In reading the analysis of the recession, the power of Starbucks as the end of an era is a powerful symbol of the end of an era. It is a metonymy in that one business serves to represent the boom of the early years of this millennium and the bust that we will live through. The latest example is this from a columnist in The New York Times:
They will suffer lifestyle reversals. Over the past decade, millions of Americans have had unprecedented access to affordable luxuries, thanks to brands like Coach, Whole Foods, Tiffany and Starbucks. These indulgences were signs of upward mobility. But these affordable luxuries will no longer be so affordable. Suddenly, the door to the land of the upscale will slam shut for millions of Americans.
The columnist, David Brooks, is using Starbucks to symbolize the changes in consumption that is happening and the decline in the fortunes of the average American and by extension Canadian. People who no longer have access to easy credit and must count their pennies for survival will not be frequenting Starbucks daily.
Brooks does provide some interesting analysis of the crisis and how people will live through it. He writes:
At the beginning of every recession, there are people who see the downturn as an occasion for moral revival: Americans will learn to live without material extravagances. They’ll simplify their lives. They’ll rediscover what really matters: home, friends and family.
Is this necessarily a bad thing? If you no longer can define yourself by your possessions and your spending, you will turn to what is affordable: home, friends, and family.
Brooks is correct in his analysis in that many will drop out of the middle class, but the overlooks one thing: easy credit simply masked the declining incomes of Americans. He writes:
This recession will probably have its own social profile. In particular, it’s likely to produce a new social group: the formerly middle class. These are people who achieved middle-class status at the tail end of the long boom, and then lost it. To them, the gap between where they are and where they used to be will seem wide and daunting.
Brooks, being very conservative, does not want to acknowledge that the George W. Bush policies favored the rich and their share of the national wealth grew. If it had not been for the various bubbles and easy credit, Americans would have noticed that they were getting gradually less affluent this past decade.
What are the options? Brooks is correct in that the options are either bitterness and pessimism or adopting a moral outlook on the economic decline. Yes, home ownership may now be out of reach for many people, but that does not mean that one cannot be happy. It is better to be happy living frugally in an apartment, than miserable as a spendthrift in a McMansion. And, as Dan Gilbert brilliantly explains on TED, we synthesize our happiness.
The only solution is frugality. Without easy credit, you must make do without many things. Without bubbles, you must find ways of saving money and squirelling it away. Penny pinching does not need to be painful, rather it is acting rationally to maximize what money you do have to live well. True, this may not be easy if the recession becomes a depression, but it won’t hurt.