Economics makes a strange bedfellow. It is real, yet unreal. I have always held that lesser the consumption, the more well-off the person, but apparently that idea goes against what makes a collection of the same people well-off, which is a bunch of people consuming their heads off and converting more and more luxuries into necessities.
I was thinking, what is it that really drives us to OWN something? If we leave the concept of status symbol aside, the positive of owning something - be it a carrot, a dress, or a car - is that the legal process ensures that I have the first and exclusive right of usage, which is actually a quality-assured convenience, that's all. We don't really need any product (unless to eat it or rub it into our skin); what we need is the service that that product provides. I realised this readily when I relocated back to India and found that I was managing very well with Uber and felt absolutely no need to own a car. Personally, I avoided the hassle of owning a car in India. Even if we take a step back and look at the total system, it is obvious that a Uber unit on road is utilised far more efficiently than a personal vehicle standing mostly at a parking lot.
Carrying this one step further, I feel that THE CONSUMER SHOULD AVOID OWNING A PRODUCT, UNLESS IT IS REALLY A CONSUMABLE. Products should be owned by service-providers, who don't consume it themselves. It is only then that a product will translate into a service with maximum efficiency.
This trend is already visible in cars. What about residences? Will the trend change to renting residences instead of owning them? I myself feel with real-estate appreciation out of the way and rental rates comparable to bank rates, it makes sense to rent furnished space rather than own them, if we are sure of not getting kicked out every year. Perhaps the legal mechanisms have to be re-written to take care of that concern area.
Let's go a radical step further. What about clothes? Renting clothes...yuck! Hygiene jumps to the forefront. But seriously, how open are we to walk into an exchange store, submit our used clothes which will be washed, fumigated, pressed and displayed in an appropriate store, and pick up the displayed clothes for a nominal exchange fee? You could recycle your wardrobe every month! Just imagine the amount of capital that lies blocked in wardrobes. In the west for example, tuxedos are rented. Undergarments would be a challenge, but I feel the day is not far when we will have cheap cellulose-based underclothes that will be 'úse-and-throw', biodegradable.
What about utensils and crockery? Even if we rent them, utilisation is still inefficient. No one can use a cooking utensil when cooking is not going on, or crockery when no meal is being eaten right then. The only way to improve the current trends is to timeshare communal kitchens and dining areas (hygiene issues considered resolved). But like clothes, this sort of change involves high acceptance of a greater good over individual preferences and insularity.
When a service-provider buys a product and rents it out, depreciation matches actual usage and re-purchase becomes a functional necessity. On the other hand, when a consumer buys a product and puts it to limited use, he is blocking capital, which is a sacrilege in business. Then why are we not worried about it, if the running of a nation is also a business?
One of the reasons we are worried about pushing service-providership more than ownership is that we are afraid that there will be lull in sale while the inventory gets dissolved. That is, of course, a reality, but it should be a one-time correction.
A relevent question comes up here. If we imagine our middle-class forefathers 50-80 years ago, they owned whatever they used. There was hardly anything rented in their houses. Was that not also inefficient? It's true, owning anything is inefficient. But their inventories were far more limited that ours. Furnishings were at a minimum. They hardly had 4-5 dresses. In villages, perhaps only two. The poor had just one cloth, which they would dry after a bath and wear again. Their utilisations were 25-50% whereas in the current times, utilisation of owned products would probably be 2-10%. So, although they also owned products, the blocked capital was far lower.
When we go to a mall and buy a dress, we have just looked at two huge inventories. One at the mall, awaiting our choice because we don't like to buy without choosing, and at home, awaiting our picking out from the wardrobe, because we need a large choice there as well. The former is a marketing goal of satisfying all segments, the latter is an individual goal of pampering our individuality. Both cost money. Let's release at least the second money back into circulation. Not only will it help the economy - more than credit does at any rate - it will also allow consumption to mirror the money flow and reduce economic lag. To my mind, that's a good thing.
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