A Libertine Question (fwd)

[Sandy Sandfort]

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                          SANDY SANDFORT
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C'punks,

On Sat, 3 Aug 1996, Jim Choate's dog wrote:

> > ...Prices rise over time because of inflation of the money 
> > supply...

> Then why didn't the costs rise at the same rate as the general
> inflation rate instead of tens of times faster?

Simple.  In a market economy, with or without inflation, relative
prices are constantly changing in response to changes in supply 
and demand, and as capital is moved among investments to maximize
return.  In an inflationary environment the result is that while
all (or at least most) prices are rising, some will rise faster
than others in the short term.  Q.E.D.

> If the cost of airline tickets matched the rise in milk then my
> gallon of milk would cost over $10 instead of the $2...
> [Jim supported his /post hoc/ argument by saying it applied to
> a lot of things, i.e., he did not address the issue, but in
> essence said /post hoc/ does not apply when there's a whole
> bunch of it.]
>
> ...It is clear that with a increase of x5 in this area and
> something like < x2 in the commodities area that something is
> at play here other than pure inflation.

Only to someone who does not understand economics.  A counter
example is the unregulated computer industry.  Prices rise very
little, if at all, and even undergo price deflation at times. 

> A straw man is where I take one situation and compare it to
> another.

Sorry, this is incorrect.  (We call that an analogy.)  The 
definition of "straw man" I used came directly from the 
dictionary.  Now you may have a "personal" definition, but I
doubt it's widely shared.  (Ref., my Lewis Carrol quote in my
exchange with the pomey.)

If there are no other questions, class is dismissed.


 S a n d y

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