Thursday, August 7, 2008

Playing the world's smallest violin

From the Marx and Coca Cola blog

You can imagine how sad I was to see this story on the front page of my local fish wrapper: Rich are not so different when economy is down. I cried a little. The story does briefly raise one interesting point:

"To be sure, the poor and middle class are being hurt more, but upper-crust thriftiness could reverberate across the rest of the economy.

The 10 percent of households with the highest incomes account for nearly a quarter of all spending, according to data compiled by research firm Moody's from a 2006 federal survey....

Other government data show households in the top one-fifth of the U.S. population ranked by income earn about half of all total personal income before taxes — an imbalance that gives the wealthy immense economic clout, said Sara Johnson, an economist at the research firm Global Insight.

"Consumer spending makes up 70 percent of gross domestic product, and when one group accounts for a very substantial share of consumer spending, they also account for a large share of the economic activity that creates jobs," Johnson said."

The richest 1% have the largest share of the national income in two decades. According to the Wall Street Journal this is due in large part to that group's declining tax rate.

Instead of a story about how an accumulation of wealth, and by extension economic power, in the hands of fewer and fewer people is having a disastrous impact on the economy at large, the story instead focuses on the "hardships" endured by the not-working class:

"Many are asking their personal shoppers and private-jet providers to seek the best deals rather than over-the-top extravagances."

Boo-hoo. They'll have to start eating the nonorganic arugula.

"He also may buy a hybrid to supplement the two Mercedes in his heated four-car garage."

So sad. Think of his children.

"A lot of our clients stop by a deli on the way to the airport, rather than have a catered meal on the plane" costing $50 per boxed lunch, said Justin Sullivan. Sullivan is the founder of Regent Jet, an Andover, Mass.-based broker that buys blocks of aircraft time to trim costs for high-end clientele whose multi-leg itineraries can sometimes exceed $100,000."

Eating from a deli! What is this, Mexico? And this quote from the managing director of investments at the beleaguered Wachovia Securities:

""People are examining, 'Do you keep the yacht, do you go to the classic-car auction, do you take the private jet?' Those sound like nice problems to have, but at the same time, they are issues."

(Marx and Coca-Cola will be on hiatus while JM recovers from his rage-induced coma.)