The economics of Radiator Springs

Having a two year old boy in my house means that Disney’s movie Cars plays on a continuous loop in my family room. I’ve seen that movie about 700 times in the last month. I’ve noticed it actually teaches a little something about the economy.

Ok, in the movie the main character, Lightening McQueen (the world’s fastest race car), gets lost and ends up stuck in this little town in the middle of nowhere called Radiator Springs. The town is basically a closed system, economically speaking. No one ever leaves the town and no one ever comes in. Each character has their own business in the town and the limited amount of money just flows around between them all. (I’m not going too in-depth here, ignore the fact they would be paying taxes and buying supplies from outside their town.)

Flo owns the gas station. Ramon owns the body shop. Guido and Luigi own the tire shop. Sally owns the motel. Filmore owns an organic/ hippy store. Sarge owns a military surplus store. If Flo buys tires from Guido some money flows from Flo to Guido. Guido might use that money to buy something from Sarge, who then gets some body work done at Ramon’s shop. Ramon then uses the money to buy gas and the money has returned back to Flo and the cycle continues.

In one part of the movie a pair of lost tourists actually comes wandering though town and everyone does their best to sell their wares to the pair. Unfortunately they leave without spending a dime, but lets say they stopped and got gas. The money they spent would have been money added to the system. More money for everyone, it would be Flo’s money at first but if she spends it in the town everyone gets a little bit richer. If Flo decides not to spend it in town and instead takes that extra money and goes on vacation to Mexico then no one in the town benefits. The money leaves and doesn’t come back. It’s as if the tourists never came by.

Now if you think of Radiator Springs as our country you can see why it’s important to buy American made products and why we want other countries to buy the stuff we have to sell. We want to keep our money in our town and bring in money from outside. It benefits everyone, not just the businesses that made the initial sale.

This is the idea behind he stimulus checks we will all be getting soon, to add money to the system. They could have done the same thing with some government spending, but sending a check to everyone is just so much cooler.