We are long past the days of “fat cats”, when rich people could afford to eat more food than poor people. And I’d argue that this is increasingly true almost everywhere you look. When I was young, a Cadillac Eldorado was a vastly different car from a VW Beetle or Datsun. Especially if cruising down the highway at 80 mph. Today Datsun is called Nissan (one of the stupidest name changes in US history). And while an Infiniti is a bit more luxurious than a Nissan, and the BMW handles somewhat better, I no longer think the experience of driving the Nissan is much different from a typical luxury car. Even the size is similar. Here’s the interior of their economy model (Sentra):
I went to Zillow, and randomly pulled off an ad for a 2800 sq foot condo in Chelsea—this one priced at $11 million. And here’s a random 2600 sq. foot condo in Oklahoma City, priced at $260,000. The NYC unit is more tastefully designed by NYC standards, but the OKC unit is more luxurious by OKC standards. In the Chelsea unit, you might want to have a $4000 midcentury-modern Poäng chair designed by Alvar Aalto:
In the OKC home you could install the Ikea version of the chair (shown above) for $79, down from a (inflation-adjusted price of) $350 in 1990. How much utility does one get from the $4000 chair? How much from the $79 chair? It’s depends how you think about it–it’s the same chair.
Over at Econlog, I recently did a post about our post-stuff economy. I grew up in the “stuff economy”, and I don’t think I’ll ever adapt to this new one. But I suppose the millennials are right, it’s stupid to accumulate lots of stuff, for all the reasons that philosophers have emphasized down through the ages. The upshot of all this is that the concept of “economic inequality” will become increasingly amorphous. It won’t disappear by any means, indeed it might get “worse” in some sense. But it will be harder to measure. As an analogy, both cancer patients and hypochondriacs feel lots of pain. In both cases, the pain is “all in their heads”. That’s where you feel pain. And that’s also where you register utility. What’s new is that it’s increasingly difficult to connect utility with physical objects (tumors in my medical analogy). (By the standards of peasant life in the Middle Ages, we are all a bunch of hypochondriacs—every one of us.) This has implications for everything from measuring the “Great Stagnation” to adjusting Social Security for “cost of living” (what does that even mean?) increases.
PS. OK, maybe it’s not all in your head. I can’t really deny that this guy is better off than I am. I’m jealous:
PPS. Did Donald leave a window open? Look at Melania’s dress.
PPPS. Seriously, this is more my style.
PPPPS. Off topic. The rich plan to vote Democratic this time.