catallaxy files

catallaxy in technical exile

The frustrations of affluence

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Who said this? "Why, as our industrialized nations get richer and richer, and as the real per capita income moves ever upwards, do so many of our citizens seem to get more querulous about their economic condition?"

Was it:

(a) Irving Kristol

(b) John Kenneth Galbraith

(c) Clive Hamilton

(d) Juliet Schor

Answer over the fold…

(a) Irving Kristol — the original neoconservative.

In ‘The Frustrations of Affluence’ Kristol observed that many Americans in the top 10 or 15 percent of the income distribution called for higher taxes on the rich but didn’t understand that this meant taxing themselves. They were affluent but they didn’t feel it.

Kristol suggested two reasons why affluent Americans felt that they were missing out: (1) the affluent society’s dependence on technological innovation; and (2) "the effects of mass affluence upon the individual consumer."

(1) Technological innovation

Technological innovation makes some things cheaper and other things more expensive. By the 1970s when Kristol was writing, white goods, air conditioners, television, cars and air travel were already much cheaper than they had been. The American working class were able to afford material goods that were once the preserve of the rich.

That is why the least discontented people in our affluent society are those members of the working class who have moved up from poverty or near-poverty to the kind of "affluence" represented by an ability to enjoy these fruits of modern technology. That explains the so-called "hard-hat" phenomenon of the late 60s which has so distressed all those who think the working class has some kind of revolutionary mission.

But while working people and their families enjoyed a new level of comfort and convenience, alienation had set in further up the income scale:

…what if you are not all that interested in having your standard of living raised in this way? Or what if you have already experienced those benefits of an affluent society? You are then in trouble, because the other kinds of benefits you looked forward to, as a result of rising income, turn out to be scarcer and more expensive than they used to be — and sometimes are not available at all. If you thought that, at $25,000 a year, you could go to the theater or opera once a week, you soon learn otherwise. If you really don’t care for air travel but have always wanted a sleep-in maid, you are just out of luck. If you had hoped to have your cocktail or dinner parties catered, you find out that, though this was once commonplace at your level of real income, it is now out of the question.

Mass produced consumer goods became cheaper but services became much more expensive. For many people being rich meant being surrounded by people who did your bidding — maids, gardeners, hair dressers, accountants, lawyers, and medical specialists. When they were forced to settle for a new television and a bigger car they were frustrated and confused.

(2) Mass affluence

The 50s and 60s saw great gains in incomes for working class and lower middle class Americans. And, according to Kristol, this meant that Americans in top 10 or 15 percent of the income distribution had more competition for the kinds of things that couldn’t be mass produced in factories. Americans on $30,000 a year who expected to be able to buy the kind of real estate people on $30,000 used to buy were going to be disappointed. Fancy restaurants, commuting by taxi, and owning a holiday home were all out of reach:

Item after item which used to be available to those who were relatively rich (top 15 percent bracket) are now available only to those who are very rich (top 5 percent bracket). The increased affluence of your fellow citizens has sent these amenities sky-rocketing in price.

The frustrations of affluence

Kristol spotted something that more recent critics like Clive Hamilton have missed. If wealthy people are suffering from ‘affluenza’ it’s not because they’ve been tricked into thinking they want more stuff. Advertising just isn’t that good. Home theatre systems, digital cameras, clothes, and packaged foods have all become cheaper. That’s the real reason we’re buying more of them. The kinds of things that are swallowing up increasing amounts of Australians’ rising incomes are not on sale at Harvey Norman or JB Hi Fi.

One thing people really seem to want is a house in as good a suburb as the one they grew up in. And with populations rising and cities spreading there just no way most people are going to realise this ambition. Nor are most people going to be able afford to send their kids to elite private schools or get them into a taxpayer funded medicine or law degree.

Kristol worried that frustrated high-income Americans would turn away from conservatism and its values. After witnessing the student uprisings of the 60s he feared the same thing Clive Hamilton hopes for — that affluent citizens would realise that economic growth wasn’t going to make them happy.

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Written by Admin

March 12, 2006 at 11:12 pm

Posted in Uncategorized

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