The Price of Civilization

by Jeffrey D. Sachs

  When I reflected on such issues twenty or more years ago, I regarded the problems of consumer addictions and “irrationalities” to be serious social issues but not serious macroeconomic issues. Addictions were for social workers and drug enforcement officials to deal with. Macroeconomics, I reasoned, is about the preponderance of behavior, not about the oddities and painful exceptions. I no longer accept that division of labor between psychology and economics. Within one generation, Americans have displayed a shocking array of addictive behaviors (smoking, overeating, TV watching, gambling, shopping, borrowing, and much more) and loss of self-control. These unhealthy behaviors surely have reached a macroeconomic scale and raise deep questions about our well-being in an era of relentless advertising and excess. Have we actually created a world that is programmed to undermine our very balance as individuals? Our society is addicted to overconsumption and household debt. It is addicted to a miserable diet that has led to a staggering 33 percent obesity rate. It is addicted to television itself, with individuals spending four to six hours per day in front of the tube and indications that they are unhappy as a result.

  The Marriage of Mass Media and Hypercommercialism

  The astounding fact of America’s media system is that it has become a juggernaut out of social control, one that is partly responsible for carrying America to the abyss. The media juggernaut has taken over our living rooms, our national politics, even the battlefields. It is yet another of the runaway factors that are destabilizing American society. The media, major corporate interests, and politicians now constitute a seamless web of interconnections and power designed to perpetuate itself through the relentless manufacture of illusion. The media peddle illusions, and those illusions lead to even more addictive behaviors, including the fixation on the media itself.

  Many observers have documented how America took a distinctive course in the TV age, thereby opening itself to maximum long-term vulnerability to the dark arts of propaganda, both corporate and official. Most consequentially, at the start of the TV era the government decided to hand the TV networks almost entirely to the private sector, based on an advertising-led model of broadcasting. In 1934, Congress rejected the alternative approach of a mixed public-private system when it passed the Communications Act of 1934.

  For several decades, the federal government, largely through the Federal Communications Commission (FCC), maintained at least some regulatory control on private broadcasters to enforce some public-spiritedness and competition.9 As in so much of American society, however, the corporate-owned media escaped the grasp of public regulation during the 1980s and 1990s, so that by the beginning of the twenty-first century, the media stood unchallenged by government and indeed had become a full-fledged propaganda partner with Washington.

  One key stop on the journey of the private sector’s complete takeover of the airwaves came in 1996, with the Telecommunications Act signed into law by President Clinton. Yet again, Clinton proved that corporate empowerment is bipartisan, without much difference between the Republicans and the Democrats. The new act effectively undid the remaining barriers to media concentration in TV and radio and unleashed a wave of corporate mergers, creating the mega–media companies. As of today, the media giants include Disney, Comcast, Westinghouse, Viacom, Time Warner, and News Corporation.

  The media and the politicians now live in splendid symbiosis. The airwaves promote corporate products, consumer values, and the careers of friendly politicians. The politicians promote media deregulation, low taxes, and freedom from scrutiny of performance and public service.

  Measuring Hypercommercialization

  Though I can’t prove that America’s mass-media culture, ubiquitous advertising, and long hours of daily TV watching are the fundamental causes of its tendency to let markets run rampant over social values, I can show that America represents the unhappy extreme of commercialism among the leading economies. To do this, I have created a Commercialization Index (CI) that aims to measure the degree to which each national economy is oriented toward private consumption and impatience rather than collective (public) consumption and regard for the future. My assumption is that the United States and other heavy-TV-watching societies will score high on the CI and that a high CI score will be associated with several of the adverse conditions plaguing American society.

  I include six items in the Commercialization Index, each item designed to measure a distinct aspect of the public-private or current-future dimensions of social choice. In each case a higher score signifies a higher degree of commercialization:

  The national consumption rate (private plus government consumption as a share of GDP)

  The average hours worked per year by a full-time employee (low leisure time, high orientation to market consumption)

  The national nonvoting rate (lack of public participation)

  Private health care spending as a percentage of total national health care spending (health care as a private good rather than a public good)

  Private education spending as a percentage of total national education spending (education as a private good rather than a public good)

  Private consumption spending as a percentage of national (private plus public) consumption (private consumption as the dominant form of consumption)

  To keep things simple, each of these measures is scaled from 0 to 1, with 1 being the most commercially oriented score. Each country’s overall Commercialization Index score is calculated as the simple average of the six component measures. The overall ranking and the six components are shown in Table 8.1.

  The United States is by far the most commercialized country in the sample, followed by Switzerland. America ranks first in one of the six variables (the share of private health care spending) and second in three of the remaining five. Generally, the rankings on the various components of the index are highly correlated across the countries. Australia, Canada, New Zealand, the United Kingdom, and the United States tend to rank high on most dimensions of commercialization. The Scandinavian social democracies—Denmark, Norway, and Sweden—tend to rank low on all dimensions.

  Highly commercialized societies like America are more likely to leave the poor behind. A high CI score is strongly associated with a high national poverty rate (measured by the OECD as the share of households below 50 percent of the median income), as we see in Figure 8.3. A high CI is also associated with a low level of development aid to poor countries, measured by official development assistance as a share of GDP. The high-CI countries are also those with the largest share of household income accruing to the richest 1 percent of households. It’s fair to say that in the highly commercialized economies, market values trump social values: the poor, both those at home and abroad, are more or less forgotten. I would surmise that in such societies, individuals are so overwhelmed by market values (bargaining, self-interest, competition) that they lose touch with other values (compassion, trust, honesty).

  Figure 8.3: Relationship Between Commercialization Index and National Poverty Rate

  Source: Data from the RTL Group and OECD.

  Table 8.1: Commercialization Index

  Source: OECD Statistical Databases and International Institute for Democracy and Electoral Assistance (IDEA). Note: U.S. rankings are in parentheses,

  Whatever the cause, the United States is privately rich but socially poor. It caters to the pursuit of wealth but pays scant attention to those left behind. And though American culture emphasizes individualism and the pursuit of individual wealth perhaps more than any other society, that focus does not lead to greater happiness.

  Of course such worries about hypercommercialism are not new. Karl Marx famously critiqued the “commodifaction” of social life from the perspective of the left. Yet trenchant criticism of excessive consumerism has also come from the religious and moral right. The famous German free-market thinker Wilhelm Röpke launched a famous and powerful critique against soulless advertising and mass consumerism in his book A Humane Economy in the middle of th
e twentieth century. Röpke observed that advertising “separates our era from all earlier ones as little else does, so much so that we might well call our century the age of advertising.”10

  Our great sociologists and economists also remind us that it’s not only mass society that has succumbed to mass commercialization, but also the rich. Early modern capitalism was built not on the goal of luxurious consumption by the rich, but rather on the virtue of prudent consumption and high saving by the entrepreneur. The German sociologist Max Weber described the highest ethic of early capitalism to be “the earning of more and more money, combined with the strict avoidance of all spontaneous enjoyment of life,” as befitting the Protestant values of the time.11 The British economist John Maynard Keynes made a similar observation about the moral underpinnings of British capitalism in the late nineteenth century. The point, he wrote, was that late-nineteenth-century society tolerated the rich because they lived properly and correctly, by accumulating vast wealth but not consuming it. As Keynes put it:

  Herein lay, in fact, the main justification of the capitalist system. If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect.… The capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of “saving” became nine-tenths of virtue and the growth of the cake the object of true religion.12

  As another example, America’s greatest late-nineteenth-century capitalist, steel man Andrew Carnegie, similarly distinguished between the worthy calling of making money and the proper use of the wealth once made. In his famous and enormously influential “The Gospel of Wealth,” Carnegie defined what he called the “duty of the man of wealth”:

  To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent on him; and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere trustee and agent for his poor brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.13

  In this way, wrote Carnegie, the wealth of the capitalists would be deployed for the benefit of the entire community. Carnegie established several major philanthropic institutions in the United States and Europe, such as the Carnegie Endowment, the Carnegie Institute of Technology (now Carnegie Mellon University), and numerous Carnegie libraries around the United States. He in turn inspired John D. Rockefeller to establish the Rockefeller Foundation, perhaps the most successful and influential philanthropic effort in modern history, as it contributed to fundamental advances in the fight against poverty, hunger, and disease, and to countless breakthroughs in the sciences and public administration. Carnegie’s social gospel lives on today in the philanthropic efforts of Bill Gates, Warren Buffett, George Soros, Ted Turner, Bill Gross, and other wealthy Americans who are giving away vast sums in the pursuit of poverty eradication, public education, disease control, and strengthening of democratic institutions. Gates and Buffett have also actively encouraged dozens of their fellow billionaires to commit to donating at least half of their wealth in philanthropic efforts.

  What does not live on, however, is the original moral underpinning of capitalism. Today’s great wealth holders, with the notable exception of the few leading corporate philanthropists, are much better known for their profligacy than their asceticism. Birthday parties, weddings, anniversaries are celebrated with high profile, multimillion-dollar bashes that are designed for the paparazzi and public titillation in service of their self-gratification. And the public duly obliges by keeping their eyes firmly fixed on the round-the-clock cable coverage. Hypercommercialism has reached the highest levels of the society, and has helped blind the super-rich to the dire needs of the rest of society.

  Advertising in the Facebook Age

  The TV age is quickly becoming the broadband age, when information is carried into our lives through a dizzying array of Internet-linked devices. A great debate has begun: what will the Internet and always-on connectivity mean for our society?

  When the Internet was first invented and the World Wide Web became a new vehicle for mass communication and diffusion of information, many pioneers of the new technology believed that it would be profoundly democratizing and anticommercial in its effects. Access would be free or nearly so, and everybody’s voice could contribute equally to the new global debate and discussion. The old monopolies of information would quickly be dissipated, and a new global cooperation would ensue.

  Those hopes, alas, are quickly fading. The Internet has apparently fragmented, rather than unified, the public square. Many observers argue convincingly that the logic of largely self-contained groups organized on the Internet around shared beliefs is leading to further polarization and increasingly aggressive surliness in the public debate.

  As for commercialization, the Internet offers advertisers and marketers the most powerful tool yet for directing their messaging to target groups. By monitoring our online behavior—the websites we visit, the purchases we make, the individuals we “friend” on social networks—advertisers have new tools to spread messages and to use social relations to track customer behavior, create fads, and foment peer pressure. Major websites such as Google and Facebook have been only too ready to turn the virtual communities they assemble over to the marketing firms. Remarkably, Google topped $25 billion in advertising revenue in 2010, and Facebook hit $1.86 billion. The not-so-hidden persuaders have been invited even more personally into our lives and vulnerabilities through the wonders of the new social networks.14

  Each day we are discovering new risks to privacy and to Web-empowered marketing, which is not surprising given the fact that some businesses will cross any line in the quest for profit. The latest development is a host of companies that create detailed dossiers on Web users, including their names, demographic information, addresses, financial information, buying patterns, social networks, political affiliations, and much more. This information is collected by way of small computer codes, “cookies” or “Web bugs,” that the firms secretly insert into personal computers when certain websites are visited or enabled, thereby allowing the firms to monitor the Internet use of the individuals and, in a Web-based network with cooperating firms, to piece together highly detailed and intrusive data sets about millions of individuals. These data sets are then sold commercially or to political campaigns and parties. According to a report in The Wall Street Journal, one of these companies, RapLeaf, had “indexed more than 600 million unique email addresses … and was adding more at a rate of 35 million per month.”15

  The evidence regarding the Internet and our psyches is even harsher. For a public already spinning from relentless TV, DVDs, movies on demand, MP3 players, and ever-smarter phones, the Internet seems to be rewiring not only our social networks but our neural networks as well. The latest concern of neuroscientists is that Internet browsing may undermine our long-term concentration in favor of our short-term responsiveness to stimuli. We don’t read on the Internet so much as we scan the screen. Surfing is different from reading, both emotionally and cognitively. We can retrieve facts much faster, but we retain them for less time.

  Psychologists and sociologists will no doubt increase their focus on our sensory overload in general. Studies of information transmission in our digital age show the remarkable increase in overall information flows per person but don’t yet reveal the consequences to our mental well-being and still less for our socie
ty. A remarkable study by the Global Information Industry Center documents the startling increases in information flows and the changes in composition as well.16 In 2009, the average American consumed “information” for around 11.4 hours per day, up from 7.4 hours per day in 1980 and no doubt still less in earlier years. These information flows come in a remarkable range of delivery systems: television (including network, satellite, cable, DVD, mobile, and other), print (books, magazines, and newspapers), radio, telephones (fixed and mobile), movies, recorded music, and computers (including games, handheld devices, Internet, e-mail, and offline programs).

  The study measured the flow of information in three ways: by hours spent receiving the information, by number of words transmitted, and by number of gigabytes of information transmitted. The last puts a premium on video and computer games. The information per American for 2009, in total and as shares of the respective categories, is shown in Table 8.2. Notice that TV still dominates in terms of hours spent (4.91 per day) and words received (44,850 per day). TV is second in terms of gigabytes behind video games. I say “still” because of the evidence that TV use is now apparently declining among younger people in favor of other forms of information flows such as computers, mobile phones, and e-readers. Electronic screens are ubiquitous and in round-the-clock use, but now in a widening array of devices.

  Table 8.2: The Daily Flow of Information, 2009