The Black Hole

Every now and then, looking at the cars around me, I wonder how this will all turn out. With falling house prices the real estate bubble has become obvious, but the car bubble remains almost unremarked.

How does this work? A person buys a Cadillac SUV, an act I regard as equivalent to piling $50,000 on the ground and setting it afire. Then, every month, they merrily burn a few hundred dollar bills putting gas in the thing.

How does this not affect our economy? There is no excess value created by the driver of a recreational pickup truck or SUV. In fact, considering the observed behaviors of cell-phone chatters, new cars are arguably an ateriosclerosis of our transportation arteries.

John Maynard Keynes said you could make the economy go by burying gold and paying people to dig it up, but that was before we realized what the carbon was doing to our atmosphere. I’ve formed no conclusions but, if you think about what you see around you, you may, like me, be flabbergasted- and wonder how this will all turn out.

4 responses to “The Black Hole”

  1. Matt the Engineer

    It’s just another way our society is inefficient. Excess does that to a society, and clearly some have had an excess of prosperity. The good news is that this bubble has been going on for quite a while, and it’s built into our economy. If this prosperity ever runs out, it (hopefully) won’t take long for the people burning piles of money to realize that they could be actually using that money for a worthwhile purpose.

    But yes, the climate issue is separate and urgent.

  2. serial catowner

    Uh, in what respect is it “good news” that this is built in to our society? That’s one of the things that scares me the most.

    Another thing that has me scratching my head- hasn’t the prosperity already run out?

    Between the bills outstanding and the bills that are pending, this country has a heap of debt. But the only ideas on the table now for making our economic engine go are ‘more of the same’- basically a ‘dig faster’ approach to being in a hole.

    I’m inclined to agree with the ‘won’t take long’ idea in the sense that new vehicles are only new for about 8 years. Arguably the owner can choose to downsize or simply not buy another vehicle at about the 8-year mark, and that’s a pretty short time compared with investing in homes or transit lines.

    And I figure that if someone simply stops driving that’s a big plus for the economy. I guess my real question has to do with the effects of pitchforking huge amounts of money into the furnace and getting no value at all. At a gut level I’m inclined to think that it’s making us, as a nation, poor at a very high rate of speed.

  3. Matt the Engineer

    By “built into our economy” I mean that if we were all subsistence farmers and had a bad year, many of us would starve to death. But since we’re apparently so rich that we can buy Cadillac SUVs and game systems, when we hit hard times maybe these luxuries are the only things that need to go away.

    “hasn’t the prosperity already run out?” In many respects, yes. But I don’t think it’s too late at all if we chose tomorrow to start using our time and money wisely. If you take a look at this (the graph, not the article), you’ll see our debt/GDP isn’t that bad in a historical sense. If we turned some of that GDP into capital for growth, we could raise this sinking ship quickly. But if we’re just adding more lanes on the freeway… well not so much.

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