I often wonder who has the harder life- intelligent or stupid people. I think it has to be intelligent. Stupid people have it easier because they're just blissfully ignorant of things, they don't take the time to think about anything, and they reduce everything to the most simple form to avoid complexity. I should clarify- most of the time I don't find most people stupid. Everyone knows how to do something really well or understands something in depth that I've never learned. When I say stupid I mean people that don't bother to learn at all, people that ignore the world around them, or people that think that changing their understanding of the world makes them weak.
I was thinking this because I was informed today that "..that's supply and demand. It's what our economy used to run on." (That is a direct quote). My wheels started turning, the hamster increased its pace, and I pondered that statement. It's a statement in various forms I've heard several times lately, mostly from people or organizations that believe America is "turning Socialist" (even though they also misuse that word, but that's a different story).
Here's the problem though. Supply and demand only truly applies to marketplaces in which a very large number of sellers provide nearly identical products or services to a large number of buyers (also called a perfectly competitive market). That's the definition that's been in use practically since Adam Smith wrote The Wealth of Nations. As far as I'm aware, America still participates in that type of economic activity for those types of products. You know- things like shampoo, potato chips, and hammers. Things that are pretty standard and have easy substitutes from other sellers.
Supply and demand, however, does not work very well or apply nearly as easily in situations where a small number of firms controls the market (e.g. cable TV, health care, insurance, phone service, etc). That is an OLIGOPOLY and oligopolies do not necessarily follow the rules of supply and demand. Why? Because oligopolies have the power to set prices above a true market rate. Why can they do this? The lack of alternative sources for the product or service means that the oligopoly holds all of the pricing power. Everyone must go to the few firms that supply the product or service, so they can charge whatever they want. I mean, when you need cable TV, how many options do you have? In my neck of the woods, there are two options. Since I'm a captive consumer to these two companies, they hold all the pricing power and I must take what is offered. This is not really supply and demand. Industries that run on supply and demand cannot set prices above the going price because there are so many alternative sources of their service or product.
Therefore, the most logical conclusion (and the one that can be directly observed- just go to the nearest grocery store or mall) is that America does, in fact, run on supply and demand but only for those products and services with large numbers of sellers and buyers in a highly competitive marketplace. Things like cell phones, credit cards, and insurance work under oligopolies and monopolies and those things do not always follow supply and demand, no matter how much you think they do or should.
Stupid people apparently have the ability make claims about things like economics but not even use the words correctly. I wish I had that ability sometimes. It frees you of responsibility for what you say and do because even when people point out you're completely wrong you can just keep on going under the premise that believing something automatically makes it true.
Anyway, if you're going to make claims about America's macroeconomic behavior, policy, or direction please make sure you understand the terminology. Otherwise, your input is less than useless and just adds to bad rhetoric instead of fixing the issue at hand.
