Wednesday, April 26, 2006

Chess or Checkers?

Anyone who claims that high gas prices hurt the economy probably plays more checkers than chess. Economics is not very difficult to understand, but economics does require a little more than one dimensional thinking and it does require understanding more than one cause and effect at a time.

Gas prices have risen because demand for gas has risen. Demand for gas has risen because more people throughout the world are working, needing energy to produce products, needing gas to drive to work, and buying cars and homes that require more energy.

As long as gas producers are making a higher than average profit, more producers will enter the gas producing business, more jobs will be created, and more money will be spent, creating a tremendously positive ripple affect throughout the economy.

High gas prices may hurt some consumers on a fixed income with a high dependence on their automobile, but only the one dimensional thinkers believe the economy is being hurt.


Hammertime said...

I'm a chess player - and you're right. Perhaps one day we can play.

David M. Smith said...

Hi Hammer,

I never said I was good at chess, but I would like to play. Please let me know the next time you visit California and then plan on spending an evening with me and my family. My girls love it when anyone beats me at anything. Perhaps I could disappoint them.