a poorer country

For most of us, being American gives us a certain notion of what it means to be a wealthy country.  Even our poorest have cars, cell phones, air conditioning.  Logically, a poorer country is a place where people have less, and of course that's correct.

But the mechanism that accounts for the difference, between a wealthy country and a poor one, is not what most Americans think.  In the US, we all know that a wealthy person has more money than a poor person.  So when we apply this to what we see, we perceive that wealthy people go to places like car lots with money and leave with new cars, while poor people can only stand on the sidewalk and look at lots full of cars that they're forbidden to own.  Money, it is commonly thought, is the obstacle that keeps the poor from owning things.  And of course, redistribution is all about giving poorer people money so they can buy things they're "entitled" to.

If we apply this reasoning to a poorer nation, we should expect to see fewer people -- the rich ones, of course -- buying cars, and more people going without.  And that part is true.  But another thing we might expect to see in a poorer country, extrapolating from our experience as wealthy Americans, is even larger crowds of "poor" people on the sidewalk, looking in at the cars they can't own.  And here is where so many Americans simply don't get it.

The real difference, between a wealthy nation and a poorer one, is not that in poorer countries there is a disproportionate number of people who can't afford a car, but that in poorer countries there are so many fewer cars to buy.  The American perception of "poor" -- people who can only gaze upon cars they're unable to own -- does not project to countries where you simply can't find a lot full of new cars.

Now you might think you'd have to go to the third world to see this, but the truth is that there's already plenty of evidence of it as nearby as socialist Europe, where a "dealership" is often a showroom with one or two cars, actual inventory is kept under lock and key, and at night they roll gates down over the windows to protect the vehicles from theft.  The less wealthy a country is, the more likely that possessions like cars -- which we Americans take for granted -- must be protected like diamonds, as their ownership becomes more confined to the same wealthiest few.

It's not just cars, obviously.  If you've ever been overseas with the latest electronic gadget, for example, you might have noticed that the people there "don't have them yet," without even realizing that what you're really noticing is that the people there are not as wealthy as we are.

Now, this difference in your thinking -- that wealth is not about who has the money to buy things, but rather about the abundance of things that could be bought -- is crucial.  When it becomes "the way you look at things," you will find that it explains so much of what you see, and that it calls into question so much that passes for sound economic policy.  I can't even begin to list them all here.

But there are a couple of places where I'd like you to apply that thinking right now, where seemingly trivial headlines might be a harbinger of something not-so-good that's approaching on the horizon.

First, between GM and Chrysler, literally thousands of car dealerships have just closed.  Now, that could just be a correction, for some kind of "bubble" of too many dealerships.  But even if it is, then as a consumer you should be seeing that the cars available for you to buy have just gotten incrementally scarcer, with all the supply-and-demand implications that come with that scarcity.

Second, Great Adventure just filed for bankruptcy.  Now, I really don't know what this means -- whether they'll be closing parks, or whether theme park investors will be biting most of the bullet on this one.  But either way, some aspect of future theme park operations -- be it whether the parks become more scarce or simply a riskier investment in general -- either way, you just became less able to afford such luxurious entertainment.  In some way or another, we are poorer for it.

And, finally, a thought on healthcare.  It could be argued that "a wealthy nation can afford universal healthcare."  And you can write a law entitling everyone to "free" healthcare.

And when you go down to your doctor's office and are comforted to find every sick and uninsured person you once worried about waiting to be seen; and when you patiently wait your turn for the MRI because, in the name of fairness, everybody now has access to it; and when you submit yourself to the decisions of bureaucrats entrusted with making "the tough decisions" about rationing care -- you may see all of that as "something that a wealthy nation can afford to endure."

But when I look at it, I just see one huge, empty car lot, with three hundred million people standing around it, waiting for the factory to deliver the next car, each wondering when they will receive theirs.  I don't share that vision of a wealthy nation -- I see it as a poorer one.

That's the John Galt Line.

Comments

[PJ]

On various news feeds there is discussion of the current very low inventory levels of many SUV models due to extreme manufacturing cutbacks during the spike in gas prices last year. Many of the SUVs that are available are garnering full list price from buyers - supply and demand implications already in play here and this BEFORE the impact of GM & Chrysler closings. Car lots in this part of the USA are already starved for choice. Your empty lot scenario not only chilling but too quickly becoming the reality.

[John Galt]

Thanks, PJ. While writing this post, I specifically thought of that very example, but forgot to include it. You are so right!

You're going to be told that SUVs are "going away" because of [insert political reason here]. But the bottom line is that when you find yourself standing on a car lot, wanting to spend your money on an SUV and unable to find one to buy, you are poorer. What good is a stack of government paper when the government effectively outlaws the things you'd like to buy with it???

Thank you so much for that contribution, PJ!

[John Galt the Visitor]

What I am going to write here could be written as a comment to many of the posts in your blog, and in other like-minded blogs:

If Americans want to see what our country will look like after a hypothetical 8 years of Obama presidency and lemming Congress, they need only look at what East Berlin and Havana looked like by 1969. Interesting that the thing that seems to symbolize "modern" Cuba is the ubiquity of 1950's automobiles, while your post here uses automobiles as an example, and one of the first crimes committed by the new authoritarian, national socialist government was the illegal firing of the CEO of General Motors. Remember: "As General Motors goes, so goes the nation." (Charles Wilson, 1953)