I enjoyed Econ101 but got a "C"

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tmiles
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2012/05/14 17:08:41 (permalink)

I enjoyed Econ101 but got a "C"

I took more economics classes but was never the star student. They have the math guys that think everything should fit a formula......quickly in micro and eventually in macro. I was more of a touchy-feely guy who thought that human emotion was as important as the math.
 
I have 3 food related examples that are, at least to me interesting.
 
Since WW II breeders have been putting more breast on chicken, and processors have been trying to figure out how to sell the leg meat. Now, since boneless thighs are on the market, they can't get enough dark meat.....taste changes. What I can't figure out is why they are afraid to raise the price of dark over white. If I put in a 5 case order for boneless thighs, I want 5 cases, not 3 because of a "shortage". I would think that supply and demand would set the price, but dealers are protecting relationships.
 
The wholesale price of pork has tanked. Nobody on the retail end is putting it on sale. Producers are pissed. They want to see market clearing retail prices.
 
Over Easter I saw cuts of lamb being sold at retail, below wholesale cost. Whole lamb (my specialty) brought very good prices, and I guy that I know had to bring in 3500 lambs from far away at high transport cost.
 
Interesting? Dull as watching paint dry? You decide.
 
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    MetroplexJim
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    Re:I enjoyed Econ101 but got a "C" 2012/05/14 18:49:13 (permalink)
    One of the damn shames of my profession of economics is what we in graduate school termed "window dressing math" or "mathematical masturbation"; such unnecessary and gratuitious fluff stands in the way of both beginning and intermediate students gaining an intuitive understanding of the principles of economics.  This unfortunate circumstance has only gotten worse since Paul Samuelson's seminal work in "mathematizing" economics, Foundations of Economic Analysis (not to be confused with his famous beginning textbook).  Sorry that you were a victim of these vile exercises in making esoteric what is really just common sense.
     
    Chicken:  what you are seeing is simply 'stickiness' in supply responding to a change in consumers' tastes & preferences.  Presently they are wondering if this is fashion or a longer run trend.  Recall that price is a market signal; retailers need to follow their natural inclination to seek 'rent' by raising the price of boneless dark vis a vis boneless white meat.  The suppliers will notice the signal and reallocate deboning personnel and equipment so as to produce more processed dark meat.  As, through breeding, dark meat is now more scarce than white I'd expect price to come to reflect his fact. 
     
    Pork:  retailers are presently earning economic rent (higher than normal profit margins) on their retail sale of pork.  Pork producers want to reduce supply but cannot do so in the short run.  In the longer run, they will, the wholesale price will rise, and rents at the retail level will no longer be possible.  Beef has been in this cycle forever.  Check the futures prices; I'll bet you see pork bellies ticking up.
     
    Lamb:  my guess is that you are seeing the market's over-supply response to the seasonal demand for lamb by Semitic peoples (Jews & Muslims).  This also happens to turkey before and through Thanksgiving:  frozen turkey becomes "almost free" while fresh whole turkey (like the whole lambs) becomes quite dear.        
    post edited by MetroplexJim - 2012/05/14 19:14:25
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    plb
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    Re:I enjoyed Econ101 but got a "C" 2012/05/14 20:45:04 (permalink)
    If it has no equations or numbers it cannot be a science, just economic philosophy.
     
    Chicken – Are they still exporting lots of dark chicken meat south of the border where they prefer dark meat?
     
    Pork – My next door neighbor who is from Iowa was heading there for a visit.  I told her to have a Breaded Pork Tenderloin sandwich for me.  She haughtily told me she does not eat pork.  Maybe that pickiness is why she is bright, wealthy, very attractive and single at 50+.  (I know, this has nothing to with economics)
     
    Lamb – I’ll have to check the prices.   We both love lamb, but my wife believes that it should not be eaten when the weather is hot.   The last we looked it was very expensive.  Lamb shanks that are mostly bone cost more per pound that most beef steaks.
     
    Plb (an engineer that got an A in Econ101)
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    CCinNJ
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    Re:I enjoyed Econ101 but got a "C" 2012/05/14 22:10:40 (permalink)
    Behavioral Economics...sometimes there's no accounting for taste.

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    Foodbme
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    Re:I enjoyed Econ101 but got a "C" 2012/05/15 03:52:54 (permalink)
    The effects of poultry exports also has a a role in supply and price.
    Mexico is the largest importer of US chickens and turkeys.
    Russa is #2:
    They were #1 until Russa restricted imports to support the Russian producers.
    China is #3.
    There's a lot of chicken flying the coop so to speak which lowers the US supply and supports higher prices.
    As has been the case for centuries---It's Supply & Demand 
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    CCinNJ
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    Re:I enjoyed Econ101 but got a "C" 2012/05/15 09:05:31 (permalink)
    It's also factors such as influence impact impulse.

    Throughout the years many people (even people who can and allegedly love to cook) have been influenced for quicker easier options from media and personalities because there must not be time to cook and cooking a chicken (nevermind cutting a chicken that must be dangerous ) must have become so complex and complicated a rotisserie chicken with bagged salad or cole slaw mix instant mashed potatoes minute rice is often considered a homemade meal.

    Starting points are often processed or prepared items. The Colonel recruits. Costco spins the wheel etc.
    post edited by CCinNJ - 2012/05/15 09:22:43
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    MetroplexJim
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    Re:I enjoyed Econ101 but got a "C" 2012/05/15 09:22:11 (permalink)
    plb

    If it has no equations or numbers it cannot be a science, just economic philosophy.


     
    As an economist, I agree.  Economics is far more art than science - well learned and practiced, it gives one the ability to observe and understand how systems work in a dynamic sense.  Unfortunately, it is in the self-interest of any academic field to clothe itself in such mystery so that the layman is both baffled and in awe.  This serves both to increase the prestige of the field as well as to augment the incomes of those practicing it.
     
    Yes, to get my graduate degrees it was necessary for me to be the master of the mathematics of LaGrange, et al.  But, in practice, plain old common sense and a firm hold on the fact that individuals will always act in what they perceive to be their self-interest are of far more value.
     
    As an example, please read the following observations John Maynard Keynes made in his extraordinarily prescient post WWI work "The Economic Consequences of the Peace":
     
    "Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
    Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose".

    ---------------
     
    It should therefore not be a surprise that one of Lord Keynes' last pronouncements was:  "I am not a 'Keynesian'!"
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    Foodbme
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    Re:I enjoyed Econ101 but got a "C" 2012/05/16 04:06:57 (permalink)
    Understanding Economics:
    An elderly gentleman who came to this country penniless and through smart, hard work made many millions in the garment industry was set to retire. Throughout his life he became a philanthropist, supporting many worthwhile causes. His friends in the industry decided to throw a retirement party for him. Many rose to the occasion and lauded him for his good works and business success. The MC finally called Abe up to the podium and asked him to tell everyone his secrets to success. Abe cleared his throat and said , "Boys, it's pretty simple. You buy stuff for a Dollar and sell it for Two. You make 1%." And he sat down.
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    tmiles
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    Re:I enjoyed Econ101 but got a "C" 2012/10/01 04:50:14 (permalink)
    Economic behavior can also be applied to human or animal behavior according to some researchers. For example,  how hard will a test subject work to get a treat?
     
    In my case, I may have been pushed to the point of using a DVR. So far, to me, it has not been worth the hassle/effort, but I know folks who watch almost nothing in real time. Last night I watched "Once Upon a Time" on TV.  It had (I think) even more ads than usual, and may have reached my "too many" point.
     
    I know that TV executives are very aware of the situation, and that if too many people go over to DVR, there will be no more "free" TV.  Already, paid (cable) shows are chipping away at traditional TV, and that except for "American Family", most of the critically acclaimed shows are on cable.
     
    The goose laying golden eggs is in one of my favorite fairy tales, and at least in my opinion, illustrates important economic/behavior issues.
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    tmiles
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    Re:I enjoyed Econ101 but got a "C" 2012/10/02 18:37:54 (permalink)
    I commented earlier about high retail pork prices while wholesale is low.  Things have caught up. I recently saw beautiful chops @1.98 and very nice roast @1.59 (with card.....lol). The pork guys are getting market clearing prices. Now they need to worry about very high feed costs for the next crop. I predict expensive pork soon.
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