that hadn’t happened for 300 million, and instead of giving each other education and medicine and sanitation and clean water, as in every child, the richest human beings — who’d only been around for 300,000 years — instead clambered over one another for more fake cheap stuff.

What an ugly, ugly picture. The Age of Artificially Cheap Stuff is, in the end, turning out to have cost us our planet, life on it, democracy, our minds, our societies, building a world we could all have inhabited, our kids, and our civilisation itself. That’s easily the biggest mistake in human history by an incredibly long way. History won’t look kindly on the fools, America’s pundits, economists, politicians, fanatics, who peddled this myth as a new Eden. Then again, they don’t care, and never will. I guess that leaves you and me.