Has it ever struck you as odd that many companies will offer free samples as you are shopping at the grocery store or the mall but you don’t have banks handing out crisp $100 dollar bills for you to try?
This isn’t quite as odd as you might think in the first couple of seconds. In a truly free market this might actually happen. Banks could issue their own currency and would compete for market share.
Today’s lesson is in supply and demand via inspiration from Tam.
Food is an interesting commodity is that it is very inelastic. If the price of gasoline goes down people will be more likely to increase their discretionary driving such as vacations. If the price of food goes down people, at least in the U.S., do not start eating more. The reverse is also true. If the price goes up people don’t cut down their eating. They will eat different foods and they will cut down on going to restaurants but they are still going to eat about the same amount of food. This means that if there were to be a small change in the supply you would expect a large change in the price.
As some people might have noticed there has been some very hot weather with an absence of rainfall in the mid-west this summer. The crops grown in the area are suffering as a result of the weather and the yields are forecast to be lower than usual. This means the price of crops over 1000 miles away in the Pacific Northwest should show dramatic increases as the crop damage in the Midwest becomes irreversible.
The result via Northwest Grain Growers:
The prices above are for a bushel (60 pounds) of wheat. If loaf of bread weighs a pound and were composed entirely of soft white wheat flour (soft white wheat isn’t usually used for bread, but this makes the point less complicated) then the roughly $1.75 increase in price would translate into an increase in production cost of something on the order of about $0.03 per loaf. So this isn’t all that big of a deal to consumers.
It is big deal to wheat producers because the cost of production is essentially fixed by the costs of land, equipment, seed, fuel, pesticides, fertilizer, and labor. If the cost of production is $5.00/bushel then profit goes from $1.00/bushel to $2.75/bushel. This is an increase in profits of 275%.
My brother on the farm in Idaho might be able pay off the loan on that “new” (new to him but it is several years old) tractor a little bit earlier than expected.
I always thought it was odd to describe capitalism as a system. Nobody arranged capitalism, or put it into place. Capitalism is the name for what happens (economically) when people are left alone.
Motor-T
July 6, 2012
Comment to Quote of the day—John Aziz
[It gets even weirder when people start whining about the government “forcing freedom” and the CIA “forcing free trade” on people. I have to conclude there is some sort of cognitive distortion going on. Either that or these people have more than few pages in their dictionaries filled in by two-year olds with crayons.—Joe]
Fallacies abound in economic policies affecting everything from housing to international trade. Where the unintended consequences of these policies take years to unfold, the effects may not be traced back to their causes by many people. Even when the bad consequences follow closely after a given policy, many people may not connect the dots, and advocates of policies that backfire often attribute these bad consequences to something else. Sometimes they claim that the bad situation would have been even worse if it had not been for the wonderful policies they advocated.
There are many reasons why fallacies have staying power, even in the face of hard evidence against them. Elected officials, for example, cannot readily admit that some policy or program that they advocated, perhaps with great fanfare, has turned out badly, without risking their whole careers. Similarly for leaders of various causes and movements. Even intellectuals or academics with tenure stand to lose prestige and suffer embarrassment when their notions turn out to be counterproductive. Others who think of themselves as supporters of things that will help the less fortunate would find it painful to confront evidence that they have in fact made the less fortunate worse off than before. In other words, evidence is too dangerous— politically, financially and psychologically— for some people to allow it to become a threat to their interests or to their own sense of themselves.
Thomas Sowell
Economic Facts and Fallacies: Second Edition Economic Facts and Fallacies: Second Edition page 2.
[See also When Prophecy Fails or my website by the same name for a quick overview.
I expect that most of those that read my blog will see the applicability of the above to our current political situation.—Joe]
The chief problem that Marxists face is their misidentification of the present economic system as free market capitalism. How can we meaningfully call a system where the price of money is controlled by the state a free market? How can we meaningfully call a system where financial institutions are routinely bailed out a free market? How can we meaningfully call a system where upwards of 40% of GDP is spent by the state a free market? How can we call a system where the market trades the possibility of state intervention rather than underlying fundamentals a free market?
…
I’m not sure that Marxists have ever understood capitalism; Das Kapital is a mammoth work concentrating on many facets of 19th Century industrial and economic development, but it tends to focus in on obscure minutiae without ever really considering the coherent whole. If Marxists had ever come close to grasping the broader mechanisms of capitalism — and if they truly cared about democracy — they would have been far less likely to promulgate a system based on dictatorial central planning.
John Aziz
July 5, 2012
Guest Post: Is Marxism Coming Back?
[As I said after reading the Communist Manifesto, “The typical two year old child or even the family dog wouldn’t accept the conclusions unless they were forced into compliance.”
Marxists are either profoundly ignorant or profoundly evil. In either case I believe it is intentional. I suspect most fall into the ignorant category (also known as “useful idiots”) but the those in the latter category have a high probability of obtaining all the power.—Joe]
This happens a lot. A customer calls about a problem, and it’s the customer’s gunsmith who says “X” yet the “gunsmith” is totally wrong. The “gunsmith” is the source of the problem, or the source of the misunderstanding of the problem. Yesterday, a rep from Big Household Word High-End Optics Company came in with a Yugo M70. The wooden buttstock’s comb was too high for him, plus he had a Galil missing a detent ball for the rear sight.
Solid wooden stock with a bolt through the middle. So shave down the comb. Fit and try. Ten minutes, plus some finish sanding and some linseed oil. Nope. “Gunsmith” decided it would be a better idea to bubba some lump of weld under the rear sight leaf, to raise the sight instead, thus negating the elevation slide function entirely, and crank up the front to match.
“Gunsmith told him that a detent ball for the Galil was “hard to find”. It took google less than a second to find several sources of loose steel balls, and yet you don’t need a ball per se. It could be a short piece of rod. All it really needs to do is fit in the hole with the spring and be sort of roundish on one end.
I asked the rep; “What kind of a ‘gunsmith’ is this guy?” And this is the answer I get every time;
“Oh but he’s a really great guy. Really a great guy. Old School. He’s been at it for decades and really knows his stuff..” I have gotten that answer from a lot of people. That very same answer. In that very same kind of ‘I can’t believe what I’m hearing’ situation.
I’ve taken to using Tam’s definition of a gunsmith– one who can take an amorphous lump of steel and turn it into a fine firearm. Give the average farmer or junior high school shop teacher around here a bent, rusty nail, a hack saw, an old bastard file and a power drill, and he can make you a new detent pin for your Galil rear sight, without ever having heard of a Galil. Actually he could make do with just the file, the saw and the nail, and his bare hands, but that take a little longer. Same deal for adjusting the comb height, but you only need the file (or a pocket knife) and a chunk of sandpaper. But an “experienced gunsmith” was out of his element. It’s gotten so every time I hear the infamous words, “My gunsmith says…” I start rolling my eyes. I know there are good ones out there (some really, really good ones) but no one calls me or comes in with a problem if they have a really good gunsmith, do they? So my sample is heavily weighted. Or so I hope.
A big takeaway here is that a nice personality, I suppose, can overcome the greatest depths of incompetence, and keep you in business.
Undefined words have a special power in politics, particularly when they invoke some principle that engages people’s emotions. “Fair” is one of those undefined words which have attracted political support for policies ranging from Fair Trade laws to the Fair Labor Standards Act. While the fact that the word is undefined is an intellectual handicap, it is a huge political advantage.People with very different views on substantive issues can be unified and mobilized behind a word that papers over their differing, and sometimes even mutually contradictory, ideas. Who, after all, is in favor of unfairness? Similarly with “social justice,” “equality,” and other undefined terms that can mean wholly different things to different individuals and groups— all of whom can be mobilized in support of policies that use such appealing words.
Thomas Sowell
Economic Facts and Fallacies: Second Edition Economic Facts and Fallacies: Second Edition pages 1 and 2.
[The phrase “special power” brings to mind “super heroes” and “super villains”. I am of the opinion that while there is ample evidence of “super villains” “super heroes” only exist in the minds of small children, some Ron Paul fans, and Democrats.—Joe]
For decades Libertarians and Republicans have been saying the economic and social policies of the left were destined to be catastrophic. Eventually all looters stop. There are only three options; 1) They stop because they realize theft is wrong, 2) They are stopped by force, or 3) They run out of places to loot.
Greece is the harbinger of our future and has the opportunity to select their option. Yet even now many do not see impending doom crashing in on them:
Riding a wave of anger to rise from obscurity to contender for power, leftist SYRIZA leader Alexis Tsipras, 37, promises to reject the punishing terms of the 130 billion euro ($163.75 billion) bailout if he wins the nail-biter vote on Sunday.
On the right, establishment heir and New Democracy leader Antonis Samaras, 61, says that would send Greece crashing out of the single currency and condemn it to even greater economic calamity.
With the election set to go down to the wire, European leaders weighed in on Saturday, urging Greeks to vote with their heads.
The bailout will not be renegotiated, warned German Chancellor Angela Merkel, whose country’s wealth is vital to shoring up its weaker partners in the bloc.
…
Some global businesses and banks are already in retreat: Europe’s biggest retailer, Carrefour, said on Friday it was selling up in Greece, a day after French bank Credit Agricole moved to take direct control of its Albanian, Bulgarian and Romanian units from its Greek bank Emporiki.
On Saturday, Germany’s Biotest appeared to become the first drugmaker to say it was exiting the Greek market in July after its customers there failed to pay outstanding bills of 7 million euros. Others have threatened to do likewise, as the Greek health sector struggles with huge spending cuts.
Spain and Italy will probably be next in line to make a choice.
When it comes time for the American left to select an option which do you think it will be? And will those that oppose them be ready if the left choses options 2) or 3)?
Just in case you’re confused on the subject (and I know that millions of people are); the purpose of a business is not to “provide jobs”. Not ever. Don’t even think about it. Stop talking about it.
The Republican Governor of the State of South Idaho is one of those who are deeply confused. He instated his “Hire One” program to nudge us into hiring people. We’re supposed to go to some government web site and see if we “qualify”. (Ooh! Do I “Qualify? Maybe I’m “special”) Maybe that’s the “jobs program” right there— more state workers to manage the web sites and the “jobs” program implementation, whether or not anyone applies. To hell with that, Governor Otter. My business is not a stupid Butch Otter, State Government “jobs” program.
If we really need more help, we (without holding your hand and without being threatened) will hire someone. That is, unless taxes, requirements, energy prices inflated due to restrictions, red tape and more restrictions get in the way, and unless you stick your nose where it doesn’t belong and use the coercive power of government to favor some businesses or industries at the expense of others– then we’d be expected to come crawling to you for some of that favoritism that only communists and mobsters have the power to dole out to their supporters. I’ll die first. I want nothing to do with you. I have work to do. You and your fellow communists at all levels are in the way. Just get the hell out of the way. Understand? No; I’m sure you don’t. You have “interests” to pander to. You’re a coward at best, and we have no use for cowards.
You’d rather have a government “jobs program” so you can take credit for that which I accomplish in spite of your interference and confiscation. Have you ever considered a “liberty program” instead of a “jobs program”? No; I’m sure you haven’t. Too novel. It takes too much imagination for some people. Communist scum don’t think that way, see. They think instead of how they can meddle, how they can take credit for other people’s work, and live as parasites off of other people’s honest work.
The purpose of business, Little Grasshopper, is to create goods and services, sell them at competitive prices, and thereby make a profit. See– jobs don’t even figure into it, except that in order to provide our goods and services at competitive prices, we NEED to hire as few people as possible to get it done right. Otherwise our expenses are too high and we fail. Get it? No; I’m sure you don’t. If you got it, you wouldn’t be talking about “Jobs” AT ALL. Jobs are what happen naturally when you leave people alone, you ignorant, pathetic, self-serving heap of RINO shit. Only communists talk about “jobs” in the context of government action.
The rest of us talk about liberty, because we want you off our backs so we can produce, sell, buy, exercise ownership of what we make, and live in peace. Get it? No; I’m sure you don’t. Your actions and your language betray you, Fool. You don’t belong here— not in the Republican Party and not in America.
We’ll make it real simple; People either a) work, because they’re free, or they b) don’t work because they’re not free (government’s paying them not to work or the government’s in the way). “Government jobs program” is therefore something of a contradiction in terms, and the mere fact that we have a Department of Labor is an affront to America.
Imagine, in just a few years, solar shingles on your brand new custom house (all you high school graduates) that cost no more than regular shingles, that will power everything in your house, heating, AC the whole deal. Imagine crops that don’t need soil (OK, maybe hydroponics) and no water (oops) and no fertilizer. Magic crops. “Literally just around the corner.”
And of course none of that can happen if the eeevil Republicans are in power. Only more of ‘bama’s stash money can make the magic happen. The private markets? Meh. All that’s done is fail continuously for 200+ years, apparently. What’s been happening in the last few years– that’s the ticket, Baby.
Now if kids actually learned science, physics, biology or basic economics, they’d laugh that gibbering idiot off the podium. This is where our Soviet-style education system comes in. Of course now anyone can look up maximum and average available energy per unit area at their latitude at various times of the year, and the efficiency of the best PV panels, take into account the problem of tracking, or in the case of your magic roof shingles the lack of tracking, and so on. And naturally, to get the most out of your magic solar roof shingles you’ll have to cut down the trees that shade your house, increasing the AC load. Or maybe not, being as they’re magic and all.
He had a teleprompter, so I have to assume that he didn’t make that up as he went along. There had to have been some planning behind it.
The Moron in Chief, to make himself look better by comparison, had pick the stupidest fool he could find I guess, and then put him out there to show the contrast, such as it is.
…she should be suckling an adult if it’s supposed to depict The Obama Way. Well, children, adults– everyone. Maybe there should be a long line behind the kid, all carrying signs and complaining/competing over who gets to suckle next.
Several years ago when the news of the exploding debt and crashing financial markets was making the headlines son James ask what this would mean. I told him I didn’t really know because I had never seen anything like it before and to a large extent we don’t have any real history of this sort of thing before. In the depression of the 1930’s the government debt wasn’t huge to start out with and there was a completely different situation with the banks and lack of insured deposits. This is different.
The one thing I suggested might eventually happen is that governments would have to start laying off people and that many laws and regulations would essentially be ignored because there would not be enough people to enforce them. His response was something along the lines of, “So this is a good thing then.” Of course it isn’t and wasn’t that simple. There can be a lot of bad to go with the good. For example there may not be enough people to enforce the morass of all the millions of regulations but there probably will always be enough thugs to enforce the confiscatory tax rates, nationalization of health care, communications, food, and energy production and distribution.
The worst of the possibilities have not happened yet but a glimmer of the good has started to shine through:
In April the household survey showed that that there were 442,000 fewer people working in government than in March. The household survey has a much smaller sample size than the establishment survey, and so is prone to volatility, but the magnitude of the drop is striking: It marks the largest decline on both an absolute and a percentage basis on record going back to 1948. Moreover, the household survey has consistently showed bigger drops in government employment than the establishment survey has.
But of course it’s but a drop in the bucket. According to the article there are about 20.3 million people in the U.S. engaged in government work. I would be happier if there were 19 million fewer than that with most of those being in the military.
…but the manufacturer defaced it horribly by putting lettering and numbering all over it. I wouldn’t mind owning one, but then I’d be forced to advertize for Colt’s without compensation, flashing that company name and address around everywhere I went. They should pay me to own it. And those serial numbers? Those weren’t required by law in the 1840s and ’50s, and the gun would look SO much tidier without them.
(This in response to people who complain that my products have to be defaced with my company’s name and the model number, or the patent number in some cases. It turns out that there’s also a significant culture in the muzzleloader world that hates the idea of signed or numbered guns. That fact that maker’s marks, serial numbers, inspectors marks and proof marks have been a necessary and worthwhile part of manufacturing since Grok made his first stone club seems to get lost on some people. Maybe the famous works of art would be worth more if they’d never been signed, too [they were such shameless self promoters they turned every work of art into an advertizing billboard for themselves]. We do refrain from using flashing lights in our logo if that’s any consolation. Our engraved logos are matte black on matte black, but they’re still too obnoxious for some people)
This is in response to Joe’s QOTD here by JFK
JFK’s concept is what I’ve dubbed the “Plausible Threat” influence in human interaction. Reagan referred to it as “Peace Through Strength”. My Plausible Threat concept is of the same nature, but is much more broad.
Why does someone do some something he doesn’t want to do, when he is told to do it? Why does someone avoid doing something he wants do to, when told not to do it? Often it’s because he sees a plausible threat of some kind looming over him, which will harm him in some way if he doesn’t tow the line. It applies in all sorts of interactions and life decisions. In some cases there is a moral factor, wherein a person’s conscience is more prominent in the decision making process. In other cases it is the plausible threat that tips the scale. In yet other cases the plausible threat is not enough, and a person or group will act in spite of it, i.e. it’s a gamble wherein the perceived benefits are deemed greater than the perceived threat. The threat could be anything from minor social tension to global nuclear annihilation.
Our second amendment is, in part, to guarantee a natural right, but also it is to ensure a plausible threat as insurance against growing tyranny.
We’ve seen on TV shows like Survivor what most people will do for a million dollars. What would some people or groups of people be willing to do for several trillion dollars, their own army, and the power to substantially control millions of people? It would take a very plausible threat indeed to dissuade the sort of motivations we’re seeing in that arena, and we have a long way to go before the whole of the people are armed well enough, organized well enough, and act in such a way as to dissuade the sorts of tyranny already in place, and the sorts that we have yet to see.
Don’t forget it. This is (partially) in response to the QOTD below.
The argument for liberty is primarily a moral one. Many people focus on cause and effect. We could dig into detail after detail, analyzing this and that cause and this and that effect. In that pursuit, yes, we will find much evidence in favor of liberty.
But liberty is not on trial. Oh no, Young Grasshopper. This may be news to most people, but it is the socialist/communist/Fascist (statist) bloc that is on trail. I hereby accuse it of willfully conspiring to perpetrate envy, hopelessness, fraud, grand larceny, stagnation, decline, anger, hate, conflict, assault, battery, chaos, and mass murder.
It is not up to us to defend liberty as such. We who support and uphold it are the plaintiffs, see? Liberty needs no defense in that sense, because it has done nothing wrong. It needs to be taught, yes, but if any fingers of blame are to be pointed, they should be pointed at the statists, and if any defense need to be mounted, let the accused try to defend their crimes. Let them point back and leer at us— but always understand that they are the accused and we are (liberty is) the injured party.
Ultimately it comes down to the fact that Man, by nature, yearns to be free. Sure; with our liberty intact, we do vastly better than we ever do without it, but the argument is primarily a moral one. Right and wrong. Freedom verses force. Choice verses coercion. Good verses evil. America was founded on that principle. Isn’t it time we strive to understand, and then to fulfill America’s Promise of Liberty? For once?
The plaintiff doesn’t walk into the courtroom with a defense attorney at his side. He may need a good prosecutor, but he doesn’t need a defense. Republicans of course have never understood it. A plaintiff or a procesuter who is constantly defending himself, with the perpetrator sitting in judgement, is a blithering fool.
Or is it Moron Heavy Boots? Ry brought up the “Heavy Boots” phenomenon a while back, but I hadn’t heard of it until he explained it to me and I Googled it. I was disappointed, but the story didn’t surprise me. I’ve talked to a lot of people about a lot of things, having been in the service business and in consumer credit, for over 30 years. Richard P. Feynman wrote about similar experiences he’d had in his teaching career. It’s sad to realize how many people lack that little bit of curiosity that would lead them quickly to understand some of the basics of their world.
At the music store, I put up a poster-sized photo of the full Earth taken from space. You’ve all seen it, and some of you will already know when it was taken, based on the history of the mission. I looked at it a lot, just as a beautiful image that says something about the ingenuity of Man, before I realized that it told us a few other things. So now I have some questions. This is my Heavy Boots experiment but it’s on a bit higher level. These questions are for those who have no idea when the picture was was taken without analyzing the image itself. Forget the history and the mission, and so on. It’s a simple question for those who know the basics of our solar system and of Earth’s place in it;
About what time of year was this photo taken? How can you tell? Also; About what time of day was it taken? How do you know?
Here’s another one. Looking at this image of the moon, assuming you’re facing East. What time is it? Why?
One of my older brothers liked to mess with people when we were younger. When one of his young sisters-in-law asked him what those bumps between the lanes on the freeway were for, he told them they were part of a project for the blind– so blind drivers could tell when they were crossing lanes. “Really?” came the reply. He pulled off a lot of that sort of thing, trying to see just how fantastic a story he could tell and still get someone to believe him. I suppose his behavior could be referred to as a search for Progressive voters. If you’re ignorant enough, you’ll believe anything if it’s presented just right. Our coercively-funded schools have that part covered. They actively discourage learning.
Leno had a bit on his show last night wherein he placed a magician behind the counter at a convenience store. There were some plastic Easter eggs in a counter display, labeled “Insta-Chick” or some such. The egg contained a little foam “chick” that would expand in water. The magician, introducing the new and rare product to the customers “placed one in a cup”, then “poured water over it” and a live chick came out instantly. People believed it, even after he said they were “engineered in China” such that you could let them dry out again and reanimate them later, and you didn’t need to feed them. More “Heavy Boots”. “Vote for me— I’ll give you free health care” or etc. is along the same lines.
I try not to be discouraged. There are a lot of people who don’t fall for this stuff. They can tell from looking at a photo of our planet what time it was taken, know that mass exhibits gravity, know that we can’t all get free lunch forever and there’s no such thing as a perpetual motion machine.
Free enterprise really means rich people getting richer: they have the freedom to exploit and psychologically rape their fellow human beings in the process…Capitalism is destroying the earth.
Helen Caldicott
[The first part of the first sentence is technically correct but she (and most others) say it as if it were a bad thing.
500 years ago the worlds richest king, with all the wealth in his country, could not have purchased a zipper for his pants, an elastic waistband for his underwear, or a single Viagra pill. A bare-footed, half-naked man dancing around a bonfire with a bone stuck through his nose was nearly state of the art in medicine.
It was free enterprise, capitalism, that gave put zippers, elastic, Velcro, and Viagra within the reach of nearly anyone. An only slightly more select class of people can have state of the art handheld device which can deliver images at nearly the speed of light. Of course those images might be TSA pinups of your wife, your daughter “gone wild” dancing half naked in front of a bon-fire, or of your politician demonstrating the effectiveness of Viagra on his stainless steel pierced penis. But still, Velcro is pretty cool stuff.—Joe]
The Fed is a patsy. It is a pathetic dependent of the big Wall Street banks, traders and hedge funds. Everything (it does) is designed to keep this rickety structure from unwinding. If you had a (former Fed Chairman) Paul Volcker running the Fed today 7/8— utterly fearless and independent and willing to scare the hell out of the market any day of the week — you wouldn’t have half, you wouldn’t have 95 percent, of the speculative positions today.
…
When the real margin call in the great beyond arrives, the carnage will be unimaginable.
David Stockman
March 3, 2012
DAVID STOCKMAN: You’d Be A Fool To Hold Anything But Cash Now
[H/T to Rudy Kearney.
I’m not convinced cash and gold are the only thing to hold onto right now. Farm land, copper coated lead, and brass would seem to hold their value better than cash and probably gold. But I see his point about stocks and fully agree the carnage is going to be massive.—Joe]
Enough is enough! They have no idea what an uprising by the Greek people means. And the Greek people, regardless of ideology, have risen.
Manolis Glezos
February 12, 2012
Glezos is one of Greece’s most famous leftists.
This was in response to the looting, rioting, and burning of the city of Athens and other places in Greece due to cuts in government spending.
Greek lawmakers approve austerity bill as Athens burns
[I know what it means. It means:
Barb and I had breakfast with son James and his wife Kelsey today. They were contemplating what the economic collapse would look like. This is probably a glimpse of what we have to look forward to.—Joe]
Someone understands economics (but has yet to learn about audio recording). Via an an e-mail from Ry;