Monday, June 06, 2005

The whole equation,

When it comes to basic economics most people are in the dark. Union leaders, politicians, and activists often seek out "bargains" in any way they can. Some complaints you hear from such people are outsourcing of jobs, high gas prices, and a low minimum wage. Rarely do such people understand the whole part of the equation of those things. They look for ways to save jobs and money, and often they do just the opposite. They confuse cost with price. High gas prices doesn't necessarily mean the cost of gas is high. In the 1970's price controls made the price of gas drop, while the cost of it went up. Time and travel are not free and a lot of that occurred in the 1970's, as people hunted for a gas station that had a shorter waiting line. What people fail to see when they are critical of "outsourcing" is that the consumer benefits from lower prices and as a result more benefits are created for everyone. When the idea of minimum wage comes around a lot of its backers think of it as the moral thing to do. But they fail to see that as a result of minimum wage, people with little or no skills (including mentally handicapped people) get priced out off the job market. We should see past our emotions in order to see the whole equation.