The laws of economics still work

By Jim Thompson
HCP columnist

Two stories that hit the news on Monday, Aug. 5 affirmed for me that the laws of economics continue to prevail.

The first was the news that Christie’s International Plc will appraise the collection at the Detroit Institute of the Arts at the request of creditors trying to value the bankrupt city’s few remaining assets.

The second was Jeff Bezos buying the financially depleted Washington Post for a mere $250 million.

Contrary to the opinions of some in this country (and elsewhere), things don’t just go on like they have been just because you think they should. Every square inch of land, every artifact, every piece of intellectual property, every brand name has a value associated with it — and an owner.

This is not the way the Indians (call them native Americans if you like, I consider myself a native American) ran things.

Chief Seattle said, “…the earth does not belong to man, man belongs to the earth.” But that is not the way we operate in the “civilized” world of today. Everything has an owner or a claimant.

And this is where the laws of economics come in. The city of Detroit cannot keep its purported $2.5 billion worth of art if they pledged it to lenders and cannot pay them. The Washington Post cannot continue as it was if no one wants to read about the world as its editors see it and hence advertisers leave.

The U.S. federal government has convinced many of us that the laws of economics need not apply any longer. Have a deficit? We’ll grow out of it.

The “poor” (whatever that means, I suspect Chief Seattle would have a different definition than we have today) need stuff? We’ll tax the nasty old rich people.

The government finances its follies with debt and inflation. And then perpetrates the idea we will take care of it “tomorrow.” But “tomorrow” never comes.

Eventually, the entire country ends up like Detroit.

In the late 1950s and early 1960s, prime Illinois farmland sold for around $700 to $1,000 per acre. Recent prices have been around $15,000 per acre. The land did not become more valuable — the dollar became less valuable.

A gallon of gasoline today costs the same as it did in 1971 — if you pay for both transactions in gold. It is the dollar that has deteriorated.

This has been felt no more painfully than in the working person’s wages. In the late 1970s, I worked in a facility where the hourly workers made $13 per hour. In the same facility today, they make $19 per hour. In the late 1970s, you could buy a Cadillac for about $8,500. Today, that same car will set you back $45,000 or more.

An element of the population and politicians want you to blame this state of affairs on rich bankers, CEOs or the Chinese. These elements of the population may be misguided or disillusioned.

The politicians are not — they are more than happy to deflect the blame away from the real source of the problem — themselves, and their fiscally irresponsible ways.

So, will Detroit’s art go to the highest bidder to satisfy the creditors?

I wouldn’t count on it. After all, what is it to pile the woes of Detroit on the tottering federal debt and save the art for the crack heads of tomorrow?

We already spent zillions saving a swamp that deserved to die in New Orleans. As for the Post, Bezos is no dummy and he likes to make money. Let’s see if he can turn around a dying newspaper. My bet is his plan will not involve newsprint.

But the bigger picture is this: Who will buy the remaining assets of the United States when the country fails?

Will the Statute of Liberty be sold to Russia and moved to St. Petersburg?

Will the Washington Monument end up in Sao Paulo?

Impossible, you say? Ask Detroit residents circa 1950 (a mere 63 years ago) if they could imagine their art museum would ever be appraised for the auction block.

We may not have 63 years left to save the United States.

Jim Thompson is a columnist for The Highland County Press.