I've heard the term "conspicuous consumption" thrown around over the years but it's never properly defined.  Because I like to label everything, just ask my critics, I'll label it: Conspicious consumption is when a person has something that is greater than 4X in size or value of what the typical American has.

Let's play a game with that:

The typical American car now costs around $25,000.  A $100,000 car seems really over the the top to a lot of people.  The typical American new home is 2,500 square foot. A 10,000 square foot home seems ridiculous.  A typical wedding costs $10,000 day.  A $40,000 wedding seems excessive.  You get the idea.

Why is the 4X important in this discussion? That brings us to the second part -- the difference between the richest people and the middle class is determined almost purely by the amount of regulation there is in the economy.  The more the government regulates the economy, the less of a gap there is. The upside is that we can get endless reports of how the system is "fairer".  The downside is that the overall standard of living we all enjoy grows at a slower rate because the mega producers in the economy are disincented from doing what they do best. 

Right now, the economy is less regulated than it was 10 years ago so the gap is growing.  But in the United States, since Reagan the economy has been much less regulated which means the gap between the middle class and the richest 5% is pretty significant.  How significant?  According to the IRS the top 1% average over $1.1 million per year (pre-tax).  The next 4% average $210,000 per year. Leaving the average American household earning around $40,000 per year.

See the problem yet? If conspicuous consumption is spending 4X what the typical American has on something and the top 5% are earning 5X or more than the average American then you are going to have people who are merely spending the same ratio as everyone else on things behaving conspiciously.

So why is that a problem? Because the people who really get upset about conspicious consumption are usually the ones who make class wafare arguments or demand much higher taxes on that top 5%.

For example, one leftist blogger put it like this (from here):

I'm enough of a believer in CPI bias to want to say "real compensation for male nonsupervisory workers has stagnated since 1973"--I think it has grown, but only very slowly, and much less rapidly than productivity.

On the other hand, I'm enough of a touchy-feey sociology-lover to believe that a good chunk of the utility the rich derive from their conspicuous consumption is transferred to them from the poor: the happiness America's working poor and middle class derive from the compensation distribution--given their compensation, the compensation of the rich, and the lifestyles of the rich and famous--seems to me to be certainly less than that of their counterparts back in 1973.

Note the premise: That the wealth that the top 5% have is essentially stolen -- transffered to them -- from the poor.  That's right, the bottom half of the populatoin are the ones really generating that wealth and the top 5% are just taking it from them.  Which, to anyone with any understanding of the economy, is utter nonsense.  Anyone who thinks that economics is a zero-sum game is clueless.  Joe Rich Guy's wealth does not hurt Bob poor guy.

But if that's not explicit enough, he then writes:

"The easiest and most important thing the government can do to neutralize the adverse consequences of rising inequality is to make the tax system more progressive, not less. A reality-based government would react to growing pretax inequality by taxing the rich more, and subsidizing the poor more (through policies like the EITC) as well. "

This is a total perversion of what the founding fathers had in mind.  It is not the role of government to re-distribute wealth.  Life, liberty, and the pursuit of happiness.  Not only would such a policy be immoral in my view, it would be damaging to future generations.  As we enjoy our various luxuries today whether it be computers, the Internet, movies on demand, much higher quality housing per square foot and per cost, etc. one should ask oneself where those benefits came from. Who came up with it?  It doesn't take a historian to note that the biggest improvements in the way we live have come when taxation was relatively low.  People are much better at spending their own money than a government agency. 

The minute a person starts to think that there is something morally wrong with one guy having a big house or fancy car or private jet or whatever and another guy "only" having one TV -- and not HDTV and living in "only" a 1500 square foot house is the minute they've given up on the American dream.

Once you give up on the American dream, you might as well start thinking like that guy who followed up his post with:

I wrote that one reason that America's rich today live the expensive and ostentatious lifestyles they do (rather than spending much more money on charity, or philanthropy) is that it is a way of making other people feel small and unhappy...

Which is about as logical as saying that the motivation for a middle class person to buy a new home is to make homeless people feel small and unhappy. Class envy is a venomous thing in a free society. Let us hope that it never becomes too widespread. The citizens of Soviet Russia got a good taste of what happens when class envy takes over.