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This article is based off a column originally published in FEE

If this was yours, would you complain? nauticexpo.com

The presidential race is heating up and both major political parties have populist candidates- that means candidates who are running on the kind of anti-establishment, anti-greed platform the left, middle, and right generally agree on.

One of these candidates, the avowed Socialist Bernie Sanders, believes the world is a zero-sum game: If I have, then you don’t, and vic-versa. He does not see the potential for us both to have, but sees the possibility that I can take from you and vice -versa. In a recent speech, Sanders lamented that people are spending money on deodorant or sneakers when children are hungry. He literally said:

“You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. I don’t think the media appreciates the kind of stress that ordinary Americans are working on.”

Not to be outside, a comedian named Louis C.K. followed up with a joke on a similar note:

“My life is really evil.

There are people who are starving in the world, and I drive an Infiniti. That’s really evil…. There are people who are like born and then they go, “Oh, I’m hungry,” and then they just die, and that’s all they ever got to do.

And, meanwhile, I’m in my car — boom boom, brrr! — like having a great time, and I sleep like a baby…. I could trade my Infiniti for like a really good car, like a nice Ford Focus… and I’d get back like twenty thousand dollars, and I could save hundreds of people from dying of starvation with that money.

 And every day, I don’t do it.

Louis C.K’s joke reflects a common complaint about markets—that markets enable people to purchase luxury goods while other people starve.”

This article is about debating whether it’s bad to purchase big-ticket items, especially when roughly 47 millions Americans are receiving SNAP benefits (aka food stamps), when so many young people live in crime-ridden areas and have parents who cannot afford to move their child to a safer school, 93 million-plus working-age Americans do not have a job, and median household incomes have fallen since 2008. When you look at the hundreds of millions of us struggling in this economy, it’s easy to get disgusted with the wealthy, some of whom probably don’t deserve their wealth (like if they earned it illicitly or obtained it by some other means than honest work), and who go drink $900 a bottle wines in restaurants in the swanky parts of Manhattan or who fly around in private jets that the rest of us can only see from the ground.

But what is a “luxury good”, and why are we taxing it? Most people would not argue that a private jet is “luxury”. What about deodorant? Most of us need that! And if one deodorant is $5 and one is $50, is the $50 deodorant “luxury”, how about Hermes belts, some of which run into the four digits. Are these luxury, or necessity, since all of us who wear pants need belts?

The reason classical liberal economic policies, such as the ones CRI advocates for, work is because the true value of an item is determined by those who buy it, not by society at large, and not by government officials who are taking guesses. There is no one item everyone in America owns, not by brand, and not by type. Most people have cars and car insurance, but not everyone does. Certainly there is no book or movie everyone’s seen or dog/cat food all dog/cat owners use, if they use it at all. Those who use or consume a particular product figure out what the value is and pay accordingly. if the collective value becomes too high for us, and we determine we don’t need or want that product or service anymore, we just say no (unless the government mandates it). If Hermes wasn’t making money selling belts for thousands of bucks, they’d stop doing it. Clearly, some are willing to pay for that, so they keep making it, and thus keep their workers employed.

Those goods and services we value more will end up having more people working in those industries, and the industries will less support lose ground. This is why there are lots of gun manufacturers, but far fewer bow and arrow makers. Or, more car manufacturing plants, but fewer horse and buggy plants. Why some people decide to fly first-class as opposed to economy on the same airplane, or even choose one airline over another, or to fly or not to fly. Market forces generally determine that the lower something costs, the more it will be purchased. For the same reason those of you who buy books on your book reader might stock up on paid books under $5, but if books were all $25, you’d buy far fewer of them (we assume you aren’t addicted to ‘free-books). When goods and services are cheap, we can consume more of them, building more industries and making more people prosperous. This is why keeping tax rates as low as possible is so important- the more cost you add, the less people can and will purchase something. This is how a person with just a two hundred dollars can buy a DVD Player, two six-packs, chips and dip, and still have enough for a month’s electric and water bill while $200 wasn’t enough to buy a DVD player when they first came out. So if you managed to buy one, you didn’t have left-over for anything else.

Therefore, it’s unreasonable to suggest that buying luxury goods is somehow bad. Yes, a millionaire could give $25,000 to a charity, or to the government, to feed, clothe, or house poor families. But if that millionaire purchased a new car at $25,000, that would help keep the auto workers, the truck drivers, and the car dealer owner and his/her employees employed. Diffusing the money among them is no different than diffusing money among the millions of hungry kids. Yes, some businesses don’t always pay or treat their workers fairly, but these businesses are absolutely in the minority.

So the next time a politician tries to tell you that luxury items are evil because they are expensive,and redistributing the wealth is the only logical solution, walk away.

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