The 6 Pack Economist

If you are doing a research paper on Einstein’s theory of relativity just go back to Google now.  On the other hand if you want some random bloggers insights on the theory of relativity in day to day life feel free to read on.

 I believe that everything in life is relative.  How good you have it is relative to the things around you.  Humans have and always will be a competitive species and will be trying to get ahead of the next guy.  Communism does not work.  We are always trying to get ourselves to the next level.  I say that this is a good thing.  Sure it has brought about wars and people have lost their livelihood but it has also gotten us out of the farmer stages of societal evolution. 

 As we grow up what is expected of us has changed and expanded.  Why?  Because someone else has done it.  We are in a constant state of competition.  This can be material goods we acquire or inventions we have patented.    

 So what the hell does this have to with economics and curing society’s ills?  Well let’s get one thing out of the way.  We will always have poor and we will always have rich.  Even soviet communism had rich and poor.  This is because everything is relative and those that are poor merely have less then those that rich.  No matter what they actually have its all relative.  In today’s America the poor have multiple TVs, a computer, a car, heating, air conditioning, and food.  Do they have the best of these things? No.  But in comparison to what people had thirty years ago these things were only in the rich peoples homes.  The reason they are still considered poor is because others have so much more or better versions of these things. 

 This relativity applies to anything people can see.  I believe that shows like the “rich and famous” belittles the people who can not live like that.  It is an instant comparison to what the viewers have, which is little in comparison.  It does not mean that they do not enjoy what they have, but they think can or should have it better.  Perhaps one day the poor will also have yachts but the rich will have bigger ones.  And the poor will not be happy then either.

 In addition to macro comparisons like the shows on TV we also deal with relativity locally.  We compete most immediately locally.  It is a “I have more then the Jones mentality”.  This can range from a new set of rims on the car, to a new fishing boat in the driveway.  It is an outward sign of status and potentially makes one more attractive to a potential mate.  Sure in the greater scheme of things it is meaningless. Since in the end if you enjoy what you have you are usually happier then those that trying to keep up with the Jones, but we still do it.

 Since we can not eliminate people from being poor, because poor is relative.  What can be done to allow for people to be happy?  What truly makes most people happy is accomplishment.  This usually means that someone is getting better relative to what they did have.  In the end this is the only thing that can be done.  Allow people to move up.  And conversely allow people to move down.

I am sure you had many some type of economics course and never had a good grasp of supply and demand, because most people do not. Unfortunately for you supply and demand controls almost everything in your life.

The reason that most people do not understand supply and demand is because the supply and demand curve is about price not supply or demand.  If the demand for something high but the supply is low the price is high.  If the demand for something is low and supply is high the price is low. 

If you want to see this action, go to a flea market.  Stop by in the morning and check the prices and the supply of what the vendors are selling.  Then stop by mid-day and see who has a lot of what ever they are selling and who has very little left to sell.  You will see those with a lot of stock left to sell, they will begin to lower the prices.  Why they don’t want to go home with the stuff.  They want to make money on it.  This is especially true if they do not have a new market to attend in the near future.

Ok that example was a little boring.  Here is a better example for you bar flies.  If you are at a bar and the ladies out number the guys say 2 to 1.  Or maybe you need 3 to 1 after all you have nothing better to do then read some guys blog.  In this case the supply of women has out stretched the demand (I know you may want two for the night but just be with happy with one).  This will immediately move your chances up.  As the night goes on people begin to adjust their standards (lower or raise their prices) till the final sale is made.  If an actual transaction of money took place you wasted a lot of time and should have spent more time on Craig’s List.

I hope this gave you a little help in understanding supply and demand.  But look forward to more on this in later series.

Orginally Posted : 18/09/2008

I have come to the conclusion that given my background in IT and my quest for extra income need to come together.  I do not have the time to search for part-time web work because of my full time job and the lack of consistency that it offers.  That and of course small businesses paying me my going rate.  Given these circumstances I decided to give this blogging thing a try. 

I figured that I am opinionated (to a fault) and I have time to write a few posts a week.  I also believe I have some pretty entertaining insights.  How humble of me.  I also have an interest in both economics and beer.  So the title of the blog should be appropriate.  In addition I will touch on things like cars, relationships, and the occasion political comment.  The politics will probably come up more then many will want and those posts will unfortunately develop into firestorms of comments.

As a general summary of my thoughts on economics it comes down to a very true euphemism.  “Nothing is free.”  In my posts I hope to give you unique insights or at the very least expose a rather evident truth you may have already know but never applied to economics.  My post “It’s all about getting laid” will open your eyes into how we as human beings react to day to day economics.  In addition to these posts I will also be reviewing beer.  These two things may seem ways apart but when one thinks about these two things they end up being together.  After all you were not drinking orange juice the last time you discussed tax cuts, strong coffee maybe but not orange juice.

I hope you enjoy the blog and visit often and occasionally donate or pick up one the books I have listed.  Especially “The Arm Chair Economist”.