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Though the Bush spin doctors artfully strive to persuade us that this election is about trust (and yes, we can and do trust George Bush to cozy up to tyrants, raise taxes, stifle initiative, favor the rich, export jobs and fracture the Official Language of Colorado), most voters seem more concerned about economic matters.
My formal economic training consists of one class in
high school 25 years ago, where we learned about the law of
supply and demand.
If demand exceeds supply, then prices rise. This encourages more production, and the demand is eventually met. Often the result is too much production, which causes supply to exceed demand. Then prices fall.
Karl Marx might have complained that this cycle was one of the horrors of capitalism, but supply-and-demand is the logic of the open market, and it once appeared valid.
When molybdenum prices rose 15 years ago, it meant that demand exceeded supply. Thus new mines went into production and copper producers added molybdenum recovery units. Supply increased, prices fell, and lots of people around here lost their jobs.
That, in turn, meant that there were more houses hereabouts than there were people who wanted to live here. Real estate prices dropped until buyers appeared.
So far, so good. However, that happened quite a while ago, and it now appears that the law of supply and demand has been repealed.
Our oldest daughter is a high-school senior and an honor student. Naturally we are proud of her, but the point here is that we are also quite astonished by the huge volume of mail which arrives on that account.
You name the college, from Southeast Central State Normal School to the Upscale Finishing Academy, and we've received a booklet with glossy multi-cultural photos, an enticing video of serene but inspirational student life, an engraved invitation to visit the scenic campus, or the offer of a personal visit from a graduate who found those the most rewarding years of life.
You'd think she was an all-state quarterback from the intensity of this recruiting effort, and other parents likewise report extreme tonnages of collegiate propaganda.
It's easy to understand why colleges so eagerly seek students. In 1980, there were 21.5 million Americans of usual college age, 20-24. Now there are only 18.2 million. The demand for a college education thereby drops on account of demographics, but the supply has been fairly stable -- about 2,000 four-year schools.
Given that, and the law of supply and demand, we should see tuition rates drop. But no, they keep rising by 7 to 10 percent a year, much more than the rate of inflation.
Or we could ponder medical services. Hospital administrators complain frequently about high vacancy rates. The United States leads the world in physicians and hospital beds per capita, though we're not even in the top 10 when it comes to life expectancy and infant mortality.
Obviously, supply exceeds demand, and may even exceed what's healthy. But have prices dropped? Of course not. Medical costs rise even faster than tuition.
In the vice-presidential debate Tuesday night, Adm. James Stockdale kept insisting that the economy was the major issue, and that until it was fixed, every other topic was moot.
But does anybody know how to fix an economy that doesn't obey the law of supply and demand? Or is it that something else is already fixed?
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