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R. D. Skidmore

Economics we Know
By R.D. Skidmore, Prof.
Mar 5, 2004 - 2:32:00 PM

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Everybody, everywhere, use economics. Some folks think that economics is too difficult for them to understand, but it's really quite simple, since they use it everyday. Recognizing a little bit of what we know of economics can save us from being hustled by the tricks of political progressives.
Richard Skidmore is a professor at Los Angeles Pierce College, Woodland Hills, California, having taught at Pierce College since 1975.

Central to economics is a few simple rules, and this is not rocket science. The first rule is that there is a cost to everything, or as Uncle Henry would say, “boy, there ain’t no free lunch and you have to make choices to eat.” To obtain one thing or more of anything requires the sacrifice of something else. Nothing is free.

I hear that, so you say, “Now hold on, Skidmore. We have free public schools, free public libraries, and free medical care!”

People who use these services do enjoy them at “no additional charge,” but by no means are they “free.” They are paid for from the financial resources of our tax dollars, and we agree as a resource that if they are not (overused) that they bring value to us.  However, if expenditures weren’t made for these public services then those financial resources would be available for other choices that would be made. Because those “other choices” are sacrificed is the cost of public schools, libraries and medical services.

The main issue about “free” services is which Americans will we as a society force to pay for them. Historically, our Judeo/Christian morality implied that the person who enjoys them should pay for the services that they enjoy. By contrast, the thief’s standard is that they don’t care who pays as long as they enjoy it.

Another basic rule of economics is the law of demand, which is an observation about human behavior and how people spend their money. Simply put it works like this:

  • The more something costs (the higher its price), the less we take of it.
  • The less something costs (the lower its price), the more we take of it.

A salient example, as the price of fuel rises, we can expect people to refrain from driving, going on long vacation trips, auto makers will have a larger inventory because people will be less motivated to purchase gas-guzzler cars, and they may be motivated to insulate their homes to reduce their energy bills.

When fuel prices drop, people will react in an opposite purchase directions.

When interest rates on borrowed money falls, people invest more and purchase more homes. When interest rates rise, they do the opposite.

There are no known exceptions to the law of demand, even though progressive politicians want us to believe that there are.

For instance, politicians want us to believe that when higher minimum wages are enacted, employers will hire the same or more low?skilled labor in response.

They want us to believe that when they raise taxes, people will be just as honest in reporting income as they were before, and that raising taxes create wealth.

They want us to believe that with a single payer health care system, everyone will be treated with the very best healthcare and the financial burden on society will not affect incomes.

Unfortunately, the reality is that there are limitations, and in economics this is a factor of scarcity.

Scarcity simply means we all want more of something, but there are not enough resources to satisfy every want. That means we must find a way to determine who is going to get what's available.

Political hucksters want you to think that they are better able to make those decisions than you are and that they should make them for you. Of course if they are going to make your financial decisions for you then all tax cuts should be “rolled back.” Can you imagine that you are not able to make good decisions about how to best spend your money?

Alexander Tyler, wrote in the 18th Century, “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship.”

Of course, the anointed political progressives see themselves as best fit for those public treasury decisions.

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


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