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R. D. Skidmore

Beer’s Supply and Demand
By Richard Skidmore, Prof.
Oct 9, 2003 - 4:27:00 PM

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Harvard School of Public Health has completed a new study on economics.

This Harvard study dealt with beer consumption among college students and was reported in the American Journal of Preventive Medicine, proving that universities can receive research dollars to study just about anything.
R.D. Skidmore is a professor at Pierce College in Woodland Hills, Ca.

What they found was that as the price of beer declined, beer consumption increased. Consumption increased even more greatly as the beer was provided free.

This is a classic confirmation of the supply demand theories that as price drops consumption increases. This is true whether you are talking about beer consumption or health care services. The fact is that the lower the price of anything will cause more people to enter the marketplace to consume, whether paid for directly or not.

This study looked especially at college students in that “young people are more affected by the price of (beer)” because of their “limited financial resources.”

The research found that bars and saloons near college campuses commonly use various discounts and promotions to attract students (customers), and alcohol promotions and specials increase consumption.

For example, they confirmed a study by TF Babor that “both heavy and light drinkers drank more than twice as much alcohol during simulated ‘happy hours’ as they did during times without such promotions.” Oh, the power of advertising.

As with all studies there has to be corollaries for people in a free economy and free society to consider.

Government interferes with society and economy, affecting the marketplace, attempting to provide and advertising “free” services to privileged populations with “limited financial resources.” But the reality is that there are no truly “free” services. Someone, somewhere, some how, must pay for those services. In the free market, services provided for “free” are deemed charity. When Government is involved it becomes an entitlement, and “free” is a code word for taxpayer burden.

An example of this is the Health Care Industry. Now do not think that I want people deprived of health care, but it does provide some good correlations with Harvard’s beer consumption and how health care is consumed.

Government agencies began providing limited health care services for those who did not have the resources to provide the full coverage that an employer benefit plan might provide or that the individual could pay for on their own.

With time, more “free” government services were offered and a greater population participated. We all act in our own best self-interest, and in a free market, if I can purchase the same product at a lower price or for “free” I will switch suppliers for the lowest cost.

In an attempt to provide healthcare for everyone, Government has mandated that all tax supported healthcare facilities accept everyone.  The result is that the limited resources of healthcare facilities and their supplies will be used up, and drain the tax coffers that support those facilities.

Since nothing is “free,” what can a progressive politician, that sees government as essential in providing a “safety net,” do? Limit the kinds of services available? Reduce staff and close facilities? How about raise taxes? But on whom shall the taxes be levied?

Legislators in California, racing the recall clock, passed Senate Bill 2 (Burton, D.) forcing business to provide health insurance for employees. It is estimated that this will initially cost employers up to $7 billion, jeopardizing the survival of California business.

The argument for SB 2 was couched around “let’s do it for the children,” and “there are thousands of children who do not have health care insurance.” You will have to forgive me, but unless children work for an employer who provides health benefits they won’t have the insurance coverage - but then isn’t that the responsibility of their parents?

How will business react to this added government regulation? Those large companies that stay will increase the retail price of consumer goods to cover this new government cost. Smaller employers, who employ 70% of the workforce, will reduce payrolls, limit their benefits, and reduce employee pay to cover the cost, or leave the state. California’s employers are already struggling under the crushing burden of exploding workers’ compensation and energy costs, one of the highest tax rates in the nation and suffocating regulations.

But then, just as California reduced the number of energy providers in the state, maybe having fewer businesses will benefit the state! Labor won’t have to search so many employers for jobs - because they left the state.

Skidmore is a professor at Pierce College in Woodland Hills, Ca. He may be contacted at rskidmor49@excite.com


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