|
Jewish World Review /Jan. 20, 1999 /3 Shevat, 5759
Walter Williams
(JWR) ---- (http://www.jewishworldreview.com) MOST PEOPLE THINK THAT ECONOMICS IS DIFFICULT, but it's really simple. More
than anything else, economics is a way of thinking. Knowing just a little
bit of economics can save us from the tricks of political hustlers.
At the heart of economics are a few simple and easy-to-comprehend rules --
it's not rocket science. Our first rule is there's a cost to everything. To
obtain more of one thing requires the sacrifice of something else. Nothing
is free.
You say: "Hold it, Williams. Aren't there free public libraries and
schools, and free medical care?" Consumers of these services might enjoy
them at a zero price, but that doesn't mean they're free. If expenditures
weren't made for public libraries, schools and medical services, those
resources would be available for something else.
That "something else"
sacrificed is the cost of public libraries, schools and medical services.
The main issue about so-called free services is which Americans are going
to be forced to pay for them. The moral or Christian principle says the
person who enjoys them should pay. But if we accept the standards of
thieves, we don't care who pays as long as we enjoy it.
Another basic rule of economics is the law of demand. That's just an
observation about human behavior, namely: The higher the price (cost) of
something, the less we take of it. The lower the price (cost), the more we
take of it.
For example, if nothing else changes and the price of oil falls, we can
expect to see greater use. People might travel more, purchase more
gas-guzzler cars and be less motivated to insulate their homes. When oil
prices rise, they do just the opposite.
When interest rates fall, people invest more and purchase more homes. When
rates rise, they do the opposite. There are no known exceptions to the law
of demand, even though political hustlers want us to believe there are. For
instance, politicians want us to believe that when higher minimum wages are
enacted, employers will hire the same or more low-skilled labor in response.
They want us to believe that when they raise taxes, people will be just as
honest in reporting income as they were before.
Psycho-babblers want us to believe executing murderers, sending more
criminals away for a longer time and concealed-carry laws had nothing to do
with today's reduction in crime. Criminals also respond to the law of
demand. When crime's cost to criminals rises, they'll do less crime.
If it weren't for the fact of scarcity, there'd be no economic issues.
Scarcity simply means we all want more of something, but there are not
enough resources on Earth to satisfy every want. That means we must find a
way to determine who is going to get what's available.
For example, even if Rolls Royce built 100,000 cars a year, I'm betting
that of the Earth's 6 billion people more than 100,000 of them would like to
have one. That means there must be a way to decide who gets the cars. We
could compete through violence, but the preferred method has turned out to
be the market mechanism --- whomever's willing to bid the highest price.
Some people piously announce there shouldn't be any competition. That'd be
nice, but scarcity requires a mechanism to decide who gets what. That
applies to everything. For instance, there's only one Williams. Mrs.
Williams had to compete with other women for my hand in marriage. She
triumphed at the expense of other women, who were forced to do
Economics 101
01/13/99:A wrongful celebration
01/06/99: Economics of predation
12/30/98: Things I wonder about
12/23/98: Unseen crime costs
12/21/98: How to become rich
12/09/98: Advancing national decadence
12/02/98: The Civil War wasn't about slavery
11/24/98:What's happened to us?
11/20/98:Tragedy in black neighborhoods
11/11/98:Family debasement
I11/04/98: Is it them or us?
10/28/98: Where are the poor?
10/21/98: The budget surplus hoax
10/15/98: Where union power lies
10/08/98: Race and sex in the military
9/29/98: Can Clinton run the economy?
9/25/98: Liberals and the constitution
9/17/98: Clinton and future presidents
9/11/98: Donate or sell organs
9/03/98: Common Sense vs. Experts
8/26/98: Mother Nature's unfairness
8/24/98: The pretense of superiority
8/13/98: Yours or mine?
8/05/98: I do my job well, so that means I can....
7/29/98: Education production