Last year at Pebble Beach we saw a 1962 Ferrari 250 GTO sell at auction for a record $38 Million. People “ooooed” and “aaaahhhed” at the sale price, but many were also underwhelmed because another 250 GTO had sold privately for $50 Million, and they had wanted to see a new world record.

From a larger economic perspective, this is madness in a most ludicrous form.

Now, I want to begin by stating that I am not someone who is against wealthy people, or against buying cool and expensive things. I am is someone with a degree in both economics and sociology who wants to see capitalism thrive in an an optimal state, where opportunity is abundant and competition is fierce.

True capitalism is an endangered species right now in America, and indeed the rest of the industrialized world. The danger is not communism/socialism, but the opposite, oligarchy. Too much of the total wealth lies in the hands of too few members of society, and the economy is being strangled more and more. In short it is because our entire economy is based around consumerism (buying and selling goods and services), and most people have less and less money to spend.

In the US, 90% of the total wealth is held by the top 10% of the population. That means 270 million Americans have very little money, and around 30 million Americans have a lot of money. The majority of consumers can’t spend much money, and the economy is suffocating because of it.

The $38 million Ferrari GTO is a big sign that our economy is in some serious trouble, let alone the $50 million Ferrari GTO that sold privately.

Here’s why…

Continue reading The Car, as an Economic Indicator, Spells Trouble →