20. November 2005 · Comments Off on Globalization: The Rich Get Richer… · Categories: General, Technology, World

…And so does everybody else. A prime example is this NYTimes (Select) story, covered by Virginia Postrel:

Big retailers in Brazil are lowering the bar for what they will sell on credit. Though the country’s shops and department stores have long sold big-ticket items on installment plans, Brazilian and multinational retailers, like Wal-Mart Stores and Carrefour of France, have begun offering purchase plans with monthly payments that come to no more than one or two reais–about 45 to 90 cents.

The shift is an effort by retailers here to squeeze more spending from the big, but cash-short, bottom of the consumer base in Brazil, South America’s biggest economy. Amid a tepid recovery that has yet to blossom into strong, sustained growth in retail demand, vendors are going to new lengths to help low-income Brazilians pay for everything from their weekly rice and beans to inexpensive items like clothes, radios, blenders and other goods.


Slower inflation enabled stores to introduce payment plans for retail goods that many consumers once strained to finance–from tennis shoes and televisions, to refrigerators and home computers. So successful was retail credit, especially among the middle class, that price tags in many stores now highlight the cost of the monthly installment, with the total price in much smaller print below.

Yet a big portion of the consumer base still struggles with bare necessities. That is why vendors recently began applying their credit plans to low-cost items, too.

Says Virginia: “While items like irons and electric grills may seem like cheap consumer goods to Americans, they are actually household capital equipment–the sort of goods that represent accumulated wealth over time. This newly available credit thus enables not only short-term consumption but a higher standard of living over the long-term.”

Now some will say that this is some attempt to entrap naive consumers. But that is typical of the infantilization endemic to the socialist mindset. No doubt some will abuse their new-found credit, and get into financial trouble. But, just as in the United States decades ago, the vast majority will use their credit prudently to raise their standard of living.

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