Jingle Bells on a White Christmas
Tomorrow we leave to drive to Atlanta. We considered flying and luckily decided against it as the snow is falling and flights are rumored to be as much as 2 days delayed. Micah has a song for the moment:
Economic Parables Part 4 - Product Value
Let’s modify our last exercise and move from a one time trade, into an ongoing series of trades. (please note I have no idea about birth rates and growth of baby animals, so correct me if you know)
John still raises chickens and he still wishes to eat steak. Likewise Bill still raises cows and wishes to eat chicken. Every 6 months they make a trade of 1 cow for 1 chicken.
The novelty of having a new type of meal - chicken, lasted a few trades for Bill. In time, however, Bill realized that 1 chicken provided him with only about 3 meals and 1 cow produced about 15 meals! Therefore when it was time for another trade Bill would negotiate based upon meal value - 5 chickens for 1 cow so that each would receive 15 meals.
Of course John did not like this new deal and wanted to stick to the old 1 for 1 trade, but Bill refused to make that deal. The value of John’s chicken’s had dropped 80%. John’s only choices were either to accept the new value or go without a cow. John decides to make the trade.
This new agreement continues for some time, until Bill realizes that every 6 months he produces 1 new cow and trades it away to John while John produces 20 new chickens and only trades 5 to Bill. John is able to build more and more chickens and Bill always stays static. Bill realizes the value of his cows is not just in the product they produce but in the comparative rarity - which is 1 cow to 20 chickens.
Analysis
Prices and the value of goods can seem like voodoo, but supply and demand are always at the core. We see it clearly by looking at just 2 individuals involved in a trade. But the same simple principle applies to all goods and services. Is there a buyer for x? What are people willing to pay for x? What is involved in producing x? And as we’ve seen there is never a hard and fast value. Product value is a negotiation and a balance of supply and demand.
We can compare what we’ve seen so far to modern day products. Take electronics - upon release the demand is high, often supply low, and novelty is a factor. People will line up and pay high prices. But those prices are never sustained. Eventually the price comes down as the market decides what a product is really worth.
Economic Parables Part 3 - A Saturated Market
John raises chickens. He has 4 chickens, but he wishes to eat steak.
Bill raises cows. He has 3 cows, but wishes to eat chicken.
John offers 2 chickens for 2 cows. Bill refuses as he would have 1 cow left - he needs 2 to reproduce. Bill offers 1 cow for 1 chicken.
Analysis.
In part 2 we established 1 chicken to be equal to the value of 1 cow. The result of part 3 is still 1 chicken for 1 cow. However, the saturation point of the market is also 1 chicken and the market cannot sustain a second trade of 1 chicken for 1 cow.
Economic Parables Part 2 - The Most Basic Trade
Our nation is expanded to 2…
The most basic trade
John raises chickens. He has chickens, but he wishes to eat steak.
Bill raises cows. He has cows, but wishes to eat chicken.
John trades 1 chicken to Bill for 1 cow.
This is the most basic economic transaction. Both had a surplus of goods they were willing to trade in order to obtain something they desired more. In this market the value of 1 chicken is equal to the value of 1 cow.
Economic Parables Part 1 - A Flat Market
In order to understand economics, it is helpful to think on a small scale. I’m hoping to build simple modelfor all to understand. I will build upon this model and I encourage feedback, why, and what-if questions. I make no claim to having economic authority so this is for me as much as anything else. Let’s begin
A flat market
John raises chickens. He is the only man in the entire nation. What is the value of his chickens? Zero. There is no one to trade his chickens to for something in return.
to be continued…
Good Government is a Myth Part 2b: Government Employment
This is titled part 2b, as my friend Chris Waner has written parts 1 and 2 on his blog The Free Exchange. Read his article “Government Employment” here. To summarize, Government cannot create wealth, it cannot create new jobs.
one of the great myths about government is that it can employ people for the betterment of the economy or in this way help the economy through tough timesThe government cannot spend a single dollar which does not have some negative effect on the economy.
Many will read this and think it intellectual nonsense. You will say “ah, but what about FDR’s public works programs that pulled us out of the great depression?” You will reason that people at work- government contractors - are people putting money back into the economy. But let’s do a few thought exercises.
If Government jobs are the answer, why not have all government jobs? If 100,000 new government jobs are going to aid the economy, would not everyone being employed by the government be even better?
How will we pay these workers? Taxes? Where does tax money come from? Some other worker.
Or we could print new money. Why is this a problem? it reduces the value of all the money already out there.
Either way, we’re not solving any problems, we’re just transferring wealth. How do we solve the problem?
The fact is that this recession is the best thing for the economy. The natural laws of free-market economics are in the process of correcting the current financial disaster, putting the unemployed in jobs that are actually needed in the economy, readjusting all the mal-investment, encouraging savings instead of run-away consumer debt. The medicine doesn’t necessarily taste good, nor does it work immediately, but it does begin working immediately, and, honestly, it’s the only thing that will actually fix the problem.
Richard Rose (the Sr)
My wife asked me to do a post about my Grandpa Rose as she never got to meet him… he doesn’t much fit into just one post so we’ll see what happens here.
Life and Legacy
My grandfather was one of 7. Born in a very small Pennsylvania cabin to a Jewish mother and a drunkard father who abandoned them to poverty. In grade school he walked home at lunch each day, hiding from his classmates that they had not enough money for lunch. In order to help provide for the family, he dropped out of high school (awarded a highschool diploma only late in life for service to his country) . He enlisted in the Navy, where he served as a signalman - nestling his service between the end of World War 2 and the Korean War. Were it not for an early, honorable discharge in order to care for his sick mother just before the escalation of the Korean War, it is likely he would have been held for a longer term.
He met his wife-to-be when she was on a date with his friend… after he jumped in the car and kidnapped her while his friend was paying for gas. They were later married and had 3 children. He lived for his family, going without himself so they could have. It was through his sacrifices and hard work that he climbed out of the legacy of poverty to which he was born. He built the house my dad grew up in - my mom reflects that even while dating my dad the house still had plywood floors and curtains for doors. These are the sacrifices of comforts for the sake of his family that he made.
In addition to his Navy service, his career included driving a towel delivery truck (where he made the front page of the local newspaper “man turns over truck swatting fly”) and later work for textile unions (with such excitement as being briefly jailed for demonstrations).
My Namesake
Richard Claire Rose and his brother/friend Paul Rose each named their eldest sons after each other for a first name and themselves for a middle name. Thus my father - Paul Richard Rose - and my father’s cousin - Richard Paul Rose. Each of those named their eldest son’s for their fathers and themselves, thus Richard Paul Rose (me) and Paul Richard Rose (my second cousin).
Confused yet? Just try being the man on the other line of the phone when they attempted to order fishing licenses for the lot of them.
Character
…a character he was! Always mischievous, always an infectious laugh. One of my dad’s memories was a time a pizza parlor where Grandpa started a food fight, throwing a piece of pizza across the room. My dad in shock asked “…what if I had done that?” Grandpa- “I’d of kicked your ass” Dad - “that’s what I thought.” He stern and forceful when necessary. He was a family man and loved kids. He was well liked by all who knew him. Honorable. Dependable. Hard working.
Memories - McDonalds
An old McDonald’s commercial, when I was just about 4 years old, featured a Grandfather taking his grandchildren to breakfast at McDonald’s. I turned and said “I bet my grandpa would do that for me” and so the tradition began that anytime Grandpa came to visit, he took us to McDonald’s for breakfast. It wasn’t until reflecting for my speech at his funeral that I realized all that time I didn’t even like McDonald’s breakfast food… I just liked being with my grandpa.
Memories - visiting
When we moved to Atlanta, myself at the age of 6, it provided the opportunity for Summer visits with just me and my cousin of closest age. I remember the car rides with Grandpa, always he would sing “on the road again” after any rest stops. “Knee crabs” were a treacherous part of a car rid with Grandpa - though we tried hard to convince him that we had sprayed for such pests.
As the oldest grandson, and always a traveler I had the chance to share quite a few visits. When I was old enough to drive and they were retired to summer’s with their travel trailer in the Florida pan handle - I made several trips down. We shared a love for seafood and would always pick up some clams and shrimp or crawdads.
One car ride when I was younger provided a memorable moment for me to turn and say “Grandpa. You’ve made my life miserable.” With much shock for sure he asked why that was. I replied “you know all those rotten things you did to my dad? Well now he’s doing them to me!” Grandpa was known for teasing and for reusing good material. My dad used to lift that material to use on us and always tell us “when I was little my dad used to do this to me and I couldn’t wait to have my own kids to do it to them”
There were many Grandpa-isms. Little sayings he had that probably wouldn’t translate well to the outsider. I have to say I can’t just sit and produce many on the fly, but there are hundreds of little things that happen in life to bring to mind a grandpa-ism. He’d smack you in the arm and wait for you to say “what was that for?” then say “that was for nothing, just wait until you do something”
Grandpa the Cook
What started this post was my relaying a Thanksgiving story to my wife. One year we had the whole extended family together for Thanksgiving and Grandpa would let no one in the kitchen - he had the entire meal covered. He liked to cook and would go through magazines and newspapers for interesting recipes to try out. That Thanksgiving we had many, I think he cooked for days in preparation.
Grandpa the Repairman
Ok, so this is this wasn’t the most elegant of his qualities, but darned if it didn’t get done in the end! As mentioned, he did built his house, but a project with Grandpa always meant something would end up broken. And when he broke one thing, he’d probably get mad and break yet another - putting a hammer through a roof, etc. Yosemite Sam cursing sounds emanating from his mouth all the while.
Grandpa Rose
Grandpa is missed. And I regret most that he never got to meet my wife who he would love, my son who he would find to be a riot, and my daughter who he would adore. I can still hear his infectious laugh. I will always feel the effects of his legacy left behind, and proudly wear the name Richard Rose.
Happy Thanksgiving
Happy Thanksgiving from 58th and Broadway at the Macy’s Thanksgiving Day Parade! Here is Micah happy:
And here is Micah not so happy as the Georgia Tech band goes by:
A roundup of news stories… that make me want to puke
The Chicago Tribute reports: Old rivals Obama, McCain discuss working together.
“Obama’s transition staff released a joint statement, describing the meeting as a “productive conversation” that opened the possibility for cooperation in the days and months ahead.”
…Just in case there were any doubts that McCain and Obama shared identical priorities and offered voters no choices.
Obama has said he expects to pick at least one Republican to serve on his Cabinet, but it is unlikely to be McCain, who can return to the Senate as a leader of his party
Lets hope not! A leader of his party?? Because his leadership turned out SO well. Someone help these people, I didn’t know assisted suicide had been legalized.
Obama and McCain displayed good chemistry, aides said. [. . .] Asked whether he was hoping to help an Obama administration, a smiling McCain responded, “Obviously.”
Isn’t that sweet. A McBama administration.
On another front, the AP reports Calif. high court asked to hear gay marriage cases
The state attorney general and sponsors of the ballot initiative that banned same-sex marriage in California urged its Supreme Court to hear a series of lawsuits seeking to overturn the ban [. . .] ‘This court can provide certainty and finality in this matter’
And here I thought 6,340,617 people provided finality in this matter through a Constitutional amendment. Let me be on the record as saying as surely as the McBama administration will raise taxes, the courts will find a way to overturn this amendment. The truth comes out in this statement:
“The petitions raise issues of statewide importance, implicating not only California’s marriage laws but also the initiative process and the Constitution itself”
Implicating the Constitution itself? Perhaps I’ve stepped into another dimension, but in the universe I came from the Constitution set law. How can it be implicated? Apparently the “living, breathing document” (read: it can change to mean anything we want it to mean) that liberals love has gone rogue and we must kill it fast.
Here comes my lunch…
Excuse the mess while I work on the website layout!
