5 min read

Did you know that 70% of our economy depends on consumer spending?

It’s a staggering fact, isn’t it? The glass-half-full perspective is that the health of the US economy is directly tied to your spending habits as the consumer. However, we are constantly targeted by sophisticated marketing and advertising campaigns designed to entice us to spend. This relentless bombardment from a $200+ billion industry makes it challenging to determine how much control we actually have over our spending. From digital ads and social media promotions to targeted emails and traditional methods like TV and print media, we're continually urged to part with our hard-earned money.

Our spending habits affect how the government behaves to further implement changes like, for example, stimulus payments (*wink, 😉), tax cuts, and lowering interest rates. The same, of course, can be said for corporations. But in the interest of keeping you engaged, I won’t delve into the psychological tactics and the role ‘credit’ plays into fueling consumer spending. One reason being, we’re all well aware of these maneuvers and two, that may just be a topic for a future post!

In this post I simply hope to generate some awareness of a fact that always seems to stay magically out of focus. The power of the Collective. This power is real, but unfortunately difficult to harness and many times I’ve wondered if we’ll ever have it at our fingertips. For me this post was brought on by a number of current topics on and off my social media feed. [i.e. Trump News, Inflation, Mexican Election, Hunter Biden]. Maybe you saw the below photo that recently resurfaced from a few years back.

“In Germany, the government has increased fuel prices, in just one hour of time people abandoned their cars on the streets, avenues and walked home. Over a million abandoned cars they had to lower the price. When the people are smart the corrupt can’t accomplish their goals,”

**Did you know it was Fake? -Yup, total** 🐂💩!

As it turns out, that was fake and never happened. German citizens never organized a protest to force the government to reduce the price of gasoline. If you saw the photo and it brought out a positive reaction from you, then I guess it did its job. Why shouldn’t we believe that together we’re capable of changing the current path?

In actuality, it doesn’t even have to be all of us. For any issue, there is always a tipping point where enough public attention and outcry can lead to change. The exact number of people needed is unknown and varies, but there are clear examples of the power of collective action.

Do you remember Net Neutrality in 2017? The FCC sought to repeal rules in place to allow Internet Service Providers to potentially control access to online content and services based on financial incentives or corporate interests, which could harm competition, innovation, and most importantly, free expression on the internet. That wasn’t fake, and the united efforts of the public, advocacy groups, and supportive state governments created immense pressure on federal authorities. This resulted in a shift in the FCC's stance and the reinstatement process of net neutrality rules, showcasing our strength in action influencing government policy.

It is very likely that the topic of ‘Net Neutrality’ is somewhere on someone’s agenda for a future date to again attempt to repeal. Potentially when that time comes around it will require less efforts than the last. I’ll stay pessimistically hopeful.

A key factor that I wish we could determine is that unknown number. How many of us does it take? Past events will tell us that it doesn’t take that many when the misguided ‘goal’ is to cancel an individual or get them fired. What about when it is for the collective good? For instance, as streaming services continue to raise their prices, how many of the collective would have to cancel or pause their subscription for them to consider a price drop? What is the number that they don’t anticipate with their strategic planning?

Not to pick on any particular service, but Netflix has around 82.5 million subscribers in the US and Canada translating to roughly, 1.27 billion dollars per month in revenue. If a corporate decision raises their basic service to $19.99, what number of cancellations would make them reconsider? 1% of subscribers in 1 month or perhaps 500,000 in 1 day? It might be that the speed and scale of cancellations are just as impactful as the numbers themselves. Like a bank run, where the rapid withdrawal of deposits by a fraction of customers can lead to a crisis, a sudden, large-scale cancellation of subscriptions could force the company to rethink its pricing strategy.

Power of the Collective

“In June of 2019 more than 1 million marched in protest against controversial extradition bill in Hong Kong. The government formally withdrew the bill in September of 2019”

The reason I ask these questions and propose these scenarios is to highlight yet another question. Did you know 78% of Americans are living paycheck to paycheck? Why is this not an issue that takes precedent over so many other frivolous ones? By consciously reducing our spending, we can send a powerful message to policymakers and encourage economic reforms that benefit everyone.

Imagine if we organized and collectively decided to reduce our spending for a short period. While it’s ambitious to expect immediate changes from policymakers, such a coordinated effort could prompt significant economic reforms that benefit everyone. I believe it would certainly prompt a reaction. Policymakers might respond by lowering interest rates, reducing taxes, and implementing measures to stimulate economic growth and fairness to counteract the reduced consumer spending.

The reality is there are countless ways the power of the collective could help harness control of our economy. Do you think liquor companies were thrilled with the arrival of Sober October? They already have to navigate Dry January. At BMG, we're dedicated to educating the public on budgeting and making informed spending decisions as a crucial step towards reducing the percentage of Americans living paycheck to paycheck. Need Assistance? [click to explore how we can help.]

EXPERIMENT: Go ahead, ask ChatGPT “What happens to the economy when the number of Americans living paycheck to paycheck goes down?”

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