I went to one of those cool high schools where most of the kids dressed like 1990’s Gap models. For those that can’t visualize that, think College Dropout Kanye West. It was pretty much a fashion show starring mostly smart kids and kids with parents that had connections. I was very much aware of the cool brands, along with the stuff you didn’t want people calling you out on early in life, so my wardrobe was never extensive or filled with cool items. Just a few, cool enough items to get me through a week and a half. Oddly enough, it’s way easier now to have decent gear with the rise of outlet malls and the high fashion replica brands like H&M or Forever 21. The cost to get in is lower but people are still burning through money to look cool.
For The Cool
A good question is why do we care? As a kid, I just wanted to look cool, but with “cool” shirts starting at $40 and jeans going for $50 plus, I had to choose wisely. Now, you can get 3 shirts and 2 pair of jeans respectively with $90 from H&M. However, we get caught up in all the things that we “should be” doing to meet some imaginary metric of beauty and success placed on us by society. Add to that, the nonstop marketing of luxury by celebrities, social media influencers and those hoping to be celebrities and influencers, the pressure to consume balances out the low prices of entry. The result is a lot of wasteful spending on clothes and consumer electronics that are considered old 6 months after you buy them.
Conspicuous consumption seems to drive the bulk of spending in the U.S. Those not up on this term, conspicuous consumption is the purchase of stuff for the sole purpose of displaying your wealth or status. The goods displaying your status are usually Veblen goods, where people want it more because of the high price. I like to say this applies to everyone wearing high fashion sneakers. In addition to most of them being ugly and bulky as hell, they come with a hefty price tag, just for a fancy name.
I’ve had my current cell phone for about 2.5 years, and it works just fine; however, there have been 3 upgrade versions since I bought it, all claiming to make the phone better than the previous iteration. Up until recently, they all looked the same too. Granted, there’s a small percentage of the population that has likely had all 3 versions just to say they did. I’m not “cool” so I don’t know who is impressed by this stuff, but I see the people that do the repeat buying often, and I can’t say that I’m impressed by them.
Maybe me not being concerned with being perceived as cool has pushed me out of touch. Maybe I see the game for what it is or maybe it’s a combination of both. When I bought my first iPhone in early 2009, 1 share of Apple Stock was around $89, by the end of 2009 Apple stock was up to $210. Apple has had two separate stock splits since then, one going for 7-1 when the stock got up to $633 per share and another going 4-1 when it got up to $435 per share. 1 share is currently sitting at $163 as I write this. Translation, buying 1 share of Apple in 2009 at $89 would be worth $1,141 right now. As long as there are people willing to invest in their public perception, actual investors will make real money on them. The same goes for most of the things we buy. Hence the reason there’s always a product review or comparison test or commercial telling you how great the new version is of brand X is.
While all these share prices are gaining value over time, interest rates that banks offer for savings accounts have gone down. In the 1980’s you could easily find a savings account with 10% interest or higher. In 2022 you’d be lucky to see 1%, and an institution offering that would consider it a high interest savings account. There are a multitude of factors for this. Fed Interest rates on homes are significantly lower on average, executive compensation and investor dividends are significantly higher. This translates to the rich getting richer, the poor getting more stuff to appear rich. This post is doing nothing to help me get product placements or sponsorship revenue, but that’s ok with me.
Technology loves and thrives and makes gobs of money on conspicuous consumption.Mark Goulston
“Expensive clothing is a poor man’s attempt to appear prosperous.”Mokokoma Mokhonoana
Balance It Out
A healthy balance would be owning stock in the things you buy to display your wealth to folks. It makes no sense to have the latest and greatest iPhone every year without owning Apple stock. Clearly you believe in the product, and you are advertising for them, why not reap in the benefits? I would say the same for the actual high fashion brands, but in addition to me thinking they are all a waste of cash, the barrier to investing is a bit higher. It may take more research to get in since they aren’t traded on the U.S. exchanges and their prices are in Euros, but, if you must have that $900 Balenciaga sweatshirt, you should be willing to pay the $558 for a share of Kering SA.
Don’t get me wrong, I like nice stuff too. Sure, my clothes are mostly inexpensive and not name brand except for the shoes. Though you can’t see it, my fragrances are expensive. If you were to ask, I likely wouldn’t tell you what I’m wearing because I prefer to be understated more often than not. Another vice I have is that I prefer the performance available in luxury brand cars versus their non-luxury counterparts. Luckily the gap is narrowing there. That said, very few of us are totally immune to buying more than we need, regardless of socioeconomic status. However, we are all capable of doing better for ourselves and our economic futures.