It is now common to ask why property prices in Britain are so high. Another way of phrasing the question might be to ask why - at least from 1945 to 1990 - UK property prices were so insanely low.
To give you one anecdotal example, my grandfather was but a reasonably prosperous GP on the Welsh borders; yet in the 1950s he could easily have bought pretty much any house he wished within 30 miles. One of the houses he considered and rejected is now a 20 bedroom hotel with a handy quarter-mile of salmon fishing on the Usk. It was on sale for about six thousand pounds.
With his sensibly Scottish approach to such things, however, he bought a modest six-bedroom villa a few miles away, and wisely spent the savings on.....among other things.... a dishwasher.
Gee, thanks, Gramps!
Mind you, this was no ordinary dishwasher. For a start, it was only the third dishwasher sold in Wales (there's posh for you). It was manufactured in New Zealand. And it cost in real terms about the same as a Ford Ka does today*.
And that in part-explains why property prices were so low then - and so high today. Back then, domestic items were insanely expensive, and acquiring them soaked up most of people's discretionary expenditure. Air travel, domestic appliances, televisions, even telephone calls were near prohibitive to most people. Indeed in the late 1950s a ten-minute call to New York cost more in real terms than a transatlantic flight today.
Now, with these things cheap in relative terms, the money saved goes elsewhere. Not into more dishwashers but into property. Into services. Into convenience. And into brands.
Note that the new wealth rarely goes towards more cars, more dishwashers....not even to more flights.
This refutes the lazy assumption that increasing levels of wealth must inexorably lead to increasing levels of consumption.
By and large there is a limit to the number of TVs people want. I have heard of one man with two dishwashers, but he is a rare exception. There are very few five-car households. Mostly, as people enrich themselves, they do not buy more things but better versions of the same things - or best of all buy better branded verion of the same things. Most people, say, would rather buy three pairs of designer sunglasses than twenty cheap pairs.
Which leads me to ask this simple question: unless you wish to tackle environmental problems by impoverishing us all, can anyone think of a more environmentally friendly way to spend money than in the purchasing of brand value?
Brands are, after all, gloriously intangible. You can build a brand without killing trees and few precious raw materials are needed in their creation. The exploitation of child labour in making brands is rare. And yet brand value creates pleasure and confers status as surely as any more wasteful (ie tangible) value.
It may seem bizarre to say it, but brands actually succeed in making us happy with less. That is precisely why they make money for the people who own them.
Want to sell a car? You could kill a cow and give it leather seats. Or you could put the money behind making the cloth-seated car more desirable.
I might go futher. The value of any branded item often decays far more slowly than the value of unbranded equivalent. Those Chanel sunglasses you buy today will still fetch a fair price on eBay in 20 years time when third-hand, while their cheaper unbranded equivalents have been clogging up a landfill for a decade.
Yet, such is my instinctive lack of confidence in the environmental benefit of brands, I can't really comfortably believe my own argument here. It can't be true, can it?
Please, someone tell me why it's rubbish.
* It still works, incidentally.
One thing with top brands is that they often get produced alongside and even have a symbiotic relationship with their cheaper (not always less well made counteparts). in the case of one very prominent brand of sunglasses for instance - they are made in bulk in China - shipped to Hong Kong (bought at 3 USD), shipped to Italy (bought at around 20 USD), assembled and branded - (sold at $200 USD) - the factory pumping out these things isn't just making them for the brand - that you can be certain of.
I think the human brain works in such as way that if you want you can virtually force a logic link between any two random things.
Interesting stuff, Rory. Here's another view espoused by philosopher John Rawls. You know more about Rawls than I do. But if I follow it (correct me if I'm wrong), he was into social fairness and justice. He envisioned a means of organising societies without existing hierarchies dictating the terms of those arrangements.Yet brands are about imposing artificial hierarchies derived from bragging rights based on intangibles. The biggest brands are religion and politics. And their brands have contributed more to the fund of human misery than most other movements. So taking Rawls at his word, what would happen if we removed all brand labels and let the consumer decide their preferences in one giant blind taste test of everything? Wouldn't that be the way to remove brand hegemony and build brands based on common and shared truths which render them 'good'?
What about war? It has to be the biggest brand the world has ever seen
And the Pope?
Have any of these ever been eclipsed by a manufactured brand? Now there's a question
Surely any environmental benefit derived from brands is more than cancelled out by the sheer volume of hot air spouted everyday by Marketing professionals (myself included)?!? ;)
I wish I had £190 to spend on sunglasses and besides aren't we just funding some body elses carbon footprint. Its not the little graphic designer guy like me who driving around a massive 4x4 in an urban enviroment where the most chance of getting the wheels muddy is driving past the local common.
Without the wealth created by brands, there would no money to save the environment. A paradoxical truth in life.
And let's not forget the green lobby is a very lucrative business for many people, quangos and governments.
Anybody who's ever read the FT How To Spend It supplement will know there's some truth in this. Five thousand pound shoes, 100 thousand pound stereos and so on keep rich people's consumption volumes down.
What's good for the environment however may not be so good for the economy, as bankers competed to raise their bonuses so as to be able to afford the same size house in a better postcode, the same car from a better maker (Tuareg vs Cayenne anyone?), Butlins holidays at Bedruthan Steps, studio quality speakers to play low-fi MP3s on, etc.
The alpha mentality this caused also appears to have sunk Iceland, Ireland and Eastern Europe and generally knacked us all for a couple of years.
How To Spend It is a wonderful lesson in the law of diminishing returns.
The last comment on this blog was some time ago - Mar '09. However, given that Rory first posted it in Nov '07, it proves what a fascinating topic 'brand' is. And when you attach 'brand' to 'issues of conscience' like the environment, it tears us apart. Before marketing people ate, used and carried stuff around with them. Now we consume. Consider the word - CONSUME. Conspicuous isn't it. People spent money based on what I think is a motivational line with 'survival' at one end and 'reward' at the other. Depending on how much we have to spend we pick a point on that line that defines our behaviour. At the survival end of the scale we tend to eat rather than consume. From somewhere in the middle of the line right up to the 'reward end, we consume to increasing degree of conspicuousness.
The people are happy, they are the fat of the land
In a proud country where chips are legal but guns are banned
Isn't it paradise when you have the freedom choose
between the luxury goods, drugs, fags, chips or booze
thebasildonbloggerstrikesagain.com
Rory Sutherland
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Member since: 03 Jun 2008
Last login: 13 Nov 2009
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