The FT has a feature article today under the headline:
The article celebrates the rise of LVMH, which is now Europe's largest company by value. It primarily does fashion, but luxury goods, hotels and services all make up a part of its activities.
According to the FT, the rise in demand for luxury goods is relentless:
Two things occur to me. One is that this makes it very clear where inflationary pressure from consumers is coming from. That pressure is coming solely from the top end of markets, which is why taxes on wealth are needed to tackle it.
The other refers to comments I made yesterday on Nicky Campbell's show on Radio Five Live and the BBC television News Channel. The National in Scotland reported my comments, so I have a transcript available. I said, when concluding my comments on Bank of England chief economist Huw Pill's claim that we must all accept that we are poorer now:
We have them saying we must accept this – well, I don't accept this, nor do I accept that the government need to continue with the policy of continuing austerity by saying they must not balance the books. These things are not true.
The one thing they don't want to increase is wages – and I am blunt about this.
This is a conspiracy and there is a conspiracy going on - and the conspiracy is against working people in favour of the wealthy and there is a class war going on in this country right now.
That class war is by the wealthy on working people and that is something we have to recognise isn't necessary.
We could cut taxes for those who are working, we could increase taxes on wealth to redistribute because that is essential, we could cut interest rates and we could spend more and that is entirely possible.
I am, of course, not the first to refer to class war being waged by the wealthy. Warren Buffet has done so. Others did so before him. It's a recurring theme in history. But it needed saying again, because that is exactly what is happening now.
What has this to do with LVMH? That's easy to explain. Those at war need a uniform. High-end fashion and consumption provides that uniform of privilege that those engaging in this class war are determined to maintain.
Norwegian economist Thorstein Veblen coined the term 'conspicuous consumption' to explain such behaviour more than a century ago. He was right to do so. Of course, the products sold are not worth what is paid for them. That is why LVMH is so profitable. It is the uniform that is being bought and the signalling that it provides as to which side you are on that matters.
And who are those committed to luxury opposed to? All those who work for a living, and most especially those who work for the state.
That those same working people happen to be the foundation of the wealth of the wealthy is something that has probably never occurred to them. No doubt they think themselves 'self-made', as one caller to yesterday's programme did. But they are not. And it is for the good of society as a whole, the wealthy included, that wealth has to lose the class war those with wealth are waging.
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Capital controls in China are also a factor in why LVMH has been advancing as their goods, in particular the handbags, are fungible for currency. Hence you see people at their two London shops before going to LHR to then travel onwards to China.
Also worth considering that there are many brand obsessed societies where a brand is regarded as a marque of quality when locally made goods can be so shoddy or even dangerous.
It’s a complex world.
But I would want to see the contribution figure of such luxuries to the UK basket of inflation measure before considering changes to the tax system, if at all. I suspect that it’s very small.
Oh come on
The rose of wealth inequality has been astonishing
Stop playing silly games
I hope that’s not Karl Turner, labour MP for East Hull, saying that.
Can you point to a source for the attribution to Warren Buffet? Thank you!
https://www.nytimes.com/2006/11/26/business/yourmoney/26every.html
Why couldn’t you use google?
Thank you again. Duly admonished!
Stanley Baldwin: “The Conservatives can’t talk of class war. They started it.” (in circa 1927 – nothing has since changed).
The film “The Triangle of Sadness” provides an amusing commentary on the rich & the servants that surround them (provided you can handle copious projectile vomiting). As for clothes – fools and their money are easily parted – LVMH a case in point. All in all sad and pathetic in equal measure.
So the highest value company in Europe sells bling and booze. What kind of world are we living in?
Baldwin was accused by the Express and Mail of being clueless about how to run the economy.
His reply -as regards those two newspapers-still holds true today.
“The newspapers attacking me are not newspapers in the ordinary sense,” Baldwin said. “They are engines of propaganda for the constantly changing policies, desires, personal vices, personal likes and dislikes of the two men. What are their methods? Their methods are direct falsehoods, misrepresentation, half-truths, the alteration of the speaker’s meaning by publishing a sentence apart from the context…What the proprietorship of these papers is aiming at is power, and power without responsibility – the prerogative of the harlot throughout the ages.”
Very good
A bit harsh on harlots, who are working class like the rest of us.
Thanks – superb. By the way, it was Baldwin who decided that the Uk needed a National Grid.
And, for an instant, she stared directly into those soft blue eyes and knew, with an instinctive mammalian certainty, that the exceedingly rich were no longer even remotely human.
William Gibson
The poor have sometimes objected to being governed badly; the rich have always objected to being governed at all.
Gilbert K. Chesterton
The death of democracy is not likely to be an assassination from ambush. It will be a slow extinction from apathy, indifference, and undernourishment.
Robert M. Hutchins
Wholeheartedly agreed about the greed of wealth and capital.
It’s as if because we are normal everyday people, we are only worth being exploited.
And Huw Pill says that we should accept out lot!
Bollocks, Huw.
“The article celebrates the rise of LVMH, which is now Europe’s largest company by value.”
I have to confess that I had to look them up. Most people would have heard of the likes of BP, Shell, Tesco, M&S, Glencore, etc. UK companies (do they still qualify as European now, post Brexit?!) or European companies like BMW. Some will even know that the UK’s biggest food shop discounters are European, Aldi and Lidl (I fancy many Brexit voters shop there). These are household names. LVMH?
But here they are, top of the pops.
https://companiesmarketcap.com/european-union/largest-companies-in-the-eu-by-market-cap/
Another interesting fact. Three years ago LVMH Chairman Bernard Arnault was worth $113 billion.
https://www.businessinsider.com/lvmh-brands-iconic-luxury-goods-bernard-arnault-2019-10?op=1&r=US&IR=T
Today he’s worth $210 billion.
https://www.msn.com/en-us/money/companies/lvmh-boss-bernard-arnault-s-wealth-hit-all-time-high-of-210b-even-as-french-protesters-stormed-office/ar-AA19S6Zq
He was the firth richest person in the world when he only had $113 billion. Now he’s the richest.
Clearly suffering through the cost of living crisis. As Hugh Pill would say, we are all sharing in being poorer.
Indeed
After I read your article the thought came to me that this would be best exposed for what it is with a modern day competitive reality TV gameshow treatment. It could be a wee thought experiment to ponder over your afternoon coffee as to what the exact scenario might be. And even though it would probably be the case that those that were being ‘exposed’ by such a show wouldn’t ‘get it’, like the Apprentice and Love Island there would be no shortage of applicants chasing their 15 minutes of fame.
Hence Brexit. The Middles Classes arose due to their ability to trade. Brexit has greatly reduced that for many, forcing some to relocate out of the country altogether in order to continue, while the great mass of those left behind find their standard of living increasingly reminiscent of the serfdom their ancestors escaped from.
The rich are not rich enough yet,
It’s not just LMVH!
https://www.theguardian.com/fashion/2023/apr/14/hermes-reports-jump-in-sales-as-super-rich-continue-to-spend-big
Al Jazeera the other evening had a report on the Bangladesh factory disaster that killed over 1100 people 20 years ago.
This is the cost of high and fast fashion as we move to the cheapest means of production possible, that allows us all to wear our class uniform, at the other end of the Spectrum, Primary sales are booming.
I would love to hear some from government be open and honest to tell us that the economy is linked to our climate crisis, and to hear they are making harsh choices that will not make us poorer, but start to even up society.
Great report from Scotland FoE Gavin Thompson that 220,000 jobs could be created by investing in public transport
https://foe.scot/22000-jobs-investing-in-public-transport/?mc_cid=53a6b854e7&mc_eid=dcf2090f36
[…] Cross-posted from Tax Research UK […]
Surely luxury goods are not taken into account in deciding on the rate of inflation?
Tell me why not?
The basket is meant to be balance d but some have a disproportionate effect on that by having more in the first place
Living in France I get to see TV news from many countries, from the UK, SKY, which is still Murdoch speak and BBC, still far too many PSC both in front of the cameras and behind.
Even Mick Lynch disappoints me because when the grossly overpaid TV mouth merchants/Interviewers state that the pay demands of the various unions can’t be afforded none of them state that the pay of the FTSE 100 CEOs has advanced by more than 40% and that’s without stock options, pension payments etc. etc.
When are union leaders going to mention these facts and stated with real anger and I do mean real anger. I look at picket lines and I never see steely hard faces that mean business, it’s always smiling laughing, giggling – behind the grinning mask lies the face of fear – and the Nasty party looking on says – nothing to worry about here, the peasants won’t do anything – business as usual.
I’m not quite sure what you are asking Richard but my question/comment may also have been unclear. I would have thought luxury goods would not be taken into account in deciding on inflation but I do not know. In chapter six of The Debt Delusion, John F Weeks makes the case that inflation is based on the prices paid by higher income people and that that is grossly unfair because the measures taken to curb inflation hurt the poorest. Do you agree with that?
I am not sure John was right – and I can’t ask him now as although I knew him he is no longer with us
Goods bought by higher earners are in the infaltion calculation
But so are those that are not bought be them
Is the weighting right?
That is what Jack Munro asked and in fairness the ONS produced a new index as a result