REALITY?: The Economy–the part I can’t do anything about

It's on everyone's mind these days, whether you're wondering how to pay the mortgage this month or whether you're canceling that trip to France. Where there was barely enough macaroni and cheese, there's half of that now. Steve Ersinghaus asks an interesting question:

For example, how much is an average 20k auto actually worth? Doesn’t this depend on the cost of smelting equipment and labor? How much is labor worth? If pay is not proportional to the cost of necessary goods vs luxuries, then what is the worth of the luxury market with its limited cycles (you know, cell phones, TVs).

I can't help thinking that not much intelligence goes beyond the cost basis to determine price or value once a profit margin is established. After that, it's the law of supply and demand. I may be naive, but this was proven by housing prices, the flexible price of gasoline and heating fuel once folks curbed their usage, and all you have to do is watch the stock market for a week to see the principle in action. Prices of those "once hot" luxury toys come down once the need is satisfied and manufacturers are gathering around tables planning the next big hit.

If America can cut its dependency on foreign oil, by alternative energy, home drilling, and responsible use, we'll cut one of the biggest drains on our system. There's no reason why we can't cut our dependency on foreign labor and foreign goods. This statement from the New York Times article that Steve references ruffled my feathers a bit:

There was Hu Jintao, the president of China, heading a delegation of 100 people and wielding a fat checkbook — nearly $2 trillion in foreign exchange reserves — that Beijing could lend to distressed countries.

China? Where their people are doing our work and being paid peanuts for it? Where we buy our lead-painted toys and melamine-laced food instead of trusting our own USA workers and products? There's a simple solution to many problems here, including jobs for Americans and non-poisonous food and high quality, safe products; cut China's imports to us big time. I understand the need and benefits of fair trade, but if we look closely, we're getting the short end of the stick here.  Oh, and slap penalty fees on American companies who produce goods overseas.

Just caught on the TV that the Obamas raked in four million last year. A half hour ago, we get Beyonce and JC (?) bringing in $162million. There are folks out there, the corporate executives, the ballplayers, the movie stars and teenybopper celebrities, who have no clue what money worries are like. But we pay them more and more because they found out that we will. As long as we will, they'll take it; it's the law of supply and demand–whatever the market will bear. If you think someone's overpaid, well, refuse to patronize their stores or use their products, buy season tickets, go to movies or buy the DVDs.

I'm no economist either, (and I can't say this without thinking of Cheech and Chong's take on Olympian Nadia Comaneci) but it seems that value is not based on any logical formula. Beauty, as they say, is in the eye of the beholder and it's the consumer that sets the prices as often as not.

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2 Responses to REALITY?: The Economy–the part I can’t do anything about

  1. Just a thought says:

    You don’t need to wait for the government to do something. Just stop buying things that have at some point been outside US borders and start buying stuff produced locally. Good luck.

  2. susan says:

    Thanks! I’m not one to depend upon the government–or ask them, for that matter–to do something. I’ve been raised to be self-sufficient and efficiently use and purchase, taking responsibility for myself. Yes, I do attempt to ‘buy American’ whenever I can. Unfortunately, a lot of stuff, even staples, isn’t produced here, even at higher prices. I buy local, shunning malls two towns over if I can help those folk I know by their faces and names. It’s a start.

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