The rich are doing just fine, thank you, and are happily spending their tax savings on luxury items, jewelry, face lifts, classic cars… not on hiring more employees. David Cay Johnston, author of Free Lunch, discusses the consequences of extending the tax cuts to those earning more than $250,000 per year.
In 2008, the near collapse of the financial system unnerved the usually confident, comfortable class. Tiffany’s sales tumbled. Its holiday season that year was a disaster, with sales plunging 21 percent.
It wasn’t just consumers wanting to spend their way up the social ladder that dropped off. Even the retailer’s traditional customers cut back. That proved that even those with plenty of money — with the possible exception of the billionaires’ club — needed confidence if they were to indulge themselves.
Now Tiffany’s customers are back. Net income rose 27 percent in the quarter ending in October, and the company managed something unthinkable to many other retailers: it successfully passed on price increases. The expectation is for a strong holiday season this year.
One implication of Tiffany’s rebound is that the wealthy don’t seem concerned about persistently high unemployment in the United States or the potential risks of central banks on both sides of the Atlantic printing money. In Europe, they don’t seem held back by worries that the Irish bailout could spill over or that the governments of Portugal and Spain are overstretched.
