The Wii Shortage, and other Disasters of Toy Economics

I got a note from a concerned parent over the weekend, while I was debating whether or not to force myself to play enough Kane & Lynch to write a review (the outcome of that debate should be obvious). When I receive a note from a concerned parent, it usually contains the words “negative influence,” but this time was different. The concerned parent was wondering if he should hurry to snatch a Wii for their little tots’ Christmas present or wait until he gets his holiday bonus. The Little Tots have said all they want this year is a Wii, and it would seem there’s a bit of a panic over a possible shortage.

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Now a shortage of Wiis isn’t news – they’ve been hard to find since they came out – nor, unfortunately, is a parent-induced holiday shopping panic. Breeders have been suffering anxiety attacks over the latest hot, new toy since Sears & Roebuck started selling Tinkertoys 100 years ago. Why should this year be any different?

I still remember watching news reports on television about mass rioting at the mall over the last, few Cabbage Patch Kids available during the great Cabbage Patch Kid panic of 1982. This was on the national news, mind you. Other interesting news items of note that year included the death of Princess Grace, the conclusion of the Falklands War and the successful implantation of the first artificial heart. But I suppose by December this was all “old news,” and whether or not little Jimmy Wetpants would get his hands on a Cabbage Patch was the most pressing concern of the day.

Malls were swamped with shoppers around the clock, parents stood in long lines, in the dead of winter, and store after store began posting notices of their success or failure to procure more of the dolls in the local newspapers. Stores lucky enough to keep the dolls in stock did more business than the town whore at a cowboy convention, and stayed open longer. But there never seemed to be enough of the dolls, and more than a few unlucky parents came home empty-handed.

By late December, supplies were running short, and more than a few late-night Cabbage Patch vigils turned violent as concerned parents fought over the dwindling supply. Competitors began selling knock-offs and unscrupulous hooligans manufactured counterfeits, selling them out of the backs of trucks in mall parking lots (even these were swamped with customers).

Adam Smith

Adam Smith

This was the same year the home videogame market began its spectacular crash, by the way. Spurred by the phenomenal success of Atari’s 2600 home console, videogame makers began peddling more and more games, often forgetting to include such things as quality and creativity. By 1982, stores were so full of lousy games – all bearing the Atari name on the box – consumers had a hard time telling the crap games from the not crap games, and so they stopped buying anything at all. Whoops. In an effort to take advantage of the console’s enormous install base, developers killed the market, setting back game development almost a decade in the process.

This is how economics works, shoppers being a lot like investors. If there’s too much of something, people don’t want it as much, and the value of the thing goes down. If there isn’t enough, people want it more, and the value goes up. Basic supply and demand, as popularized by Adam Smith. But if you find The Wealth of Nations a bit too dry, Netflix It’s a Wonderful Life, starring Jimmy Stewart, for a classic demonstration of economics in motion.

In the film, Stewart plays the owner of a savings & loan in the fictional town of Bedford Falls, which sadly finds itself out of cash. Since Bedford Falls is a small town, word spreads quickly, and people start to worry. They run to the bank to draw out their money before everybody else can draw out their money, in the hopes that, although the bank may be short, they’ll at least get theirs, so no harm no foul.

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Unfortunately, banking doesn’t work like that. No bank ever has enough money to cash out all of its depositors. They use the money you deposit to make investments, and thereby earn interest which they then repay as dividends to shareholders and interest to you at a slightly reduced rate. Banks aren’t simply great big boxes where money is stored. They’re money factories, where money is put in (by you) and cranked around the investment community for a while, where it generates more money (not for you). If everyone who ever put in money wanted all of their money back, even in times of relative economic stability, there’d be a major problem. Naturally, then, in times of economic instability, these problems become more acute.

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In It’s a Wonderful Life, the rumors of a shortage at the bank created a panic, which created an intense demand for cash, of which the bank had only a limited supply. The result? Not everyone who wanted their money got it, and the bank crashed. Yet later on in the film, when Stewart’s character pleaded for money to keep the business afloat, the community answered by donating everything they had. This suggests the demand for cash was artificial, generated by the panic, and that folks actually had all the cash they needed, and then some – enough to give some of it away.

Economics isn’t just about numbers. It’s also about people. And people are completely screwed up. Best Buy seems to think more people will buy a Wii this holiday season if they think there are only a few of them left. Unfortunately, as history (and film) has shown us, they’re right.

“While supplies last” and “hurry – sale ends Saturday!” advertisements have been used to great effect for at least a century, but so too has the old charlatan’s trick of holding up an object and claiming it’s the last one in stock. If there are four on a shelf, you may walk past, confident there will still be plenty when you’re ready to spend the money. But if there is only one, you might be tempted to buy it just in case there’s a shortage. And if there really is a shortage, prepare to hear about it on the nightly news (or stand in line for one, depending on whether or not you have children).

This phenomenon is called artificial demand, in relation to the product, and hypnotic consumption, in relation to you. You don’t really want to spend your money right now on that Wii, or Cabbage Patch Kid, or the factory-installed clearcoat undercoating, but you’re afraid if you don’t, you’ll miss your chance or have to pay more later. It’s like buying two cans of beans when you only need one, because the sale sticker says “save $0.39 on 2.” It’s a constant assault against your will to save money, and often the easiest way to win is to avoid fighting altogether and simply not buy anything at all.

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But what if you can’t? What do you do when you’re like the concerned parent who contacted me this weekend, and you really want a Wii to give to your kids? What if you’re one of the unfortunate mob who’s been trapped by the spiral of incited demand, and you just want the damn thing, not because everyone else does, but because you do? The Wii is this year’s Cabbage Patch Kid, and every child wants one – even yours. So how are you going to make sure he gets one?

Be smart, and be vigilant. Remember, artificial demand is just that: artificial. There will most likely be plenty of the thing to go around this holiday season, otherwise they wouldn’t be bothering with inciting the demand in the first place. Shop around, be persistent and you will likely be victorious. Just don’t reward lousy bastards who’re trying to bilk you. And if all else fails, and in spite of your best efforts you still can’t find the damn thing, buy your kid a sweater and tell him to get a job and buy his own damn Wii. It’ll teach him the value of money, at least, and he’ll surely respect you for that someday. Maybe.

Russ Pitts is an Associate Editor for The Escapist. His blog can be found at www.falsegravity.com.

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