This morning a colleague told me about his visit to a local gun show. Naturally it was filled to capacity and there was much waiting. He told me that prices are up dramatically and that many items – especially ammunition – are in short supply. I said, “well, that’s supply and demand.” He agreed and told me that not everyone sees it that way.
He told me of a short conversation he had while waiting in line. When the topic of high ammunition prices came up, the other gentleman argued that it should be just the opposite. If people want to buy a lot of ammunition, prices should fall. It is like a national “volume discount” or something. My colleague didn’t engage the gentleman further but he and I had a good laugh.
Of course always and everywhere dramatic increases in demand, in the short run, result in increases in prices. At least until supply can be ramped up to meet demand. It always amuses me that there are people who just don’t get that and never will. It’s like they have been denied an ability to work the magic of economic thinking. They can’t see it and they don’t get it. To them, it is unfathomable. They are economic muggles.
Speaking of economic muggles, the nation is being led by one.
What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with Barack Obama was this revelation: “At one point several weeks ago,” Mr. Boehner says, “the president said to me, ‘We don’t have a spending problem.'”
The president’s insistence that Washington doesn’t have a spending problem, Mr. Boehner says, is predicated on the belief that massive federal deficits stem from what Mr. Obama called “a health-care problem.” Mr. Boehner says that after he recovered from his astonishment—”They blame all of the fiscal woes on our health-care system”—he replied: “Clearly we have a health-care problem, which is about to get worse with ObamaCare. But, Mr. President, we have a very serious spending problem.” He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: “I’m getting tired of hearing you say that.”
You can’t get much more muggled than that, can you?