(November 23) – “While most Americans would be content with a Sony Playstation 2 or a sweater twin set under the tree, for an increasing number of people mere cashmere does not say ‘I love you’ with quite the same authority as pashmina. Accustomed to luxury, these new-economy swells expect the most expensive version of everything — and are likely to get it,” writes Leslie Kaufman in today’s New York Times.

“The economy may be slowing and lots of dot-com stock options are underwater, but the top slice of income earners is still sitting on a huge pile of wealth and their free-flowing extravagance is expected to propel such top purveyors of gilded baubles and designer delectables as Tiffany & Company, Neiman Marcus Group and LVMH-Moët Hennessy Louis Vuitton into yet another banner financial year.”

“Luxury goods are not, of course, necessarily expensive in absolute terms, but they almost by definition cost more than the same products by other makers. It is, for example, just as possible to buy a $20 silk tie as a $75 version.”

“But high price is part of the appeal, and these products are designed to muddle the sub-lobe of the brain that makes cost-benefit calculations. The darkly lustrous eye powders of Chanel or an elegant, logo-encrusted satchel by Louis Vuitton seduce in ways cheaper alternatives cannot: they cost more, but who can put a price tag on that one accessory that makes one feel, for an instant, Vanderbilt-rich or Sophia-Loren-glam?”

“In moments of reflection, every affluent shopper suspects that there is as much art as substance in the difference between a Revlon lipstick bought at the drugstore for $8 and the By Terry counterpart from Saks Fifth Avenue, going for $49. And that the margin between an Omega Speedmaster, which usually retails at well over $3,000, and a $65 Timex i-Control model is as attributable to vanity as to quality.”

“But since nothing would be quite so deflating for this fantasy business as for a customer to discover that a life- transforming cosmetic was actually mass produced on a factory floor for $2 (the average industry price for lipstick), luxury-goods companies guard no secret more ferociously than the cost of making their wares.”