Wednesday, May 21, 2008

Our Demanding Society

The basic laws of economics centers around the
concept known as "supply and demand".

For example, let's say you really like Chocolate donuts, and in fact everyone you know likes Chocolate donuts. If there is only one donut shop in town (which in fact would be a local monopoly) they could charge five bucks a donut if they wanted, because there was no other way to get scrumptious, delicious, warm chocolate donuts. Now let's imagine if in this same town, a SECOND donut shop opened up. They could set their price at four dollars, which would still be high, but lower than the existing shop. The other shop would lose business and be forced to LOWER their prices in order to stay competitive.

Later on down the road, a corporate bakery makes donuts by the dozen, lowering prices because now chocolate donuts were plentiful and even though the local donuts were more expensive and probably tasted better, people were willing to take a lower quality product to save a few bucks, just so long as they had the appearance of being people who could afford chocolate donuts. The local stores would downsize or close due to the overabundance of donuts, allowing the corporate bakery to make ALL the donuts for the area. But with rising costs of retirement, insurance and disability, the corporation found itself top-heavy with overpaid management and overpaid line employees. So to save the brand at all costs, the company would fire domestic employees and move the entire factory overseas-where the managers would still get hefty incomes, but the line works were paid in dollars per week instead of dollars per day. The citizens still wanted to have those desirable chocolate donuts, but now in order to keep a profit for stockholders, the company has eliminated jobs that allow money to return to the economy.

On top of that, let's assume that Congress, concerned about the increasing girth of its citizens, decides to limit the number of yummy chocolate donuts that can be made in this country. Now imagine that a factory in Indonesia makes really cheap chocolate donuts. They could sell them for a dollar a DOZEN. That would drive out the local shops and corner the business with lower grade, cheaper quality chocolate donuts. Add that the dollars would only flow OUT of the country, creating an economic vacuum. They would outsell the American corporation, buy them out and before you know it, the only thing Americans have to show for their trouble is way too much of a belly from gorging on chocolate donuts. The only solution to save the economy is to permit chocolate donut shops to open and produce the SUPPLY that the public DEMANDS.

Now let's talk about gasoline. It comes from oil. A barrel of oil yields just about 17 gallons of gas. And that's before the spa style additives demanded by certain states. Believe it or not, we have oil resources in our national territory, but we can't access it. We can't even think about accessing it. And furthermore, if you read the web, we should feel virtuous for not allowing American countries to access American resources for the benefit of the American public. Who is running this show anyway and who is in their back pocket?

While I do think that corporate honchos are getting far too much compensation for what they actually do, and while there are probably layers of management that could disappear tomorrow without ill effects, the key issue to gas prices is SUPPLY AND DEMAND. Corporate profits have remained steady. You hear the astronomical numbers of gross income, but not the facts regarding the increased cost of everything from exploration to transport. Our economy demands oil and gas. And whether you like it or not, that's not going to change very soon. For all of the pie in the sky promises, there are few meaningful alternatives right now. You can talk electric hybrids, but there are still questions about the environmental impact of the batteries, and you can talk electric cars, but if you charge a car using conventional power sources, you are using coal or natural gas-both questionable sources in terms of the environment. We can't build nuclear, we can't harness enough wind or water power, we simply don't have a viable delivery system for biodiesel or other sources. In short, we are left stranded by the same Congressional do-gooders who claim to have our best interests at heart. Our Congress has patted themselves on the back for limiting exploration off of Florida, off of the West Coast, the East Coast and Alaska. Never mind that Castro and his friends are there pumping away to have oil that will be refined in Venezuela. There comes a point in time where you have to put aside your petty bickering to look at the greater good. What good comes of $4.00 per gallon gasoline? What good does it do other than make those who struggle even less able to survive. If you answer that it makes people use mass transit, then you are a self-centered boob. While it may allow some to consider those options, how many more will it limit in terms of their ability to hold a job, go to school or get medical services? It's time to be big boys and girls and allow limited drilling in ANWR, and on the coasts. And it's time to remind those folks in Washington, who's boss.

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