Ambani Fights Inflation

As I have explained earlier, concentration of wealth at the very top is an excellent way to cut inflation. Mukesh Ambani has done his bit to fight inflation by building an expensive house.† Those who are decrying this as an example of conspicuous consumption are missing the point. If, instead of† building an expensive house, Ambani had distributed the money as salaries to Reliance employees or as profits to shareholders, the money would have chased goods that the poor also consume. By keeping the money for himself, he has caused a reduction in prices. The consumption†of the super-rich is different from that of the rich and the middle-class.† As long as the super-rich spend money on status-goods and as long as their money goes to other super-rich people – such as when they pay M F Hussain for a painting, or Hafeez Contractor to design their house, it keeps money out of circulation from the general economy. The super-rich should, as a social obligation, take utmost care to ensure that their money circulates among themselves and does not leak out.

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