We all have lots and lots of stuff. We like to think that it’s valuable because we’ll use it one day. It’s not. It’s worthless.

What I didn’t understand was that the value of some new acquisition wasn’t the difference between its retail price and what I paid for it. It was the value I derived from it. Stuff is an extremely illiquid asset. Unless you have some plan for selling that valuable thing you got so cheaply, what difference does it make what it’s “worth?” The only way you’re ever going to extract any value from it is to use it. And if you don’t have any immediate use for it, you probably never will.

Companies that sell stuff have spent huge sums training us to think stuff is still valuable. But it would be closer to the truth to treat stuff as worthless.

After reading this, I’m ready to go through the house and to start tossing “stuff”.

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One of the running themes of the economist Robin Hanson’s excellent blog is that arguments like the ones found in these books are actually an elite-status proxy war. They denigrate the one measure of high-visibility achievement—income—that public intellectuals don’t do very well on. Reading “Shiny Objects,” you get the feeling that he is onto something.

Consider the matter of status competition. Mr. Roberts, like so many before him, argues that conspicuous consumption is an unhappy zero-sum game. But this is of course true of most forms of competition: Most academics I know can rank-order everyone in the room at a professional conference with the speed and precision of a courtier at Versailles. Any competition, from looks to money to academic credentialing, both consumes a lot of resources and makes many of the participants feel bad about themselves. Why, then, does the literature on status competition always tell us that we should redistribute capital gains or inheritances and never tell us that we should redistribute academic chairs or book contracts?

Fantastic.

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Carl Haub, senior demographer at the Population Reference Bureau in Washington, D.C., has estimated that 106 billion humans have been born since Homo sapiens appeared about 50,000 years ago. That means that the richest one percent in history includes 1.06 billion people. There are currently 6.2 billion humans alive, leaving approximately 100 billion who have died. Who among the dead was rich by today’s standards? Not many. Royalty, popes, presidents, dictators, large landholders, and the occasional wealthy industrialist, such as Andrew Carnegie and Leland Stanford, were certainly rich. All told, it is difficult to imagine more than 20 million of these people since ancient Egyptian times. This leaves 1.04 billion wealthy alive today, or 17% of the world’s population.

The poor in the United States, by contrast, live on up to $23.50 a day. Except for the few hundred thousand who are homeless, the Americans whom the U.S. government defines as poor live exceptionally rich lives. In most ways, their lives are better than those of kings and queens just 200 years ago. Consider the quality and quantity of our food, clothing, refrigerators, televisions, washing machines, stereo systems, and automobiles. King Louis XIV of France had a greenhouse so he could eat oranges. The poor in this country can eat an orange every day, regardless of season. King Edward III of England could summon the royal musicians to play music. The poor in this country have a wide variety of music at their command, 24 hours a day, played note-perfect every time. Edward III lived in a dark, smelly, cold castle. Even the worst houses in this country are more comfortable and have electric lights, too. Care to live without showers and flush toilets? The kings of England and France had to. Next time you see a Shakespeare play in which kings and princes cavort, remember that royalty in Shakespeare’s day had rotten teeth, terrible breath, and body odor that would make you keel over.

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The grand total of the combined net worth of every single one of America’s billionaires is roughly $1.3 trillion. It does indeed sound like a “ton of cash” until one considers that the 2011 deficit alone is $1.6 trillion. So, if the government were to simply confiscate the entire net worth of all of America’s billionaires, we’d still be $300 billion short of making up this year’s deficit.

That’s before we even get to dealing with the long-term debt of $14 trillion, which if you’re keeping score at home, is between 10 to 14 times the entire net worth of all of the country’s billionaires, combined. That includes the all-powerful Koch brothers ($40 billion between them), the all-powerful George Soros ($14.5 billion), all the Walton family (of the Wal-Mart fortune), Steve Jobs, Oprah (at a paltry $2.7 billion), the Google Founders, Michael Bloomberg, and the Mars family (of the candy bar empire).

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Karol talked about Langa township in South Africa. It was established as a place for blacks to live, but they weren’t given any rights to the properties whatsoever. They had to get permission from the city government even to paint or repair their homes. By 1994, the government had started to turn over ownership to the people who lived in the homes.

I was thrilled to hear the story of Sheila, a very entrepreneurial woman in Langa township. (Her story starts about 39 minutes into the podcast.) Sheila had been a domestic helper in Capetown when she saw a receipt for two glasses of wine and a plate of cheese. She was stunned to see that that sold for more than she got paid in a month. She knew she was worth more than that. So, she decided to prove it.

After a few false starts, she hit on the right business plan. Tourists had been driving through Langa Township for years, to see the results of apartheid. But they never got out of their tourist buses. Sheila decided to give them an opportunity to start getting out. She opened up a restaurant in her house (after she’d received the title to it). She now serves meals to tourists, while telling them the story of her life and her experiences under apartheid. Her restaurant is well known for “authentic” South African food. It’s primarily advertised through word of mouth and bloggers (how great is that?). The restaurant doesn’t just support Sheila. She also employs five other people to keep things humming along.

Does South Africa have more economic freedom than the U.S.? In some ways, it does. Try opening a restaurant out of your home and see how long it lasts before the local authorities shut it down. But, in South Africa, Sheila was able to use her home to create a living for herself, create income for others, create something for tourists to see and do, and educate many people along the way. And it all happened because she had the economic freedom to use her property in the way she saw fit. Her tourist guests use their freedom to eat where they see fit and her desire to keep her restaurant’s reputation protects her customers as they eat.

Sheila’s story is a perfect example of the win-win results that come from letting people make their own economic decisions and bear both the profits and losses that they generate. It’s also an example of how far you can go if you decide to change your circumstances instead of complaining about them.

To receive government reimbursement, auto dealers who offer rebates on new cars in exchange for so-called clunkers must agree to “kill” the old models, using a method the government outlines in great detail in its 136-page manual for dealers: Drain the engine of oil and replace it with two quarts of a sodium-silicate solution.

“The heat of the operating engine then dehydrates the solution leaving solid sodium silicate distributed throughout the engine’s oiled surfaces and moving parts,” says the National Highway Traffic Safety Administration publication. “These solids quickly abrade the bearings causing the engine to seize while damaging the moving parts of the engine and coating all of the oil passages.”

Over the weekend, half a dozen mechanics gathered around three clunkers marked for death at Jim Clark Motors in Lawrence, Kan. As Loris Brubeck Jr., the dealership’s president, held a stopwatch, the sodium-silicate solution took two minutes flat to kill a 2002 Ford Windstar, and just a few seconds more to kill a 1999 Jeep. But a 1988 Dodge van lasted more than six minutes.

“Sometimes those old engines, they’re the hardest to kill,” says Mr. Brubeck.

I can’t get over what an incredibly wasteful program this is.

Cash for Bonkers – John Hood – The Corner on National Review Online

Automobiles represent a significant share of the nation’s capital stock. Even used cars often have years of life left in them, years during which owners can use them to get to work, perform work, or transport themselves and their families for education, recreation, or consumption.

“Clunkers” don’t play much of a role in the lives of upper- and middle-income Americans, I suppose, but they play a major role in the auto market for low-income Americans. What the federal government is now doing is using taxpayer dollars to subsidize the large-scale destruction of functional cars that would otherwise exchange hands one or more times in the used car market. This will make it harder for poor folks to purchase cars in the future. It’s an income transfer up the income distribution, at the behest of so-called progressives.

Barack Obama’s Clunkernomics by Rich Lowry on National Review Online

The fundamental mistake is to think that the government can magically induce economic activity with no countervailing downside. The Clunkers program is really just shifting around sales, creating the illusion of a demand for cars conjured out of nowhere. To the extent the program has enticed people to speed up or delay their purchases to take advantage of the rebate, it has borrowed demand from earlier this year or the future for a burst of sales in the summer of 2009.

The car-buying guide Edmunds.com reports that as many as 100,000 buyers delayed their purchases, waiting for the Clunkers program. And some of the roughly 60,000 trade-ins that take place in any month anyway were rushed to gobble up the rebate. “We have crammed three or four months of normal activity into just a few days,” Edmunds.com CEO Jeremy Anwyl writes in the Wall Street Journal.

The Clunkers program demands that the old cars be disabled. In a ritual repeated in dealership lots across America, sodium silicate is being poured into car engines to kill them. Many of these cars have value and could be sold on the used market. They are being destroyed senselessly in a diktat reminiscent of Franklin Roosevelt’s slaughter of livestock during the New Deal. Decades later, we still haven’t learned that the wanton destruction of goods is scandalously wasteful economic policy.

Gwen Ottinger – When ‘Clunkers’ Are Greener – washingtonpost.com

But these consumption-promoting policies are not necessarily a boon to the environment.

First, even when new cars and appliances are more efficient than the ones they replace, the act of replacing them entails environmental costs not accounted for in the stimulus programs. Building a new car, washing machine or refrigerator takes energy and resources: The manufacture of steel, aluminum and plastics are energy-intensive processes, and some of the materials used in durable goods, especially plastics, use non-renewable fossil fuels as feedstocks as well as energy sources. Disposing of old products, a step required by most incentive and rebate programs, also has environmental costs: It takes additional energy to shred and recycle metals; plastic components often cannot be recycled and end up as landfill cover; and the engine fluids, refrigerants and other chemicals essential to operating products end up as hazardous wastes.

Policies that encourage purchases of energy-efficient products may also increase, rather than decrease, energy use by confusing efficiency with consumption. For example, Energy Star refrigerators, which now qualify for rebates in many states, are certified to be 10 to 20 percent more efficient than “standard” models. Yet the Energy Star rating is awarded overwhelmingly to refrigerators far larger than would have been the norm two decades ago, and smaller models of refrigerator, which use less energy simply because they have a smaller volume of air to cool, were not even included in the Energy Star program until 2002. Consumers who wish to benefit from environmentally friendly stimulus money, then, are pushed toward purchasing “efficient” but relatively large models rather than being encouraged to opt for the smallest refrigerator, with the smallest energy demands, that meets their needs.

Beyond these concrete environmental drawbacks, product-replacement policies also send a message that old things are dirty and inefficient, while new ones are necessarily green and efficient. Under the Cash for Clunkers program, for example, old cars must be traded in for new ones. Yet plenty of used cars exceed the required 22 mpg: The Toyota Prius hybrid, on the market since 2001, gets upward of 40 mpg, and even a 15-year-old Honda Civic gets 28. By assuming that only new products can be environmentally friendly, these policies lead us to discount the environmental gains that could be made through well-established and low-tech means, such as smaller refrigerators. They also reinforce the idea that all products, even “durable goods,” quickly become obsolete — a notion that leads to overwhelming amounts of environment-despoiling waste.

More Cash for Clunkers III – John Stossel’s Take

Another unintended consequence of the Cash for Clunkers program is that poor people who can’t afford new cars – or expensive used cars — will be crushed along with all those clunkers. If you can only afford $500 – $1,000 for a car, you’ll find many of these vehicles are now unavailable. They have been sent to the junk yard thanks to this program.

The Blogger News Network points out that junk yards that demolish the clunkers aren’t allowed to pull engines and other parts before they’re crushed, making parts for older cars harder and more expensive to get.

“Cash for Clunkers” benefits New Car Dealerships primarily, by increasing sales, and the upper and middle class possibly, by giving them an extra few hundred dollars. But it’s not good news at all for lower income people. We can’t afford a new car, and we won’t be able to continue fixing our older cars at an affordable price, if we can find the parts at all. This isn’t good.

In fact, the Obama administration knew they were taking away our options to keep our vehicles running. They want our cars off the road, and they really don’t care how it affects those of us with very little money. The little guy isn’t a priority. Obama pretended to champion the little guy in order to get their vote, but it’s becoming more and more obvious that special interests – those that have received the bailout money and those industries he is choosing to socialize – are what he really champions. Politics as usual.

My friends in this income bracket [$250-380K] tend to have have high mortgages, work 60-80 hours a week, pay 40-50K or more a year for child care (a nanny is necessary when you often work into the late evening–and even day care for two kids in the DC area costs close to 40K a year), and have six figures worth of student loans, primarily from professional school, that they are still paying off. In other words, approximately 100K of their pretax income is taken up by their student loans and child care costs, which are the equivalent of “startup costs”. Their mortgage costs may seem excessive, but you don’t easily make six figures in low-housing cost cities like Des Moines, and living in outer suburbs is very difficult when you work 12 hour days.

If a hypothetical couple’s initial income is a total of $300K, and they work an average of 70 hours each, and assuming two weeks vacation, they are in effect getting a grand total of $28.57 an hour for their labors, and a fair percent of that is going to pay interest on the mortgage. I’m sure they are glad to know that they are rich enough to be taxed at over 50% of their marginal dollar.

I wonder how many people think about that when they think about soaking the rich?

Walter Williams states it beautifully.

Warren Buffett and Bill Gates, with about $60 billion in assets each, are America’s richest men. With all that money, what can they force us to do? Can they take our house to make room so that another person can build an auto dealership or a casino parking lot? Can they force us to pay money into the government-run retirement Ponzi scheme called Social Security? Can Buffett and Gates force us to bus our children to schools out of our neighborhood in the name of diversity? Unless they are granted power by politicians, rich people have little power to force us to do anything.

A GS-9, or a lowly municipal clerk, has far more life-and-death power over us. It’s they to whom we must turn to for permission to build a house, ply a trade, open a restaurant and myriad other activities. It’s government people, not rich people, who have the power to coerce and make our lives miserable. Coercive power goes a long way toward explaining political corruption.

I don’t fear the rich. I fear a President and Congress who think they know how to run my life better than I do. I fear state and local governments that have the power to fine and imprison me if I don’t live by their prejudices. I fear the government.

Do you?

Maybe.

But we don’t really work all that much more. We just work differently.

Recent studies show that Europeans work much harder than most people think, and some, such as the Germans, work every bit as hard as we Americans do. An analysis of why makes it tough to say that one culture is somehow wiser than the other.

The key to the research is a simple question: What’s work? The statistics we usually see focus on jobs that people get paid for, and by that measure Americans do indeed toil much more than Europeans. But that measure overlooks all the cooking, cleaning, lawn mowing, and other home-based labor that most people do. We don’t get paid for it, but it’s just as real as other work. When we count it as well as paid employment, the whole picture changes.

A thorough study by Richard Freeman of Harvard and Ronald Schettkat of Utrecht University found that Germans and Americans labor almost exactly the same amount. (The researchers note, “While our data deal with Germany and the U.S., our findings reflect the difference between EU and American models of capitalism more broadly.”) The difference is that we do more market-based work, and Germans do more home-based work.

Now, I’d much rather do work that I get paid for than work that I don’t get paid for. I’ll take my leisurely home life over the Europeans leisurely vacations any day. Not to mention: America’s model produces more jobs for women and low-skilled workers.

An important result is that we create far more service jobs than Germany does, and that nation’s much smaller service sector is the main reason Germans are less likely to be employed, with an unemployment rate consistently higher than ours for the past 20 years.

New research by Richard Rogerson of Arizona State University finds that “almost all of the difference [between Europe and the U.S.] in hours of [paid] work is accounted for by differences in the service sector.” Some people denigrate burger flipping and the like as dead-end jobs, but for young people whose skills aren’t yet highly developed, they’re gateway jobs that are the best economic use of their time.

Now carry the analysis a step further. The difference between Germans and Americans in work profiles is much greater for women than men. American women are far more likely to hold paid jobs than German women, and those who do are far more likely to earn higher pay.

The conventional wisdom is actually hilariously wrong in this instance. Americans only appear to work harder because we get paid for a higher percentage of the work we do. Americans can have just as much “free” time as Europe only if we agree to actually work for free!

No thanks.