veryone knows the conventional story about American spending habits. It begins with the Great Depression, which instilled a permanent thrift mentality. Scarred by deprivation, sobered by the scarcity of the war years, Americans in the middle of the 20th century were transformed en masse into tightfisted, financial neurotics, perpetually saving for the next rainy day.
But then along came a new generation, the spoiled baby boomers, for whom thrift became a dirty word. And now we are in the midst of a new Gilded Age of instant gratification, dominated by people who know nothing but limitless prosperity. (Never mind the dismal 70's.) A quick glance through the press reveals scads of stories claiming to capture the new ethos -- tales about parents buying Estee Lauder's Origins Natural Resources diaper "balm" at $10 for a 3.5-ounce bottle, East Hampton millionaires dropping $1.5 million on a pool, companies asking $3 million for a diamond-studded bra. In these stories you can hear the reporter sharpening the sword of justice in the background. The clear subtext is that the rich today don't deserve their bounty and that a terrible day of reckoning soon will be upon them.
But this morality tale doesn't hold up to scrutiny. In the first place, there's no pile of evidence to suggest that the Greatest Generation, as we now worshipfully call it, is reacting differently from anybody else to today's good times. In fact, the members of this supposedly thrifty cohort are setting new standards for post-retirement consumption. According to the Bureau of Labor Statistics' Consumer Expenditure Survey, the post-65 set increased their spending levels faster than any other group between 1987 and 1997. A lot of this money is spent on entertainment. The average household headed by a person 65 to 74 years old now spends more on entertainment than the average household headed by someone under 25.
Claritas, a market-research company, breaks down the population into different market niches, based on their buying patterns. One is a group Claritas calls Gray Power, which consists of college graduates over the age of 65. They live in part off their savings, have annual incomes around $36,300 and make up about 2 percent of all households. Their six favorite cars are the Cadillac DeVille, Lincoln Continental, Infiniti Q45, Mercury Grand Marquis, Lexus LS400 and Mercedes Benzes of all varieties -- not exactly budgetmobiles.
David Brooks, a senior editor at The Weekly Standard, is the author of "Bobos in Paradise: The New Upper Class and How They Got There."
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These gray-haired hedonists are disproportionate consumers of saltwater fishing tours. Their favorite magazines include House Beautiful and Travel and Leisure. Their quintessential bumper sticker, according to Claritas? "We're spending our children's inheritance."
Moreover, when you go back and wade through the books and magazines that were popular when the Greatest Generation was in its peak years, you find yourself in a world as consumption-obsessed as our own. In 1954, Russell Lynes chronicled America's passion for conspicuous display in a book called "The Tastemakers," with chapter headings like "Suburbia in Excelsis."
In 1959, Vance Packard wrote a book called "The Status Seekers," in which he described how prosperous Americans were spending their luxury dollars. Some were buying big air-conditioning units and installing them in the front windows of their houses. Inside, they mimicked Old World gentry. They put hunting prints and faux ancestor portraits on the walls, period furniture in the "study" (as the den came to be known), silver candlesticks on the mahogany dining-room table. The prototypical luxury item of the day was the gold faucet. Packard noticed that his status seekers put gold faucets in the guest bathroom first. You know you had made it as a company man if you got to use the executive washroom with the gold faucets.
In retrospect, the big difference between their spending patterns and ours is that they took their materialism straight, while subsequent generations have been conflicted about it. When members of the World War II generation got rich, they wanted to look rich. They made their homes more formal, their jewelry more elegant and the furniture more upper crust. Now when people get rich, they make their homes more casual, their appliances more rugged and their furniture more primitive. The richer they get, the more they want to look like Shakers.
Yankelovich Partners is one marketing group that studies generational spending patterns. Their reports tend to be a bit overwrought. But Yankelovich's president, J. Walker Smith, and his co-author, Ann Clurman, are probably onto something in their book, "Rocking the Ages," when they write that the members of the World War II generation desire "material goods for their own sake." Members of subsequent generations, they say, are more likely to have postmaterialist values, prizing experiences more than goods.
Today's spenders are desperate to show that though their stock portfolios may bulge, they themselves have not become pampered elitists or Gilded Age vulgarians. Today's consumption comes wrapped in morality. It's not only the thriving ice cream companies and toothpaste firms whose branding strategies revolve around their environmental policies, nor even the hyperspiritual advertising campaigns that assure you, "Don't worry, if Mahatma Gandhi had bought a luxury car, ours is the one he would have chosen."
More striking is the way consumers now shape their spending patterns to prove how antimaterialist they are. It won't do to be seen pampering yourself with Faberge eggs or caviar. But when you're spending money on something useful, the sky's the limit. A code of Extravagant Utility prevails. You can't have a mere winter coat to protect you from normal American winters. You've got to have a Himalayan-tested, Gore-Tex-Cordura-Polartec composite parka, with microfilament hood design, polyurethane coat-welded seams and universal radial hinges, durable enough to keep you warm on your next trip to Pluto yet collapsible enough to fit in your back pocket, in case you find yourself in one of those hell-on-earth ordeals that Jon Krakauer is always writing about. We don't want to look like languid aristocrats. We want to look like rugged, practical people whose down-to-earth (yet adventurous) lives just happen to require the most expensive gear.
There seems to be some sort of rough cycle to this: one generation is unabashed about money, the next rejects straightforward materialism. The antimaterialists don't necessarily spend less; they just dress their money in the robes of virtue. Three hundred years ago, the Puritans tied the worldly calling to strive and make money to the heavenly calling to serve God. So the early Americans forced themselves into dark clothing and resorted to incredible subterfuge to display their status markers. (For instance, a rich merchant would purchase the finest imported cupboards and then paint them black, and so congratulate himself both for his possessions and his modesty.)
In the 19th century, transcendentalism inspired wealthy burghers to forsake lavish consumerism and instead to live simply in the woods (or at least adopt the patina of simple, organic living in their country "cottages"). And today we have adopted another characteristically American ethic that celebrates high thinking and plain living.
Today's consumers have created a sumptuary code to help them moralize their money, weaving together the various strands of contemporary high-mindedness. This code owes much to environmentalism, borrowing the notions of scarce resources and the virtuousness of living close to nature. It also draws from the ethos of the "cultivati," which holds that it is vulgar to display wealth nakedly, the way those vulgar yuppies used to do in the ghastly 80's. The imperative now is to prove your cultivation by displaying a preference for folk crafts over garish luxuries, simple and nutritious foods over rich and expensive dishes. There is more than a dash of plain old American egalitarianism in this, the idea that you should try to be rich without insulting the ideal of equality.
This sumptuary code, while not restraining spending, does seem to have changed it. According to the Consumer Expenditure Survey, Americans in 1997 spent 13 percent less -- in constant dollars -- on food away from home than they did in 1987, and 24 percent less on alcoholic beverages, 18 percent less on reading materials and 15 percent less on clothing.
When members of the World War II generation got rich, they wanted to look rich. They made their home more formal. Now when people get rich, they make their homes more casual.
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And while there is a lot of consumption going on, there's also a lot of moneymaking as well. According to the Federal Reserve Board triennial Survey of Consumer Finances, the American balance sheet is in reasonably good shape. The assets of the average family are rising faster than its debt. So, overall, the average American household is in better shape now than it was three years ago. The nation's notoriously low savings rate doesn't include capital gains. If you count stock portfolios as savings, which normal families do, the American nest egg is healthy.
What about those spoiled Information Age zillionaires? Conventional wisdom holds that they're a bunch of free-spending dot-com crazies stockpiling Range Rovers and Aspen summer homes. But if you hang around them for any time, you discover that most high-tech zillionaires are staid middle-aged workaholics. Most are zealous about making money but haven't a clue about how to spend it. Many don't have the cultural capital to appreciate finery that doesn't come in the form of a really neat hard drive.
The United States Trust Company did a survey of the richest 1 percent of Americans and found that less than a third of them purchase furs, jewelry or other stereotypical luxury goods. Only 18 percent own or plan to own a vacation home; they're more likely to spend some money renovating the place they're in. What they like best is using their money to make more money. Nine in 10 of those surveyed have kept all or most of their recent stock market gains in the market. You get the impression of a group of business magazine readers who spend their leisure time sensuously staring at their quarterly mutual fund reports.
Nor is there much evidence that today's youngsters -- the Gen X'ers and younger -- are extraordinarily besotted with shopping and buying. The Gen X types are starting to save for retirement at even earlier ages than the boomers, and in greater amounts. Moreover, there's more than just anecdotal evidence to suggest that the 20-somethings are more antimaterialist than their boomer elders. It's not just that they go around in those dirty flannel shirts.
American Demographics magazine recently completed an analysis of future spending patterns by generation. They found that if current trends continue, householders ages 25 to 34 will spend a greater share of their income on reading, computers and software and less on cars, alcoholic beverages and household services. That's not exactly the Donald Trump mold.
So it's not that America is suffering a fall from grace: the thrifty World War II types giving way to the spoiled children of affluence. It's more complicated than that. If you are one of those 75-year-old retirees cruising around in the latest Cadillac, you have probably tasted scarcity at some time in your life. You can look money in the face.
But if you're a 35-year-old executive in a Lincoln Navigator, you probably never have. Somehow you feel that you have never really tasted reality (like people who theorize about war without ever having seen combat). You feel guilty that your whole life has been spent in a cocoon of prosperity. You sign up for pseudo-deprivation vacation packages, but you're not sure it helps. In this time of prosperity, it's not just that money dominates America. Ambivalence about money dominates America. People are working harder than ever to get it, but then they worry about getting corrupted by it. These are the anxieties of affluence.
