Key insights
- The author questions the viability of a K-shaped economy, where only the wealthy thrive. While theoretically higher prices on luxury goods could offset lower sales volume, the model is vulnerable. Flaws include potential for social unrest and the reliance on a small consumer base, making the economy susceptible to shocks in high-end demand. Reduced overall consumer spending could also negatively impact broader economic growth.
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?