Mother’s Day, Father’s Day…there are a couple of other occasions when shopping is mobilised to express love and appreciation. (Black Friday panders to more basic instincts.) The wonder is that Matariki has not (yet) become a market-driven holiday, although $21 plus postage can score you a double-sided Matariki Sparkle Jar Light. Christmas, however, is still far and away the biggest faux-sacred, family-based shopping festival of them all.
Christmas is the time when everyone gets invited/pressured/shamed into spending like a rich person, even if they are not. People on low incomes, middle income earners and the affluent alike are all exposed to the same festive advertising, and we have inherited the same cultural expectations. Gifts under the Christmas tree for the kids! Families dining happily at the Christmas table!
Never having known the Lord personally, I have no idea how he feels about the marketing uses to which his birthday has been put. Yet I’m fairly sure that Jesus would not have wanted families to be spending the rent money and going into debt in order to celebrate his birth. It always has been a mixed bag. For many people, warm childhood memories are a big part of this particular celebration. Yet for almost as many people, Christmas can also be a time of year fraught with social and economic anxiety (and family arguments) and that comes on top of the extra kitchen duties expected of wives and mothers.
There seems to be no escaping from it. Come Christmas, spending on gifts for the kids and feasting for the family is for most of us, a deeply internalised measure of self-worth. Obviously, this can have punishing consequences when the bills fall due.
All together at the checkout
Nearly everyone spends up large during the festive season, whether they can afford to or not. That makes the Christmas period something of an outlier. During the rest of the year, a disproportionately large share of the retail spending is done by a fairly small section of society. In the US, Moody Analytics have estimated that 10% of the US population account for over half of all retail spending in any given year. The concentration of wealth that this reflect is accelerating. Currently, the top 10% of Americans owns $113 trillion of the nation’s wealth, but the top 1% own nearly half, at $52 trillion. That’s a new record.
As Emma Janssen of the American Prospect magazine recently pointed out, the growing extent to which high earners are propping up the economy is being cemented in:
“[It] has created a self-reinforcing loop where more and more of the economy is working for people at the top, and not [for those] at the middle and bottom,” said Michael Linden, a senior policy fellow at the Washington Center for Equitable Growth. That can show up in everything from the selection of stores that are at the mall, to what kind of policy is prioritized in government.
In New Zealand, accurate figures on the skew of retail spending are hard to come by. Conservatively, the best guesstimate is that the top 20% of incomes are doing the heavy lifting on retail spending. Point being: this concentration of spending power creates perverse self-reinforcing loops of a familiar sort, especially around pricing.
Here’s the logic: if it is mainly wealthy people who are spending, then prices – e.g. for airline tickets – will tend to be set at the level that wealthy people can afford. There’s a word for this process. It is called “plutonomy” and it refers to how economic disparity ends up making things more expensive for all of us:
If wealthy consumers are responsible for the lion’s share of spending, the logic goes, companies might as well raise their prices—the primary buyers can afford it. [Corporates write off those sky-high Air New Zealand ticket prices against tax. The rest of us are not so lucky.] “If you can come up with something that [rich people will] regard as special, you can really make a lot of money selling to them,” said Robert Frank, a professor of management and economics at Cornell. “So, a lot of the ingenuity in the economy gets directed to things that we would think of as less than essential.”
There is a feedback loop involved. As Emma Janssen adds, this is the idea behind “premiumization”, a trend whereby companies brand their products as being high-end and desirable, and market then almost exclusively to wealthier consumers, and only aspirationally to everyone else:
A Forbes article describes premiumization as a “strategic move by consumer brands to elevate product offerings and charge higher prices.” The push for premiumization is largely driven by demand—wealthier consumers have more money to spend and are looking for “premium” ways to spend it—but it is also spurred on by inflation, which pushes companies to justify price hikes with a shiny exterior.
Footnote: BTW, this “premiumization” trend provides quite a good counter argument for a wealth tax. If the wealthy having too much disposable income is driving up prices for all of us, then taking some of their spare change away from them via a wealth tax will flatten the price spiral, put a lid on inflation, and expand the customer base for the retail sector by making consumer goods a bit more affordable. Just saying.
The whole economy is gentrifying
Regardless of the misgivings we might have about it, this is the nature of the economy in which we live and work. Services of a superior calibre are being reserved for those that can pay the tab. Meeting their needs is being treated by government as its No.1 priority. The spending power held by the rich (and, we can include in that category, farmers flush with dairy returns) exerts a gravitational, tidal pull upon the entire economy. Commonly, a lot of attention gets paid to the impact of wages on prices (the dreaded wage/price spiral!) but IMO, we should be paying more attention to the impact that the concentration of wealth is having on prices.
Instead – and weirdly – much of the business news coverage takes it for granted that the spending and investing habits of a relatively small tier of relatively wealthy people are the economy. As a result, we are constantly being told that the recovery is just around the corner, that consumer confidence is perking up, and that retail spending is gathering steam.
Rarely, if ever, is it specified who is spending, whose confidence is improving, and which people and communities are just getting by, or going backwards. Newsflash: when the Reserve Bank cuts mortgage interest rates, the nearly half of the New Zealand population who live in rented accommodation do not get more in their back pocket to spend.
For a good example of this blinkered coverage: take a close look at the good news story about the “rebound” in retail spending reported for the September quarter. Some key differences rated only a glancing mention:
Of the 15 retail sectors monitored….the largest gains were recorded in motor vehicles and parts retailing (7.2 per cent) and electrical and electronic goods retailing (9.8 per cent), indicating that consumers are not only purchasing everyday items but also investing in higher-value, big-ticket items. Other sectors contributing to growth included food and beverage services, as well as hardware and building supplies, while supermarkets and grocery stores experienced a slight decline.
So…which consumers are spending significantly more on cars, big ticket electronic goods and on “food and beverage services”? My hunch is that it would not the same people who are spending less at supermarkets and in grocery stores. That September quarter story could be read just as credibly as evidence of an increase in socio-economic inequality.
Cheering for Christmas
Finally, I would argue that it is this divergence of fortunes that makes Christmas spending such an anomaly. As indicated above, Christmas sentiments all but erase the divisions that normally exist between retail customers. During the “festive season” people are strongly urged to behave as if money, for once, is no object. Unfortunately, the reality is that a growing number of New Zealand adults can no longer afford to give their families the Christmas experience that their parents provided for them.
Footnote One: As is often reported, the middle class are struggling to hold their ground in this situation. They’re too poor to avoid the impact of rising prices, but too wealthy to qualify for help. Understandably, middle class earners are also reluctant to accept the implications of their deteriorating position. Janssen again:
The middle class is taught, through carefully designed marketing and social media, to identify more with the rich than the poor. This class misalignment keeps them striving for the upward mobility our economic mythology promises them, even though so many are just one medical emergency or car crash away from poverty.
“The people in the middle aren’t resentful of the lifestyles of the rich,” [the US academic] Robert Frank says. “They want to see pictures and footage of mansions and yachts. They think, usually incorrectly, they’ll be rich someday. What will it be like?
Footnote Two: How did we get into this situation? The same Citigroup memo 20 years ago that first popularised the word “plutonomy” (approvingly) likened the pre-GFC economic boom times to the Gilded Age of the 19th century robber barons. In the memo, Citigroup’s global investment bankers asked themselves an interesting question – what are the common drivers of plutonomy? Their answer:
Disruptive technology-driven productivity gains, creative financial innovation, capitalism-friendly co-operative governments, an intentional dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law and patent invention. Often these wealth waves involve great complexity, exploited best by the rich and the educated of the time.
Meaning: history tells us that money makes even more money for itself from those “technology-driven” gains in productivity. Therefore, “capitalism-friendly co-operative governments” should do all they can to enable “the rich and the educated” to exploit their existing advantages to the max. Elites do, and should, control access to the drivers of advancement. Succinctly put. Citigroup should have put those sentiments on a Christmas card.
Christmas songs
Picking favourites here. Obviously, any number of great traditional songs have been inspired by the Christmas story. Babies, divine or otherwise, do hold out the hope of new beginnings. Among these traditional Christmas carols “Lullay My Lyking” is (a) beautiful and (b) startling in the way it addresses the divine:
Lullay my liking, my dear Son, my Sweeting;
Lullay my dear Heart, mine own dear Darling…
Fittingly, this carol is sung on the soundtrack of then film Black Narcissus. In that classic movie, the nuns in their monastery in the Himalayas find it increasingly difficult to stay focussed on spiritual matters:
The track record of modern singers trying to create new Christmas songs proves that it is harder than it looks. Yet back in 1956, the Hepsters (and since then, whoever made this lovely video of their child riding around in a bumper car) had made it seem so easy…
Hands down though, Lou Barlow still takes the prize for the most successful secular take on the Christmas narrative. Asa he says, his song “Mary” is the oldest story never told. It offers an account of the origins of the Christ child from the point of view of the human father who has been erased from history: “…because they’d stone us both/ if they ever knew.”