Bob Hawes |
Monday, 15 September 2008 12:01 AM |
There are many drivers of consumer spending.
A term that fascinates me is that theorised by the economist Thorstein Veblen over a century ago.
He referred to the phenomenon of “conspicuous consumption” in his publication delightfully titled The Theory of the Leisure Class.
Veblen was describing a pattern of behaviour whereby societal upper classes were adopting lavish consumption habits, spending on goods and services as an outward display to demonstrate income or wealth and a measure of social status.
Veblen further described conspicuous consumption as the waste of money and/or resources in this pursuit of a display of higher status – it had a dark side.
Economist Paul Nystrom extended Veblen’s concept. Nystrom was observing the hedonistic behaviour of the industrialising world in the 1920s and suggested that lifestyle changes were inducing a "philosophy of futility", which would increase fashionable consumption.
The wheels fell off in the 1930s and through the Second World War, but the template was already forged and ready to be adopted as economic circumstances improved.
We have moved on somewhat from the concept of the beautifully coined “leisure class” where “gentlemen” studied philosophy and fine arts for no other purpose than status.
Contemporary economists and sociologists argue the conspicuous consumption affliction is now a pillar for particular consumer spending habits in the developed and developing world alike.
Terms used more recently like “material world”, “keeping up with the Joneses” and the negatively connotated “affluenza” reflect the persistence in society of the notion of conspicuous consumption.
Affluenza portrays circumstances of an illness inflicting society.
The more you earn, the more you shop, the sicker you become. Kath and Kim clarified things by noting their “effluence” in reference to their endowment of riches.
Social commentators have been quick to point out the extent of the affluenza epidemic.
They quote traits typifying conspicuous consumption and measures of consumerism within our society. The four wheel drive (Toorak tractor), the giant barbeque, the plasma TV are a few.
At the high end, the burgeoning size of dwellings materialising in massive house extensions and bigger new homes occurs at a time when household density is declining.
Economists suggest this phenomenon partly explains the recent decrease in home affordability. At its peak, entire suburbs across the country have looked like construction sites and they’re just the ones experiencing extensions.
Perhaps the ultimate symbol of the affliction of conspicuous consumption is Dubai. We’re frequently reminded, however, that the motives for development over there are far deeper.
Economists cite logic such as delving into the pursuits of architectural excellence and building the foundation for the transformation of an economy as the oil runs out. Justification based on rampant population growth or a current grave shortage of floor space or dwellings appears to be lacking.
However, despite where the truth may lie, the stuff keeps selling so they keep building and in a Las Vegas sort of style, the next will always be better than the last – it’s quite bizarre really.
Back home, the uncertain and volatile economic circumstances in recent times provide a window for society to “get well” and recover from the affluenza virus, for a short time at least.
We’re told consumer spending at the top end usually slows when times get tough. The discretionary items are no longer discretionary – they’re off the shopping list altogether.
Likewise, the volume of development applications slows and the talk is of hunkering down, rationalising and consolidating.
It’s a matter of keeping what we have and appreciating the intrinsic value of goods and services in our purchasing choices rather than bowing to the pressures of consumerism – what a novel outlook. Social status and social climbing go on hold.
Sociologists also point to the dark side of conspicuous consumption – the compulsive spending, extension of credit and the inevitable bankruptcies and dislocation that follows. The government also suffers as taxation income declines.
So as consumers recover and get well, other things get sick.
“For every action there is an equal and opposite reaction”.
Conspicuous consumption is ingrained. Scary as it may seem, there are elements within the property and retail industry waiting for the next bout of flu to hit and as you get “sick” they can get well again. Enjoy the respite, and then take the medicine.
Bow Hawes is development partner at Buildev and chairs the Property Council of Australia’s Hunter Chapter.
Bob Hawes |
Monday, 15 September 2008 12:01 AM |
