When Consumers Are Full

There have been many stories about how when pre- and post-holiday sales are disappointing for merchants it drives prices down too far. Within those stories there seems to be an assumption that consumers should continue to spend for anything as long as the price is low enough. "It's not that consumers don't want the things being offered," the sentiment appears to be, "they're just being stingy with their money and looking for bargains."


While traditional supply-and-demand economics has trained us to think this way, there is something else in play that is often overlooked. Consumers may simply be "full."

Acquiring things has limits. Even if prices drop to near zero, some items just will be seen as unnecessary at a certain point following a period of sustained acquisition during "good" economic times. Economic "supply-siders" will tout the notion that just about anything will drive an economy as long as there is enough of it--a large supply of something will drive down prices and offer an irresistible call to buy. It is the lowering-of-prices side-effect that is the important part of this ideology, not size of the supply, really. We just need to reach an "equilibrium" and things will begin to recover, goes the thinking.

This thinking hurts sellers, though, as they are often forced to close when price demands fall too short. In all the economic theories that we are taught, we forget that most things that can be categorized within a "system" will reach a limit eventually--a point of being full. No amount of tinkering with supply and prices will force a change in behavior from consumers when consumers just doesn't want anymore of whatever's being offered--when they've had enough, already. This state has not been unforeseen, it's just been responded to with different pricing methods to try and avoid the inevitable point of consumers being full.

For instance, pricing strategies have moved toward bundling of items in an effort to increase sales. Prices are set at two or three...or 10...for a certain price; items from socks to plastic bowls can rarely be bought individually any more; products that require an ongoing supply of something (i.e., ink) do not include much of it with each replenishment; contracts for service get extended (i.e., cell phones) for longer period of time; etc.

Growth, the buzz word that we all hear as the goal of any economic or corporate policy, has its limits. There will be declines and reversals. Policies never seem to take this into account. Therefore, when it happens, the sting is more severe than needed.

We need to change our thinking about economics and turn toward a goal of sustainability, not ever-increasing growth. No system can grow forever. Economics is no exception. If we wish to reduce the pain--the economic ups and downs--that is the result of our looking to unrestricted growth as a goal, we need to realize that the goal is the problem.

There has been next to no research on what it would take to build a sustainable economy. We need to get our best minds on the subject and listen to what they have to say. If we don't want to continue to experience the pain of uncontrolled growth as our only economic goal, we need to look to alternatives. It's long past time to do so.