Category Archives: Economics

Those Evil And Greedy Hotel Owners

My family and I recently traveled cross country and I looked for inexpensive hotels for our overnights. I discovered that the average price for a decent hotel was about $70.00 a night. So let me see. $70.00 a night equates to about $2100.00 a month for rent. Wow, what a rip off for a one-room kitchenless, unit in a so-so neighborhood next to a freeway.

So there I was, getting sleepy, in dire need of a place to lay my head, and waiting for me were these greedy hotels wanting to gouge me just because they could. Man! Greed is so ugly.

So, what I propose is a law that makes it illegal for these shady types to charge so much to people who have no other place to stay. Let’s see, the going rent payment for a family of 4 is, say, $1000.00 a month. This equates to about $32.00 a night. But since hotels only give you one room, then it ought to be at least half that. So the proper rate should be about $15.00 a night. That would be fair.

“But wait”, you say, “hotels are different than houses. What you’re saying is completely absurd.”  To this I respond, “Yes it is, very.”

But what if I were to change the discussion to loans? Suppose I said that all loans ought to look like a home mortgage. Suppose I looked at the payday-loan business down the street and started a crusade to force them to lend their money for a more “fair” rate?

In the same way that finding a place to sleep would become virtually impossible if rates were forced to be less than $15 a night, then so would getting that much needed loan to keep my lights on, or being evicted; both of which are much more expensive to remedy than the interest rate for high risk loans.

But hey, at least my do-gooderness would get a boost from “helping” the poor, even if I actually did more to hurt them, and that’s what it’s all about… isn’t it?

Advertisements

13 Comments

Filed under Economics, fairness, Money, Politics

Better Technology = Efficiency = A Better Life

We somehow inherently know that we are better off when the farmer uses tractors rather than people to plow his 150 acres. We know this in spite of the fact that one tractor replaces hundreds of employees. Somehow we know that what was introduced by the tractor is efficiency which allows for the higher standards of living we now enjoy in modern society.

If our thinking is static or narrow we may not see beyond the unemployed farm workers. But if our thinking is dynamic we realize that the tractor didn’t just pop out of thin air, nor did the steel from which it was made, nor the gas in it’s tank, and so on.  All of these required people, indeed employees.

So come on. You can actually enjoy that .25¢ banana, that somehow found its way from somewhere in Central America to your air-conditioned grocer, and that you lugged home in the comfort to your air-conditioned car, and are now eating in your air-conditioned house as you gaze at your 92 inch plasma, without worrying too much about unemployed wagon wheel makers.

5 Comments

Filed under Economics

It’s Where You Start That Determines Where You Finish

I enjoy articles on economics. The first thing I attempt to determine however is the writer’s starting point.

If a writer  starts from the premise that “government planners” can successfully control the allocation of scarce resources better than free markets, then I know that the author isn’t living in reality. He instead lives in a daycare world.  His “finish”, no matter how sophisticated his thinking, can be summed up as all us children nicely sharing our little resources like Tonka Toys.  Of course those who write from this perspective see themselves as the grownup women watching over us selfish children and our resources with a keen eye on who gets to play with what.

Many “economists” still live in such a world.  Because resources like, say, food, simply appeared on their tables at dinner time, and cars appeared in their driveways at 16, and a full government or daddy-funded education just appeared, seemingly from nothing, experience has conditioned them to feel that resources simply appear from nothing and the driving question then is not how to create more but rather how can what already exist be fairly distributed. That homes, medical care, education, or food are not a right that can be guaranteed by one man to another is utterly unfathomable to those who start with such thinking.  Such starting points determine the finish; though like all Utopian dreams, that finish must ever be in the future requiring patience from those who suffer interminably from the inevitable hardships that come with them.

On the other hand, writers whose starting point is the realization that resources are the result of risk, work, and production, not to mention human factors such as self-interest and motivation, are much more trustworthy.  Good thinking must necessarily be aligned with reality.

As for me, I’m much more confident in the economics of one whose thinking was forged in making payroll and successfully competing for business in a hostile world while simultaneously thwarting greedy lawyers, and power-hungry politicians and their bureaucrat dogs.  I’m much more inclined to think this person’s economics more insightful than those of tenured theorizers whose circumstances insulate them from the consequences of their stupid “ideas”.

5 Comments

Filed under Economics, fairness, Government, Harsh Reality, Worldview

Marxism, Capitalism And Their Politics, Explained

Why can’t government use its power to force equality?

What are some real problems with Marxism’s idealistic theories?

Does Capitalism really exploit the weak?

This video is a great short lesson in answering these questions:


____________________________
See also:

Bob And His Apples

Leave a comment

Filed under Economic Science, Economics, Government, Harsh Reality, Politics, Worldview

No Matter What Happens, There Will Be A 1%

Well, the Title is not totally true. If everyone had exactly the same thing, then there would only be the 100%, which would include everybody. But let’s face it, that’s not ever gonna happen.

Below is an excerpt from this paper, written by someone who imagines just such a world… until it gets interrupted by reality. And that same reality includes those who would rather not have any cool stuff for themselves at all if it meant being faced with the possibility that someone else might end up with more than their “fair share” of cool stuff.

Imagine a society with perfect economic equality. …[N]o one worries about the gap between the rich and poor, and no one debates to what extent public policy should make income redistribution a priority. Because people earn the value of their product, everyone is fully incentivized to provide the efficient amount of effort. The government is still needed [and are funded] with a lump-sum tax. […]The society enjoys not only perfect equality but also perfect efficiency.

Then, one day, this egalitarian utopia is disturbed by an entrepreneur with an idea for a new product. Think of the entrepreneur as Steve Jobs as he develops the iPod, When the entrepreneurs product is introduced, everyone in society wants to buy it. They each part with, say, $100. The transaction is a voluntary exchange, so it must make both the buyer and the seller better off. But because there are many buyers and only one seller, the distribution
of economic well-being is now vastly unequal. The new product makes the entrepreneur much richer than everyone else.

The society now faces a new set of questions: How should the entrepreneurial disturbance in this formerly egalitarian outcome alter public policy? Should public policy remain the same, because the situation was initially acceptable and the entrepreneur improved it for everyone? Or should government policymakers deplore the resulting inequality and use their powers to tax and transfer to spread the gains more equally?

2 Comments

Filed under Economics, Equality, Government, Social Justice

Free The Slave? Not So Fast!

The prominence of slavery was a reality for all but the tiny slice of recorded history we call the present.  But mankind appears to have rejected this practice  in modern Western Civilization, which, given the stock from which I come myself, probably saves me from being one… which is good.

But fortunately for us lazies and unfortunates another kind of slave has emerged.   This new slave is cheap, works hard day and night, never complains, and separates us by leaps and bounds from the toils, cares, and harsh realities that were ever present in the lives of our ancestors.  But, best of all, this slave is willing to be enslaved, and needs no crusader on his behalf… until lately.

The slave of which I speak is “energy”.  This slave looks like a washing machine, a dishwasher, air conditioner, automobile and so on. And for those who in the past needed armies of slaves for building pyramids and harvesting crops and so on, those armies now look like bulldozers, cranes, and combines.

Also, we generally associate slavery with back-breaking labor.  But this slave does much more than that. It will take us 2000 miles in a few hours, or pump blood through our bodies while another heart is installed, and much more. Let’s see our mental image of a slave do that!

There’s an old Chinese proverb that supposedly goes like this: “If you want to know about water, don’t ask a fish”. Everyone alive today has benefited so much from this slave, and in so many ways,  we now take “him” for granted.  It’s almost as if this slave is as sure to us as tomorrow’s sunrise, and as plentiful and certain too.

Perhaps life immersed in a world filled with the benefits of energy explains why so many, who daily depend on this willing slave for life as we know it, also believe that it can be done away with, and life as only we few humans in history have experienced it, will continue unchanged.

2 Comments

Filed under Economics, Harsh Reality, Politics, Words, Work, Worldview

A Penny Too Far

Would you buy a 100 million dollar house if you liked it? How about a 100 dollar house… if you liked it? Since most of us can’t afford the former, and will never see the latter, the house we end up buying, if we buy a house, will necessarily be somewhere between these two extremes.

Whether it be houses, cars, milk or bread, there must, therefore, exist an exact price beyond which we will forgo our desire and keep our money.

Granted, while it does seem odd that one penny could break a deal on a transaction involving hundreds of thousands of dollars, like say a house, in reality one penny could. We can follow this logic by asking the question: “Would I still buy this house if it were one penny more? OK then, how about two penny’s more?” Simply repeat until the house is “too expensive”.

For this reason marketers grapple with each penny in the final price of something. They know that that penny may become one penny too much for someone, or some.

Corporations, from necessity, must constantly make decisions based on this fact. They must attempt to squeeze the most return for the buyer and themselves out of each penny. While such decisions can appear to have a slimy greedy feel to them when examined out of context, each of us make similar decisions daily without even realizing it. We could spend an hour walking to the store, which is safer; or we could spend 15 minutes driving to the store with higher risk of harm or death, to save 45 minutes, for example.

In the final analysis the lines are precise. Whether or not we extract resources, buy that thing, indeed every decision we make in an economy ultimately comes down to a line that exists between “not one cent more” and “that’s one penny too far”.

 

5 Comments

Filed under Economics, Human Nature, Money, Supply And Demand