Explaining Economics one 6 Pack at a time.


  • Tag Archives supply and demand

  • The Big 3 Bail Out and the UAW

    Posted on November 11, 2008 by drinker

    So who is to blame at the UAW for this mess?  My last post talked about the corporations blame.  This one will go into the UAW blame.

     I never begrudge someone from making a good living and trying to become rich.  I hope to be there one day.  What I don’t like is when it gets abused.  And looking at the salaries of the UAW, I firmly believe that it was abused.  

     Unions can be just as short sighted as Corporations and this is definitely the case with the big 3.  Who signed these contracts?  147K a year (salary plus benefits) for an assembly-line worker?  Is there a special talent needed for this or perhaps many years of technical training?  Just a high school degree and a good work ethic (plus a connection I am sure) is all that is needed. 

     I think what we have here is a supply and demand problem.  I can’t believe that the supply of high school grads with a good work ethic is so low that these assembly line workers can demand such a high salary (I would love to get the salary by the way).  I will never begrudge someone from getting a good salary but this is just ridiculous.

     Was there a time when the big 3 controlled all and were so full of profits that they could pay these salaries? Sure there was, oddly enough it was when they were making some of their worst products.  The unions pushed to get ever little bit they could out of the corps with the idea that they were only going to get stronger and would be able to pay these benefits.  But alas like all things, this was soon to change. 

     Now Detroit can no longer pay these extravagant salaries (the upper management too).  Detroit needs to change and change fast.  They need to cut costs and make better cars.  Some people will have be cut or everyone will have to be cut.

     Figures, just when they make a car I am really excited about too.

     NOTE: Although the orginal salary was based on a shady number, the real number is closer to $55 an hour for pay and benefits or about 100,000 a year.  Still seems like their would be a larger supply of people willing to the do the job then the demand for the jobs but who knows.

    This entry was posted in Economics, Politics and tagged , , , , . Bookmark the permalink.

  • Supply and Demand, there is no getting away from it

    Posted on September 18, 2008 by drinker

    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.

     

    This entry was posted in Economics and tagged , . Bookmark the permalink.



©2012 The 6 Pack Economist Entries (RSS) and Comments (RSS)  Raindrops Theme