This is the fifth entry in an eight-part weekly series that provides a detailed look at the book by Emrys Westacott. If you’re new to the series, feel free to hop back to the first entry.
What is extravagance? Westacott boils down the term to three distinct meanings.
First, extravagance can refer to living beyond one’s means. If you make $30,000 a year but spend $35,000, you’re living an extravagant lifestyle simply because you’re spending more than you earn.
Second, extravagance can refer to being wasteful or careless of costs. Someone going into a store and tossing items they want into their cart without any concept of the price of those items is being extravagant.
Third, extravagance can refer to any form of living expensively, in which you pay out large sums to satisfy personal desires and impress others. This is extravagance in the sense of mansions and private islands and diamond-encrusted brooches.
Modern society has a strange relationship with extravagance. Sometimes, it’s criticized and looked upon negatively; at other times, it’s lauded and looked upon positively. What creates that dual sense about extravagance? That’s the focus of this chapter, which starts by looking at extravagance as the opposite of prudence.
Extravagance as Imprudence
Extravagance in the sense of living beyond one’s means is mostly only seen as a negative when it’s avoidable. People with little income and struggling to keep food on the table who are forced (or nearly forced) to live beyond their means are usually not viewed in a negative light. Rather, living beyond your means when you’re earning a healthy income is generally seen as negative, because it’s seen as irresponsible.
Yet, at the same time, pop culture lauds extravagant lifestyles. You can barely turn on the television without seeing someone living a lifestyle that’s beyond the means of the average American, and many people who can’t actually afford that lifestyle still try to attain it by living beyond their means.
The modern American economy encourages people to spend and spend and spend. It’s sometimes even tied to patriotism – after 9/11, the government strongly encouraged a sense that buying consumer goods was a person’s patriotic duty.
Much of the business press and the mainstream press lauds entrepreneurs who go into heavy debt in order to build a business. They either gloss over that debt leveraging entirely or make it seem like a good thing.
Similarly, enormous college debts are seen as okay as long as they lead to a potential career path with a high income, though there’s often a more negative perspective on going into extensive debt for a less lucrative educational and career path.
In summary, our culture has a really strange relationship with spending beyond our means and going into debt for it. Sometimes, that kind of overspending is criticized; at other times, it’s lauded. This is a result of a mix of values in our society that sometimes contradict themselves and aren’t always fully clear.
People are often disgusted by the huge extravagance of the mega-rich. Stories about having a pilot fly across the country to bring a meal to them or buying a private island is often seen in a very negative light. Is it envy, though?
A good clue comes from the tabloids, which report on the disastrous personal lives of the super-rich. This lends some credence to the “envy” argument, because the popularity of such tabloid stories provides a negative balance to the envy people feel toward the extravagant lifestyle those people live.
This is because when we see extravagance, we often prescribe negative traits to the person that practices such extravagance (even if we envy the extravagant experience). We see those people as greedy, untrustworthy, self indulgent, and self promoting, and thus those tabloid stories make natural intuitive sense to us. That extravagant person must be a bad person inside, so it’s not surprising that they have a disastrous personal life, goes the thinking.
Philosophers often tie this phenomenon to a sense of “inauthenticity” or ignorance and avoidance of the tenets of a good life. The movie Citizen Kane is a perfect example of this; as Charles Foster Kane grew wealthy, his negative character traits emerged while, at the same time, he became more and more extravagant in his life, building the ridiculous Xanadu estate for himself to live on.
Another interesting argument against extravagance is the “aesthetic argument,” in that expensive high end items are wasted on those who do not have the ability to appreciate them. Why would someone pay an exorbitant amount of money on a Steinway piano for a mediocre piano player? A Steinway can be magic in the hands of a really skilled player, but in the hands of an average player or a beginner, it’s not going to sound much different than an inexpensive piano. A Steinway in the home of a mediocre piano player. I like to think of this argument in terms of items we have in our kitchen – do I really need a high end chef’s knife? Not really. I’m a decent home chef at best.
This brings us around to the question of harm. Does extravagant behavior by the rich cause anyone harm? There are two arguments that it does. First, the “knock-on effect” – it can encourage others to extravagant behavior through emulation, which can cause them financial disaster. Second, money used for extravagance could be used in a more effective way for society’s benefit.
This second argument is an interesting one. Do wealthy people have an obligation to use their wealth to society’s benefit, in a manner like Andrew Carnegie or Bill Gates? How much extravagance should they do without if doing so? It ends up being an uncomfortable argument.
One side of that argument is the type of utilitarianism advocated by Peter Singer. He argues that every single human has an obligation to promote happiness and alleviate misery where we can. From that perspective, extravagance is a strong moral wrong as it completely goes against alleviating misery (and somewhat against promoting happiness). Under this sense of utilitarianism, people should use all of their disposable income to help others.
While this has appeal on the surface, very few people live this way, for two key reasons. First, it assumes that we have equal obligations to everyone in the world – yourself, immediate family, close friends, extended family, strangers. People are naturally drawn to be more generous and helpful to people they’re closer to – I’m going to be more helpful and generous to my child than to a random stranger on the street. Second, spending money on luxury isn’t equivalent to causing people to die. A person’s spending choices isn’t causing someone else’s misery or death. In the end, utilitarianism in this sense might be morally justifiable, but it ignores human characteristics.
Of course, there’s the “supply side” argument, that extravagance by the wealthy helps society as a whole because of the trickle down effect. This argument, of course, ignores the reality that the vast majority of wealth in society is invested in finite assets, like real estate and precious metals, which drives up the price on those assets and makes it even harder for the rest of the populace to buy those things.
My take on all of this is that whenever one does something with money and takes it to an extreme, whether it’s miserliness or extravagance, it’s generally seen as a bad thing. Most cultures tend to come down on the side of moderation in most things, and this is no exception.
Arguments in Favor of Affordable Extravagance
Westacott seems to eventually come down in a middle ground of affordable extravagance, in that it’s at least acceptable to be extravagant in some areas of life as long as you remain within your means. For example, if I can afford that expensive chef’s knife, then it’s an acceptable purchase, but if I go on to spend thousands on kitchenware on a regular basis, I’m being overly extravagant. At the same time, complete self-denial isn’t desirable either. Westacott offers four arguments in favor of that kind of affordable extravagance.
First of all, extravagance fuels economic growth. This is a weak form of the supply side argument, as it argues that actual extravagant behavior – not the idea that concentration of wealth will produce extravagant behavior – can fuel economic growth. Spending on extravagance provides income for businesses and individuals that results in higher employment rates, and it also provides tax revenue as many luxuries are heavily taxed. It’s only when extravagance becomes excessive and pushes people beyond their means that problems tend to crop up, like the housing bubble in which housing loans were given out to people who really couldn’t afford them.
Second, extravagance fuels culture. Great cultural works or “wonders” are extravagant uses of resources. Building the Great Pyramid of Giza or the Colossus at Rhodes are incredibly expensive, but they provide a wonderful cultural benefit in the form of happiness and civic pride that’s hard to put into dollars and cents. This is why nations will often fund great cultural works because they make the citizens happy and fuel civic pride.
Third, extravagance adds interest and excitement to life. There’s often a sense that frugality is “boring,” and thus the opposite is sensibly seen as “exciting.” Excitement is often seen as good and desirable in modern culture and it’s often tied to extravagance, like someone winning an extravagant prize on a game show. Modern culture constantly lauds extravagant items and experiences because it excites and attracts people. People who are instead careful with their money are often painted in a negative light, a la Ebenezer Scrooge. They’re seen as boring and often painted with other moral defects.
Here, Westacott digs into an interesting side discussion about how experiences tend to provide more happiness than stuff and how experiential spending (i.e., traveling abroad) is seen as more “sophisticated” than buying things. However, experiential spending can be incredibly expensive, too, as anyone who has ever planned a trip to Europe can attest to.
Finally, extravagance enhances our understanding and appreciation of things. If you just buy the cheapest wine and the store brand version of everything, you deny yourself the opportunity to appreciate the variety and quality of experiences and options available to you. Extravagance battles back against that, as it is a window into experiences and options that one might not normally have, which enhances one’s palate. I think this is a reasonable idea to a small extent; the challenge is to make sure that what once was an extravagant rarity doesn’t become a new norm.
Can Extravagance Be a Duty?
Are there reasons outside of the extravagant experience that might justify extravagant spending or behavior? Westacott spends the latter portion of the chapter focusing on some of those ideas.
First of all, extravagance can be a source of national pride or, at the very least, avoidance of national ridicule. This is why many nations bid and fight to host the Olympics and the World Cup – it’s an extravagant event that is virtually never profitable, but it does pay dividends in a sense of national pride and a feeling that your city or country is important on the global stage.
Most local economies rely somewhat on moderately extravagant behavior by people in the area. Services such as restaurants and clubs and other forms of entertainment only exist when people are spending their money extravagantly, and those businesses employ a lot of people in the area.
Some cultures have a gift-giving practice that nods towards extravagant gifts as a social convention. Thus, buying and giving extravagant items is considered a social norm and to not do so is something of a social mistake.
This shows up to a certain extent in American culture. Think of things like wedding gifts and graduation gifts and bar mitzvahs in America: it’s generally seen as a bad idea to go “cheap” on such gifts. It’s considered a social obligation to give at least a decent gift at a major social event like those.
As with everything, there’s a balance to be found here. It’s a bad idea to go into debt for a wedding, but many people do not want to go “cheap” on their wedding for a number of social and cultural reasons, namely the prevalent cultural belief (which I don’t buy into, but one cannot deny it’s there) that a cheap wedding cheapens the occasion.
The key argument in this chapter is that there are a lot of reasons and benefits for occasional extravagance, but that repeated or intense extravagance that goes beyond your means is a bad thing both for yourself and for others.
This goes in line with my own perspective on frugality, which does not exclude the occasional splurge or extravagance, but gives it plenty of breathing room so that it feels special and you get to enjoy the anticipation while, at the same time, not becoming frequent enough that it becomes routine and boring and no longer special.
Next week, we’ll take a look at the philosophy of frugality in a modern economy.