A Christmas Day Economics Story
During college at the University of Missouri I was fortunate to take economics classes from the legendary professor Walter L. Johnson. One year he told the following story (paraphrased):
When my children were young we used to travel to my in-laws for Christmas. One year we couldn’t make the trip until Christmas Day. About halfway we realized that we were perilously low on fuel. My wife was worried that no gas stations would be open on Christmas and we’d be stranded.
I told her that as an economist I believed in capitalism and that our capitalist economy would provide us with an open gas station. There is an opportunity to sell fuel to travelers on Christmas, which meant that some gas stations would be open to take advantage of the opportunity – even on Christmas.
We pulled off the highway at the next exit and after a bit of looking found a gas station that was open. The lesson: if there is a demand – an opportunity to make money – the economy will provide.
Professor Johnson’s Christmas Story has stuck with me and I have regularly found applications for its lesson. An example occurred this week. Yesterday I had a 5:25 a.m. flight so I’d need to get a taxi or Uber/Lyft to pick me up around 4:15. Ugh. The question I pondered the night before the flight was whether I should call right then to arrange for a taxi pick me up in the morning, or should I chance that an Uber/Lyft being available that early in the morning (in suburbanish St. Louis)?
I thought back to Prof. Johnson’s Christmas Day economics lesson and I decided to have faith that the economy would provide. Because there was demand (me and others with super early flights), I decided that a few Uber/Lyft drivers would be up early wanting to make money.
Sure enough, around 4:15 a.m. I requested an Uber and there were three drivers available pretty close by. I asked my Uber driver why he drives so early in the morning. He said he likes to get a few trips in each day to supplement his income from his day job but there is too much competition from other drivers to driver after work. So, he gets up early and makes more $$$ per hour. The economy is amazing.
Fantastic John Kenneth Galbraith Quotes
Switching gears but staying on the topic of economics and economists – John Kenneth Galbraith (1908 – 2006) was an important 20th Century economist. He taught at Harvard, Princeton and Cal-Berkeley. In addition to being an accomplished economic thinker he also is the author of some great quotes. Here are some of his best:
Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.
It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled seas of thought.
Economics is extremely useful as a form of employment for economists.
The only function of economic forecasting is to make astrology look respectable.
What is called sound economics is very often what mirrors the needs of the respectably affluent.
If all else fails, immortality can always be assured by spectacular error.
In any great organization it is far, far safer to be wrong with the majority than to be right alone.
The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.
Under capitalism, man exploits man. Under communism, it’s just the opposite.
Do not be alarmed by simplification, “complexity” is often a device for claiming sophistication, or for evading simple truths.
The conventional view serves to protect us from the painful job of thinking.
There are few ironclad rules of diplomacy but to one there is no exception. When an official reports that talks were useful, it can safely be concluded that nothing was accomplished.
The capacity for erroneous belief is very great, especially where it coincides with convenience.
This should be required reading for all college graduates – so they will understand how things are really going to work in their new jobs
Extra helpings of truth in this IFOD mental meal. Thanks!