Thursday, May 03, 2007

Economics 101

Gas prices have hit a new all-time high here in California, and nationwide according to the news, and it’s not even Memorial Day yet. We are told that prices are headed even higher and that they are not caused by oil prices at this point, but rather by increased demand. The high prices, we are being told, are our fault because we are using too much gasoline.

I keep hearing that “increased demand” refrain, and it really chaps my scrawny ass. Okay, that’s a figure of speech, as “scrawny” is not really the operative word, but…

Increased demand permits higher prices, it does not require them, it does not cause them. The cause of higher prices is either higher costs, for raw materials or in processing, or it is greed.

If I have 10 widgets that cost me $8 each, a market of 10 people who want widgets, and I decide I need 20% margin of profit to operate, then I have a balanced market of 10 customers for 10 widgets at $10 each.

If I’m sitting there with those 10 widgets and 20 people show up I can start a bidding war and get those people bidding against each other for those widgets and I will make a larger profit, but I do not have to do that. The procedure that is fair is to sell at $10 to the first 10 people and go home with the $20 profit that I decided ahead of time was my fair profit.

Or I can sell at $20 to the 10 people who yelled the loudest and then go home, telling them that the higher price is their fault for yelling so loud.

Or I can do like the oil companies do. Real quick get 10 more widgets, which also cost me $8 each, sell all 20 of them at $20 each and go home, telling buyers the price is their fault for being willing to pay so much.

Make no mistake, in the latter cases the high prices were caused by greed.

Advertising 102

My girlfriend and I were talking about osteoporosis and she told me she has to set aside time one morning every week to take her osteoporosis pill.

Oh, barf.

I have emphysema, heart disease and Parkinson’s. For one thing, I don’t sit around and chat with my friends about how often I take medication. Of course I’m a guy, right? We talk about cars and baseball and go, “duh” a lot, but… But if I did have that discussion, would you like to guess how many pills I take and how often I take them?

One morning every week. Forsooth.

Just how freaking long does it require to take a pill?

I’m not suggesting that I don’t think that condition is serious, or that developing a pill that can be taken less often is not worthwhile, but…

I told my doctor in one visit that I wanted him to prescribe a purple pill for me and, before he could ask why, I added that I wanted it to have two yellow stripes on it. The second part of my request (and that I couldn’t quite keep a straight face) tipped him off to what I was up to and he asked, “Didn’t the advertisement tell you to ask your doctor if it was right for you?” he asked, smiling. I acknowledged that it had and he shook his head. “I’m so sorry,” he said, “It’s not right for you.”

As I suspected, doctors absolutely hate these advertisements. My doctor is something of a dinosaur in that he runs a private practice and makes almost a religion out of a) not keeping patients waiting for him and b) spending as much time with patients as they need. When he comes in to examine me he initially sits down with my chart and we talk about what has happened since my last visit. He really doesn’t need to spend time talking patients out of some inappropriate drug that a television ad convinced them that they need for some condition that they don't have.

He did rather enjoy the time I told him I thought I had the bird flu because, “that’s what’s in Reader’s Digest this month.”