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La Dolce Vita

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By Sujit Bhar

In Plato’s Republic, one of two cities is healthy, the other has “a fever”. The latter, said Plato, was the luxurious city. Dwelling on Socratic dialogue, Plato argued that the difference is that the citizens of the latter “have surrendered themselves to the endless acquisition of money and have overstepped the limit of their necessities”. Plato’s main character Socrates (not his guru Socrates), finds communities in the luxurious city living beyond the natural limits of necessity. He finds the healthy city sustainable, limiting consumption to actual needs, and the luxurious city unsustainable, because it lives beyond its needs.

That was authored in 375 BCE. Back to today’s news: As Tesla stocks tanked over the last couple of weeks, CEO Elon Musk lost nearly $200 billion of his wealth, a world record. That brought back to the top of the pile, as the richest man on earth, Frenchman Bernard Jean Étienne Arnault, co-founder, chairman, and chief executive officer of LVMH Moët Hennessy. He had been there before, but, like a good old wine, the stock has matured further.

The luxurious city has not only survived, but has grown beyond the expectation of all wise minds.

Assimilating this within a general social perspective, let us get one thing clear: luxury matters. LVMH Moët Hennessy – Louis Vuitton SE is the world’s largest luxury goods company, and Arnault has an estimated net worth of $182.8 billion as of December 2022, according to Forbes.

Forget Plato’s apparent prescience; flip through any business journal that cares for reality checks, you’ll see the world predicting a recession. Switch on any news channel and a possible collapse of the Chinese economy is in sight. Yet, the luxurious city’s walls remain high and straight, protecting its communities in cocoons of invulnerability.

According to John V Kulvicki of Dartmouth College, USA: “Luxury has a bad reputation, built on marble and gold, boutique shopping and penthouse suites…” He says this needs a rethink. Luxury, he says, can be separated from “vulgar displays of wealth and power… it is an important aesthetic experience.”

Human civilisation, one would tend to believe, has grown beyond the chores of daily needs and towards better living. In fact, LVMH espouses that its “vocation is to ensure” that it can “design, produce and market products and services defined by excellence and the highest quality.” Restricting the definition of luxury to that, one might want to bring within this ambit the best products and services today, such as the best MRI machines, the best town water supply system, or even the most efficient public distribution system that transports food grains to exactly where it is needed, at the right time, and at the right price. These are estimates and examples of excellence. Yet, they aren’t what we define as luxury.

Hence the LVMH definition isn’t exhaustive. Frankly, this is bound to end up as a complicated definition, because the luxury industry is unique. It stands alone amid a sea of goods and services.

Think cars. As is said, there are cars and then there are cars. You can run an empire and family while driving a Toyota Corolla—billionaire investor Warren Buffet does it—or you do the same chores in a Rs 1.3 crore Porsche Cayenne. Both take you from point A to B in decent time and good comfort, but a Corolla is anything but a luxury car. The Corolla performs the same jobs in the healthy city that the Cayenne does within the walls of the luxurious city.

Think diamonds. The De Beers’ ad promo “A Diamond is Forever” made that particular gemstone a rage and abnormal price tags were invented. You can find industrial diamonds in any diamond cutter tool, but that is workhorse gem, hoi polloi of gemstones. That does not take away the superior quality cutting edge these tools produce. Yet, an industrial diamond piece will never be a girl’s best friend, no Marilyn Monroe crooning for them.

Power of the promo

So, maybe Plato got it wrong, or he did not realise the power of marketing and promotions to communicate brand values, and sell products to a specific target group. Remember how Joseph Goebbels proclaimed the greatness of the Third Reich? He sold a criminal as a saviour of the German race. That is, possibly, political luxury. This narrative has gained currency today, as human brands are assiduously promoted.

Today, all that boils down to 330-400 million consumers of super luxury goods worldwide, as per the Bain report on luxury industry. That is the extent of Plato’s luxurious city. The market has grown from just 90 million in 1995. Today almost half of the total number of luxury consumers are in emerging markets, with over 50 million in China alone (pre-pandemic estimates).

One may assume that with such a small market, this industry is of little consequence. Not quite. The power of fiction is often greater than the power of reality. Think Goebbels and his parables of lies. While consumer numbers are low, astronomical unit values make up for the grind. The industry is virtually recession proof, though, during the pre-pandemic recession the global personal luxury market retreated nearly 10% from $172 billion in 2007 to bottom out at $157 billion in 2009, according to Bain’s luxury study. It recovered quickly in 2010, though. Then, in 2020, with the pandemic sales fell for a year.

The luxurious truth

The sum and substance of this study may be to buff the stigma off the elbows of luxury goods. Maybe luxury is good. There have been rare instances of people who can pay a gazillion for a service, but hesitate. When “they” talk about price gouging, maybe they feel there’s a bit unfair in the dealings.

Or, you may come face to face with some from the healthy Indian city, for whom the mere access to justice is a luxury. No matter if that is his fundamental or constitutional right. Would that put our courts within the walls of the luxurious city?

Think cars, again. According to the Bureau of Transportation Statistics (USA), the average age of all light vehicles in operation in the US in 2021 was 12.1 years, though the average age of household vehicles for several years was found to be 15.8 years. That is 0.8 years above scrapping standards in India. Is there a scope of using older cars in India, if all environmental norms are maintained? There are tests prescribed, and more often than not, the 15-year cut-off is final.

Healthy city residents, using his/her Corolla, or even a Maruti Alto, thereby limiting his/her consumption to actual needs, finds, at the end of 15 healthy years, that he/she should buy again. He/she also finds that his/her “needs” have been redefined, without his/her consent, without any concern for his/her financial condition. Where do these changes emanate from, and why? Cars are so well built these days that, with good maintenance, they can serve a person for a long time. How do they run longer in the US?

Such anomalies do not get to strike root in luxurious cities. They have a stronger voice against delayed justice and injustice: they are heard quickly. When they cry out against price gouging, or unfair pricing, they are they are the first to be addressed. Which brings us to the striking fact that luxurious city dwellers may have a better handle on society, on how healthy city residents should access their “needs”.

Under certain circumstances there exists the possibility that luxurious city dwellers would want newer cars every now and then, or want quick resolutions to cases and better quality amenities. Remember, these will result in precedent-setting cases, crumbs that healthy city dwellers will benefit from. This is that fabled and mystifying trickledown factor that economists often talk about.

Let luxury lead us to a better quality life. Let the new age subjects of the new age rajahs live a decent, healthy life. Let the Bernard Jean Étienne Arnaults of the world create a better profile for a new age country like India. One day, the Ritu Kumars and Manish Malhotras and Sabyasachis will be the standard bearers of India too, within luxurious and healthy cities.

—The author writes on legal, economic and corporate issues, apart from social commentary. He is Executive Editor at India Legal

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