The White Paladin Opines
about pretty much anything that is on my mind or that I find interesting. I'm a teacher, writer, bookseller, fan of crime fiction, film noir, Texas Tech athletics, history and economics and have very strong opinions on politics.

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Saturday, January 30, 2010

Economic Illiteracy Elected Obama

This is not a new piece though I just stumbled upon it when surfing.... it's spot on with my beliefs and states them much better than I am capable of doing. It's from Civil Society Trust. Here's an excerpt....

"What is fundamentally not understood amongst an apparent majority of voters is that entrepreneurs and their financiers, (often being one in the same), create jobs. They perform the vital discovery mechanism of demand assessment and supply a potential solution, risking their own resources to do so."

One of the statements that the author makes that is often misunderstood is that supply must come before demand. People often say, how can you supply something that you don't know the need(not demand) exists for. This is proof of the economic illiteracy of the person who says this. Demand is not need, demand is the actual purchasing of a product or service at a given price level, not whether you want it or need it. If you are unable to pay the price at which the good or service sells, then that's not demand, that's just want or desire. Also, in order to 'demand' something, you have to supply the needed good or service that supplies you with the money to purchase it. Money is simply the medium by which we trade our own goods and services for those of others through markets. Any time the government intervenes, they create a higher price or lower demand through taxation or regulation, unless they are 'subsidizing,' which simply means they are redistributing goods or services from somewhere else, and as a result they are intervening in another transaction or set of transactions, creating a domino effect of interventions in market transactions.

1 comment:

  1. But demand and supply are interconnected, aren't they? If you don't know mobile phones exist you won't 'demand' one. The power of advertising is to create demand.
    Sometimes demand outstrips supply, which is annoying. My crime thriller, CUT SHORT, is in stock on amazon again. (It's been a bit of a "runaway success" here in the UK and my publisher have had to reprint twice in 6 months - huge demand here.) Now are saying 'only a few left in stock' after ONE day, so many people ordered the book while they were out of stock. (Why didn't they get in more copies?! Another case of demand outstripping supply.) I see you read crime fiction so if you're reading CUT SHORT, feel free to visit my blog and let me know what you think.