As I read the papers and hear the various comments about price gouging(Gas prices in particular), protectionism, and "fair trade" rather than free trade coming from the likes of Chuck Schumer, Lindsey Graham and others, I'm beginning to think that these individuals must have slept through Economics 101 to come up with such comments. Now I know that such powerful folks like those in Congress won't pay me no mind but if they did, then I'd refer them to get caught up on the science of Economics by reading Tim Harford's wonderful book The Undercover Economist. While most books on the "dismal science" can be a bit boring or wonkish, Harford has written a accessible primer that will shed a brighter light on the subject and wipe away the falsehood's and outlandish statements being doled out by members of Congress. One individual that really enjoyed the book is C.R. Hardy who has written nice review of The Undercover Economist over at National Review Online. Here a lot at what Hardy has to say about this gem of a book:
Harford strikes at economic illiteracy closer to home as well. His book opens with a fascinating discussion of the price of a cup of coffee. Doesn't Starbucks price gouge? Just what is captured in the price of a thing? Doesn't the coffee industry exploit poor farmers in Brazil? Who exactly is getting rich off my $4.15 café mocha? It turns out that classical economic thinking about scarcity power, incentives, market structure, distribution, and self-interest go a long way toward illuminating the flaws in our arm-chair answers to these and other questions. Harford also covers plenty of other engaging topics in the same manner, such as auction design, health care policy, and how to get drivers to curtail car usage in congested areas.Now I'm no expert on the study of Economics but with what I read and know, I'd say that The Undercover Economist is a good book to go to if you want to learn more on this useful science.
The Undercover Economist should be placed in the hands of any young person looking for a quick introduction to economics, any older person who missed out on Economics 101, or anyone who took Economics 101, but was not able then to realize that it applied to real life.
5 comments:
I think a major flaw in the comparison of a cup of coffee to the price of gas is the choice of the consumer.
I CHOOSE to pay a lot for my Starbucks coffee. Yes...it could be considered price gouging (at it is really). I realize it only makes Starbucks rich...not the coffee farmer.
BUT you don't hear outcries for coffee (and any other consumer goods) because we choose to buy them unlike gas.
If I think that Starbucks is really too high then I don't buy there. I can buy cheap coffee and enjoy it just the same. We have no alternatives to gas and are FORCED to buy it. If the price of any consumer good increase like the price of gas has (say a mocha doubles to $8.00), I'd bet you'd see less people buying it. I wish we had the same choice with gas....we don't so you hear complaining about the price.
The coffee argument is only valid with part of it.
Now their are some alternatives to folks buying gas. If you life close to work you could walk, ride a bike, train, subway or a bus(If you live in a city.) For folks further away from work or living in the country they could rideshare, telecommute(If your job allows this or can be done at home) or you could buy a hybrid or a more fuel efficient vehicle. You might not like these suggestions(Most of which I abhor.) but all in all they're ways to get around high gas prices.
--For me I say build more refineries and conduct more drilling or look at schale or tar sands for oil. This is the supply-sider view.
For most people, there aren't efficient means of saving gas. Very little of the country lives in populated urban areas where public transportation (bus, subway, biking, walking) is viable.
And ride sharing w/ people in rural areas is a weak alternative at best (think where we live...Wilkinson County and how aggravating it would be to find, and meet to ride share. People's daily lives are already filled to capacity without wasting more time getting to/from work.) If ride sharing is the best alteranative then it's already too late - gas will be too high for the middle class.
As it is now....people still HAVE to buy gas and drive (espcially rural people).
Noone has to by lattes.
I know that folks in Wilkinson County are out of luck with such alternatives but is sure beats paying $9,000 more for a hybrid that resembles a sardine can and is slow as Christmas. Look at the "Prius Rage" that drivers are experiencing as the owners of these cars slow down traffic due to the lack of pick-up speed on the interstate. Like I said before, the best thing to do is tackle the supply side of oil rather than what the folks in D.C. are doing right now.
The folks in DC are doing nothing (and if the trend continues...only do something when they have to).
I hate SUVs like a passion (I have a laundry list full of complaints), but at least one of my wishes is coming true: gas is becoming so high that a lot of people can't afford to drive them anymore! Even with my car with it's small engine and ave. gas mileage, it costs me an arm/leg to fill up. I'm sure some people are hitting $100 to do so.
Only THEN, when people can't afford owning those types of cars will automakers be forced to produce vehicles with better gas mileage. The technology has been out for years (too bad the American automakers lack so far behind)
gotta go!! Lightening!!!
YOWZA!
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