Friday, July 7, 2017

Here is a Little Economics Lesson

Here’s a little economics lesson: supply and demand. You put the supply out there, and demand will follow. -- Rick Perry, U.S. Secretary of Energy
While the media is having fun at the expense of Secretary Perry's asinine "economics lesson" it is worth pointing out that the very same publications that ridicule Perry perpetually peddle the exact same theory under the guise of "debunking" the imaginary lump-of-labor fallacy. Here is The Economist from yesterday telling its readers that the demand for goods and services is infinite:
By the 1990s governments and employers realised they were making pension promises they would not be able to keep. The idea that there is only a finite number of jobs to go round—the "lump of labour"—was more widely exposed as a fallacy. It became fashionable to argue that "we must work till we drop."
Just for the record, the number of jobs to go round is indeed finite. The demand for goods and services is limited by the funds and credit available to consumers to purchase them and the time available to consume them. Those funds and credit are, in principle, limited even though those limits are, in practice, quite malleable and difficult to pinpoint. Expansion of credit beyond those limits invariably leads to collapse when debt loses its "credibility" -- which is to say the reasonable expectation that the debtor can continue to service the debt.

Perry may be a total fool but he is only parroting what he has been taught by... "economists."

7 comments:

ProGrowthLiberal said...

Let's do this in terms of market pricing. If Rick Perry wrote a speech - who would buy it? He could try to sell it for $100 but no takers. He could lower the price to $10 but still no takers. He could lower the price to $1 but no one would still buy it. Now if he lowered the price to negative $10, I'd take his ten spot and be glad to take his speech to the shedding machines. In this way - his little quip might be correct.

Sandwichman said...

I am sure that Rick Perry will get a handsome fee for a "speech" after he winds up his govt. appointment.

Jerry Brown said...

PGL, I am afraid I have to disagree. While it does seem that the supply of right wing BS is almost infinite, the demand for it also seems to increase with the supply. Its like some kind of miserable feedback mechanism. Maybe it is the original vicious circle, in which case it is aptly named. :)

JDM said...

In Rick Perry's formulation, he writes a speech and no one wants to buy it. So the solution is to simply write the speech again and again and again. That way people will start lining up to buy it.

Bruce Wilder said...

My impression is that the people who pay for Rick Perry, speeches and all, are not the same as the people who are forced to consume governance-by-Rick-Perry™, which is provided to them without much in the way of spontaneous popular requests. Though it does end up costing the recipients of Rick-Perry-governance, there is no ticket price, so to speak, since like advertising, it is a something of a public bad (analogous to a public good, but . . . not actually good).

Bill said...

Is demand infinite? Are you kidding?

Demand cannot be greater than desire, and desire, while great, is not unlimited, except in pathological cases. As everybody with a grain of sense knows, Enough is enough.

Anonymous said...

This is the stupidest summary of Say's law, I've ever seen.