Editorial analysis: The Problem with Billionaire Consumption

The Problem with Billionaire Consumption

Context The extravagant wedding celebrations of billionaire Mukesh Ambani’s youngest son highlight the issue of “conspicuous consumption” among the wealthy.

Perspectives from the Right and Left

• Right-wing View: In a capitalist democracy, billionaires are free to spend their wealth as they choose, assuming market fairness. Inequality stems from flawed policies, not market dynamics.
• Marxist View: Profits are seen as unfairly extracted from labor, making billionaire consumption illegitimate. Capitalism inherently causes inequality, favoring the few over the many.

Impact on the Economy

• Defence of Consumption: Domestic consumption by the rich can boost local demand and employment. However, investment, not consumption, is crucial for long-term growth and productivity.
• Keynesian Perspective: Wealthy classes are expected to invest profits to ensure economic growth and employment. Lavish consumption reduces available investment, harming economic welfare.

A “Social Contract” John Maynard Keynes argued that capitalist societies allow wealth concentration if it leads to high investment and productivity, without drastic price increases. Modern capitalism faces issues where private profits do not guarantee investment, impacting the working class.

Conclusion The visible inequality due to high youth unemployment, stagnant wages, and job losses highlights a significant public policy issue that remains unaddressed.