Economics


Today, I only rent the land, but a few years ago, I used to rent mobile homes. I had one fellow who had a couple of kids and was squeaking by. Like most people, he tended to live paycheck-to-paycheck. I tried everything short of paying him to help him stay in my rental, but eventually had to evict him.

During the last week or so of his stay, we were still trying to work things out and he said he was speaking with someone about something at lunch earlier that week. Now, I need you to picture how I lived at that time. I had gone to work for Wal-mart because my rentals were not pulling in enough money for me to live on and my savings were quickly dwindling.

I live a pretty meager life. I don’t eat out. I don’t commute. I combine trips to save fuel. I only watch matinees at the cinema. I set up a community book exchange to lower my book costs. I drink a diet powdered drink to save money on food. Back when this was happening I didn’t even have cable TV.
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In another lifetime, I used to work for The Home Depot. Back then, it was important to me to know as much about big box retail as I could learn. I read the insider magazines and read a lot of the manuals and generally tuned my ear to anything having to do with any of the big box retailers.

I met a fellow once who had worked for a lumber yard who was a competitor of ours. I asked him why contractors seemed more likely to go to his stores rather than mine. He said something which made very much sense at the time and something which later I would participate in as well.

As a mobile home park owner, much of my time is spent doing odds and ends jobs around the park. It is not uncommon for the company pickup truck to be loaded with plumbing parts, tools and other valuable items.
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Picture this. You are called in to a local court and asked by town officials about your earnings over the last year. It is revealed that you have had a really great year. Your pay went up and you were able to pay down your existing debt. You have a few skills that make your labor much in demand. Demand is so great that you will see a massive increase in pay this coming year.

Now, one of the idiot politicians asks, “Since you made so much money last year and since there is a shortage in alternatives to your work skills, why not work for less next year.” I’m willing to bet that you would probably want to ask the idiot politician what he or she was smoking and whether they were willing to share.

Let me make sure you understand what I am saying. You have a highly demanded skill, but there are alternatives for your customers. Unfortunately, all those alternatives are even more expensive than purchasing your skills. Your customers are hitting hard times and they need financial relief from your high prices.

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In real estate investing propaganda I often see terms like “50 cents on the dollar” or “buy property for half off.” This is bull shit, folks. Any product sold is worth exactly what the purchaser paid for it. A house which sells for $50,000 is not worth more than $50,000. We know that because it sold for $50,000, not for more than that.

Is is possible for a person to buy a house in the morning and sell it immediately for a profit. With a double closing I could do it in one trip to the closing company. Though it is a rare deal, it might be possible to buy a property for $50,000 and immediately turn around and sell it for $100,000 in one transaction.

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Barak Obama is touting a tax credit for college tuition. I can only hope that this is just a promise and will not come about. I read recently that a politicians job is to make promises. It’s not their job to fulfill their promises, just to make them. Why would I be against a tax credit?

One reason was given in a short interview on my local news station. The speaker said that students could go to bigger schools. In her opinion, the tax credit would allow students to spend more on education, but Obama wanted to help people save money on tuition.

Left only to the market, if the price of education was too high then colleges would have to reduce their prices. The reason we might need a tax credit to help people afford education is if we are already doing something which inhibits this market mechanism.

Instead of offering a tax credit to fix the regulation, why not just repeal that regulation which messes up the market in the first place? Why does “doing something” have to add more laws? Since the market works all by itself, why not make “doing something” mean getting out of the way of the market?

Sometimes it does it subtly and sometimes it does it obviously, but regulation always changes the market place in ways we may not understand. It seems to me that Consumer Law attempts to give power to consumers because some people are convinced that large firms have all the power. But do they?

In a free market every trade is voluntary. There is no legal method to initiate force. Not even government can initiate it. Free market advocates often complain that there is no need for anti-trust or consumer law.

Take, for example, the scenario of a dominant market player (like Intel) using its size to drive other players out of a particular market by lowering its prices so much that they are sometimes selling below cost.
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The U.S. has 4% of the world’s population and consumes 25% of the world’s power.

This time I heard it on the NBC Evening news. The reporter never bothered to ask why the speaker made this comparison. What the Bleep do these two things have in common?

Okay. At first glance this statement seems to hold some substance. What could only 4% of the world’s people be doing that accounts for so much power usage? Hmm. I wonder if production might tell us something?

Gross Domestic Product provides of the best measures to compare countries or populations. According to the International Monetary Fund the 2006 World GDP was $48,245,198,000,000 and the U.S. GDP is $13,194,700,000,000. Isn’t it a coincidence that the U.S. GDP is about 27% of the World GDP and the U.S. power consumption is 25% of world power consumption?

Daniel Botkin was featured on the EconTalk podcast for November 26, 2007. In the interview he says some really neat things about nature.

Most species have evolved and adapted to change and depend on change, so assuming steady state goes against their needs.

He’s referring to more than just climate change. In some forests the vegetation has adapted to fires. When we stop allowing fires to control wilderness, we actually destroy nature. Daniel illustrates that our perception of what nature should be often influences what we do to nature.
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I ran across this argument in a political thread about libertarians.

… the fact that your lap top just went up in flames and distorted a years work product is of little concern. You will get your check for $1000 to replace the Lap Top. You talk to a lawyer You are told it will cost at least $35,000 and maybe 5 years to make a claim for the work product you lost. a work product might have a worth in the Millions but do you have the time and the money to recover the loss …

In your scenario the idiot consumer placed millions of dollars worth of information on a single device with no backups. Even if the battery was well made, the potential for loss of the information is too great to warrant such a risk. I wouldn’t leave that kind of information on any single device.
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The whole is more than the sum of its parts — Aristotle

I read something recently and it got me thinking. Basically, I have always relied on the old axiom the the whole is more than the sum of its parts. People, working together, often can accomplish tasks that could not be done working separately.

The mathematician in me, balks at this idea. The whole could never be greater than the sum of its parts. So, I compartmentalized my thoughts on this. Sometimes math doesn’t work in the real world.
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