Conspicuous consumption

The challenge comes down to each person's definition of luxury, lavish and prestige.?ÿ Eating in a restaurant instead of at home is a major luxury for some but merely routine for others.?ÿ Having more than one reliable vehicle to transport yourself around daily is a major luxury for some but grossly inadequate for some who feel the need for a large number.?ÿ Lavish and prestige are similarly challenging to define consistently.

Much of what we hear about on the nightly news that is destroying the economic world is the currently extremely low level of conspicuous consumption.?ÿ Tuxedo rentals are probably at an all time low, for example.?ÿ Communities that live or die based on tourist activity must be in deep trouble already.

Those who are fortunate to have a steady income throughout this pandemic probably have more money in their bank accounts right now than they have had in years, if ever.?ÿ So, is that person a bad person because they aren't spreading it around to all those who would normally be getting it?

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Was chatting with a son-in-law a couple of days ago about how it is going working from home for the past two months.?ÿ He is one of about 13,000 office workers for his employer in the Kansas City area.?ÿ The firm is already investigating whether or not to continue to maintain offices for all of these people as things are working well without their physical presence on a daily basis.?ÿ Let's say they decide 10,000 employees no longer need a standard office.?ÿ That would then put office space for those 10,000 people available for use by other firms.?ÿ That, in turn, would delay the need for new office space in the area.?ÿ That leads to a downturn in new construction and a decreased need for the professions and crafts that make their money on certain aspects of new construction.

Meanwhile, the son-in-law is not driving roughly 50 miles per day saving wear and tear on his vehicle, delaying when he might purchase a new one, reducing maintenance expenses and greatly reducing the money spent on fuel.?ÿ That means those who have benefited from his daily and routine expenses aren't going to receive nearly the amount they are accustomed to receiving.

I've lately pondered the huge social axis that is occurring right before our eyes.?ÿ With all this staying at home my gas mileage has gotten a lot better.?ÿ I'm up to 3 weeks a tankful.

Maybe folks are reevaluating their priorities, both social and financial.?ÿ My fear is that when people realize they can still "get by" with so much less consumption our consumer-based economy will take a big hickey.?ÿ?ÿ

I'm also reminded of my Grandfather's stories of living through the Great Depression.?ÿ He was lucky enough to have hung on to a few teams of mules.?ÿ All the WPA construction provided him and his sons a windfall of income.?ÿ He rented out a team and operator on the road projects for twenty cents an hour; a dime an hour for the team and a dime an hour for the operator.?ÿ He also received feed-vouchers for his teams.

He was able to purchase starving mules from neighbors that were down on their luck.?ÿ He would fatten them up, supply all the tack and rent another team out for the road construction.?ÿ He made more money in the Depression than he ever did trying to raise cotton.

Papa was a poor and frugal man.?ÿ He thought the government was wasting money by hiring his mule teams.?ÿ He told me once, "No man is worth 10 cents an hour".?ÿ?ÿBut he turned in his time sheets every Friday.?ÿ 😉

Some people know this song is about them.

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As a teenager I hooked up with Thoreau's Walden?ÿand have kept a copy near at hand ever since. A lot of people take issue with the details therein. But the basic message that the truly necessary things in life can be had for little effort, and what is really valuable is free time to do what you want to do, is valid.?ÿ

My personal example of conspicuous consumption is the kit car I purchased about this time last year that had been assembled by the high school automotive classes over a couple of years.?ÿ It appears to be a 1927 Mercedes Benz Gazelle until one looks closer.?ÿ Drove it in several parades last year.?ÿ Probably won't be doing that much this year.

@holy-cow

The circular flow of economic activity. We all make our livings by doing things for others that they either can't do for themselves or don't want to do for themselves. Reducing that flow to mathematical models is descriptive but not always predictive.

A year from now the economics Ph.D.s will still be calibrating their models to account for the changes. It's a good time to be a forecaster, there's lots of demand for forecasts, but good ones are hard to come by. 

Right now, it may be ol' Elon Musk who is charting the course for all of us.

The whole thing is a catch-22.?ÿ Part of me feels like this might be a correction to several generations that can't or haven't had to do things they should be able to do for themselves like changing their oil, rotating their tires or COOKING for example.?ÿ People should have some basic life skills but for some reason the notion of giving your kids better than you had turned into not making them responsible and allowing them to become entitled.?ÿ On the other hand I struggle with the people that make a living changing oil, rotating tires and cooking not having work.?ÿ I don't know what the right answer is but my guess is Middle America will be responsible for finding the right balance.?ÿ ?ÿ?ÿ