Bling isn’t for everyone. The Atlantic reports that University of Chicago economists found that black families spent 25 % more on BMWs, finger-rings and Yves Saint Laurent than a white family of the same demographic.
They tested this finding out in a bunch of other circumstances. They found rich white people in South Carolina spent far more on bling than those in California. A theory started to emerge.
Conspicuous consumption is stronger among people from social groups that are on average, poorer. It’s why Jay-Z video’s have Rolls Royces in them. He’s from the projects. It might explain why the Chinese are so keen to buy cars. It could even explain why, back in the day this lady’s great-great-great-grandfather thought it would be totally sweet to have a hat made of gold. Suck on that, peasants!
Moet Hennesy Louis Vuitton (LVMH) is a big luxury goods group. They are like a fat kid in a candy shop right now. LVMH sold $5.69 billion of exclusivity in the 3rd quarter of 2008 alone. The Chinese are buying up the notion of exclusiviity by the container load. Russia is another big market for them.
What all this made me think of was Simon Kuznets. He’s a Russian-American economist who theorised a curve that we now call the Kuznets curve.
It is used to describe the havoc wreaked by economic growth. As you can see, as income per capita rises, inequality rises. But it doesn’t last for ever. At a certain point in a country’s development, the forces that drive income up also start to spread it wide.
There is also an environmental Kuznets curve, that suggests that as the economy grows, environmental degradation increases, until a point arrives where that gets reversed. Eventually, citizens demand a cleaner environment and pass clean-air laws, etc. To explain this, consider whether the UK environment is in better shape than the Chinese.
Maybe conspicuous consumption is another bad that we could put on the vertical axis. At first, noone has anything. Then, as income grows, those who’ve got it want to flaunt it. Eventually everyone is well off enough to just STFU.
The rich people from rich groups , still obviously have tons of money. Where does it go? Into inconspiscucous consumption. They have nicer socks, apparently, and comfier pillows. They’ve been investing in better medical care, nicer soap, and holidays you don’t get postcards from. They get a maid and driver but they keep it on the down low.
Eventually, if my Kuznets curve theory is correct, the rap videos of the future will feature subtle drive-bys of very large houses completely obscured by trees, exceptionally well-tailored suits with no visible branding, understated watches completely devoid of sparkles, and instead of a cadillac or a beemer, Jay-Z will just be accompanied by a chauffeur….
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