Conspicuous Consumption = Flaunting it!

October 30, 2006

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

The last posting for the month on common economic terms will be “conspicuous consumption,” which was a term first introduced by Thorstein Veblen in his 1899 book entitled The Theory of the Leisure Class. 

Personally, I found a connection between this term and the thoughts offered by Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations.  It appears that wealth is tied to power and, as we know, power tends to corrupt the moral fiber.

Conspicuous consumption is a phrase with a definite negative connotation; like the word vanity, the phrase has been used to depict a moral deficiency. 

In the attached pdf, we follow the concept of wealth from Adam Smith to the coining of the actual phrase, then add on the denigrations of the 1960s.  The current slang word for conspicuous consumption is “Bling Bling,” which captures the essence of the phrase.

Please read the attached pdf.  As always, your feedback would be appreciated, and I hope this posting will entice you to do more research on your own. 

1) How could this posting be improved?

2)  Yes, the phrase “Flaunting it” was derived from Zero Mostel’s comment in movie The Producers .  Can you suggest a better alternative Conventional Wisdom? 

3) Do you have a better Moment of Zen?

Jim C Quiz – conspicuous consumption.pdf 

Law of Diminishing Returns = An Economic Proof of Less

October 23, 2006

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

We continue to look at common economic terms this month with the phrase “Law of Diminishing Returns,” which is a term that has been used since the late 18th century.

The concept is also called the law of variable proportions and can be defined as a supposed point at which additional effort or investment in a given endeavor will not yield correspondingly increasing results. 

The use of the term initially was used in relation only to agriculture, but then spread to the whole economy. 

Please read the attached pdf posting on “The Law of Diminishing Returns and your feedback would be appreciated.  I take special wordsmith pride in the opening sentence and the Moment of Zen.

 As always, I hope this posting will entice you to do more research on your own. 

1) How could this posting be improved?

2) How could this economic issue relate to the mid-term elections?

3) Do you have a better Moment of Zen?

Jim C Quiz – Law of Diminishing Returns.pdf

Trickle-down = Political or Economic?

October 16, 2006

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

We continue to look at economic terms this month with the phrase “Trickle-down Economics,” which is commonly related to the approach used in the Reagan era. In fact, the supply-side economics approach in the 1980s was called Reaganomics.

Last we learned that economics assumes people do not have the resources do satisfy all of their wants; thus we must make choices about how to allocate those resources. The Reagan approach was to cut the top tax rates (business and personal), which would trinkle down to the common man by leading to a) economic growth, b) income growth, c) wage growth, and d) job creation.

Trickle-down Economics can be defined as a theory that financial benefits given to big business will in turn pass down to smaller businesses and consumers. It has been heavily debated whether any true benefits actually do trickle down, yet the heavy defense spending during the Reagan era did result in huge deficits and led to the crumbling of the Iron Curtain.

The use of the term “trickle-down” seems to have taken on a negative conotation. In fact, most Republicans claim that the the term was never used by them and it was a derisive term created by the Democrats.

Please read the attached pdf posting on Trickle-down Economics. As always, I hope this posting will entice you to do more research on your own. Your feedback on how to improve this web site would be greatly appreciated – for example:

1) How could this posting be improved?

2) How could this economic issue relate to the mid-term elections?

3) Do you have a better Moment of Zen?

Jim C Quiz – Trickle-down.pdf

Scarcity=>Trade-offs=>Opportunity Cost

October 9, 2006

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

This month we are looking at economic terms, and we started last week with a political favorite – “Guns & Butter,” which provides an excellent segue for “Opportunity Cost.”

Economics 101a – All economic questions and problems arise from scarcity. Economics assumes people do not have the resources do satisfy all of their wants. Therefore, we must make choices about how to allocate those resources.

Economics 101b – Economics is primarily about the efficient use of scarce resources, and the notion of opportunity cost plays a crucial part in ensuring that resources are indeed being used efficiently.
In general, economists define the “opportunity cost” of any good or service as the value of all the other goods or services that we must give up in order to produce it.

The Guns & Butter is a classical example: Every dollar spent on war is a dollar we cannot spend on addressing other priorities, whether abroad or at home.

That seems simple and straight forward today, but the concept of an alternative or opportunity cost was not even discussed until the Austrian economists brought it up in the mid-1800s.

Please read the attached pdf posting on Opportunity Cost. As always, I hope this posting will entice you to do more research on your own. Your feedback on how to improve this web site would be greatly appreciated – for example:

1) How could this posting be improved?

2) How could this relate to the mid-term elections?

3) Do you have a better Moment of Zen?

Jim C Quiz – Opportunity Cost.pdf

Guns and Butter = An Economic Choice

October 2, 2006

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

The mid-term elections are right around the corner, and it seems fitting that we focus on political terms this month. We all have heard of the term “Guns & Butter,” which is a phrase that has been used in devisive economic arguments for many, many years.

Guns (military spending) and Butter (domestic spending) may be an over simplification, but it clearly reflects the consequences of an unbalanced economy. For many years North Korea has chosen guns over butter, which has devastated their quality of life.

Back to basics - the true value of the concept is that it denotes having to make a choice. Many times this choice is not fully explained to reflect that there is a cost to each choice.

In fact, each course of action actually has two costs – the cost in money and the opportunity cost (the cost of foregone alternatives).

Please read the attached pdf posting on Guns & Butter. I hope it was entertaining enough to have you do a little more research on your own. Here are a few questions to get you started:

1) How could this posting be improved?

2) How does this really relate to the mid-term elections?

3) This phrase was used before WWII; what is its true origin?

Jim C Quiz – Guns and Butter.pdf