The Limits of Luxury

The recent purchase of Saks Fifth Avenue by the retail holding company that owns Lord & Taylor, along with this analysis recently published in The New York Times, illustrate even more than property values the futility of organizing society for the benefit of its wealthiest citizens.

As the Saks article illustrates, high-end retailing isn't what it used to be.  Once, Saks was among many New York-based stores that catered to what was once called, in a more genteel era, "the carriage trade."  That number had already shrunk considerable by the time I moved to New York in 1979 and, after my departure in 1982, it shrunk even further, not only in New York but across the country.  The few local stores that survived did so largely by becoming national retailers (Neiman-Marcus and Nordstrom's being two prominent examples).  Given the fact that Hudson's Bay, the purchaser of Saks, already owns another high-end Manhattan retail name plate, it seems to be a foregone conclusion that one will be eventually sacrificed in favor of the other.  If I had to make a prediction in this regard, I would bet on Saks surviving; it has had a stronger retail performance over the past two decades than L&T has had.

The Saks article focuses more on the lifestyle aspect of retail change in America, i.e. the growth of outlet malls and online shopping.  But, indirectly, those changes make a point about income inequality.  There was a time where middle-class income in this country was sufficient that middle-class shoppers could afford the occasional minor splurge at a Fifth Avenue-style emporium.  That is no longer the case--which goes a long way toward explaining the emergence of outlet shopping, often organized around tourist destinations so as to give the retailers a chance to compete for vacationers' dollars as well.  Obviously, Internet shopping, less dependent on bricks and mortar than traditional retailing, has become an attractive option as well.

But this has made the SFAs and L&Ts of the world almost exclusively dependent upon the uber-wealthy to meet their extremely high bottom lines--and there just are not enough uber-wealthy people to support the existing inventory of luxury stores.  This guarantees that the number of those stores will be reduced even further, reducing competition AND allowing merchants to drive up the insane prices up to even more insane levels.  Which, in turn, will mean that even the discounted outlet prices will be even higher.  And, ultimately, this will mean that almost no one will be able to afford luxury shopping at all.

It's this sort of insanity that shows that wealth redistribution, in some form or another, is not just a good idea, but absolutely essential to the survival of our society (not only nationally, perhaps, but internationally as well).  If there was a way to do it other than by wealth taxes, I would be all for it.  The money's got to come from somewhere; it might as well come from the people who have it and who debase its value and utility by sitting on it.  The Times article offers consumption taxes as an alternative, but I don't see how that can work if income is so low that it depresses the overall amount of consumption in society.

I do agree with the last sentence of the article:  "Get ready to choose a side."  I know where I stand, and you know it too.  Hopefully, you'll stand with me, and thereby with everyone.