Wednesday, January 17, 2007

golden age of consumerism

Basic Tenets of Consumerism
Consumerism is a supply-side phenomenon. Those who purchase are consumees. Envy is the basis of human consumerism, not greed. Proliferation of communication technologies has expanded distribution channels for fear, then envy. Sell fear or sense of inadequacy, juxtapose product that creates envy, then sell product. Product differentiation has enabled further confusion of the public and increased exploitation of envy. Globalization is enabling export of fear, then envy, then product.

Favorable trends for consumerism
1) increasing stress among the masses. Mass distribution of fear, inadequacy and desperation through social isolation, negative news, and adulation of the wealth class
2) wealth polarization: 20 years ago there was 1 billionaire in the fortune 400, now all 400 are billionaires. There is burgeoning wealth polarity throughout the world through maturation of finance, buffeted by common law which enables wealth hoarding. In the old world you could only keep what you could physically protect. Now lawyers and police help protect what you keep.
3) There is a fallacy that economic stress will keep a lid on consumerism, such as inflation, debt, oil prices. however, according to recent article by Ajay Kapur of Citigroup, 60% of consumption is done by top 20% in wealth while the bottom 20% only accounts for 3% of consumption. This is a massive change since even 15 years ago when the numbers were more like 35% and 10%. This is a tectonic shift in consumerism that few seem to have noticed. In other words, those that are sensitive to economic cycles (the bottom 20%) account for a negligible amount of consumption while those that are immune to economic cycles (wealthy 20%) do most of the consuming.

Thus, we are entering the golden age for consumerism, especially if you are dealing with products or services with real or perceived scarcity. Take a look at the price of any luxury item or collectible. It has been inflating the last 20 years much faster and CPI. Now we are globalizing all of these trends.

It all hinges on the definition of prosperity which ought to be “how one feels about oneself”. Once people are made to feel inadequate, and are given products to compensate, consumerism takes hold.


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