On the benefits of luxury and the super-rich

Recently, Jeff Bezos flew into space, but most importantly, unfortunately, he returned back. Astrologers have announced a week of condemnation of the "super-rich", the number of arguments has doubled that the same money could be spent on the starving children of Africa. So, we have a good reason to talk about our god - Capital and explain why the "super rich" with their expensive toys actually benefit all of us.

Yachts, expensive cars, houses with AI controlling ass heating, now private spaceflight - it's hard to see the public benefit in all of this, but there is one. And it was best explained by Friedrich Hayek in The Constitution of Freedom. The thing is that progress develops unevenly - it goes in echelons. While one part of society lives in today, the other part has one foot already in tomorrow. Almost any item of technology is initially expensive, but becomes cheaper in the process of accumulating knowledge - about efficient production, saving resources, improved design, etc. etc. But the accumulation of such knowledge requires experimentation and means. Who will pay?

At the end of the nineteenth century there was one luxurious toy. It was called "car". The first cars were expensive, drove slowly and were significantly inferior to horses in terms of economy. Where did the demand come from then, which made it possible to work out and reduce the cost of technology? That's right, from the rich, who could afford such a luxury. As a result, cars went into mass production and became a universal means of transportation. All thanks to the fact that some Vanderbilt rolled girls to the envy of neighbor Rockefeller.

And so it is with just about everything else: cars, planes, refrigerators, radios, electricity, computers, medical technology - all this was initially created by the rich. Demand made it possible to reduce the cost of production and make the product already widely available. In short, the rich with their "luxury" are dudes who voluntarily and at their own expense generate knowledge about new technologies, which everyone will then use. The chic billionaires of today are being converted into the mass goods of tomorrow. Of course, not every product can be made cheaper, and not every product is needed by the public at all - but it is precisely this "test" that the hated by all lovers of "overconsumption" are busy with.

In fact, there are only two ways to roll out innovations - either the decentralized system described above, or the centralized system represented by the state. And when it comes to the "luxury tax" - it's not about taxing senseless consumption, it's about opting for the second model. Those funds that the rich spent on running innovations end up in the hands of officials. Maybe they will invest in something useful, but rather as usual.

Mihail Pojarsky 2021-07-23