Category Archives: Human Nature

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”.

 

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

Static Snapshots Reveal Nothing About Economics.

A young man went to a grocery store one night to buy food.  He left with a loaf of bread and a stack of bologna, because, well, that was all he could afford.  He then went home to his apartment which was furnished with aluminum lawn furniture.  His bed was a cushion from an outdoor lounge chair as well.  He kept it on the floor of his closet where he slept.  He worked at night, you see, and couldn’t afford curtains.  Needless to say, he was poor.

But this true story is only a snapshot.  To examine only this snapshot tells us virtually nothing except for those “present” circumstances.   In this case for example, the young man had done poorly in school.  But his poor performance had nothing to do with any of the usual culprits that are trotted out.  It was because he thought it more important to “hang out” with his friends.  By his own later-in-life admission, his meager circumstances were not the result of something so vague as rich white men’s greed, but of his own laziness.

The story also says nothing of his future.  In time this person managed to get his act together and buckle down.  He went to school, read, and worked hard.  In time his fortunes changed.  He learned a skill that paid well, got married, had children, and is now living a comfortable middle-class life.

This is why snapshots aren’t worth much beyond fueling emotional “causes”.  Life, economies, fortunes, circumstances; they are all dynamic, not static.  The vast majority of young people fortunate enough to live in free-market systems begin their lives with very modest means, which actually build character.  Left alone, with equal opportunity and the right mindset, they will find their way out of those circumstances if they are willing to make sacrifices, work hard, roll with the punches that are certainly coming their way, and live ethically… and the sooner one starts the better.

The young man in this story, if you haven’t guessed, is me.  I suppose I could have blamed my circumstances on social injustice, or the 1%, or some other shadowy boogie man meant to send me cowering into the arms of the socialist.  But my real enemy resided in my own skin.  It still does.

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Filed under Economics, Harsh Reality, Human Nature, Morality, Work, Worldview

First Things

Ideas that are so basic and fundamental that they are beginning points of thinking I call “first things”.
An example of this is the idea that nothing can be got from nothing. In economics this particular “first thing” is fundamental.  But wait, you might protest, the government can create money from nothing and then exchange that money for something; isn’t that getting something from nothing? No, and we know this because it violates a fundamental commonsense principle… or “first thing”.

Economics is a kinfolk of global warming and evolution in this way. A thing is made so complicated that “first things” are lost sight of. Plausible explanations about a thing, combined with a highly technical language, combined also with conclusions we desperately desire to be true, mixed with academic browbeating and political correctness, can lead otherwise smart people to believe that man can change the temperature of the planet through a tax, that he himself exists through a chain of events that started from nothing, and that wealth can be created by printing money.

But though we may not be able to argue against the millions of technical details thrown at us, as long as we do not lose sight of first things we will not have to fall prey to dazzling displays of BS.  Politics has usurped true science.  There are political motivations having nothing to do with the sciences at hand, but which are driving many of the issues supposedly based on science.   The modern acceptance for scientific consensus is an excellent example of this.  Man would do well to remember his past experiences with scientific “consensus” and make all attempts to avoid its advancement-retarding dogma.

Science means knowledge, that is, what is known and not what is politically acceptable and presupposed.  We live among the wonders of a scientific age which can be intimidating. There is much every person doesn’t understand which can make us susceptible to intimidation by intellectual words, charts and doublespeak.  But we need not be the moronic patsys, of others who are themselves moronic patsies, as long as we don’t lose sight of first things.

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Filed under Economics, Human Nature

The Egalitarian Pipe Dream, Social Justice part 5

Two conflicting economic goals involving “equality” are often confused.  One is of equal outcome (which I will discuss today) and the other is equal opportunity.

The vague ideas upon which “Social Justice” are constructed all involve, in one form or another, the goal of equal outcome.  The dreams of such “justice” envision a world that functions much like a global commune in which the outcome for every inhabitant’s effort is the same in terms of resources.  In this global commune, rich and poor would be blights of the past.

But entertaining such visions is just one of the luxuries enjoyed by affluent societies.  Prosperity allows the affluent to dream of their Utopia without having to actually engage the harsh realities of man’s existence such as the true condition of man himself.  But the harshest reality is the means by which a diverse group of people, with diverse ideas of happiness, goals, strengths and weaknesses must be oppressed to effect equal outcome. It necessarily requires the loss of freedom, and of the concept of private property; two things which the advocates for social justice unfortunately take for granted.  It also requires a heavy handed and totalitarian government in order to ensure and enforce the “fair” allocation of resources; a government, by the way, which historically has always exempted itself.

In reality the equitable distribution of resources is not much more than a feel-good idea that is a source of meaning and purpose for those who advocate for it.    Bright people sit in their comfy homes and faculty lounges discussing it as an abstract thing that will not touch them.  But the reality of it is by no means abstract, for history is replete with ruinous and nightmarish examples of real attempts of “social justice”.

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Filed under Harsh Reality, Human Nature, Social Justice

The 3 Most Important Things You Need To Know To Not Be An Economic Moron

Here are those three things:

  1. Motivation
  2. Motivation
  3. Motivation

Why do you buy one car over another?

Why do you go to one store as opposed to another?

To answer these you need realize only one thing: motivation. You, like no one else, and most especially a communist central planner, know what you want and how much you’re willing to pay to get it. But it’s not always this simple… until you think about it.

Here’s one just a little more challenging :

Why is your government bankrupt?

Did you ever stop to think that every purchase you make is like a vote? Millions of people vote every day with their millions of purchases. They in fact play a small part in determining what is available to them and at what price.

The same thing happens on election day. The big difference is that the vote you cast on election day appears to be free, but the consequences of that vote can be very very expensive. Here’s how it works:

  1. Politician needs to appear as a combination of Santa Clause, Mother Teresa and sugar daddy.
  2. Politician sets up a ponzi scheme to fund your belief that he actually is Santa Clause, Mother Teresa and sugar daddy.
  3. Politician needs campaign cash so he can get the message out that his opponent is an evil and sick individual who really ought to be in prison.
  4. Politician becomes best friends with government unions in return for large donations. He promises union members that they never need experience the same economic calamities as their schmuck taxpayer counterparts.
  5. Politician grows public employee unions thereby growing campaign cash.

What are the motivations of both the politician and the individual who casts a vote for him? You got it: self-interest. It is a powerful motivator. But while political promises may look shiny, wisdom would suggest consulting those motivations informed by long-term consequences.

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Filed under Human Nature

The Price Of Utopia? You Can’t Afford It

When a person buys a loaf of bread he probably has no idea how the price of that bread came to be.  He notices when it is different from last week.  Some may have a vague idea that it is being impacted by inflation, whatever that is.  Yet prices, and how they are set, are central to economics.

While it wouldn’t make economic sense to drive around comparing bread prices to save 2 cents, it would make sense on something that saved, say, hundreds of dollars.  And, as one might suspect, people do generally drive around looking for the best deal on a new car. Consequently, the lowest priced dealership sells more cars.

We experience the same thing as sellers.  We must offer what we are selling for a competitive price or no one will buy it.  However, most don’t see themselves as sellers even though that is exactly what’s happening  when someone’s looking for a job.  He is offering to sell his back or brains.  That’s also why someone who can do brain surgery is able to sell his services for much more than someone who can cut your grass.  If brain surgery knowledge and skill were as easy to come by as lawn mowing knowledge and skill, why you could probably have that tumor removed for 30 bucks.

But what if a politician sets prices on bread, cars and brain surgery?  What would he set them at?  How would he be able to know the intricate and myriad details of availability, want, and how his price will affect both?  The answer is that he can’t.  But that won’t stop him from trying because he’s a politician, and as such he’s selling you something in his own right, which is a line.  It’s much easier to legislate the illusion of wealth than it is to create it, and sadly, man never tires of buying the line that such can be done.

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

You Will Always Be In Chains

Being in chains is a metaphor, of course.  Chains depict restraint of a physical sort, but the reality of economics depicts restraints of a different sort.  One person might be restrained from eating T-bones due to the lack of a few dollars, or a politician might be restrained from buying those last few votes because he couldn’t produce the millions required for handouts.  But regardless of circumstances, the slack eventually takes out of everyone’s chain.

But this is why economics is such a hot topic isn’t it?  No one likes restraint, especially when they see their neighbors living lives with much less restraint.  It just doesn’t seem fair.  Perhaps that’s because it isn’t.  Worse, a different sort of chain, “human nature” will keep anyone from fixing it.  Oh, not that it won’t be tried over and again, but man’s selfish nature will always intervene in his vain  attempts at instituting equality.  This truth is simple to see, and clearly demonstrable with a cursory glance at history, but while man is clearly not capable of producing a “fair” society, apparently he is exceedingly apt at self-delusion.

Every person’s chains could be loosened if the efforts to loosen them were judged by results.  But unfortunately history is generally marked by the burden of unnecessarily tight chains because man’s tendency to judge efforts according to intentions rather than results.  Failure, therefore, is gain for the “fixers” because it results in shorter chains that the “fixers” are eager to address if only the enslaved would grant them more power.  The result?  More chains.

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Filed under Equality, fairness, Harsh Reality, Human Nature, Politics, Social Justice, Worldview