Sunday, 15 August, 2010

Broken families and rich individuals

In the video RSA Animate - Crises of Capitalism, David Harvey, a Marxist says that the present crisis has everything to do with fall in real income per family in the Western world; in this one, Crisis of Capitalism, The Critique,  someone debunks Harvey by pointing out that income per capita has increased and that the fall in income per family is simply because there are more families now, that is, if a population of 100 were split into 25 families of average size 4 (persons per family) 30 years ago, now that same population is divided into, say, 50 families of average size 2.

I have heard the same explanation from the Kublai Khan of capitalism, Jack Welch.

It looks too easy to be right.

First, where is the data? Let’s say fewer people are getting married in the West these days. Does that also mean that the size or nature of the family unit, on average, has changed drastically?

Second, if the income per family has dropped, why should one not worry about it? Doesn’t the amount a person spends, and saves, depend enormously on whether he or she is in a family?

Just take rent or mortgage. Suppose a family of four spends x by living under one roof (average spend per person = 0.25x); and a pair of divorced parents with the two children living with their mother spend 1.2x (father’s rent = 0.4x; mother and children’s rent = 0.8x; average spend per person = 0.3x, 20% more than the average for a 4-member family). Does that not make a significant difference?

Plus, the mother’s income may be less than her married counterpart’s because she has more on her plate (no-one to share her load with).

The father, on the other hand, may be spending more on conspicuous consumption than his married counterpart does.

In fact, both parents may be spending more on sex (wining, dining, gifting, grooming to entice mates, or straight cash) than they would have had they been in a family, where sex it is essentially a bonus (free gift?) of family life.

And while married parents (or parents who operate as a family in spite of not being married) may save to provide for the future, parents who do not operate as a family may, for financial and psychological reasons, save little.  

I mean, the word income has very different meaning when applied to a person than when it is applied to a company (where it means profit). So why don’t Western commentators take that into account?

1 comment:

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