What I mean is an economy that only serves the top buyers. I think the math can work. If you increase the price that the top buyer pay then, I think the premium would make up for the lost volume. My boss at McDonald's once explained it to me like this… Boeing only needs to sell a few super expensive planes while McDonald's has to sell tons and tons of burgers on the cheap. Obviously, this model might come to a sudden end when the pitch forks come out. However, that's a different discussion. Purely from an economics stand point, is it viable? What are the flaws that would break this model?
Is a K shaped economy viable and sustainable?
byu/NashDaypring1987 ininvesting
Posted by NashDaypring1987
5 Comments
Your boss’s analogy works for individual companies but not for a whole economy. Boeing can charge millions per plane because airlines need planes. That doesn’t mean every business can pivot to that model.
The wealthy don’t eat 100 burgers a day or buy 40 pairs of shoes. There’s a hard ceiling on how much one person consumes, so you literally can’t replace lost volume with higher prices past a certain point. You also lose all the scale efficiencies that make stuff affordable to produce in the first place.
It’s not just that pitchforks come out. The numbers themselves don’t add up before you even get there.
Top 20% are responsible for about 80% of yearly consumer spending. That’s why market doesn’t care about “affordability crisis”
Sure. It’s called feudalism, and it works until the serfs get tired of it and drag the lords from their castles.
>What I mean is an economy that only serves the top buyersWhat I mean is an economy that only serves the top buyers
Average american is wealthier today than ever before, despite what talking heads might say. FRED publishes these facts.
Pitch forks will never come as you can placate the masses with sports and celebrity gossip long enough that they forget. Speaking of airlines, more and more airlines are making their money not from economy class tickets but from fewer business and first class tickets. Companies can and will continue to operate by simply shifting over their target client base. It doesn’t have to be dramatic like charging $100 for a burger.