Everyone pays the cost as the rich keep spending.

 

Everyone pays the cost as the rich keep spending

The Financial Times (FT) columnist, Rana Foroohar, wrote that she recently took a holiday vacation in the Hamptons, a wealthy area that lies just outside New York. On a shopping trip she says that she was "stunned to pay $800 dollars for a single shopping cart of groceries", at the IGA, the American equivalent of the UK's Tesco. She says that wealthy locals and vacation shoppers notice, but don't seem to curb their spending habits.

In the U.S., the top 40% of people in the income distribution, account for 60% of consumer spending, whereas, the bottom 20%, account for a mere 22% of consumer spending. Foroohar, points out that in the U.S., those who are in receipt of higher incomes, tend to receive a greater percentage of compensation from stock and home equity which fuels consumer spending. Indeed, the top 20% of Americans as a whole, enjoy 80% of wealth effect from rising stock and home values.

As the American economy becomes increasingly financialised, she asks why would the wealthy invest in factory or workplace training when they can by back stock to increase shareholder value by driving up the price. While that wealthy American plutocrat, Jeff Bezos, can build a half-billion dollar yacht for himself, Amazon have just offered a 35p an hour pay rise to increase rates of pay to £10.50 and £11.45 an hour, depending on location. The pay offer led to a walk out by Unite and GMB union members.