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.
The super-rich, by cornering resources, cause a net decline in consumption of resources by others. Ambani’s building, for example, has used up valuable land that could have been used by others – at least it seems that way at first glance. But look at the positive side. If he hadn’t built his house in South Mumbai, the place would have hosted an apartment or an office complex. Those who would have lived or worked there would still be rich – such is the nature of the place. They would certainly have cars that would have added to Mumbai’s congestion. Of course, Ambani’s house will also have a staff and there is ample parking space in the building, but I can guarantee that his house has caused a net decline in car use. His brother Anil commutes by helicopter to the DAKC in Navi Mumbai. This looks like an extravagance, but if this expense item results in lower salaries for Reliance employees and forces them to commute by train, the helicopter ride is actually carbon-positive.
The cry of “conspicuous consumption” seems like childish whining to me. The problem, as we have seen, is not that Ambani consumes too much – that is a social good. The problem is with the conspicuousness of the consumption. Others will see Ambani’s consumption and aspire to replicate it, at least in part. The culprit in this case is social mobility and the spirit of egalitarianism that gives the middle-class aspirations above their station in life. This was exactly the problem the caste system was supposed to solve. If we had a society where your position was determined by the accident of your birth, then Ambani’s consumption would not have caused concern to anyone except his peers. The government needs to take urgent steps to combat inflation by increasing social stratification and rigidity.