Basic Economics

I've been saying stuff like this for years and I'm not even an economist (altho' I did take Econ 101 in college). I just understand the law of supply and demand. And I also moan about the economic ignorance in the country that demands that politicians "do something" about high gas prices. Doctor Williams writes this about that:

Of course there's another type of exchange not typically sought, namely good-bad exchange. An example of that kind of exchange would be where I approached the retailer with a pistol telling him that if he didn't do something good for me, give me that gallon of gas, I'd do something bad to him, blow his brains out. Clearly, I'd be better off, but he would be worse off. Game theorists call that a zero-sum game -- a transaction where in order for one person to be better off, the other must be worse off. Zero-sum games are transactions mostly initiated by thieves and governments.

Sometimes there really isn't much difference between thieves and gummints except gummints can legally take your money or your property and there's nothing you can do about it. The thief goes to jail. The gummint keeps on fleecing you. He continues:

In the wake of the spike in fuel prices, many Americans demand that politicians do something. You can bet the rent money that whatever politicians do will end up harming consumers. Despite a long history of their economic calamity, some Americans and politicians are calling for price controls or, what amounts to the same thing, anti price-gouging legislation. As Professor Thomas DiLorenzo points out in "Four Thousand Years of Price Control," price controls have produced calamities wherever and whenever they've been tried.

Unfortunately, selective memory is short. Many people are too young to remember the 70's. Other people are just too stupid to remember the 70's. What happened then? Gummint "did something" and initiated price controls which led to gas shortages and gas lines. When Reagan was elected he abolished price controls. Gas prices went up, people started economizing and conserving. They bought more fuel efficient cars that were manufactured in Japan. Detroit didn't get the message. They were still building gas guzzlers. Yeah the gummint enacted fuel efficiency standards, but it wasn't the gummint that made Detroit start building fuel efficient cars. It was competition and the market place. Detroit was behind the curve and they never recovered from their lack of prescience.

Does all this shit sound familiar? It should 'cause after 25 years, we're going through it again and once again Detroit is building gas guzzlers. The 25 years of cheap gas have ended. SUV sales are down. I wonder why?

Posted by denny at December 7, 2005 11:39 AM