Friday, November 14, 2014

Envy is the same colour as money

The New Zealand Herald, the other day, published a story about how much John Key was spending on a hotel room.

Well, not really. Mostly they cribbed the story from the UK's Daily Mail, which was more interested (and it shows) in what David Cameron was spending to attend the G20 summit. Turns out, Cameron is the third-biggest spender after Presidents Obama and Xi. While the leaders of such also-ran countries as Germany, Italy and Japan, and even the king of Saudi Arabia, are slumming it at $400-600 a night hotels, our Mr Cameron is splashing out A$1250 a night for his bed in Brisbane.

(Actually, we don't know that - not from this story, at least. He might be accepting a bribe from the hotel so it can advertise that he stayed there. Or he might be accepting bribes from other hotels to keep him away. Who knows? So long as he declares them, it's all good.)

But the Mail, I guess, is more concerned with the look of the thing. Is it Right, for Mr Cameron to be spending like this abroad after four years of preaching austerity at home?

Which just goes to show what a tediously snobbish little rag the Mail really is. Because as Cameron surely knows, if you want to make money, it's essential to spend it as if it meant nothing to you.

I have no idea where I first heard that bit of wisdom, beyond "somewhere in my youth". I don't think the person who told me had any idea why it worked, but I've given it a couple of decades' thought now, and I've worked it out. See, the most important thing about money - as every economist from Micawber to Friedman agrees - isn't how much you have, it's how fast you spend it. "Velocity of circulation", it's called. And in the interests of the economy, it's better for everyone that it should be spent as quickly as possible. Money changing hands is a good thing.

And therefore, when people make decisions that affect who gets to be rich - all other things being equal, they'll tend to favour the big spender. This is the real reason why political campaign ads work. It's not the content, it's the demonstration value: "See, this is how I splash money about! Vote to give me more money, and some of it might splash on you!"

So, David, congratulations on doing your country proud. Now I trust you'll take the next logical step and strike the word "austerity" forever from your political vocabulary, and that of your party.

The only leader who deserves higher marks (Obama spends more, but let's face it, the US genuinely is richer and bigger) - is the president of Burma, who is staying in a $1300 hotel despite Burma not even being in the G20. Now that's ballsy.

1 comment:

Anonymous said...

Reminds me of how auctions work best for the committed: fast bidding, fast upping of bids. Scare the competition away.