The shutdown taught us that if rich people don't indulge themselves, poor people starve.
This is obviously a design flaw in the economy.
(I wrote this at the peak of the shutdown. I should have posted it then, but the lesson still holds.)
The economic lesson of the pandemic is this: the inessential has become essential. I’d like to consider this as a design flaw. How can we repair our society so that luxuries for those of us with more access to capital are not necessities for those with less?
Here’s the paradox: for rich people expensive restaurants are a luxury, but for society as a whole, they and their like have become necessities! The same can be said for other luxuries; travel and furnishings come to mind. But let’s consider restaurants.
THE REQUIEM
Since I get most of my news (and these days, my daily fix of the Spelling Bee game) from the New York Times, I have been offered up a lot of requiems for restaurants from underemployed restaurant critics.
Here’s a typical example; well-written and fluent, I suppose, but wholly unsurprising and verging on predictable:
https://www.nytimes.com/2020/12/19/opinion/sunday/restaurants-closing-covid.html
The Greatest Restaurant City in America Is Hurting More Than You Know
Subtitled “The coronavirus has come for the trattoria you love.” it’s an op-ed about the loss of restaurants in New York City.
Away from the city or cloistered in our apartments or hesitant to visit communal spaces until the pandemic ebbs, we won’t know or register that a beloved trattoria is gone until some safer day when we try to make a reservation and learn that there’s nothing at 8 p.m. or even at 5:30 p.m. because there’s nothing, period. Until we walk down the street where sated brunch-goers once spilled out of our favorite bistro and see an empty, still patch of sidewalk instead.
NECESSITIES VERSUS LUXURIES
Restaurants provide a mix of services of luxury and necessity.
On the one hand, everyone must eat; few of us want to cook every meal we eat, and many of us lack the time or the skills. Outsourcing cooking and the ancillary support activities (shopping, dishwashing) outsources a necessary service.
On the other hand, a restaurant cannot survive without providing palatability. The customers can always take their custom to a comparably priced restaurant with tastier food. Between acceptable palatability and extraordinary culinary delight there lies a vast range, and it is the most extraordinary experiences that are no longer available that we rue the most.
This complicates my case a bit; each individual has their own standards for minimal palatablity. But surely for most people it doesn’t cost more than say $US 30 to prepare and present an adequately palatable meal, so for purposes of clarity, lets say that anything costing more than $30 to the diner constitutes a luxury service.
MOURNING THE LUXURIES
Let’s start with two obvious observations
1) Nobody *needs* a $200 meal.
2) Few people would refuse a gift of, say, a gift of a pair of $200 meals at their preferred restaurant with their preferred companion.
As $200 restaurants go away, there is definitely a real loss. But what does that loss mean in a time of emergency?
DEFENDING THE LUXURIES
The restaurant requiem genre is not about whether it will remain possible to pick up a soup and a sandwich. That doesn’t seem to be at risk. What is at risk, rather, is the unique personal vision of chefs and restaurateurs. And of course, any of us who can afford this luxury will mourn the loss of such opportunities.
But the author is presumably aware of how much struggle and fear there is in the world today, and how decadent bemoaning the loss of such luxuries appears in this context. “First world problems” and all. So a common refrain in the Restaurant Requiem is to bemoan the fate of the (mostly underpaid and frequently exploited) people who manage to glean a meager living from the industry.
And it’s not just the owners and managers and cooks and bartenders and servers and dishwashers who are losing — though their pain, make no mistake, is most acute. It’s all of us, and we have absolutely no idea how much we’ve lost.
...
The tragedy is national of course, and it has had profound effects on the American economy because, as Matt Goulding noted in The Atlantic, the restaurant industry “generates $900 billion a year and employs 15 million people.” He meant in normal times. That’s what it did generate; that’s what it did employ. Not now.
...
“People don’t understand how large a ripple effect on the economy one 30-seat restaurant can have,” said Gabriel Stulman, who has had to close two of his nine Manhattan restaurants. What dies along with a restaurant is money that went to a landlord, to food producers, to food deliverers, to linen suppliers, to appliance repair workers. “For most people in our industry, 90 cents of every dollar that we make goes back into the economy in one form or another,” Stulman told me.
This sort of talk is deemed as necessary but it’s also deemed as sufficient. My luxury is not decadent. My luxury “provides employment for less fortunate people” and “stimulates the economy”.
And there’s the end of it. Everybody knows that full employment is the goal of society, and that to attain it the economy must be stimulated. Not the ‘droids you’re looking for. Nothing more to see here.
THE NECESSITY OF LUXURY
There is a Jedi mind trick happening here, and to see through it we have to consider what is going on at the whole systems level.
In past emergencies, society was urged to “tighten its belt”, to bravely accept a certain level of privation for the benefit of society as a whole. This changed notably in recent decades.
After the terrorist attacks of September 11, 2001, when the economy was reeling, President G W Bush encouraged everyone to keep spending.
“When they struck, they wanted to create an atmosphere of fear. ... Do your business around the country. Fly and enjoy America's great destination spots. Get down to Disney World in Florida. Take your families and enjoy life, the way we want it to be enjoyed.”
https://georgewbush-whitehouse.archives.gov/news/releases/2001/09/20010927-1.html
( see also https://press.princeton.edu/books/paperback/9780691159584/beyond-our-means
https://www.nytimes.com/2012/01/15/business/consumer-spending-as-an-american-virtue.html )
TIME magazine commented:
Taken on its own, this wasn't such a horrible sentiment. But Andrew Bacevich has made a convincing case that it was part of a broader pattern of encouraging financial irresponsibility. "Bush seems to have calculated — cynically but correctly — that prolonging the credit-fueled consumer binge could help keep complaints about his performance as Commander in Chief from becoming more than a nuisance," Bacevich wrote in the Washington Post in October.
http://content.time.com/time/specials/packages/article/0,28804,1872229_1872230_1872236,00.html
A SOCIETY ADDICTED TO INDULGENCE
What’s happened in living history is that we have developed a system that itself is addicted to luxury.
If wealthy people stop indulging their whims, poor people starve.
It seems to me likely that this wasn’t the case in the past; luxury consisted of a small enough fraction of the economy that the rise of fall of particular luxury sectors had modest effect on society as whole. Regardless of whether my surmise is true, we do now have a situation in which many people of modest means coping with necessity are dependent on fewer wealthy people indulging expensive whims.
One might naively anticipate that the less wealthy person, with less demand upon them to serve the whims of the wealthy, would be blessed with additional leisure.
What’s missing, of course, is the capacity for that person, now underemployed, to allocate resources. In the present emergency, the resources are still there, though. The essential sectors, farming and shipping, are functioning at only slightly reduced capacity. That poor people are going hungry because rich people are demanding fewer plates of pappardelle with sea urchin is not a law of nature.
It strikes me as a design failure, a deep flaw in social organization. The production of essentials is solid. But the poor person is denied a way to allocate that production because of the absence of demand for supposedly "inessential" services. So we are left encouraging a revival of demand for luxuries, for travel, for restaurants, for renovations. This is excused not because we miss those inessential indulgences but because poor people miss the essential employment that they "provide".
One might prefer a world in which, when expensive whims were less indulged, there would be more to share among everyone else. That the “inessential” has become “essential” is a conundrum that needs some serious thought. It ties into questions about the nature of money, of labour, of wealth, and most of all of "growth".
Some will argue that all of this is an inevitable necessity, that it's built into the human condition, but I don't think they have provided compelling arguments. I doubt that this bizarre paradox that we are living is even stable, never mind inevitable.