Wednesday, September 09, 2009
A remarkable Washington Post news article extolling the wealthy:Waiting for Deep Pockets to Open
Recovery May Well Wait on the Wealthy to Step Up Their Spending: (excerpts) Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy.
"Unless these people turn up, a lot of companies won't turn up," said Milton Pedraza, founder of the Luxury Institute, a consulting firm. "When they are not spending, it definitely impacts all of us in a negative way."
Conditions are beginning to improve for the well-to-do.
... a recent survey of wealthy consumers by market research firm Unity Marketing showed their confidence in the economy during the second quarter jumped by the largest amount since the firm began tracking the data. The key to the story is the first line quoted (above): Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy. It may be that the wealthy are (or more accurately were) the most important, but that doesn't mean it's optimal. If, as many claim, the distribution of wealth has become concentrated at the top, it's pretty lame - especially in an economic downturn - to passively accept the Bush-era economic structure as a given and root for the top dogs of that time. But that's what the Post does.
posted by Quiddity at 9/09/2009 12:42:00 PM
8 comments
As I am becoming fond of saying, John Graham is not half the man his mother was!
Doesn't the story refute itself?
If we take the story's premise, that "affluent shoppers" are "the top 20 percent of the nation's households", then non-affluent shoppers account for 60 percent of all spending.
Who will buy more refrigerators, cars, air conditioners, televisions, cameras, furniture, trips,homes etc. A limited amount of wealthy individuals with concentrated wealth (how many fridges do they need?), or large and affluent middle and working classes based on income that is distributed more equitably?
Which economy will generate more commerce, more jobs, and therefore more profits in the long term? One geared to a few wealthy spenders (like in the 3rd world)or one geared to mass consumption? The WAPO speaks for the affluent few. They only care about themselves and not the country. WAPO best ignored.
Yes, but there is a key difference between the top 20% of the nation's households and the bottom 60% . The affluent shoppers are the ones that buy the new houses, the new cars, and labor intensive luxury goods and services, including the early adoption of what becomes commonplace and available to non-affluent shoppers.
The non-affluent population tends to buy big-ticket items used. They buy an existing house. A used car. Second-hand and mass-market manufactured goods.
If you want good paying, unionized UAW and construction jobs with good benefits and retirements, then you HAVE to root for the existence of a part of the population that is willing and able to pay the substantial new-construction labor premium for new cars and new houses. Otherwise there will be no one to buy those new cars and houses. It makes no sense to on the one hand demonize those who are able and willing to spend lavishly, and on the other hand depend on them for the well-being of everyone else.
> it's pretty lame - especially in
> an economic downturn - to
> passively accept the Bush-era
> economic structure as a given
> and root for the top dogs of
> that time. But that's what the
> Post does.
What I find more interesting is your implied critique. If it is somehow lame to root for those people who can purchase the luxury goods that fund the construction and auto industry, then who should we be rooting for? Who will replace the affluent? Who will buy new cars? Collectives of poor people? The government? Or will there be no or hardly any new cars at all? How about houses? If there are no affluent people to build new houses, who will build them? Where will poor people get their houses and cars? Will they be better or worse used houses and cars than used houses and cars originally built for affluent people?
The interesting thing about this post is that Quiddity finds it remarkable to read a newspaper story that deviates from a political philosophy that makes no sense. It seems self evident that if you attack and destroy wealth, you will be left with nothing but poverty. Point this out to leftists and it is not as if they don't understand it; it is as if it doesn't even matter.
The only one writing about attacking and destroying wealth is Anonymous at 9/09/2009 8:25 PM. Our host's post critiques the notion that spending by the wealthy will magically turn things around. They've never had it so good but the economy is still shit because there's only so much that a limited amount of wealthy individuals can consume no matter how expensive it is. The wealthy can certainly not buy enough cars to keep GM or Ford afloat. Our host didn't suggest we should get rid of the wealthy. Trickle down has been an epic failure. What we need is trickle up. Thanks Anonymous at 9/09/2009 8:25 PM for the baseless premises, straw man arguments, and gratuitous smearing of "leftists" (whatever that means).
How does "trickle-up" work?
How does "trickle-up" work? If more cars, fridges, trips, houses, televisions, etc. can be purchased because the middle and working classes are more affluent due to more equitable income distribution, are the wealthy going to get bigger bonuses or smaller bonuses? Bigger commission or smaller commissions? Figure it out.
Bigger, because they are at the top end of a widening bell curve of income distribution.
If the median income rises from $20,000 to $30,000, for instance, then one can expect the far outlying edge of the income distribution to rise as well.
To leftists, this is evidence of a rising disparity between the richest and poorest people, and constitutes an injustice. All efforts to rectify this injustice come at the expense of contracting the income distribution bell curve; making everyone poorer to guard against the danger of a few people getting too rich.
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