The Hobo Philosopher

Supply and Demand

By Richard E. Noble

I just bought 50 gallons of LP gas. It was half the price of the 50 gallons that I bought last time. It is now December, winter! The demand for home heating fuel is up. The price should have been higher. It was lower.
I filled my car with gasoline yesterday. It cost me half as much as it did a few months ago. The price for a barrel of oil is under 50 dollars. The Arabs have cut production, lowering the supply, but yet the price is going down.
John Kenneth Galbraith, decades ago, warned about putting too much faith in classical economic theories like supply and demand. He claimed that we didn’t really live in a capitalist system and that the market system was a misnomer. He described our system more appropriately as a corporate system. He wrote a book about the crash of 1929. I’ve recently read that book. Somebody should reprint it. It’s like deja vu all over again.
But in recent months I’ve learned about the stock market’s effect on supply and demand and prices. It seems that speculators can buy future commodities or commodity futures, or whatever they are called and with no change in either the supply or the demand they can change the whole price structure. Oil was 140 dollars per barrel and I am told that maybe 40-60 percent of that price could have been due to stock market speculators.
The Arabs and OPEC have cut production yet the price of oil at the pump and for the furnace is dropping. What’s going on? Have the speculators stopped speculating? A few months ago they were buying corn and rice futures and the prices were going up. It doesn’t seem to matter what the supply or the demand is. It is more important to know where the speculators are going to “bubble up” things next. Could it be that we have too many people with too much money?
Our domestic automobile companies are going to the government for help. Some politicians are suggesting that Toyota and Honda will be lining up next. How can they make automobiles and sell them when General Motors and Ford can’t? Don’t they deserve a kickback from the taxpayers too?
Well, from my reading they have already got their kickback. When they negotiated to build here, they got free land in many cases from the communities that they settled in. They were given tax immunity from the counties and states where they settled. They demanded that there be no unions in their plants.
I read an account by Robert Reich who was once Secretary of Labor. A Toyota plant was breaking the law with regard to labor practices. Robert Reich and a team of Washington labor experts rushed to the area to straighten out the situation. They told the manager of the plant to straighten up. The next day a big announcement appeared in the local newspaper. Toyota was going to close down their plant in this neighborhood due to harassment by the federal government. Reich and his team rushed out of town with their tales between their legs.
But what about federal taxes? Well, the Japanese import most of their parts from Japan. They only assemble their cars here in the U.S. Japan charges their American based plants substantially for these parts. Consequently their federal income taxes are low or non-existent. In some cases the American government may even owe them money.
Their executives defer their pays, and collect when they return to Japan in the form of pensions and bonuses. The only people paying taxes at the foreign car plants seem to be the American workers who assemble the cars there. On top of all that the Japanese government is involved in the finances of their companies.
The American car producers receive none of these benefits.
Whenever I go down to the post office, the lot is usually filled with SUVs and pickup trucks. I’ve even seen a few Hummers down there. Americans were buying these gas guzzlers just a short while ago. People have told me time and again that they wouldn’t buy a little car like the one I drive because they are not safe.
So now we hear that the paychecks and the retirement of the workers at the “domestic” production plant should be cut or forfeited.
Unions at their peak only represented 30 percent of the American labor force - today they are under 10 percent and dropping fast. It seems to me that there is more than supply and demand going on here.
If workers in our economic system cannot be paid living wages and in some cases “good” wages, then what good is our economic system? When it comes to labor, supply is virtually unlimited and demand almost always inadequate. We call it full employment in our system when over 10 million people are unemployed. And our chief defense against inflation is to layoff or fire employees. If capitalism only benefits the rich, the super wealthy and the corporate executives and the vast majority of people must live either in poverty or mediocrity then what good is the system? Where is the American dream? Maybe that is the answer. The American dream is a dream and only an attainable reality for the few and not the many. Maybe that is the way that it has always been, the majority only thought it to be otherwise.

“A Little Something”is R.E. Noble’s first book of poetry and it is now on sale at Amazon and locally at Downtown Books along with Hobo-ing America, A Summer with Charlie and Honor Thy Farther and Thy Mother. Richard Noble is a freelance writer who has lived here in Eastpoint for nearly 30 years.