Power-shifting has nothing to do with your car.
I mentioned briefly in my posting about Gut Instincts, the concept of power-shifting. This also popped up in my posting about Northwestern Mutual Life. Power-shifting has nothing to do with your car, but rather is an attempt by a party in a transaction to shift power and control in the transaction to their favor.
How does this work? Well, ideally, in Adam Smith's fantasy-world, both sides in an economic transaction have equal power. You have cash in hand, a retailer has a product they want to sell. You both have a "meeting of the minds" (a contract law term) and reach an agreement and once again Mr. Smith's "invisible hand of the marketplace" has triumphed.
But such is hardly the case. In most instances, one party or the other has the upper hand. During the recent recession, we saw this firsthand, as businesses literally begged us to buy things - and we as a nation, refused. I was at the Nissan dealer, and they were offering huge rebates on their small trucks - selling a loaded crew-cab for $22,000 out-the-door. Nine months later, the car business roars back, and the same truck is selling for $25,000 and don't even dream about a discount.
One side or the other, in any transaction, usually has the upper hand. One way to save a ton of money is to avoid getting into transaction where you are the weaker party.
And to some extent, this is inevitable. You need food to survive. You need a place to live. You need gas in your car to get to work. And when there are shortages of these things (or perceived shortages) you end up paying "whatever it takes" to get these goods.
But even in situations like that, you can regain the upper hand. You can shop aggressively on price. You can rent instead of buying - in an overheated market. You can buy a car that gets good gas mileage and thus buy less gas. When you fail to do these things, often you are handing the power and control in the financial relationship to the other side.
And it goes without saying that when you decide you desperately need something, whether it is a new iPhone or a Abercrombie t-shirt, you hand over all power and control in a financial relationship, with your blubbering thanks (and your checkbook) hoping for the privilege of getting the desired consumer good.
This is why, for example, Wal-Mart still has their "Black Friday Door-Busters!" even after people have been trampled to death. The wrongful death suits are just a part of doing business. What is more important than the life of some part-time security guard is selling the idea that you are "lucky" to get "good deals" and that you should line up outside a store (like people in Soviet Russia) to get some piece of electronic crap for your trailer. Human life trumped by a flat-screen TeeVee. Power-shifting at its finest!
More often than not, this power-shifting is psychological more than financial. A Doctor keeps you waiting for a half-hour for an appointment, thus signalling whose time is more important (and no, he doesn't make house calls). A car salesman makes you wait in a cubicle for 45 minutes while he "clears a deal" with the manager, and then comes back with "bad news". The client or customer can't take your calls, but instead has his secretary call you back and say "Please hold for Mr. X!"
It is all a matter of posturing, power, and control - and often in a situation where you actually have the power in the relationship but they want you to think that you don't.
For example, car-buying is a classic example. Most people loathe buying a car, as it is loaded with all sorts of psychological games. And no matter what price you paid for the car, chances are you don't really know the real price, and moreover, you have this nagging feeling you were cheated. It never works out well.
You are, of course, in the driver's seat. You have the money to buy the car (whether cash or borrowed) and they have cars that they have to sell, or go out of business. And there is no shortage of cars in the world. The planet Earth easily has a 50% excess in production capacity for automobiles.
So the first thing they have to convince you of is that you are "lucky" to be approved for a loan, and moreover "lucky" to get one of the few cars with that package of options in that color - at that price. Never mind that cars pop off the assembly line in the time it takes you to read this sentence. Never mind that borrowing money and buying crap is hardly a privilege. They have you twisted all around, right from the get-go.
And many people never get out of this mindset - thinking they are "lucky" to get a bank loan or a credit card offer, when it is the bank that is lucky to get your money.
And that is one reason why buying a car from an individual is such a better deal - or can be. Once in a while, you run into individuals who try to power-shift. For example, I met a lady who wanted more money for her used Passat wagon than a new one cost, on the grounds that "they didn't make many in blue!" You just have to walk away from people like that.
Of course, power can shift in a financial relationship, depending on what part of it you are on. If you sign on to an odious cell phone contract with a two-year commitment, they will act like you have the power, until the moment you ink the documents. At that point, you lose all power in the relationship, as you now are locked-in to a contract with onerous early-termination clauses.
So how to you maintain power in a relationship? Well, the goal of course, should be to maintain an even balance of power and not try to hog power for yourself. People who try to be "in control" all the time usually end up losing control. If you walk into a car dealer with the idea of "pulling one over" on them, odds are, you will end up squandering hours of your time and not accomplishing much.
A better idea is to seek out "fair deals" and not screaming bargains, as the latter are rarely found and usually are dangled out as bait for odious transactions.
The best way to maintain power in a financial relationship is to just consume as little as you need, rather than all that you want. The worst deals I have ever been in, during my entire life, were, in retrospect, for unnecessary wants, rather than physical needs. Once you get your heart set on a shiny new car, cell phone, granite countertops, designer clothes, or other ego-stroking gear, you hand over all the power in your life to the people who have these things.
On the other hand, if you decide that owning stuff really isn't all that important, you end up not needing a lot, and when you get off the bandwagon of "must have" you find amazing bargains presented to you.
But if you do get into a deal, look for the signs of power-shifting and beware when it occurs. Once they have you thinking that handing over your hard-earned money (and borrowing more) is a privilege, well, you are completely screwed.
