SamRussell's blog

Obamacare: An Example of Excessive Government Meddling

 

Just about the most basic of economic functions, what the law states of markets, is not understood by most. We hear "supply and demand" but don't think about how precisely supply is established, why demand occurs, or how price is determined.

Further, we hear that wealth is made by the mix of labor and capital. For most of us in these days of political correctness, "wealth" sounds evil and "capital" sounds worse. "Labor" conjures images of poor workers under the rule of ruthless capitalists creating wealth - in their own business. What a false image and prevents us from understanding the simple nature of markets.

Let's simplify it. Labor equals people. Capital equals resources. Wealth equals money.

Here's an example of the coming of money with simply a person and basic resources. A female needs money, but she's got no resources except clay in her own yard. She combines the clay with water and makes pots that she dries on a sunny day. She sells the pots to passers-by for the money. She has created money, by just her own work and meager resources.

On this example, we view the coming of supply (anyone times resources) and demand (passers-by who need pots). If the seller along with the buyer agree with the worth with the pots, costs are the end result, and that we possess a simple demonstration of supply, demand and price.

Many government officials have not understood markets and therefore are incompetent at permitting them to work without their interference.

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