By Chris Rossini
Thomas Sowell described government intervention perfectly: “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics."
That, in a nutshell, defines all of the competing factions who use government to try to get their way. They want healthcare to be cheaper (or even FREE!). They want fossil fuels to be more expensive. They want this regulation or that regulation. They constantly want government to "do something".
Well, government has done something alright. The amalgamation of all these competing interests have turned the U.S. economy into a twisted pretzel. At every turn we see a mish mosh of policies and restrictions. All of it has been done to thwart what would have naturally occurred if the market were left free to function.
Unfortunately, most people don't care about supply & demand. It's never properly taught in schools (big surprise) so most just grow up thinking that economic laws are strictly for those egghead professors to worry about. After all, Americans have their mighty government! If citizens just summon the will to "make their voices heard," the government will turn stones into bread if it were so desired.
Yet supply and demand never yields. It remains buried under mountains of bureaucratic meddling. It cannot and will not be repealed no matter what anyone thinks. In fact, the great Austrian economist Ludwig von Mises once wrote: “The criterion of truth is that it works even if nobody is prepared to acknowledge it.”
In America, far too many people refuse to acknowledge the laws of supply and demand. The "Fight for 15" thing that we see today is an attempt to subvert supply and demand. In fact, the minimum wage itself is government's way of "doing something" to overrule the market.
Yet the market never loses to government. The minimum wage merely forces the lowest-skilled and most vulnerable members of our society into unemployment. The only losers are those who believe in government.
I'm very happy to report some positive news though. There is a company that we've all heard of, Uber, that is actually standing up for supply & demand!
Apparently Uber has something called "dynamic pricing" in which the prices of getting an Uber goes up when the demand for them goes up.
Sounds like basic economics right? Of course price is supposed to rise when demand surges. That ensures that an Uber ride will always be available.
Well, unsurprisingly, many people have a problem with this. They'd rather prices not rise, no matter what! They're probably living in the fantasy world that their professors have instilled into them. You've probably heard it: "rising prices must mean that you're being 'gouged' by greedy corporations."
Yes, these individuals would rather prices remain artificially low during surge times. Do they think a single step ahead? No.
But what would happen if Uber were forced to keep prices lower than what the market demanded? There would be shortages of Uber rides! People would stand around cursing and complaining about how much "Uber sucks!" You can't get a ride when you really need one!
Fortunately, Uber is not yielding to economic ignorance. They are going to keep their "dynamic pricing". A spokesperson emailed the following statement to MarketWatch:
“Uber is always looking for ways to better predict supply and demand in a city. But this story is not accurate: we have no plans to end dynamic pricing. While we understand that no-one likes to pay more for the same trip, it’s the only way to ensure that passengers can always get a ride when they need one."
What a breath of fresh air.
(h/t - EconomicPolicyJournal.com)