Volume 11 Number 3
Is There An Economist in the House?
01 June 1998

While many struggle with how to survive on too little money, a growing number face the opposite problem: what to do with unprecedented spending power. Richard Griffiths asks himself some hard questions about how he should use his cash.

Our background is typical English middle class. My wife and I were both born into post-war families where every penny counted. Every purchase was carefully considered: routine shopping always involved time and effort spent finding the best prices. On the rare occasions that we went out for a meal, it was considered a luxury. Paying someone to help with chores around the house and garden was unthinkable on two grounds: we could not afford it, and there was an implicit moral rectitude in being self-reliant.

With such a morality it was also unthinkable to pay for beauty treatment, massage or other personal services. This view was re-informed by Thatcherism, which added the supremacy of price competition in the market place, and the importance of financial self-reliance.

Although the children have left home, we are both still very busy. My job involves long hours and frequent nights away from home. My wife is Honorary Treasurer for the local Women's Institute County Federation (I think she puts in more hours than I do at work). By the time we have undertaken our share of (mostly pleasurable) village duties there is little time or energy left for domestic operations.

As we thought about today's world, we began to realize that the link between morality and economics depended on circumstances, and that today's answers were different from yesterday's. So we now find ourselves doing things that we would never have contemplated previously.

We have decided:
* not necessarily to buy the cheapest goods but to buy value-for-money goods as locally as possible from shops where we feel that the staff and suppliers are well treated;
* not to worry about having meals out once or twice a week;
* to accept gracefully the need to have paid help in the house and garden;
* to relax the mad rush to save more and more for retirement, and to enjoy more travel, concerts and similar things today.

How did we arrive at such conclusions? Everyone does the weekly supermarket shop on the basis of making the money go further. We will even drive several miles (generally uncosted) to a distant shop to take advantage of a modest discount. Fierce competition drives down prices ever further. As retailers squeeze prices to the consumer, they also squeeze the amounts they pay to producers. This reduces incomes and employment levels throughout the supply chain.

In purely economic terms, this is probably right. But it puts people out of work and places intolerable stresses on those still in work--together, arguably, the cause of much of current society's troubles. The laid-off workers are paid unemployment benefit--not from some magic pot but from the taxes which we all pay. Many of them get depressed and some in desperation resort to vandalism and crime--adding yet more to our taxes and insurance premiums. This seems to be a vicious circle.

Is there an alternative? If we were all prepared to pay a little bit more for our groceries, more people would be employed, vandalism and crime might well fall, and so therefore would the need to collect tax. That could be a virtuous circle. I believe that it is highly likely that the reduced indirect costs would more than compensate for the higher prices--a win-win situation rather than a double whammy.

What about our decision to pay people to do things for us? Consumption of raw materials threatens the Earth's fragile ecosystems. So maybe today's moral argument is that we should deliberately choose to spend our money on services in preference to goods. Not only does this reduce consumption but it keeps people in work. Eating out falls into the service category. Our conclusion is that those who can afford it have a moral duty to use other people's services regularly.

Some might say that the above reasoning is just designed to makes us feel better about indulging ourselves. Is it today's equivalent of the 'noblesse oblige' of previous eras when the landed gentry felt obliged to give employment to the local peasants? I suspect that some of the gentry thought: 'Keep the peasants busy and they'll give us less trouble.' Our conclusion is that, with a less direct connection between the 'haves' and the 'have-nots', those of us who have the money to spend should do so in a way that maximizes the dignity of useful employment for others.

In conclusion, I believe that we have to untangle economics and morality. The fashion for economic judgements has passed. We now need moral judgements, with an understanding of the economic consequences. Or, if there were an economist in the house, would he disagree?
Richard Griffiths

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