The Guardian treats us to a long read on how appalling – vulgar even – is the How To Spend It supplement to the Financial Times. This could even be true, for it is little more than a listing of this week’s Veblen Goods. However, the real information contained in the diatribe is that those who write the Guardian have no clue about economic statistics. They’re just not cognisant about that world outside the window. For they keep telling us that this listing of baubles for the rich is aimed at the 1%. Which is nonsense, a mistake that could only be made by those who have no idea who the 1% are.
How to Spend It: the shopping list for the 1%
In an age of astonishing wealth, nothing reveals the lives of the ultra-rich like the FT’s unashamedly ostentatious luxury magazine.
Well, really, no. The 1% aren’t the ultra-rich. Nowhere near it.
Sometimes this elite life is fleetingly visible to the rest of us – the chauffeur-driven car waiting outside a boutique in a smart part of London or New York. More often, it is invisible – the super-yacht out at sea. The 2008 financial crisis and subsequent global recession and austerity have left this life largely unaffected – and often enhanced, with emergency measures such as quantitative easing hugely benefiting the rich – while altering the lives of almost everyone else. Books and articles about the 1% have become a booming genre; many newspapers, including this one, now have “wealth correspondents” to report on the super-rich. Yet journalists and academics often struggle to capture more than the hard, glossy surfaces of this private world: the size of the yachts, the profusion of servants. If you want to understand the underlying desires and pleasures – and the restlessness and competitiveness – of the 1%, then you need to read How to Spend It.
Seriously? The 1% are on yachts, have chauffeurs, servants?
If we restrict ourselves to the UK the 1% are those earning – pre-tax do note – more than around £160,000. Yes, that’s a nice chunk of change. But super-rich? Rilly? When we count his book royalties that’s about what Owen Jones got one year. Owen is the super-rich scouring the FT’s magazine for which jewelled watch to buy? And no, I’m not joking, a Guardian columnist with a reasonably successful book is in the 1% for the UK by income. If Polly’s next book sells 50,000 copies then she too would be. Actually, if we count by household income then Polly’s already in the UK’s 1% (hmm, maybe, depends whether David Walker’s still earning).
The consumption habits of this elite matter increasingly to all of us; the spending decisions of the rich are now economic and social forces of enormous power. “As the rich have been getting progressively richer,” an analysis by the US investment bank Citigroup found in 2005, they have been “saving less and spending more”. Unlike other consumers, the report went on, the rich find many products, such as designer clothes, more desirable the more expensive they become. The countries where the rich congregate, such as Britain, Canada and the US, have been changed radically by this frenzy of spending: they have become “Plutonomies – economies powered by the wealthy”.
Plutonomies have ever more dominant and sterile cities, spiralling property prices, worsening social segregation and increasingly polluted environments – as the 1% travel more and more, and take up more and more space, their luxury towers literally casting everyone else into shadow. Above all, the increasingly separate world of the rich consumer sends a divisive message: if you have enough money, you can escape.
So now we’re talking about the global 1% are we? Which is not who you think it is. The average schoolteacher in the UK is in the global 1%. That’s by income, for that elite begins at a little above UK median wage, around and about £30,000 a year (median UK is some £23,000 or so, but that’s from memory). The global 1% in wealth would include a teacher who owns their own house after say 25 years of working at the classface. For yes, a decent occupational pension and a UK house do indeed put you into the global 1% by wealth.
The FT’s How To Spend It supplement is not aimed at this audience.
The actual lesson to take away from this is that The Guardian simply don’t know what they’re talking about on matters economic. But then we knew that already, right?
And yes, this does matter:
Since 1980, the share of national income taken by the richest 1% of Britons and Americans has almost trebled. Across the world as a whole, the 1% now have half of all the wealth, the highest proportion for almost a century.
For How To Spend It is aimed perhaps at the UK’s 0.1%, at the global 0.01, possibly even 0.001% (the FT, not just the supplement, reaches some 900,000 people out of 7 billion) meaning that we’re talking about the merest froth on the top of the global $80 trillion economy. Who do not own 50% of the total wealth nor any great number of percentage points of the national income. But, you know, if only the Guardian knew….