The flat screen TV phenomenon
Do you remember, back in 2005 or 2006 or even up to early 2008, how absolutely everyone seemed to be buying flat screen TVs? And not only one, they’d actually buy new ones when new models came out, or ones with different high definition properties. And not just people who could afford it, either. The marketers did an excellent job in somehow convincing people that they needed these flat screen TVs so bad that they should just put it on their credit cards, all 3 thousand dollars of it, or whatever those things cost.
I don’t know exactly how much they cost because I never bought one. The last TV we bought was in 1997 and it still works, for the most part, although it’s really hard to turn it on and off. When it finally kicks the bucket I’m thinking we go without a TV, since TV pretty much sucks anyway. When we do watch it, it’s for live sports (local, or nationally televised, since we don’t pay for cable). Baseball we watch or listen to on the computer.
I was reminded of the the “flat screen TV era” by my friend Ian Langmore the other day when we were discussing household debt amnesty. His argument against debt amnesty for consumers was that they might spend it on crappy things. His example was luxury dog poo, but I’ve been obsessed with the flat screen TV phenomenon ever since a friend of mine, who was $120,000 in debt and didn’t have a salary, somehow managed to buy a flat screen TV in 2007. It blew me away in terms of wasteful consumerism. Ian found this unbelievable blog which kind of sums up my concerns.
In Ian’s opinion, the danger of amnesty, or any system where money is put willy-nilly into the hands of consumers, is twofold:
1) We waste time on unproductive activities. E.g. people spent time buying/building cars that are unneeded.
2) If a miscalculation is made, then the over-leveraged money-go-round stops with a huge mis-balance. E.g. home mortgage crisis.
These are very good points, and put together form a lesson we somehow can’t learn, although perhaps that can be partially explained by this article.
I have two thoughts. First, I’m also uncomfortable putting money in the hands of irresponsible consumers. But the truth is, the way I see it is currently working, we are already putting money in the hands of irresponsible bankers (that’s what the term “injection of liquidity” really means), and they are not doing anything with it, so let’s try something else. In other words, an alternative unpleasant idea.
Second, I don’t think we are going to see a new wave of flat screen TV buying any time soon. If we put money into the hands of consumers right now, I think we’d see them pay down their debts, go to the doctor, and buy jeans for their kids. Of course, there is always someone whose pockets burn with cash, and they would waste money in any situation. Let’s face it, though, credit is tight right now compared to the mid-2000’s. In fact, since economists seem to have a tough time spotting bubbles until afterwards, maybe we can take “a huge part of the population starts buying useless gadgets on credit” as almost a definition, or at least a leading indicator. Then at least there would be some point to all of that wasteful spending.
mathbabe 
Actually, Cathy, why is that blog so unbelievable? It sounds like the person who wrote it is part of a two-income couple with no kids; I don’t see any indication that they’re in debt or that it’s a stupid decision for them to have bought a $500 TV.
Is it wasteful? I dunno. Is it wasteful to buy a cup of coffee every day? That adds up to more than the TV every year, and nobody buys a flat-screen TV every year.
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In some sense you’re right, I have no idea if this couple could afford a $574 TV. It was more the tone that was employed, giving the impression that the purchase was some breathlessly anticipated necessity, which I wanted to point to as bizarre.
To answer your question, I do consider buying a cup of coffee every day wasteful, especially if it’s $4 and especially if you can’t afford it. On the other hand, people tend to use petty cash to pay for coffee so at least it seems like real money; with big TV purchases they tend to put them on plastic so it doesn’t.
And yes, people do buy a new flat-screen TV every year, or at least they used to. Some of those are made to work for about a year, and the cost of fixing them is the cost of a new one.
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The only TV in my house is a small flat panel TV in my kitchen connected to an antenna. It’s mainly used for watching local and network news. I get perfect HD reception for free. I spend far more time listening to public radio. A new SACD player has higher priority in my house than a big TV in the living room.
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I agree that the country should look at other ways of injecting cash into the economy. On the whole I think that higher minimum wage would be a better way.
The reason I used “luxury dog poo” as an example is due to this story told by my coworker:
Two economists were walking down the street. They spot a pile of dog poo, and the first tells the second, “I’ll give you $1M if you eat that.” The second does and is paid. The next day, they see another pile of dog poo. The second economist tells the first, “I’ll pay you $1M if you eat this pile.” After eating the poo, and receiving $1M, the first econmist exclaims, “what the hell did we just do? We’ve ate two piles of dog poo and gained nothing!” His friend replies, “not so, we just added $2M to the GDP.”
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I think that you are overstating the irrationality of flat screen TV purchases, partly because you are a member of the “pointy-headed elite.” Considering that you think that not having a TV is a reasonable option for you, of course you cannot understand these purchases. But when you consider how much time most Americans actually spend in front of their televisions, I think that spending over $1000 on one is actually quite logical, even for a middle class family, if it represents a significant improvement over the old TV. In the time period you are talking about, there was genuine major improvement in TV technology and prices.
My point is not that people don’t waste their money on TVs. My point is that you are probably unfairly singling out TVs because of your own personal preferences. People waste their money on all kinds of ridiculous things that they can’t afford, whether it be iPads, baseball season tickets, new furniture, Starbucks, a BMW, original artwork, a $1000 stroller, designer handbags, European vacations, etc. I think it’s a bit judgmental to say which of these things are “wasteful” and which are “worthwhile.” The only thing that matters at the end of the day is whether you are living within your means.
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I totally agree. That’s why I mentioned that I don’t really like TV, to point out that I’m one of those assholes. But I still think they are a waste of money.
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A parallel phenomenon has been that of digital cameras. Rapid progress in quality has forced consumers (and professionals) into frequent updates, to the profit of the manufacturers.
Flat panel TVs have undergone rapid improvement in terms of resolution, frame rate, size, brightness, color quality, etc. And now there are 3D TVS. Consumers have been more than willing to “keep up with the Joneses” every time new technology is rolled out.
In the days of film cameras, people upgraded their camera bodies rather infrequently. Improvement in image quality came mainly from new film and new lenses. It was very cheap to try out a new film to see if you liked the results better. Lens technology evolved slowly (but surely) and a new lens could usually be used on any camera body of the same manufacturer. Enter digital cameras. The first ones had absolutely dismal image quality (remember the first CDs?), but every year the number and sensitivity of the pixels improved and consumers and professionals upgraded continuously (spending a lot of money in the process). And now many of the still cameras also do video, and that keeps improving as well. Unlike the film world, if you wanted higher quality you have had to upgrade the entire camera body, and particularly with the professional quality cameras, this has been very expensive. Finally, many years after their introduction, professional digital cameras rival or exceed the quality of film cameras, especially in regard to the low light noise performance of FX (“full frame”) cameras, internal digital processing, and autofocus speed. Unfortunately, they are still heavy and bulky, unlike my NIkon FE2 film camera which is lightweight, small, and robust, a perfect “backpackers camera.” The small consumer digital cameras are unfortunately awfully fragile. Within a year or two the technology will probably have matured to the point where I will seriously enter the market. In the meantime, I scan film with a high quality 40 MP minolta film scanner. That’s not especially convenient, but that forces me to be more selective with the photos I actually want to keep.
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t doesn’t matter where in the economy you do it, if you suddenly put a large quantity of money in, there will be irrationalities. It is like a flash flood. If you give it to consumers, they buy the necessities they can, save a proportion, and spend the rest on froth. If you give it to bankers, they take more and more risks as they try to maintain proportionate rates of return on greater amounts of capital (remember, natural growth looks similar to a logistic curve, but they want hockey sticks).
On the other hand the government could give grants to people for particular things….for example if they were to pay for people to install solar energy on their roofs, the money would reduce future expenditure by the recipients who effectively receive a small income boost (in power saving).
So in a way the question is what proportion of the money is spent wisely if it is made by one government, by thousands of institutions, or by billions of individuals. In each case there are more choosers with less money each. However, we all navigate life equipped only with a rear view mirror; there is no guarantee that any of us make the right choices.
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I agree about wasteful consumerism, and about most TV (my exception isn’t sports but cooking shows.) But there’s an uncomfortably patronizing note whenever the consumption habits of poorer or lower-status people are criticized–I had almost said derided. Years ago the garbage collectors in Berkeley–almost 100% of whom were African-American–went on strike; they ran into opposition from some on the Left who argued that they would only spend the extra money on environmentally harmful products like print-patterned toilet paper. But it was the paper products industry that devised and promoted the stuff, and it was hard not to feel that the objectors were going after an easy adversary rather than challenge a big, powerful one.
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Not that I disagree with your point or even the consumer product you singled out for exhibit A, I couldn’t help but notice the irony in your later being interviewed by Frontline. If it weren’t for that (awesome) interview, I and probably many others wouldn’t be here now.
I have to admit though, the irony is diminished a bit by the fact that I didn’t watch any of it on a television. I caught the whole thing online on my computer.
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There’s an art project that seems to fit here: http://www.facebook.com/PeopleLikeFlatscreens
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