Pizza Economics

Pizza is MasterPo’s #1 food group!

Although MasterPo is not Italian there may be some long lost ancestry to account for it.

Nevertheless, pizza is definitely a staple of MasterPo’s diet.

Pizza also helps illustrate very well the fundamental rules of economics and the reality of business.

In MasterPo’s neighborhood there are 3 pizzerias. MasterPo and Mrs. MasterPo usually order pizza from pizzeria #1. That establishment makes the best pizza in the neighborhood. Sometimes instead of pizza the order will be for hot heros, and occasionally for a full take-out dinner entrée.

Unfortunately pizzeria #1 closes early so if life’s events are running late MasterPo and Mrs. MasterPo will order pizza for pizzeria #2 that remains open a bit later. Their pizza is pretty good too. Haven’t tried their hot hero’s or dinners, probably won’t, but is likely decent.

Pizzeria #3 MasterPo doesn’t like. Early when MasterPo’s family moved into the neighborhood MasterPo went into the pizzeria, tried the pizza, and it was not at all to MasterPo’s liking.

Maybe it was just a bad day?
Maybe under new ownership the pizza has improved?

Nevertheless, once bitten makes for twice shy so MasterPo will not order pizza from pizzeria #3.

So to summarize:

- 90% of MasterPo’s pizza business and 100% of hot hero’s and take-out dinner business goes to pizzeria #1.
- 10% of the pizza business and none of the heros/dinners business goes to pizzeria #2.
- None of either business goes to pizzeria #3.

But nothing remains forever…

A few months ago a new pizzeria opened in the area.

Very risky business move in MasterPo’s opinion. While it does have very good location on a busy main road, being in such close proximity to three other established pizzerias is gutsy to say the least.

In the fullness of time on day MasterPo and Mrs. MasterPo decided to order a pizza for dinner and chose to try the new place. The pie came and it was good. At least as good as pizza from pizzeria #1, certainly better than from pizzeria #2 and infinitely better than MasterPo’s sampling of pizza from pizzeria #3!

Some time later MasterPo and Mrs. MasterPo decided to try their dinners as well. Wow! The portions were noticeably larger than from pizzeria #1 and the food came with side salad and fresh garlic knots. Truly a hearty meal! And yes, the food tested great too.

So now the rankings stand as follows:

- The new pizzeria is tied with pizzeria #1 for the MasterPo’s pizza business (50/50 which is ordered from) but becomes pizzeria #1 by receiving 100% of MasterPo’s take-out dinner business (unless there is some reason not to order from them or they aren’t available).
- Old pizzeria #1 slips to pizzeria #2 for dinners.
- Old pizzeria #2 drops to pizzeria #3 for pizza.
- Old pizzeria #3 falls off the radar altogether!

And judging from the amount of traffic in/out of the new pizzeria MasterPo has observed MasterPo’s family aren’t the only ones who like this new place!

From an economic point of view consider what this means.

The new pizzeria has taken away a significant amount of business from at least two other local establishments. This includes formerly repeat customers such as MasterPo’s family. he new pizzeria has also “raised the bar” in terms of expectations for portion size and the completeness of a meal.

And, not to be overlooked, the price (cost to the consumer) is also very much on par with market rates for similar food in the area (i.e. the price is very competitive!).

Who knows – some day one of those other pizzerias may close up, unable to compete. If that happens there are likely other factors involved but MasterPo is sure the competition from this new pizzeria didn’t help matters much.

But from a consumer’s point of view it’s a win-win scenario: MasterPo has more choices (variety) to select from, very competitive pricing, and greater value for the cost spent.

This pizza analogy holds true in all cases. Someone (i.e. business) comes along that can offer more items and better prices – that appeals to the consumer. It may in the end cause other businesses in the area to scale back or even close but it’s the consumer that benefits.

The news these days rants about this business closing because it can’t compete against that business over there. MasterPo isn’t so cold hearted as not to realize the loss of jobs and income when a business closes. And regular readers of MasterPo know how MasterPo feels about protecting a failing enterprise just because (i.e. no too-big-to-fail).

Nevertheless, this is reality. When someone comes along that can provide better products or services at the same or lesser price that is an advancement in the state of the art for the economy. It is a necessary and healthy growth of economics and society. Any attempt at artificially restricting such changes or artificially supporting the less competitive enterprises at best is doomed to failure, at worse hurts and retards the economy.

Otherwise we’d still have stage coaches running today.

And they wouldn’t be serving pizza!

The Classless Society Myth & Dangers

A classless society. The dream of all Socialists, Marxists, Communists and Progressives.

No more lower class, middle class, and definitely no more upper class! We’re all one uniform “class” of people with equality and social justice for all.

MasterPo has read about the dream of a classless society all MasterPo’s adult life (and even earlier). The reason MasterPo writes about this topic now is something recently read struck a cord.

On Yahoo Finance’s Tech Ticker site, in response to an article posted, a Yahoo user calling herself (if it really is a female, going to make that presumption) CalifBlonde posted the following comment:

“Middle class, Upper class, lower class...blah blah blah.... Seriously now; give Thanks to Obama and the Democratic party staying the course and we will soon be a classless society. Finally!”

It can sometimes be difficult when reading comments online to know if the author is serious, sarcastic, or just trying to yank your chain to get a rise for kicks. MasterPo is a frequent reader of Tech Ticker and often sees CalifBlonde’s comments post. Her comments definitely fall into that category of uncertainty.

However, this article isn’t about CalifBlonde per se. It is about the concept – the classless society – that she seems to be espousing.

MasterPo wants a classed society!

Yes, you read right.

A classless society is the final step on the road to 100% socialism and/or Marxism, and totalitarianism.

First reason: Having the strata of 3 classes (lower, middle, and upper) is an excellent motivation for hard work, risk, doing the right thing by way of yourself/family/society, and provides inspiration for striving for achievement. Whether you like it or not (and I suspect many socialists don’t like it) people gather their resources and push onward in life because they are inspired and motivated to get out of their current class and rise up into the next class.

Someone who is poor rarely enjoys it. Through hard work and commitment they have the real chance (but not a guarantee!) of rising into the middle class and even the upper class.
Someone in the middle class takes on greater risk for the chance to be in the upper class. They dream the dream and try to make it happen through work, innovation and risk.

And someone in the upper class continues to work hard (believe it or not!) to stay in the upper class. Even when someone in a higher class falls into a lower class (due to whatever circumstances) knowing there is a higher level. MasterPo has been there, done that.

Second Reason: Government can not raise “the poor” to an upper class status. That isn’t saying government can’t mandate (and a HUGE cost to the nation, i.e. tax payers!) people in certain status get this-or-that for free (as with National Healthcare now). But no government policy can raise up a person. That is something the individual must do themselves.

However, government can reduce or lower someone in the upper classes down to a lower class via the same policies and mandates.

Is that the classless society you want to live in?

Third Reason: Do you seriously and realistically think the super-uber Hollywood/celebrity/politico rich people are going to allow – much less be happy about it! – themselves to be torn down in social and economic status?!

George Clooney
Rosie O’Donnell
Barbara Streisand
Tom Hanks
Oprah Winfrey
Sean Penn
John Travolta
Danny Glover
Tom Cruise
Martin Sheen
Steven Spielberg
George Lucas
Michael Moore
Sting
Bono
Charles Rangel
The Obamas
The Clintons
(just to name a few)

Does anyone REALLY believe any one of these people (and others) will just cheerfully give up all their wealth, assets, possessions etc and live the humble life of a “classless” citizen of society?

Class is in session.
Enjoy it.
Live it.
Thank Heavens for it!

Perpetual Motion Economics

A strong, healthy, prosperous and especially growing economy simply can not function like a perpetual motion machine.

A “perpetual motion machine” is a theoretical and largely mythical device that not only performs some type of work but does so at the same time it produces its own energy for operation. Once set into motion the machine creates its own operating energy, for all intents and purposes, eternally.

Thus it is referred to a “perpetual motion”.

The quest for the invention of such a device dates back to at least the middle ages and continues to this day. Over the centuries many very creative and imaginative designs have been thought of and tried. But the realities of our physical world make such a device an impossibility (at least with our current level of technology and understanding of physics). Friction, air resistance, fluid dynamics resistance, gravity and more physical forces all come to play to stop a perpetual motion device from working no matter how promising it looks on paper.

And economy is just the same.

As of writing this just-released data shows the housing market has sunk dramatically. This is being blamed, among other reasons, on the expiration of the Federal government’s $8,000 home buyer credit. Thus is can be concluded that a great many people took the plunge to buy a house in order to get the credit in spite of all the other economic issues at hand.

In theory, this credit was supposed to kick-start segments of the economy linked to home building, maintenance, and selling.

The government offers a home buyer credit.Builders buy materials and hire people to build new homes.People buy the new homes giving money to builders and realtors.These people pay taxes on the money they make building/refurbishing homes and selling them.The government gets money back to give out again as additional home buyer credits.

A perpetual motion machine! (in theory)

But now that the credit has expired buyer have slowed their buying which means builders have slowed their build, which means they don’t buy materials and hire people as much, etc etc etc.

The point is to show an economy simply can not function, much less even hope be strong and healthy, when it’s government being the start and stop for the economic activity. In this example, people have to be willing to buy homes (new or used) regardless of credits and incentives.

Government cannot be the instigator and the beneficiary of the economic activity. The example described above is akin to a patent on total life support – the heart and lungs may be working pull the plug and all stops. Not a good definition of “life”.

A perpetual motion machine is a myth.
Perpetual motion government support is equally as mythical.

Green Energy: Cheap, Abundant, Efficient

Those are three words you never hear mention when “green” energy is talked about!

Wind and solar (as they are the current two top darlings of the “green” energy crowd) are never ever described in those terms.

MasterPo wonders: Why?

Sure wind and solar are described as “environmental”, “safe” (what can go wrong with a windmill unless you walk into it?!), “renewable” but never ever described as being cheap, abundant or efficient.

“Cheap” you can see for yourself. Go price the cost of an 80% solar power system (which is what the “experts” recommend for most homes). MasterPo has. To add an 80% solar system to MasterPo’s house would cost $50,000. Even with the tax credits and rebates (which are not guaranteed MasterPo would qualify for) it will still cost MasterPo about $25,000 out of pocket At that cost electric rates would have to jump 8x current rates in order for MasterPo to break even in 10 years on such a system!

(If anyone has a spare $50,000 or just $25,000 to donate for MasterPo’s solar system your generosity would be appreciated.)

“Abundant”. Sure. If you can guarantee cloudless skies and stiff breezes 365 days a year.

A couple of years ago MasterPo and Mrs. MasterPo spent a few days in Atlantic City in the summer. The local power company has 3 MASSIVE wind turbines on the shore line. Throughout the stay only 1 turbine at a time ever turned and even then it was slow. No breeze.

And what of shorter days and lower light intensity in the winter?

“Efficient” changes almost every day as newer technologies come out. Solar panels manufactured today are twice as efficient as those made just 5 years ago! Imagine what it will be in 10 years. So why buy today what will literally be obsolete in a year or two?

Wind turbines have a very limited life. Wear&tare is extreme.

And in both cases commercial solar and wind power generation has to be built in remote areas with wide open spaces. Construction costs and logistics are more difficult, plus loss of generated power efficiency when the electricity has to travel long transmission lines to the consumer.

Cheap, abundant and efficient energy is vital to the growth and prosperity of a 21st century economy. If you look across the world those countries that do not have cheap, abundant and/or efficient electrical energy production also do not have strong economies or high standards of living!

That begs the question: Why is the President so head strong pushing to abandon traditional energy sources for admittedly more expensive, less plentiful and inefficient sources instead?

Things that make you go “Hmmmmm….”

The Classless Society Myth & Dangers

A classless society. The dream of all Socialists, Marxists, Communists and Progressives.

No more lower class, middle class, and definitely no more upper class! We’re all one uniform “class” of people with equality and social justice for all.

MasterPo has read about the dream of a classless society all MasterPo’s adult life (and even earlier). The reason MasterPo writes about this topic now is something recently read struck a cord.

On Yahoo Finance’s Tech Ticker site, in response to an article posted, a Yahoo user calling herself (if it really is a female, going to make that presumption) CalifBlonde posted the following comment:

“Middle class, Upper class, lower class...blah blah blah.... Seriously now; give Thanks to Obama and the Democratic party staying the course and we will soon be a classless society. Finally!”

It can sometimes be difficult when reading comments online to know if the author is serious, sarcastic, or just trying to yank your chain to get a rise for kicks. MasterPo is a frequent reader of Tech Ticker and often sees CalifBlonde’s comments post. Her comments definitely fall into that category of uncertainty.

However, this article isn’t about CalifBlonde per se. It is about the concept – the classless society – that she seems to be espousing.

MasterPo wants a classed society!

Yes, you read right.

A classless society is the final step on the road to 100% socialism and/or Marxism, and totalitarianism.

First reason: Having the strata of 3 classes (lower, middle, and upper) is an excellent motivation for hard work, risk, doing the right thing by way of yourself/family/society, and provides inspiration for striving for achievement. Whether you like it or not (and I suspect many socialists don’t like it) people gather their resources and push onward in life because they are inspired and motivated to get out of their current class and rise up into the next class.

Someone who is poor rarely enjoys it. Through hard work and commitment they have the real chance (but not a guarantee!) of rising into the middle class and even the upper class.

Someone in the middle class takes on greater risk for the chance to be in the upper class. They dream the dream and try to make it happen through work, innovation and risk.

And someone in the upper class continues to work hard (believe it or not!) to stay in the upper class. Even when someone in a higher class falls into a lower class (due to whatever circumstances) knowing there is a higher level. MasterPo has been there, done that.

Second Reason: Government can not raise “the poor” to an upper class status. That isn’t saying government can’t mandate (and a HUGE cost to the nation, i.e. tax payers!) people in certain status get this-or-that for free (as with National Healthcare now). But no government policy can raise up a person. That is something the individual must do themselves.

However, government can reduce or lower someone in the upper classes down to a lower class via the same policies and mandates.

Is that the classless society you want to live in?

Third Reason: Do you seriously and realistically think the super-uber Hollywood/celebrity/politico rich people are going to allow – much less be happy about it! – themselves to be torn down in social and economic status?!

George Clooney
Rosie O’Donnell
Barbara Streisand
Tom Hanks
Oprah Winfrey
Sean Penn
John Travolta
Danny Glover
Tom Cruise
Martin Sheen
Steven Spielberg
George Lucas
Michael Moore
Sting
Bono
Charles Rangel
The Obamas
The Clintons
(just to name a few)

Does anyone REALLY believe any one of these people (and others) will just cheerfully give up all their wealth, assets, possessions etc and live the humble life of a “classless” citizen of society?

Class is in session.
Enjoy it.
Live it.
Thank Heavens for it!

Lessons From The Colony – Taking Without Giving (or Ask Not What You Can Do To Help)

Last night (as of writing this that is, maybe not when it is actually put on the blog) the Discovery Channel aired the final episode of "The Colony". MasterPo had reviewed this series in a prior article and still give it 2-thumbs up. Now that the show is over (hope they do something like it again!) there are several lessons from the show that MasterPo believes are totally applicable to life today in our present society. In particular there is one scenario they showed that MasterPo want to discuss first.

As before, SPOILER WARNING.

Continue at your own risk.

When the colonists first arrived in the warehouse it was clear that someone else had been living there before. No one was around but there was bedding items, some canned food on shelves, a couple of this and that trappings of very basic life, etc. A few episodes later the now-former residence returned.

A man and a woman, Andre and Elizabeth, came in a back door with a key and surprised the colonists. Both are obviously actors like the rest of the outsiders the colonists meet. But they played their roles very well.

"Andre" is a very large and muscular man, clearly more a fighter than a thinker. The woman called "Elizabeth" seems to be playing the part of a scared and physically vulnerable woman alone in a world of anarchy. We (the audience nor the participants of the Colony) don't know what either person was in life or did for work before the disaster that is the back drop for the show, though it is certain that dog-eat-dog has been their philosophy since then. It also isn't clear what the relationship is supposed to be between the two.

Are they married?
Lovers?
Or just loosely banded together for mere survival?

(Towards the end of the series Elizabeth appears at the door of the Colony alone asking for food and water; Later Andre comes in alone threatening the colonists; So it appears the two went separate ways soon after initially meeting the Colony participants. Therefore marriage is unlikely.)

The Colony participants, after getting over the initial shock of their sanctuary being so easily "invaded" realize these are the people they thought had been living here when the show first started. Andre doesn't like that the colonists are in "his" warehouse and Elizabeth immediately starts sizing up what can be taken.

The colonists do try to be the better people and welcome them, albeit cautiously. The two claim to have been on a long range scavenging trip and now are just returning. The colonists show them around, show them all they have done to improve the warehouse, all they have so far created like filtering water, growing some food, producing electricity from wood gas powered generators etc. The colonists offer them food and the chance to stay as members of the colony. But with the understanding that the two follow the same rules and conduct as the rest of the colonists.

And there in lies the problem: Andre and Elizabeth (especially Andre) do not want to follow the rules! Andre goes so far as to say over dinner "What if I want to stay but not follow your rules? Just do my own thing?"

They want the benefits of living in the colony – the food, water, shelter, electricity etc – but refuse to take part in the operation, organization and work to advance the colony's survival. Things quickly come to a big confrontation as Andre and Elizabeth are found stealing food and other supplies from the Colony and the colonists are forced to physically drive them out of the building.

MasterPo thinks this episode more than any other of the show is an excellent example of the problem we face right now in American society today! That is, more and more and more people want to take the benefits of living in the American society yet fewer and fewer and fewer are willing to obey the rules and laws, and especially fewer and fewer are willing to contribute to the society by hard work in education and later vocation that adds value to the society!

More and more people just don't see the "need" to contribute to society. MasterPo is not referring to the tired old liberal saying "Give back to the society that made you." That's a rallying call for taking resources away from building a society by usurping the energy and vitality of people that otherwise would have been put towards advancing the economy which in turn helps all.

MasterPo is referring to "contributing" by going to school (or vocational training) and earning your diploma or degree, getting started in a career (as oppose to languishing for years and years at a minimum wage Wendy's or Starbucks job), voting and taking part in your community, saving and investing for your own future and that of your family, maybe even starting a business or buying into a business etc. That is how people contribute and "give back" or pay back society from which they take the benefits of living in.

But too much now people, especially (and frighteningly!) young people just don't see the importance much less the need to break out of the "fun zone" of youth and start building for their own futures. Then they complain that others have things and/or more things than they do.

You don't build an expanding, healthy economy or society when there are more takers than givers. And you certainly do not advance a growing healthy society when government forces people to give "contribute" by taxation of those people who have worked hard for what they have.

Liberals often say that a society is measured by how well it cares for those who can't care for themselves. MasterPo does not know where that brain-fart of a line came from. Nevertheless, there is a big difference between caring for someone who can't care for themselves vs. caring for someone who is capable yet unwilling to provide at least some care or input for themselves!

Remember that even the Roman Empire wasn't conquered (not completely) but collapsed from with in as more people demanded services and fewer were willing to work for those services.

History is sometimes prolog.

The Choices We Make: The Story of Terry

It is said (philosophically) that at any given point in life we are the sum of all the choices we have made in our lives up to that point. And since no two people will ever make exactly the same choices in all situations all the time it follows with certainty that what sums up to your life will be different (at least to some extent) than my life or someone else's life.

The choices we make – or not make (for not making a choice is itself a choice) – all add up. Doors of opportunities open and close based on the choices we make. Our entire futures can be made or broken based on what seems like an innocuous decision.

And so comes to the story of Terry.

Terry (don't know if that is his real name) is a reader and commenter on another blog site. Yet it seems that Terry has made a number of decisions that haven't panned out as he hoped and now feels he is owed something back.

Terry claims to be (MasterPo only knows about him and his life based on what he has shared with other blog readers) a 55 year old unskilled, minimum wage guy living in the Rust Belt in a rented apartment. Don't know if he's married. I'm going to guess he isn't.

He says that back in the 1980's (that would make him about 30 at the time) he went to school and got a Bachelors degree in Political Science with the expectation of going on to law school to be a lawyer. But when he graduated college the market for lawyers had dropped considerably while the cost of law school had also risen considerably. Ultimately he didn't go on to law school and hasn't done anything else with his life.

Terry first came to MasterPo's attention while he was commenting on a blog article about mortgages. Terry complained that as an unskilled, minimum wage 55 year old worker he can't afford to buy a house and is stuck paying in rent what a mortgage would be. He felt the government (and by extension the American people) owed him something to make home ownership possible for him now in his later life.

Now, Terry has come under a lot of scrutiny lately on that blog site for not having taking a different career path when his ambitions of law school clearly weren't going to happen any time soon. He could have been a teacher, for example, or at least brushed up on some business skills and gotten an office job. Or perhaps even move to another part of the country with better career prospects. Or something else. But he didn't have to be a bare bones minimum wage worker for the last 30 years!

There could be a hundred or more scenarios as to why Terry chose not to pursue another path to career success. MasterPo is not going to waste space listing them here. Nor will MasterPo impugning or chastising Terry for his station in life now.

But MasterPo is holding him – and more importantly the thousands, perhaps millions of other Americans – accountable for their choices in their lives. That is, MasterPo finds it hard to accept that in aaaaalllll of the past 30 years Terry (just using him as an example) has been waiting and hoping that somehow, someway, the economy and the environment and the forces that be will align and he will be able to go to law school and have his lawyer career. MasterPo finds it hard to have more than just passing human sympathy for people who are now living for the results of their decisions or lack of decisions.

This is all too familiar. MasterPo has meet soooooo many people (men and women) of all ages, especially younger people, who simply have chosen to do nothing and wait and see. That is a choice. Sometimes it is the correct choice. But at some point it's time to either shit or get off the pot. Either way, if you do nothing then nothing is what you will get!

We have all made choices that ultimately didn't turn out as we had hoped or wanted. Sometimes we choice A and feel we should have chose B instead, or visa-versa.

Sometimes we have a chance to make new choices to try to correct the ones we feel we made poorly. Other times once a decision has been made that's it. The choice has been made and we have to live with the out come, good or bad.

The point of all this being that our lives are what we chose them to be. Sometimes the chose is a blind one, but many times it isn't. You will never get where you want to be if you don't chose to start moving in that direction. You still may never get there but you will get much much closer than just sitting still.

Carpe Diem!