Use Giffen goods to exploit the poor in your dystopian society

So you've taken over the world. Good for you! But how are you going to make the most of your newfound kingdom? By wringing all the money you can out of the oppressed poor using Giffen goods.

Welcome! First of all, let me salute you in your newfound status as supreme overlord of Earth. And let me say, that as a popular internet personality (by some standards), I can really help you out in controlling your society of defeated, joyless drones. In fact, let me give you a hand right away. You're probably thinking that, in order to run a basic economy, you're going to keep a low price on subsistence goods, allowing the poor to feed themselves, and then allow them occasional treats to keep them working.

Perhaps you're not even concerned with economics, but want to keep an eye on those blackmarket economies that have sprung up around the ruined cities of the world. You notice that some things have low prices, while others have higher ones. And people tend to buy more of the low-priced stuff and less of the high-priced stuff.

Not necessarily! All the way back in the 1800s, which is a time you can read about if you pull a few books out of the smoking remains of our libraries, there was a man named Robert Giffen. He noticed an interesting thing. Poor people tended to buy a lot of bread, since it was the cheapest good.

But when bread prices went up none of the poor stopped buying bread. In fact, they bought even more. They didn't do this out of a need to be seen with high-priced goods - it wasn't a designer label thing. During periods of low bread prices, they bought enough bread to allow it to be a staple of their diet, and then bought a few more expensive goods, like meat and cheese, to supplement their diet. As the price of bread went up, they had to cut back on the more expensive items, like meat. But meat was so much more expensive than bread that, with the income freed up from buying meat, they could now buy a lot more bread. Pushing up the price on certain goods made people buy more of them, not less.

These goods are called Giffen goods. They share a few characteristics. First, they have to be the kind of thing that nobody bothers buying when the prices go up. These are bottom-of-the-barrel goods - called inferior goods. On the other hand, there can't be a replacement for these goods. The public has to rely on them, not like them. Finally, they have to be a good bit of each person's income, but not enough that people can't afford other things. In other words, give them hope that they can get more than the bare minimum out of life. Then, whenever you need a little extra cash, push up the price on the Giffen good and take that hope away.

Anyway, that's my advice on managing your dystopia. If you don't like it, don't worry. I'm gonna be over here in a corner working out a way to explode things that I think is really going to tickle you. Just give me a second. Hey, what's with the big glowy thing? NNNNNNnnnnnno-

Via Inferior Goods, Giffen Goods, and Shochu.