why do people buy luxury branded items when there's so much poverty in the world?

Question

let's face it 3rd world countries with so much poverty. hunger and sickness is rampant..why not just donate that for charity instead of using such expensive status symbol products?

Answer 1

The rich in Africa also buy luxery branded items.
I think it's a bit naive to suggest that we should all donate our money to charity, because if I've worked really hard and got a bonus, then I want to have a bit of luxery in return, like perfume or shoes, to reward myself.

Answer 2

Actually, as an economist, I hate to say it, but those luxury items actually do reduce poverty. It seems counter intuitive that this would be the case, but it is true.

Poverty is not caused by some people having more and others less, if it were then communism would have worked. That was the entire concept behind it, redistribute the money and make everyone equal, end status symbols and so forth and make the place fair.

It not only failed dismally, it created tremendous poverty.

There are two facts missing in your view of the world, that as an economist I am aware of, but isn't widely talked about so you have no reason to be aware of.

First, much of the poverty and famine in Africa are being created by the aid agencies. One African economist actually wrote an article begging people to quite giving money to help Africa. Some countries are turning away aid.

Now, as Paul Harvey says, "for the rest of the story." The United States very altruistically wanted Africa to be like the rest of the world. We went in to save it. On the way we noticed poor people and so we sent free food over from America. What we did not observe is the impact such a thing had. Imagine if someone sent your entire town food. You wouldn't need to buy it. So local farmers would rationally start growing non-food items like tobacco or foods for export. That is fine, until suddenly people who are not receiving aid suddenly cannot find food. Farms require a certain scale of production and by feeding some we started in motion the mass starvation of all. So people go to the markets for food and they have to buy from overseas which will include transportation costs. Some cannot buy so we send more food, which expands the ring of farmers who stop growing, which triggers more famine, which triggers our help, which triggers more farmers to stop growing and so forth.

The same thing is true with aid in all kinds of other areas. One of the disturbing observations is that much charity fails all the parties involved. I am not saying charities are detrimental, it is just that if I give a family member or a local community member money, I can judge how much is helpful and how much would harm them. You can give to much. When charity is disconnected from measurable outcomes, it starts doing harm.

Now to why these status symbols help. First, allowing people to exercise their preferences in the freest way produces the highest per person income of all possible combinations. Further, since these items are costly relative to the materials, it requires substantial money to pass to master craftspersons. They in turn buy goods and services and so forth.

It dislodges money from the rich in the form of consumption and passes that money into the general economy. That added work actually adds quite a number of jobs that include jobs for the poorest people.

As strange as it sounds, and ignoring the "externality" of sustainability in a fragile world, you should be encouraging the rich into conspicuous consumption if that makes them happy.

Do not forget America was a third world country as was Japan at the end of the War and Europe mostly for that matter. First world status comes from allowing freedom to all people regardless of wealth to exercise their self interests. If you want to eliminate poverty, educate third world workers so they can compete effectively, educate women in particular, push for political freedoms and an end to corruption. You will find everyone gets to eat then. It isn't that there isn't enough food in the world, it is that restraints on freedom keep people hungry.

Answer 3

oh thats something else.. i mean we cant dictate people to help people.. thats why its called charity because you donate it wholeheartedly and not just you were like forced to do so.. i mean its their lifestyle there's nothing we could do we that.. its how they live their life, they've earned it and so its incumbent in them to spend it.. its their initiative to donate if they feel like they have more than enough to get through the years or whatever...

for me having such luxurious items is a pay off of their strenuous activities that they perform to earn something for themselves..
IT's something that is out of our business but somehow reminding them that they have enough is enough to awaken their conscience that they should do something for other people also.. selfserving is not what we were taught to do its how we serve other people. but i guess people are just so materialistic that they get to spend thousands or even millions of luxurious items..
the question is?? have you even consider donating some of your hard earned money to charity? if not your just the same with them..

Answer 4

There has always been poverty, and most likely there always will be. I think you may be assuming that since they are poor they are not happy. This is not always the case. Did you ever think it may be their Karma to be poor? Maybe in their prior lives they were rich extravagant people?

Answer 5

people are self oriented this days. it just the way most people are these days.