Jeff Neal for C.U.R.E. - Certain Unalienable Rights Endowment

Posts Tagged ‘economics’

Jack Nicholson, The Reverend Mr. Al Sharpton and Candy

In Financial, Opinion on December 14, 2011 at 4:05 pm

On, Professor Don Boudreaux, tells us (Link Here) that the reverend Mr. Al Sharpton is raising a stink (yes, I realize that has a potentially double meaning and is redundant – as in, what else does he do?) regarding Walgreens’ failure to adequately serve poor neighborhoods.

Why does he stipulate that Walgreens is obligated to serve any customers?  They are free to put all of their stores on Park Avenue, if they like, yes?  Are there any Tiffany’s in the poor neighborhoods Mr. Sharpton is worried about, or any check cashing, pay-day loan operations Rodeo Drive?  What would Charlie Sheen do in a cash emergency and why isn’t someone looking out for him?

I frame it more seriously this way:  Walgreens’ total market capitalization of approximately $35 billion did not materialize from thin air, reverend Mr. Sharpton.  As the Professor Boudreaux points out via his list of things Walgreens chose to do to make pills and suppositories appear behind their counter (just next to $3.49 ethnic hair products, $1.59 paper towels and $1.29 candy bars, etc.) this kind of operation is the result of billions of independent, unique, untraceable decisions about the most effective uses of capital and labor.  That unimaginably complex process has resulted in a situation where, for $1.29 you get a Milky Way AND, implicit therein, you get the benefit of the trillions of dollars it took to deliver it there between the M&Ms and the Snickers.

HUH? you say, trillions?  Yes, trillions.  Add Walgreens market cap to that of Mars Candy, Pfizer, Merck (and every other company who has a product on offer in that store) and it’s AT LEAST multi-trillions of dollars.  The owners of Mars Candy, Inc can’t deploy only the miniscule fraction of their world-wide enterprise that made YOUR Milky Way, even though you are paying only for your tiny share of Mars Candy.  And the same goes for the companies offering the products you didn’t even purchase, because it is the unique combination of products services, and multiple locations that is the essence of Walgreens, the magic that makes Walgreens exist.  That’s the beauty of Walgreens (and 7-11, Kroger, Victoria’s Secret, Federal Express and  . . .)

When will you learn, reverend Mr. Sharpton, that stuff doesn’t happen because you have a camera and a microphone; stuff happens because, to paraphrase Milton Friedman, millions and millions of men and women, almost all of whom don’t even know of the existence of the rest, and many of whom would hate each other if they ever met face-to-face, in their own way, free of coercion, contributed to that Milky Way’s being there.  And it was there for you last Wednesday at 2:43 a.m., exactly when you wanted it there – for a mere $1.29.  And the cold pint of milk tasted great with it, too, didn’t it!

And, now you want the government to fine tune and improve on that model for you without disturbing its intricate and delicate balance?!  NO SIR!  Step away from the counter and put your hands in the air.

To borrow from A Few Good Men “I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom that I provide, and then questions the manner in which I provide it! I would rather you just said “Thank you,” and went on your way.  Otherwise, I suggest you pick up a weapon, and stand a post.”

Freedom, Milky Ways . . . same thing.  Mr. Sharpton, Walgreens doesn’t have time to explain how they put your Milky Way on that shelf.  They’d rather you just pay the $1.29, say ‘Thank You’ and go back on TV.  Otherwise, I suggest you go find a trillion dollars and make your own candy.

Freedom promises that you have the choice to buy your widgets or pharmaceuticals anywhere you like.  Freedom does not promise you that Walgreens will make them available to you, 24/7, at a price you can afford.


Tax Cuts for the Rich!

In Economics, Financial, Humor on March 17, 2011 at 10:28 am

The Tax System Explained In Beer – by unknown author.

Suppose that every day, ten men go out for beer & the bill for all ten comes to $100. 

If they paid their bill the way we pay our taxes, it would go something like this : 

The first four men (the poorest) would pay nothing. 
The fifth would pay $1 
The sixth would pay $3 
The seventh would pay $7 
The eighth would pay $12 
The ninth would pay $18 
The tenth man (the richest) would pay $59 

So, that’s what they decided to do. 

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. 

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80. 

The group still wanted to pay their bill the way we pay our taxes. 

So the first four men were unaffected. They would still drink for free. But what about the other six men- the paying customers? 

How could they divide the $20 windfall so that everyone would get his fair share? 

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. 

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay. 

And so the fifth man, like the first four, now paid nothing (100%saving). 

The sixth now paid $2 instead of $3 (33% saving). 

The seventh now paid $5 instead of $7 (28% saving). 

The eighth now paid $9 instead of $12 (25% saving). 

The ninth now paid $14 instead of $18 (22% saving). 

The tenth now paid $49 instead of $59 (16% saving). 

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings. 

“I only got a dollar out of the $20 saving,” declared the sixth man. 

He pointed to the tenth man, “but he got $10!” 

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!” 

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!” 

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!” 

The nine men surrounded the tenth and beat him up. 

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill! 

And that, boys and girls, journalists and government ministers, is how our tax system works. 

The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.. 

Tax them too much, attack them for being wealthy, and they just may not show up anymore. 

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier. 
For those who understand, no explanation is needed. 
For those who do not understand, no explanation is possible.


Who is John Galt?

Can we predict innovation? Our government thinks so.

In Economics, Recommended Reading on February 7, 2011 at 11:18 am

Professor Boudreaux makes the point well in his recent post on Cafe Hayek.

An oxymoron – Politically favored Innovation

So President Obama wants to encourage investment in innovation and new technology so the USA can compete with other countries.

As it turns out, Mr. President, this country of freedom-loving men has been doing that for generations with no help from politicians or any big-government ideas.  By definition, one can’t anticipate or get ahead of innovation or creativity.  It is spontaneous, it happens at the hands and in the minds of free men participating in mutually beneficial exchanges and in the pursuit of money and profit.  The government can only stifle that activity by redirecting labor and capital into some preferred use.

Let freedom produce good things in abundance, as it always has.


CPI – Does it measure anything?

In Economics, Everyday Life, Recommended Reading on February 6, 2011 at 7:39 am

Professor Donald Boudreaux asks (at some length) whether the CPI conveys any useful information.  He looks at the 1975 Sears & Roebuck catalog and analyzes the price of many of its items.  Link to Cafe Hayek — where orders emerge.

It’s an interesting read about the things CPI attempts to measure.  I ask an additional question to which he alludes but doesn’t ask explicitly – How can we compare with a statistic the price of something we take for granted today (the computer screen you’re reading at the moment, e.g.) which didn’t exist at any price in 1975?

Not everything can be measured in terms of money.  The value of the truth and the freedom to innovate is incalculable.

Commercial Real Estate – A look back

In Financial on February 5, 2011 at 5:13 pm

A slightly dated video of a certain prominent Washington, DC developer produced by Huffington Post.  Government actions will not and should not attempt to save the free market from its mistakes.  Too much leverage, cheap money, prolific development, unchecked risk-taking, and unrealistic economic predictions led to a bubble.  It had to burst, but the government ill-advisedly socialized the pain rather than let the flawed business plans result in failure and losses.

See video here.

The gap between rich and poor

In Economics, Financial, Opinion, Recommended Reading on February 1, 2011 at 10:30 pm

Don Boudreaux again.  Several examples that make the point that wealth is not necessarily sticky or bias.  Wealth is created by worthy, hungry and hard-working men.  It isn’t static or loyal.  It, absent government intervention that favors the well-connected, flows freely to and from the productive and the moochers, respectively.

See his piece HERE. on Cafe Hayek.

Another point.  About the purported problem of a concentration of too much wealth in too few hands….those who are for ‘distributive justice’ seem to favor a set of government policies to ‘correct’ that problem might check their math.  Taxation to spread the wealth would give 535 men and women control over the wealth of millions of ‘rich’ people (1% of the population is > 3 million people, and they possess a mathematically disproportionate % of the wealth in America).

535 is 0.000147% of the population.