Ed,
At 11:11 28/10/2010 -0400, you wrote:
For 200 years (roughly 1780-1980) every single adult knew of some consumer
product that he couldn't afford but yearned for because the next higher
class was flaunting it. So, whatever his discretionary income, be it ever
so small (200 years ago), the next desirable product was identifiable and
was saved hard for. Those products of the first 100 years or so we would
now regard as trivial. Those of the last 100 years were not so trivial --
radio, telephone, car, fridge, central heating. All iconic products start
out by being very expensive. But, increasingly mass-produced, they work
their way down through successive classes. They motivate everyone to buy
something at some income level or other.
Where are the new iconic products? There aren't any. They petered out at
around 1980 and it was then that the financial sector then started
throwing credit at consumers to keep them buying new embellishments of old
products, not uniquely new ones. But now, since the credit-crunch, we are
now into a no-growth economy and it may be a very long time before a new
situation emerges.
Keith
Keith, as usual
I'm saying it "as usual" because I want to provoke someone to disprove what
I'm saying. Find me a new consumer product that's highly desirable by the
rich, very expensive -- say, equivalent to what the car was in the
1910s/20s -- but capable of repeated phases of mass production until it
reaches down to everybody in due course.
you attribute America's and the world's economic woes to the absence of
new iconic products, your argument being that the lower classes of society
look up at the consumer capital goods that the classes above them have
bought and, in a fit of envy and emulation, save like hell so that they
can buy them too. You say that new iconic products petered out at around
1980 and that, funded by consumer credit, people have been doing little
beyond buying embellishments of old products, etc. So, there isn't really
that much to spend on and, hence, the downturn, etc.
An item in today's Washington Post suggests another reason for limited
consumer spending: "A majority of Americans now say they are worried
about making their mortgage or rent payments, underscoring the extent of
economic anxiety in the country heading into midterm elections
Of course! Because we've had an enormous economic catastrophe. I don't
expect consumers to worry overmuch about keeping up with the Joneses when
they can't pay their mortgages or they're in danger of losing their jobs!
. ... A new Washington Post poll shows that concerns about housing
payments have spiked since 2008 despite some improvements in the overall
economy. In all, 53 percent said they are "very concerned" or "somewhat
concerned" about having the money to make their monthly payment. Worries
are the most intense among those with lower incomes and among African
Americans."
So, people may not be spending because they are trying very hard to pay
their mortgages or their rent. Nevertheless, your argument about
spending being driven by consumer envy may still make sense. Soledad
O'Brian's CNN program on Black America the other night was on the problems
black middle class Americans are having in staying in their homes. Both
working parents in the family she featured made their money on
commission. Their income had fallen quite drastically during the past
year or so and they were having a lot of trouble in meeting their mortgage
payments. Little wonder, considering the house they were living in. It
was huge with a two or three car garage and a multiplicity of rooms. It
had obviously been bought out of a feeling of entitlement when things were
going well but was far too elaborate and costly now that good times were over.
What this suggests is that iconic new products can take a variety of
forms, bigger and more elaborate housing for a rising middle class
emulating the rich
for example.
The home is probably the most "precise" of all the status objects one buys.
Go into a new housing estate and you'll find the people there will have
very similar incomes.
Keith
What it also suggests is that there is little that is certain in the
economy; you may be seeing yourself rising upward one year only to be
sinking the next. It's an uncertain world, and as Chris keeps telling
us, the predators wanting to sell you something you can't afford are
never far away.
Ed
Keith Hudson, Saltford, England
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