ADAM Smith was a guy who lived in Scotland, when this nation produced a bunch of intellectuals. This was during the 18th Century. His most famous book is known was (briefly) as The Wealth of Nations. Perhaps because it was published in 1776AD most Americans are not familiar with it. Most do not even know that it was published. He picked a bad year, as we tend to remember only one event per year. However, his book had a great influence on the thoughts and values of the Western World. It served as a quasi Bible for the advocates of free enterprise and traditional conservatism. I offer this only as a preamble, but a necessary one.
As I write this the Stock Market indices are falling, again. That is, the average prices have fallen, quite a bit. And this is bad, very bad. And the housing market has continued to stay low. That is, these prices have fallen for some time, and also quite a bit. And this too is bad, very bad. And, as we all have noticed, the gasoline prices have risen, quite a bit, for a long time. And this is very good… no, wait; it is bad, isn’t it? If falling prices are bad, then rising prices are… Let me try again, when it costs more to get the same thing, then…
I got confused (this happens when I watch TV news shows). Are high(er) prices good or bad? I suppose that this matters on who, or what, one is. If one is a seller then a high price is good. If one is a consumer then a low price is good. Adam Smith pronounced this, infallibly (even though he was not the Pope, or even a Catholic), long ago. It is always and everywhere a benefit to the consumer that he obtains what he wants at a low(er) price. Period. Edinburg has spoken; the case is closed.
Home ownership is, officially and mythologically, a national goal. Lower prices increase this probability. Owning stocks is similarly a national goal. The prices move down only when the stocks are sold. I repeat: this happens only when a stock is sold, that is someone obtains the stock. And it means that that someone got it as a low(er) price, and has more money to spend on something else. Adam would be happy, and the consumers should be too.
I am NOT saying that, from a national and/or economic point of view, every price fall is a good thing. However, I am saying that from the individual’s point of view every price fall is a good thing. A nation may be more than simply a collection of individuals. But this is one thing that it is. Adam had it right from the beginning. And the only point that I wish to bring to you, here and now, is that there is another way to look at all the “bad” news.
You would think that at least one of those many, many TV network “experts” would also realize this. Maybe we need more 18th Century Scots on TV.
Consider visiting "Dueling Ghost Writers"(and read the most recent comments from Oscar Wilde and Mark Twain) at Wildeandtwain.blogspot.com.
Or consider this: The feds pumped money into various lending institutions with the goals of helping people become home-owners. The Democrats liked the government handing over money to people who posed too great a risk for private businesses to lend to; the Republicans (at least Bush's set) liked the idea of the government facilitating the American dream of private home-ownership. Then, when the loans inevitably proved bad, the cost of houses plummeted. Which now, everything said and down, should facilitate home-ownership as a result of government intervention, right? (That is, for those people who have any money to buy cheap houses with.)
~Tobias
Posted by: Tobias | August 08, 2011 at 04:54 PM