Posted on 05/12/2008 9:06:22 PM PDT by jazusamo
Some people think that the reason the public misunderstands so many issues is that these issues are too "complex" for most voters. But is that really so?
With all the commotion in the media and in politics about the high price of gasoline, is there really some terribly complex explanation?
Is there anything complex about the fact that with two countries-- India and China-- having rapid economic growth, and with combined populations 8 times that of the United States, they are creating an increased demand for the world's oil supply?
The problem is not that supply and demand is such a complex explanation. The problem is that supply and demand is not an emotionally satisfying explanation. For that, you need melodrama, heroes and villains.
It is clear that many people prefer to blame President Bush. Others prefer to blame the oil companies, who have long been the favorite villains of the left.
Politicians understand that. Numerous times they have summoned the heads of oil companies before Congressional committees to be denounced on nationwide television for "greed," with the politicians calling for a federal investigation to "get to the bottom of this!"
Now that is emotionally satisfying, which is the whole point. By the time yet another federal investigation is completed-- and turns up nothing to substantiate the villainy that is supposed to be the reason for high gasoline prices-- most people's attention will have turned to something else.
Newspapers that carried the original inflammatory charges with banner headlines on page 1 will carry the story of the completed investigation that turned up nothing as a small item deep inside the paper.
This has happened at least a dozen times over the past few decades and it will probably happen again.
What about those "obscene" oil company profits we hear so much about?
An economist might ask, "Obscene compared to what?" Compared to the investments made? Compared to the new investments required to find, extract and process additional oil supplies?
Asking questions like these are among the many reasons why economists have never been very popular. They frustrate people's desires for emotionally satisfying explanations.
If corporate "greed" is the explanation for high gasoline prices, why are the government's taxes not an even bigger sign of "greed" on the part of politicians-- since taxes add more to the price of gasoline than oil company profits do?
Whatever the merits or demerits of Senator John McCain's proposal to temporarily suspend the federal taxes on gasoline, it would certainly lower the price more than confiscating all the oil companies' profits.
But it would not be as emotionally satisfying.
Senator Barack Obama clearly understands people's emotional needs and how to meet them. He wants to raise taxes on oil companies.
How that will get us more oil or lower the price of gasoline is a problem that can be left for economists to puzzle over. A politician's problem is how to get more votes-- and one of the most effective ways of doing that is to be a hero who will save us from the villains.
You have heard of the cavalry to the rescue. But have you ever heard of economists to the rescue?
While economists are talking supply and demand, politicians are talking compassion, "change" and being on the side of the angels-- and against drilling for our own oil.
Has any economist ever attracted the kinds of cheering crowds that Barack Obama has-- or even the crowds attracted by Hillary Clinton or John McCain?
If you want cheering crowds, don't bother to study economics. It will only hold you back. Tell people what they want to hear-- and they don't want to hear about supply and demand.
No, supply and demand is not too "complex." It is just not very emotionally satisfying.
Thomas Sowell bump.
Oh, yeah, that was fun! Some of the happiest hours of my childhood were spent sitting in gas lines, visiting with all my friends and neighbors, learning interesting new vocabulary from our parents ...
It was a joke.
I thought my “let congress set a price” comment was so obviously sarcastic, that I didn’t need to include
/sarcasm.
Economics knowledge is the engine that drives our society. To understand economics one must study History, Logic and Math. Guess which studies receive the least emphasis in our society?
A local radio personality, Ed Wallace KLIF, hosts an auto show. He evaluates new cars and writes articles for the Fort Worth Star Telegram and several Auto Magazines. He admits to being a former auto salesman but his knowledge and advocacy of economics is breathtaking. He explained how "Contango" operates.(Contango is the term which describes whether a commodity speculator is making money or loosing money on futures contracts.) For several years he has been stating that the growth of the Indian and Chinese economies were going to effect oil demand. He explained how China had a Communist rule about moving away from your home and place of work. Now the citizens are auto mobile, (unlike the pictures of Tienamen square when everyone was on bikes), and the demand for SUVs, (GASP) are soaring!!
Thomas Sowell and Ed Wallace would make and excellent Presidential Ticket!
I have been told, but cannot conform, that it is illegal to for the oil companies to list the gas taxes they pay.
But that is not the whole burden: add the gas taxes (road use tax) PLUS their SSN taxes, company AND personal income taxes (on the profits they get), company AND personal state taxes and income taxes, environmental taxes, and road taxes, and dump fee taxes, and real estate taxes .....
Add 5-7% sales tax on every item they purchase.
Add a visitor's tax and a restaurant tax on every person that works out of town in a hotel while drilling ....
Add a airport use fee on every flight they make to get to a meeting, or to go look for more gas and oil ....
That's easy enough to do. Computer>Laser Label Printer>Trip to the Gas Station. Just make sure that you are discrete about it.
Uriah — you forgot to add to your analysis that when the oil prices eventually ‘normalize’ that a lot of the newer speculators are going to get burned. Happens in every speculative bubble.
I remember those gas lines. Whenever my wife in a fit of disgust suggests artificially limiting gas prices, I remind her of those lines.
I ask her “Which would you rather have? The desire to go someplace & there be no gas? Or would you prefer to HAVE gas available when you need it?” Indications are that people are conserving gas by cutting down on trips in the car.
/sarcasm.
Mile-long gasoline lines were a real laugh riot back in the Seventies!
But some of us lost our sense of humor about it after a while . . .</sarcasm> tags are cheap. Here's a supply of them, free!</sarcasm>(Note that I made the code to display the code which will, if pasted into a reply, be parsed as </sarcasm>)</sarcasm>
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Can you explain the California taxes further, please? I do not follow. Am stunned by the 69-cent tax posted, however. I live here ...
This is a little out of date with current prices. Remember 6% Sales Tax. 1.25% county tax. 1.2 cpg state UST fee. plus local sales tax.
http://www.californiagasprices.com/tax_info.aspx
I think the economic ignorance in our society is on purpose. The left cannot maintain power if people understand economics.
Sowell has done it again, though. Just when I thought I had a good handle on a topic, like why the left is so economically ignorant, he shows me another facet of the glittering jewel of ignorance that is leftism.
OK, so it’s not just economic ignorance on the part of leftists that make them take such stupid viewpoints on economic issues, it’s the “emotionally (un)satisfying” aspect of economics that adds to that ignorance, making it WILLFUL ignorance to satisfy their juvenile emotional needs.
You are out of your mind. Oil future prices are no more than what people today think Oil will be worth in the future. The term speculator is populist rhetoric. Once again, a populist pretending to be a conservative on the Free Republic!!!. Why can’t the owners of oil get together and sell futures? The oil is theirs. They have the right, nay obligation, to get the highest price possible. Just like you have the right to get the highest price for your labor or anything you sell, and you have the right to get the lowest price possible for anything you buy as long as the OWNER is willing to sell.
You need to read Thomas Sowell cover to cover and put one of his books under your pillow for a few months.
“That assumes that price is reality, and that money is a concrete thing. In fact money and prices are information, and the quantity of gasoline (supply) and your desire to go somewhere in a car (demand) are reality. If the government “sets the price of gas,” what it is actually doing is censoring the message you send to an oil company when you show up at the pump with your credit card in hand. It is the government telling you that you are not allowed to tell an oil company that you want a quart of gasoline more than you want a dollar.”
WOW, great post. If 51% of the people knew this we would be far better off.
Sowell’s economics books are going to be front and center in our homeschool curriculum.
I’ll have to generalize it for pre-k, but that’ll be part of the fun.
“Thomas Sowell and Ed Wallace would make and excellent Presidential Ticket! “
Don’t know about Wallace but I AM voting for Dr Sowell.
My comment was sarcasm, too :-).
Then of course you would be happy to receive your salary in information.
NYMEX crude up $2 suddenly. RBOB gasoline 3.21 suddenly. Heating oil 3.68 suddenly. What is going on?
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