Thursday, February 25, 2016

$70,000 Pickup Trucks

In 1995, this was a pretty "fully loaded" Ford F-150 with nearly every option.  It sold for $22,000.  Today, you can buy pickup trucks for two to three times this amount.  What is going on?

The price of gasoline is down to less than $2 a gallon, so obviously the gas shortage is permanently over and gas will never go up in price again.   So time to break out the champagne and buy the largest vehicle you can.

And people are.  Americans are spending money - lots of it - on very expensive cars and trucks.  And the car makers are banking the money while they can - knowing full well that it might all go away in a real hurry, as it did in 2008 when gas briefly hit $5 in a gallon.

So they are offering fully loaded crew-cab dually diesel pickups with leather interiors, sunroofs, and other "luxury" features with price tags that are creeping up toward the six digits.   What the heck is going on here and who can possibly afford this?

It is always surprising to many folks how middle-class and lower-middle-class blue-collar workers can afford to buy so many motorized toys - expensive ones at that - when they appear to be dirt poor.   But make no mistake, rednecks love to spend money, particularly borrowed money, on things like penis boats, luxury motorcoaches, expensive pickup trucks, pricey motorcycles, and the like.

As I noted in my Mullethead on the Beach posting, it ain't hard to do.   First of all, you need to break free of the myth that just because someone is a redneck or a "tradesman" they don't make a lot of money.  During boom times, even unskilled laborers can make a ton of dough.

For example, as I related before, I met a man in North Dakota who was proud that his son, at age 22, was making well over six figures in the oil fields - what with overtime and all.   Problem is, the kid was spending the money faster than he was making it.  Dad related how Junior had bought a new Dodge truck for over $63,000 - as well as a Harley, a new mobile home, a set of jet skis, and so forth.   And instead of paying cash, he sign loan documents on it all.

Then the price of oil went below $30 and the fracking business went South.   No one likes to talk about this, but really bad things are about to happen in North Dakota and Alberta.   Canada is facing huge deficits and poor Justin Trudeau took the helm just as the economy started to implode.  Campaign promises of reducing deficits and borrowing are out the door now, as Canada's economy prepares to crater in a big way.   Borrowing money and priming the pump of the economy is probably the right thing to do - and hope that oil prices go up again to pay it all off, down the road.

Anyway, getting back to Junior, he lost all that overtime rather quickly and his income dropped below $100,000 - quite below.  The company then (illegally) asked him to work five days a week, while being paid for four, so they could claim he was "part time".   With jobs evaporating quickly, they get away with this, as young men heavily in debt are desperate for any work.  From boom to bust in just a few short years, you could see this coming a mile away.  Well, I did, anyway.

Others are more fortunate, at least for a while.   When we lived on the lake in New York, there was an obnoxious guy with an off-shore powerboat who would race up and down the lake.  This is a boat with three 1,000 HP racing engines, that easily cost close to $200,000 to buy.   And he blew up engines pretty regularly.   How does a redneck afford such a thing?

Well, it ain't hard to figure out.  His lake lot was nothing but a boat hoist and a clapped out travel trailer.   Rather than invest in a nice house on the lake, he spent it all on the boat and dock.   He had a good construction business going, with a few guys working for him.  He was making well into the six figures, so he figured, "why not spend it?" - thinking that if business is this good, it can only get better, right? 

That was in 2005.  Things changed a few years later.

Rednecks do make good money at jobs like that or by running businesses.  And a lot of them spend it even faster on depreciating assets.   When it all goes bust, they declare bankruptcy and start over again.   And along the way they don't bother funding an IRA or 401(k) or indeed, even pay for their own health insurance.   They have a great time and then let tomorrow worry about the bills.

One redneck even tried to explain to me that his way of living was actually better.   While he might not have a fully-funded retirement, he will have a good time along the way, and when he is old and grey, he will re-live "all those great memories" of zooming around on his speedboat.

I suppose there is a perverse logic to this, if you are content with memories later in life.   However, when you see older impoverished people (who tell you about how "back in the day" they were players) it is very sad, and no, they don't seem to be content with just memories of how good things used to be.

I personally don't buy the argument.   Having material things is hardly satisfying or enriching of your life - particularly if it means hardship later in life.   And having material things while not responsibly supporting yourself seems to me to be socially irresponsible.

The truck pictured above was my 1995 Ford F-150 Supercab Lariat XLT - a name nearly as long as the truck.  Back then, it was about as fully loaded as you could get, without getting the ugly "Eddie Baur" package (whose two-tone paint and tan trim pieces faded to pink within a few years) or something called an "electrochromic rear-view mirror."

Speaking of which, what is the point of those?  I own two vehicles with them, and they suck.  They are supposed to automatically dim when headlights hit them from behind, but they don't seem to do much of anything - not like the little lever we used to push to switch from "day" to "night" back in older cars.   You end up just moving the mirror, which seems a waste, as the whole deal was this "electrochromic" thing was going to save us from the "hassle" of moving the day/night lever (which was so onerous!).  But I digress.

The point is, you couldn't option a truck much more than that.  Power windows and locks and cruise control were seen, back then, as sissy accessories that no "real man" would have on a truck.  Today they are standard, and leather interiors, expensive sound systems, and power moonroofs are all popular options.   The pickup has become the new Cadillac as one reader has noted.

The problem is, of course, can we afford this?    As middle-class people, owning cars that cost nearly a year's pay seems somewhat problematic.   But again, we see this all the time with the lower classes.   A tiny "modular" crackerbox house near Auburn, New York, barely worth $100,000 has a $60,000 BMW X5 parked in front of it - along with three other cars.   A $150,000 tract home near here has two BMWs, a Mercedes and a pickup truck in the driveway - guess which is the most expensive vehicle?   In both cases, what is parked in the driveway exceeds the value of the home.

And this is nothing new - it just reflects the different value systems of the "upper class" and the lower classes - and how each ends up where it does.   When I was growing up, my parents lived in a $100,000 house, which doesn't sound like much, but they bought it in 1968, so that would be like a million-dollar home today.   My Dad had a company car, and my Mom drove a series of inexpensive shit cars - a Fiat, a Vega, and a Dodge Aspen.

My parents chose to spend on the house instead of what was in the garage.   They invested in their children's college education (which didn't really pan out for three of them.  I largely paid for my own, and well, it turned out to be a better investment).   My parents were incredibly cheap when it came to consumer goods - my Dad refused to pay more than $99 for a television in his life, until we all left home and he splurged on a new RCA Colortrak.

Meanwhile, my poorer friends who lived "in town" in houses costing $20,000 or less all had new color televisions and the kids even had an extension phone in their bedroom!   Dad had a new Mopar - a Fury II or whatnot, as did Mom.   And when the kids got their driver's licenses, they all got a hand-me-down car from Dad.     The Blue-Collar mentality back then was not much different that it is today - enjoy your money while you can and fuck the future.  Of course, back then, many blue-collar people had pensions.  Such is no longer the case.

Here on our island, a lot of relocated Yankees from "up north" are concerned that the remodeling of the island will make it "unaffordable for the average Georgian".   They have this naive and condescending idea that the "average Georgian" lives in a shotgun shack, drives a jalopy, and has three teeth in his skull.  The reality is, your "average Georgian" loves to spend money.  In terms of States with the most luxury car registrations, Georgia comes in sixth - with other Southern States (such as Florida and Texas) also making the top 10.

While these carpetbaggers wring their hands and fret about how their perceived stereotype of the "average Georgian" is going to get by, the actual "average Georgian" is down at the bar buying the house a round of drinks.  Rednecks have more money than you think - they just aren't very smart about what they do with it.

And that gets right back to the roots of poverty.  As I have noted in the past, poor people are not penniless and in fact an awful lot of money passes through their hands.  The key word is "passing through."   If you are not astute about money, you might think that spending is wealth and that a fancy new truck means you are rich.   If you feel sorry for such folks, that's up to you.  Myself, I see it mostly as a matter of poor lifestyle choices and not some great economic injustice.

Hard to feel sorry for anyone driving a $70,000 pickup truck.

UPDATE 2020:  When this article was written, someone in Jacksonville bought a 2016 King Ranch for about $65,000.  It would have been $70,000 if it had four-wheel-drive.   Fast-forward three years and 20,000 miles, we buy it secondhand for half that amount.  And oddly enough, adjusted for inflation, that is exactly what we paid for the "loaded" 1995 F150.   Of course, that truck didn't have even power seats, much less auto-parking, lane control, radar cruise control, four cameras, panoramic sunroof, four-wheel disc brakes, heated and air-conditioned massaging seats, and so on and so forth.

Oddly enough, if I was to buy the "equivalent" of our 1995 F150 (manual seats, power locks, windows, cruise, cloth interior, cab-and-a-half) it would have cost less in money adjusted for inflation, that we paid for the 1995 model.   So maybe these are the good old days....