Tag Archives: supply and demand

Demand

Remember that old equation – supply and demand. A friend of mine said something that really struck me. He said we aren’t going to get an explosion of jobs until demand increases. Demand equals the middle class doing better. It is really that simple.

Let’s take Levi’s 501 jeans. How do we get Levi’s to hire more people to make more of their classic 501 jeans? It isn’t by giving tax cuts to Paris Hilton. It is by putting more money into the pockets of average middle class Americans. Then, when thousands of Americans buy Levi’s 501 jeans and the demand exceeds the supply, the Levi Strauss company will hire more workers to make those classic jeans. It is that simple. 

The oil industry is killing me

I truly understand the principles of supply and demand. We have system set up wherein we, the American people, are held hostage by the oil industry. There is no real shortage of oil. None. Yes, there is increased demand by China and other emerging nations, but for the most part there is no shortage… yet prices went up? Why? The explanation that we’ve been given is ‘CUZ. That’s the official explanation. Oil speculators think that there may be an oil shortage in the future. So, they are bidding up the price of oil and we have to pay more. When we get angry and stop driving, this increases the supply and oil prices magically come down. There has to be a better way to run an industry where we, the American people, aren’t getting shafted by speculators.

From CAP:

America is suffering from another oil price shock less than three years after prices hit a record of $147 per barrel in July 2008. Over the past month oil prices rose by over $20 per barrel, or more than 25 percent. This price hike reflects political instability in many oil-producing Persian Gulf nations. And Wall Street speculators have preyed upon oil users’ fears about supply interruptions to bid up the price to over $100 per barrel.

As the price of oil climbs, so too does the price for gasoline. Every $10-per-barrel increase in oil prices boosts gasoline prices by 25 cents per gallon. Many Americans do not have the option to significantly reduce their driving or easily buy more fuel-efficient new cars, so they spend more on gasoline and less on other goods and services. This slows our nation’s still shaky economic recovery and disrupts job growth. Meanwhile, our economy ships off nearly a $1 billion per day to other nations to purchase foreign oil. And higher prices due to instability and speculation inflate the profits of big oil companies while Americans’ wages remain stagnant.

It’s time to get control of volatile oil prices that are hurting our economy, our security, and the everyday budgets of American families. These measures are crucial for longterm economic growth, more jobs, and less dependence on foreign oil. They work together to reduce imports and save money. (more…)

Countdown: McCain And Deregulation

Senator John McCain is finding it harder and harder to run away from his record. He wrote an article in the September/October issue of Contingencies (a journal I had never heard of) in which he stated:

“Opening up the healthcare insurance market to more rigorous, nationwide competition, as we have done over the last decade banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”

I guess it never occurred to McCain that healthcare does not respond to the supply and demand theory that drives most of the market. Nobody goes to a doctor because they seek the cheapest medical treatment. As a matter of fact, people will frequently drive for miles out of their way, to see a physician who they believe is the “best.”

More importantly, this short excerpt shows McCain’s true tendencies when faced with a problem: Don’t analyze the problem; Deregulate it.