Prius Commercial Illustrates Economic Theory

In countless discussions with economists and non-economists alike, I’ve been amazed at how difficult it seems to be for people to grasp the new economic theory I presented in Five Short Blasts – that beyond a certain point, over-crowding begins to erode per capita consumption, inevitably driving up unemployment. 

I sometimes suggest that people consider the extreme limit – a world that is so densely populated that it is literally carpeted with human flesh.  In such an extreme case, per capita consumption would fall to virtually zero since there is no room for anything other than people, packed together so densely that a ping pong ball tossed into the crowd couldn’t find its way to the ground.  In such an example, it’s intuitively obvious that employment would also fall to zero.  (If no products are consumed, then no employment in producing and distributing products is available.)  Unemployment would rise to 100%.  It’s just simple math.  If per capita consumption is a function of population density (a parabolic function that rises to some point and then begins to decline) and the limit is zero when population density rises to infinity, then per capita consumption can only decline as the limit is approached, no matter how far away that limit may seem. 

That world is portrayed perfectly in the Toyota Prius commercials that have been airing on television lately.  A Prius wends its way down a one-lane road through a world where, except for the road, people occupy every square foot.  What appears to be grass is, upon closer examination, a field of people dressed in green, packed tightly together and waving, as though blowing in the breeze.  What appears to be blue streams are actually people dressed in blue, bounding along like bubbling, flowing water.  Even the sun itself is a ball of people, dressed in bright yellow and red.  The only object visible, other than people, is the Prius. 

Pictured in the commercial is a world where economists’ illogical premise that population growth can forever be used as an engine for economic growth has arrived at its logical conclusion – a world where people own and consume nothing.  There is no room for anything, other than to stand in one spot, wave in the breeze, and watch one car go by down a narrow road.  (Unexplained in that commercial is where the steel, glass, rubber, plastic and lithium batteries used to assemble that car, and the gasoline used to fuel it, came from.) 

But now imagine that you’re a Prius salesman, tasked by your boss with selling a Prius to every potential consumer in that picture.  After making your pitch, touting the eco-friendliness of the vehicle, your first potential customer replies “that seems like a very nice car, very eco-friendly, but no thank you.” 

“Why not?”, you ask.  “Well, for starters, just where the hell would I park it?”, comes the reply.  “There’s no place to build a garage.  And, besides, where would I drive it?  It’s so crowded here that there are no stores, no places of employment, nothing.  It’s so crowded that we don’t even have farms!”  (The dark side of the commercial, unseen by the viewer, is that the people in the Prius world survive only by cannibalism!)

Unfortunately for you, the Prius salesman, being a blade of grass and waving in the wind doesn’t pay well.  With no consumption in Prius-Land – there are no houses, no other vehicles, no golf clubs, no boats and, for obvious reasons, no lawn mowers (yikes!) – there is also no employment.  There isn’t even a textile mill to make new costumes to replace the ones worn by the blades of grass, sure to wear out as they constantly rub against one another as they wave in the breeze.  No one earns a dime. 

So, good luck selling those Priuses (or anything) in Prius-Land.  Fortunately for Toyota, the Prius commercial ends as the Prius drives into the sunset, sparing you what happens soon thereafter.  Had the cameras kept rolling, you’d have seen that the Prius was on its way to the last open landfill to be buried, making way for a little more space to be occupied by a few more blades of grass.  Then, growing weary from waving in the breeze, one blade of grass turns to another and says, “I’m hungry!”  Uh oh.  The rest of the commercial became R-rated for extreme violence, and had to cut.

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2 Responses to Prius Commercial Illustrates Economic Theory

  1. mtnmike says:

    Pete,

    This may be a little nit-picky, but 100% unemployment is impossible until 100% of the people are dead. Perhaps you meant that comment tongue and cheek.

    The unemployment rate in Singapore (second most dense population on earth) is 4.8%. India has an unemployment rate of 7.32% while the U.S. will certainly exceed 10% in the next couple of months.

    Our social safety net in the U.S. for dealing with unemployment was designed around a model that allows for very little unemployment (about 5%) for any length of time until the revenues from those working no longer supports the unemployed and the massive underlying bureaucracy that administers the social programs.

    Unemployment of 10% is untenable in the U.S. as can be seen in all states that are experiencing levels above that number…like California and Michigan for example.

    • Pete Murphy says:

      Mike, unemployment is low in Singapore only because it’s the major distribution center for all of Malaysia and much of southeast Asia. It’s a tiny city-state. That’s why I rolled Singapore into Malaysia in my calculations of population density in the book. Regarding India, it’s difficult to say what their real unemployment rate is, since shoveling human waste from your front door step for a penny day probably counts as employment there. It’s certainly much lower than it would be otherwise thanks to their trade surplus with the U.S. and other nations primarily in services but also in manufactured products. Right now, global unemployment stands at an average of 30%. The more “globalized” we become, the more we will approach that average value.

      I agree that 100% unemployment is impossible, only because the population density depicted in the Prius commercial is also impossible. At some point long, before reaching that density, poverty will cause our death rate to rise, stabilizing our population.

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