Friday, August 01, 2008

Meditations on a Wrangler/Mangler. Part 2.

I am just back from the massive car-rental complex at McCarran Airport. And I'm happy to report that I've found a way of making my points about the vanity aspects of my daughter's Jeep ownership (and the implications thereof, for society as a whole) without further besmirching Jen's reputation as a mother.

First of all, the Alamo section was a frenzied, comical scene. At Alamo, at least here in Las Vegas, you get to go right over and pick your own car from whatever's available on the lot at the moment; evidently several airport shuttle buses had disgorged their human cargo of weekend arrivals all at once, because there was intense competition for the status cars as they came back from being serviced. All over the lot, dads (as well as a few moms) were dropping their luggage in a heap and sprinting to claim dibs on some Caddy or Lincoln, Cherokee or Hummer before someone else could get to it.

And there, in a forlorn little grouping at the calm eye of this auto-snatching storm, sat three Toyota Corollas, utterly undesired and seldom even meriting a courtesy look as people flew by. So I took one of 'em.

Let me share what I've learned about the new Toyota Corolla. It goes exactly where you point it, but also soaks up bumps in the road like a much larger car (no trade-offs between ride and handling here). It's surprisingly peppy off the line, and it stops on the nearest edge of a thin dime. Inside, it's much roomier than it appears from outside, and also gets high marks for fit-and-finish (i.e. the doors close with a reassuring fhwump, the dashboard components all line up, and nothing squeaks or rattles at highway speeds). Finally, though I don't yet know this for sure, I'd expect it to be great on gas.

Alas, it's a Toyota Corolla. So it gets no love at the car-rental counter.

Which brings me back to my daughter's Wrangler/Mangler. So far as I can determine, it does nothing well. (Not for her purposes, anyway. The reviews say it's great off-road, but the closest Jen will ever come to off-roading is when the damn thing wanders onto the gravel shoulder as she struggles to keep it on course.) It doesn't steer, it doesn't accelerate, it doesn't control the climate, it doesn't even always honk when you ask it to. But it's "fun" and it's "cute," and I get the feeling Jen likes the way she looks as she pilots it around Vegas with the wind whistling through her hair...

What is it that we privileged Americans chiefly consider in our consuming decisions? Or let me ask the question more pointedly: Why do we consider so many variables that have nothing to do with intrinsic merit? What motivates us to buy what we buy, and to pass up what we pass up? If a Toyota Corolla delivers even just 85 percent of what a BMW 5 series delivers in every category of actual measurable performance, why does anyone buy the Beemer? Or at least, why do we cheerfully pay for the BMW a sum that would buy us a Corolla plus two spares?


Just a thought: Sheet metal is sheet metal. It can be fabricated into any shape an automaker desires. GM, if it wanted to, could make a car that looks like a Vette but costs like a Hyundai. (I know this for a fact. I've done the research. Remember that book on "vanity"?) But carmakers see no reason to give away added profit margin that car shoppers will eagerly fork over just to own a certain look. So as a rule, if you want sportscar looks, you're gonna pay sportscar dollars. Carmakers could even make a car that rivals Corvette performance in a sexy little shell (and some second-tier carmakers have done just that. The Subaru WRX, with its 5-second zero-to-60 times, comes to mind). But the name brands? GM? Toyota? No way! Why build a car to sell for $25,000 when people will mortgage their souls to own substantially the same car for $50,000 or more? (OK, yeah, there's a little bit more to it than that. I'm not implying that the extra $25,000 is pure profit. But the explanation would go on for page after page. For now, I ask you to trust the validity of the larger point I'm making.)

GM quite easily could make a $20,000 Vette or a close approximation of same. Don't hold your breath. Because GM knows that people who buy Vettes are conditioned to expect to pay two or three times that sum. In fact, and this is key, GM knows that a fair segment of its market would not buy the car if it were "too affordable." It is vanity, not fabrication costs or any other quantifiable considerations, that's driving price.

In a free market, things generally cost what people are willing to pay. This principle holds for products sublime and ridiculous, for the most ordinary staples of daily life and the most important purchases we make in our lifetime. In the former category, take gasoline. Would you like to see gas at $1 a gallon again? I have a foolproof plan: Everybody simply stop buying gas, period, until prices drop to $1. Presto, it will happen. Sure, there may be other things that would have to happen in order to facilitate this, and some of those other things might be unpleasant. But it comes down to priorities. And if the chief priority is to cut gas prices by 75 percent, that's how we could do it. Probably in under a month.

As for the category of major purchases...take my sister's palatial home in an elite northern suburb of San Diego. I gather from what she and her husband told me during our recent visit that she's down a good $300K in market value, due to the current mortgage crunch/housing slump. This is the same house that she bought two years ago for $1 million; in fact, it's better. She's made wholesale improvements throughout, including lush landscaping, gorgeous tile flooring (the real deal, not some cheapo imitation), elegant window treatments, hardwood moldings at the tops and bottoms of all walls, etched-glass accents, and a showpiece of an ascending exterior entryway that's had passersby actually wondering if her home is the neighborhood clubhouse. (Calling them her "front steps" doesn't begin to do them justice. That's the photo above left.) No matter; the house is worth maybe 70 percent of what she paid for it without the improvements, which also means the house is presently worth less than what it cost the builder to build. (Of course, the builder has long since been paid by the bank, so he could care less.) The bottom line is that my sister's beautiful house has no value apart from what the market will support. A few years ago when California real estate was experiencing one of its periodic spirals, the house was worth $1 million. Today it's worth $700,000. Next year it might be worth $2 million or $4 million or $250,000 or, if the Big One hits, nothing.


What is the house really worth, then, in and of itself? I'm not sure there's an answer. The marketplace decides worth, recalculating/recalibrating each and every day.

But this I do know: If
people like my daughter buy crappy cars for vanity-based reasons that have nothing to do with quality or performance, then crappy cars will continue to (a) be made, and (b) sell for good money. If men (and increasingly women) are willing to spend $3,000 or more to own home-theater systems whose audio advantages are beyond the perception of 98 percent of all human beings, then not only will those systems continue to sell, but the entire home-theater marketplace will be inflated to artificially high levels. If women (and some men) are willing to pass up a no-name real-leather handbag that costs $40 in order to own the $700 faux-leather designer handbag with that neat little triangular logo, then the latter bags will sell like hotcakes (and the designer in question will laugh all the way to the bank). Same thing with those $300 shoes that are woefully uncomfortable and possibly even unsafe, but do, after all, have those too-cute red soles. Something to ponder?

Oh, as to the photo at right: I just thought I'd include a road sign you don't see every day. It's at the entrance to the Hoover Dam recreation area.

* Yes, I said I rented a Cadillac last week for our trip to San Diego. That's because we needed a car with ample squirming room for five on a 4.5-hour trip, and the Cad was on a weekend special.
** Competition and marketplace imperatives have changed this somewhat (think Pontiac Solstice), but it took a long, long time.

15 comments:

Cal said...

For some reason I think I may have said this before, but what about the old saying that "material things don't matter".

It has always been amazing to me the ability of humans either to forget, or not to tell the next generation about economic hard times. I mean I wasn't even a teenager in the late '70s and I remember the even/odd license plate for gasoline purchases. The SUV and housing crazes are something that if I haven't lived through them I wouldn't believe. Especially after the Internet stock craze of the late '90s.

I remember reading a story recently about some area in Colorado that environmentalists want to preserve but I think the Bush administration is allowing some kind of development. The story quoted an environmentalist as the reporter interviewed her while she was driving through the area in a SUV.

I'm not a conservative politically. But I see the point they we are trying to legislate the forgiveness of bad economic behavior. I don't think you can force people to avoid becoming suckers if they are unwilling to take responsibility.

But I also don't think the fat cats on Wall Street whose companies made such bad loans should be able to keep their money or be in positions to run anything ever again. I don't believe in "heads I win, tails you lose" economics.

My suggestion is that gas is sold on the basis of the fuel efficiency of the vehicle. The people who own the low mpg cars should have to pay a premium. We do that with electricity usage.

Steve Salerno said...

Regardless of where one falls on the political spectrum, there are lots of good points here, Cal, with some good historical perspective.

monique said...

"It's like when I go shopping. I have to have the most expensive thing. Not because it's expensive, but because it costs more." (Cordelia - Buffy the Vampire Slayer)

I've never been one to shop for status or style over function and affordability. It's sickening to think about the amount of money that must be wasted in a year, not just by the obscenely rich but by ordinary people who can't afford the minimum payments on their credit cards but will still buy the next big thing.

Steve Salerno said...

Monique, that is so on-point. When I see teens leaving their shifts at Burger King in their $150 sneakers and then immediately whipping out their $500 iPhones and getting into their beat-up cars with the $1500 "spinner" rims, I don't know whether to laugh or cry. That is the phenomenon I alluded to (albeit briefly and rather obscurely) when I mentioned home-theater systems: The pretension to wealth and creature comfort popularizes the idea of spending money purely for ego gratification; that conditions all of us to spend much more than we should (or need to) and inflates the dimensions of the marketplace for everyone, including people who are making little or no money. That's also why I cringe when I hear celebs talk about their $8000 pocketbooks or $2000 baby strollers: Just because you have tons of money means it's OK to waste it? (And then you hold a benefit concert and lecture me about how I "need to do more to end world hunger"??)

Anonymous said...

We buy what we buy not for ourselves, but to impress others. I have "made it" and can afford a BMW. We care what "others," who we probably never meet, think about us. How do we "appear" and "appear is the correct word.

Steve said...

Much of marketing is about how to create "intangible benefits" that distinguish your product from the competition in a way that lets you charge a premium.

A friend of mine once said he envied how I'd taken a year off between jobs to play and travel. We compared salaries. His was TWICE mine.

The difference? I lived cheaply, bought what I needed, and paid attention to value.

He leased the fanciest and best car. He replaced his stereo every year with that year's leading edge technology. He spent thousands and thousands yearly on the "latest and greatest" of everything, with no regard to what value he was actually getting or whether he even needed it.

Meanwhile, me and my 20-year-old stereo had a wonderful year-long vacation.

Mike Cane said...

>>>whipping out their $500 iPhones

Hey you. Lay off the iPhone! Heh.

The car I want, laughs and looks be damned.

But my dream is to mod it a bit.

Cosmic Connie said...

Steve, I’m looking forward to reading your book on vanity. I confess that when you first mentioned you were working on this project I didn’t completely understand the significance, but it really does seem to be a logical expansion of your investigation and research on SHAM. After all, the vanity of the numerous selfish-help gurus – and their followers – is at the heart of so much SHAM stuff. More than that, vanity is what drives so much of our economy and, it could be argued, inflates the cost of just about everything.

You wrote (in response to Monique’s comment), “That's also why I cringe when I hear celebs talk about their $8000 pocketbooks or $2000 baby strollers: Just because you have tons of money means it's OK to waste it? (And then you hold a benefit concert and lecture me about how I ‘need to do more to end world hunger’??)”

Although I believe people have the right to “waste” money they’ve legally earned (“waste” being a relative term anyway), I’m getting more and more annoyed by those righteous-celeb trends myself. Hand in hand with the phenomenon of what used to be called “conspicuous consumption” there seems to be a lot of what I like to call “conspicuous altruism” (a term I think I coined, though I’m hardly the first to write about the phenomenon). While this altruism may actually have positive results, it’s hard to overlook the massive ego investment that some of the conspicuously altruistic have in the deal – not to mention the hypocrisy of those who lecture the rest of us from their mansions and limousines. I tackled the conspicuous-altruism angle in my usual serious way last year:
http://tinyurl.com/6fvrnk

Again I must invoke one of my favorite snark targets, a New-Wage guru who is constantly bragging about his ’spensive cars, and who recently placed an order for a new breed, a Scorpion, that “only” costs $150,000 (hey, it’s “green” – it supposedly gets 40 mpg). He portrayed the car as a real bargain – for him, anyway. At the same time, he’s been cooking up some change-the-world gimmick to End Poverty In Our Lifetime, called Operation Yes (www.operationyes.com). As a FHPP (Formerly Homeless & Poor Person – another “credential” increasingly being adopted by New-Wage leaders), he apparently feels qualified to tackle this issue.

Believe it or not, I’m not one who decries “bleeding hearts” and automatically thinks any altruism is suspect. Even though there’s now some scientific evidence that altruism makes us feel good and is actually beneficial to our health – which means there is a bit of selfishness even in the most genuinely altruistic soul – I think that many people truly do want to make a difference. Perhaps even the above-mentioned guru, in his less self-serving moments, really wants to help make the world a better place to live.

But talking about it and getting people all excited about it, and even inspiring them to take action – in the form of sending money, or volunteering somewhere, for example – is a looooooooong way from tackling the problem at its root. (Think Werner Erhard and his celebrity-riddled Hunger Project back in the late 70s.) I don’t know the details of our present-day guru’s “end poverty” program, but I get the feeling that in essence it’s going to be another affiliate-based Internet scheme that will make him as much money as possible, and give a few others a chance to make some money, and make a few more feel momentarily better about themselves because they think they’re “making a difference.”

Besides, poverty is relative, and there are different ways to measure and define it. So the concept of “ending poverty” seems too abstract to be useful. And (bringing it back to the topic of your post), if the majority of people in our privileged culture remain so deeply driven by vanity, they’ll keep paying premium prices to buy stuff that really could be sold for much less. And the price of just about everything will still continue to go up.

So… even if all of that selfish-help get-rich crap really worked, and people put it to use, and everyone, or the majority of people, became at least a millionaire – well, obviously, being a millionaire wouldn’t be a big deal at all any more. There would still be the insufferably vain who had to be multi-multi millionaires, billionaires or multi-billionaires; in fact the boastful guru mentioned above once said one of his goals is to be the world’s first *trillionaire*. And, of course, there would still be people who would always want more and better stuff than the next person. The price of everything would just keep going up, and, absent some horrendously expensive government program that the rich and middle-class would no doubt bitch about, some folks would still be left out in the cold.

I hope that my rambling about all of this stuff doesn’t make me sound too simplistic, but, when I’m not busy snarking and trying to be clever, these are issues that really bother me. I don’t know what the answers are, but I am very interested in exploring the questions, which is why I look forward to reading your “vanity” book.

RevRon's Rants said...

Steve - Perhaps we're using too broad a brush here...

Back in the early '70s, I flew home from San Diego to Houston on Christmas leave from the Navy. Not wanting to fly back, I bought a 350cc Suzuki motorcycle and rode it back. A few months later, I was transferred to the SF Bay area, and rode the bike to my new duty station... by way of Houston! When I arrived in Oakland, I sold the bike, completely over the fascination with riding. The trip wore me out!

A month or so later, en route to the VW dealership to get paperwork started to purchase a Super Beetle, I stopped at a BMW motorcycle shop, just to look. Told the owner about my trip - and my vow never to tour on a bike again - and he tossed me the key to a BMW sitting out front, telling me to be back before they closed.

When I returned a few hours later, I told him to write it up. I was sold. In the years since, I have owned a total of 3 BMWs and 4 Moto Guzzis - all "status" brands. My insistence upon owning these bikes was borne purely of their function, but I have to admit, the smug pride of ownership did rear its ugly head.

The point of this over-long story is that not every purchaser of "status" brands makes the decision to buy based upon how the purchase will affect the buyer's image. Sometimes, there is something about the actual experience provided that justifies the purchase.

And just for the record, my next bike will be a Kawasaki KLR, which has proven its function in the military for over 20 years. Not sexy, not a "status" item... just extremely functional.

Steve Salerno said...

Connie:

Wow. If ever anyone posted a comment that deserved about 119 separate threads of response, yours (above) is it. I apologize for not being able to address it in depth here. Actually, I'd love to be able to say that I'll address your comment (and its manifold sub-comments) in detail in my book on vanity--but that project, regrettably, is in limbo at the moment. It's a very long story (and one that, in and of itself, has much to say about life in latter-day America, I think), but I'll have to save that sad saga for another day.

Thank you for the time and thought you put into your words.

Mike Cane said...

>>>Although I believe people have the right to “waste” money they’ve legally earned (“waste” being a relative term anyway),

Glad to see that "relative" in there. In my childhood surroundings, buying books was considered a "waste."

>>>in detail in my book on vanity--but that project, regrettably, is in limbo at the moment. It's a very long story (and one that, in and of itself, has much to say about life in latter-day America, I think)

How many times must I smack you in the head with the New Age Religion of eBooks, Steve?! (You know I couldn't resist calling it that!)

Ken said...

Interesting car rental experience. I got a different perspective two months ago when I went on line to reserve a rental car in Vancouver.

When I went to the website for the name brand rental agency closest to my hotel I checked their rates.

The cheapest cars they had were the subcompacts. To my surprise the next cheapest were SUV's (and they were only slightly more expensive then the subcompacts). I could only surmise that the rental agencies are going out of their minds trying to get people to rent the gas guzzlers that used to earn them top dollar.

Cosmic Connie said...

I did mis-speak slightly (or, rather, mis-write) regarding that certain New-Wage guru's Conspicuous Altruism project. His goal is to end *homelessness* in our lifetime, not poverty. Because, you see, he was once homeless too, blah-blah-blah.

Sorry to hear your vanity book is in limbo, Steve, but that's all the more reason for you to keep SHAMblog going.

Elizabeth said...

As fate would have it, this story, on vanity of the holier-than-you, in the news today:
http://tinyurl.com/66rh59

Steve Salerno said...

Thanks, Eliz. I don't know why that book deal has been so problematic and snake-bitten for me (or my precisely, my agent). Could it be that the problem was/is--gulp--the writing itself?!?