“The Rise of Consumption Equality” is a provocative editorial from the Wall Street Journal by Andy Kessler. He notes that many people are sleeping in tents to protest income inequality in this country (later I will post blog pictures from my conversations at “Occupy San Francisco” — dsk).
While income inequality is noteworthy, Kessler points out that that millionaires and billionaires are experiencing a horrifying revolution: consumption equality. In other words rich people used to work 60-80 hour weeks to accumulate wealth and enjoy perks beyond the middle class. Now there is not much difference between a luxury suite at the Super Bowl and reclining at home in a massaging lounger watching a 55-inch high-def television purchased for $700. A $2.4 million dollar Bugatti gets stuck in the same traffic as a $16,500 Ford Focus. Either of them can hit 70 miles per hour on the highway. A private jet is nice, but you can fly almost anywhere in the world for under $1,000.
Kessler notes, “In 1991, a megabyte of memory was $50, amazing at the time. Given its memory, today’s 32-gigabyte smartphone would have cost $1 million back then, certainly an exclusive item for the wealthy. Heck, even 10 years ago, a 32 gig cost 10 grand. But no one could build it — volume was needed to drive down both cost and size and attract a few geeks to write some decent apps.” In other words, it it took a market for millions of smart phones before there was a market at all.
He concludes, “Just about every product or service that makes our lives better requires a mass-market or it is not economical to bother offering. Those who invented and produced for the mass-market get rich. And the more these innovators better the rest of our lives, the richer they get but the less they can differentiate themselves from the masses whose wants they serve.”
Even though income inequality may widen in the future, consumption equality likely will become the norm. I am still grateful for rich people, but not as much as I used to be…
Part 1 of 2