THERE was a comic who was popular a number of years ago. I forget his name. He was on Saturday Night Live a lot. One of his skits was the 15 minute college degree. He argued that, no matter how long you studied or what course you would take, you would remember only 15 minutes worth of knowledge after four years of study. So why not save all that time, and money, and get a degree in 15 minutes?
He pointed out that no matter how many courses you took in economics, the only thing you would remember is “supply and demand.” No matter what the question was the answer is always “supply and demand.” He is not totally right. However, he is closer than one would think. Let me put it this way. In “The Sound of Music” we are told that when you sing you begin with do(e), ray, me. In economics you need to begin with supply and demand.
This may not be totally correct. Maybe the place to begin is with humans. Human nature can be understood because we all share it. Let me put the two together. Supply means that amount of an item (or service) that a seller is offering for sale at a particular price. Demand means that amount of that item that the consumers are willing to buy at that price. When these two levels are not even there is an incentive to change conditions.
When supply exceeds demand the seller will usually reduce the price he is asking. He does this because he does not want to have an excess of his product hanging around. The ONLY reason he produced it was to sell it. Lack of sales mean failure, and maybe going out of business. When demand exceeds supply the consumer will usually offer a higher price.
The official entire thrust of the current administration is based upon the idiotic Keynesian theory that increasing demand will increase prosperity. The programs place money into the hands of those most likely to spend it immediately. Maybe they will, but so what? Increased demand will cause producers to raise prices. This is what people, being humans, do.
That is, they will NOT hire new people to produce more to meet demand. Human nature is simple. Raising prices, because of increased demand, is A simple way to increase profits without expending extra labor or expense. The problem with the current administration is that it fails to consider human nature and thus fails. Recall that it is based upon how things are done in Chicago, where the dead vote and “the Cubs” is considered a proper name for a men’s team.
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