But are the costs of living really soaring or are we just spending more than we need?
Let’s be terribly honest with ourselves: Recession or no recession, we hardly ever stop shopping. The only way economic variations affect our spending is in terms of the time and the amounts spent shopping.
Is it that we’re a lavish bunch of people? Is it that there are just too many nice things available to us? Is it that we want to show off our hard-earned money? Or is it that we’re a society increasingly focused on material satisfaction?
A little bit of everything
The fact that we’ve earned our money and that we’re looking for satisfying ways of spending it is not an uncommon practice among developed nations. But the fact that we spend so much on many unnecessary or over-priced items does make us stand out.
Do we ever stop to think about the price-point of purchase versus the manufacturing cost? Does it even bother us?
Take, for instance, the very simple act of buying a salad for lunch. These days a decent salad comes to about $10. On the surface, it seems like a good deal: you’ve got baby spinach, feta cheese, chicken, tomatoes – the works. If you were to get each of these ingredients from the supermarket you would probably arrive to about the same price. EXCEPT that items from the supermarket would give us a few servings of salad as opposed to just one!
Sure, the price difference could be attributed to a priceless commodity: time. We don’t have time to go to the supermarket, we don’t have time to make the salad, and we don’t have time to clean up, so naturally it seems more cost-effective to have it all in a quick and effortless manner. But that means adding the cost of labour – the cost of someone making your salad and selling it to you.
Plus the fact that business owners make orders in bulk, which means that they don’t pay the same price we do at the supermarket. Paying a bulk cost and charging customers a seemingly reasonable retail price already gives them a relatively high gross profit percentage.
Just to give you some perspective, here’s an interesting article on the real cost breakdown of a simple radio. This one touches on how things may appear cheap because consumers are passing down the cost to other workers.
Of luxury goods, property prices, and COE
Terms like ‘handmade’, ‘limited edition’ and ‘finest craftsmanship’ are price-drivers for both luxury goods and food – but are they really worth the price?
A 2011 New York Times article talks about how luxury items are quickly snapped up despite their high price when the economy is good. But even in times of recession, luxury brands sell at ridiculous prices (and some later get marked up even higher when eventually the economy improves)!
That just goes to show that branded items are very often more about the brand rather than the quality or the usefulness of the product itself. Otherwise, how can one explain the fact that in times of little to no encouraging economic prospects people are still willing to pay so much for shoes and bags that don’t constitute an essential purchase?
One important driving factor is the fact that the brand – that is the name, the company, and the workmanship behind the product – rely largely on constructed corporate mythologies designed to give depth and sense to the act of purchasing.
That way, instead of thinking “these shoes are nice, but I don’t really need them, I already have 30 pairs at home I never wear”, you automatically think “I MUST have these shoes! It says here on the box they were handmade in Italy by an old shoemaker who was the mentor of the company’s CEO. And they’re on sale!”
On another scale and hitting closer to home, property prices in Singapore follow pretty much the same pattern: a luxury item (let’s be honest, million-dollar properties ARE luxury goods) is made more desirable because of its rarity.
In this case the item does fulfil a basic and essential human need – the need to shelter yourself and your family – but various factors force us to consume the item as if it was a luxury item: real estate speculators buying and reselling flats for a profit, Singapore’s limited physical space, the desirability of new versus old flats, the need to live in a nice and enviable neighbourhood, etc.
All of these elements have logically led us to a situation in which people are increasingly fed up or just downright distressed.
That’s why the government recently increased the stamp duty from 10% to 15% in an effort to control foreign buying of Singapore properties that may give rise to a market bubble. Singaporean PRs are also imposed a 5% levy now.
And don’t get me started on the COE! Am I the only one who can’t believe we have to pay thousands of dollars for literally a piece of paper that costs as much as a home or a car in other countries?!
All in all, it feels as if rich foreigners are not feeling the love, PRs don’t see a point of being a PR, and Singaporeans are generally not happy with everything.