Archive for Economy

The Good In Rising Food Prices

The cost of food is going up, and this is a fact. Will it be permanent? I’m inclined to say yes, but we’ll have to see what happens within the next few months. McDonald’s is changing it’s dollar menu for one thing, and other companies such as Pepsi Co. are slightly decreasing the amount of product as their way to save money, rather than raise prices. One could argue if this is actually fair to the consumer, but companies do have to find a way to stay in business, or the situation in America would be much, much worse. So then, how could I say that the rising cost of food is good?

For one thing, rises in the cost of food benefits farmers. Farmers can take advantage of the increased profit margin by planting more crops. I realize this is not true throughout the world. Today on the radio I heard a discussion about how most Honduran farmers, the ones with small farms, can’t seem to rake in the benefits of rising food prices because the cost of fertilizers and such are too high. They aren’t comfortable growing more crops because they are not sure it will sell. There are organizations helping these farmers to sell their product, but it will take time. In any case, there are still plenty of other farmers who are willing to grow more to increase profits, and because America exports plenty of food, our economy should reap in plenty of benefits, at least from that sector.

Something else rising food prices is doing, as I’ve mentioned, is reducing portions of food on the shelves, and making eating out all the more expensive. This is more of a good thing for America than for anyone else because it helps to combat obesity. America’s portions are, let’s face it, enormous. It’s too easy to overeat in this country, and that’s partially due to the fact that people want the most bang for their buck. A double cheeseburger for a buck? That’s a good deal. But what if that double cheeseburger starts to cost $1.30, $1.60, $2.00? With that kind of a price increase, people will begin to find more value in simply eating at home. Some people don’t have the time to eat at home, you say. That’s fine, because the rising cost of foods will ultimately have people spend less out in restaurants. Soups and salads generally cost less than everything else on most menus these days, and I can see more and more people saving money that way. Once customers begin to lose interest in the other menu items, these restaurants will have to start lowering their prices, and I see no better way to do that than by offering smaller portions.

Jerry’s Subs and Pizza, a popular fast food chain where I live, increased their price of their five dollar pizza special on Mondays to six dollars a few months ago. Monetarily, it’s only an extra buck. Big deal. Six dollars for a whole pizza still seems pretty good. However, the psychological impact is much more profound. Five dollars is a nice, even number. When people think of five dollars, they think of a singular green bill with which to pay it. Six dollars? That’s two pieces of paper money, at least. Or, it means paying with a ten. Yes you get change back, but the whole thought of needing a ten dollar bill to pay for the pizza makes it far less appealing to people. I know I cringe a lot more when I use a ten dollar bill as opposed to a five, even if I know I’m getting change back. The Monday special isn’t too popular anyway, so it’s not really a big deal. But still, people don’t like seeing their products go up in price. It has the impact of driving away customers. Had Jerry’s instead opted to cut their portions down a little, people would have made less of a fuss, in my opinion.

Is it ethical to lessen the portions in food products without announcing it to the consumer? It’s certain legal; as long as the packaging reflects the new net amount of product inside, I see no problem with this tactic. It is the consumer’s responsibility to look at the labels and to see how much product they are truly buying. Americans don’t check how much they are truly buying and largely ignore the labels. I think it’s a bad habit that needs to be broken, and we don’t need to be spoon feeding information to the public. It sets a bad example to society by encouraging lower expectations of its members.

With the increase in the cost of food, one could assume that the cost of healthier foods will go up as well. And yes, they will as well go up. In general, healthier food options have generally been more expensive than their fast food counterparts. In many cases the healthier foods are just regular foods but with a lot less food provided in the package for a much greater price, as is typically seen with frozen dinners. However I don’t believe this will be an issue. There are two ways one can lose weight via their diets. One, he or she makes healthier decisions and pick foods with greater health benefits while avoiding junk foods. Two, he or she simply eats less. It’s fairly simple: consuming less calories will decrease your weight and/or weight gain if you keep all other variables the same. It’s all a matter of how much value people put into weight loss or eating healthily. If eating healthily in my mind is priced at two dollars, and I can get a nice salad for three bucks, then I’m only paying one dollar for food. If the double cheeseburger at McDonald’s starts to cost two dollars, I’m saving a dollar on food every time I buy a salad, and thus I will make the choice to go with the savings every single time. Another way to think about this is to simply state the obvious, that in this situation, the salad only costs a dollar more, and it’s going to be much better for you in the long run, depending on what kind of salad it is of course.

In time people will begin to get used to the increased price of food. Again, I don’t know if prices will continue to rise, but I do know that America will be prepared to adapt to it, much as they have with the current prices of gas. I will also reiterate that this article is about the benefits of the rising cost of food, and that there are plenty of negative side effects as well. Perhaps I’ll touch on the bad effects of these rising prices in a future post, but for now, keep in mind everything that could be potentially beneficial from this phenomenon.

As always, I will entertain any questions, comments, or concerns via email at crowtche@juniorpolitics.com or by dropping a comment.

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Three Dollar Gas Is Good!?

The price for a barrel of oil has been going down in the past week or so. People seem to be getting excited by the fact that gas might even go back down under four dollars a gallon. This is great news! Well, at least according to the media. But is it really? I mean I remember when people were complaining that gas had hit three dollars per gallon. Now people are rejoicing? Please…

It’s almost as if the public is letting themselves be taken advantage of. Gas shoots way up in price, even higher than it probably should have been, and then lowers itself to a level that makes people feel comfortable again, even though that value is way higher than consumers were paying before. I think it’s nonsense the way people are reacting to the situation. Gas may be going down now, but that doesn’t mean the panicking is over. We’re far, far from that point. Actually, we’re at the polar opposite of where we’d like to be: this is only the beginning.

Republicans are blaming Democrats for not allowing offshore drilling, as that supposedly would bring prices down. Democrats are blaming Republicans for not allowing the public to use reserved oil stashed away for emergencies. Who’s right? I don’t know. What I do know is that nothing is getting resolved in this manner. Even if either method (or both) is used, that does not change the fact that all of these options are but short-term solutions only. There’s still going to be an energy crisis and a gas problem, even if these new sources of oil are opened up. Oil consumption is on the rise on an international level, and neither of these solutions reduces that consumption.

I’m all for solving problems in the short-term, especially given the current state of the American economy, but we cannot allow these solutions to give us peace of mind. In fact, I’m glad that people are actually starting to be concerned about oil. This acts almost as a wake-up call to America, to help conserve our natural resources and to begin investing in fuel efficiency and alternate sources of power. In the end, we are going to run out of oil. Let’s face it, we consume oil at a much higher rate than it is produced (which takes millions of years, might I add). If nothing is done about this situation, expect gas prices to start skyrocketing once Earth begins to truly run out of our precious oil.

Europe has had extremely high gas prices (compared to us) for a while now. However, Europe simply consumes much less gas than America. They’re not quick to complain because they’ve known the consequences of driving a car for some time now. Europe’s public transportation infrastructure is also amazing compared to that of the United States. I hear reports all the time of more and more people beginning to use subways in cities. I think it’s great, but aren’t some of those subways already crowded? Imagine if half of the cars on the road disappeared today, and all of those people in those cars began to use some sort of public transportation. Could America’s public transportation system handle the increase in patrons? Definitely not. We were caught with our pants down, and now we’re going to be severely punished for it if we do not get our act together.

Maryland is actually working on getting cleaner buses, meaning, that the buses will be hybrids and thus consume less oil. I think it’s a good first step in the right direction, but again hybrids are treating the symptom, and not the infection. I’ve heard the phrase “America is addicted to oil” so many times now, that it’s beginning to get irritating. We know we’re “addicted to oil”. We get it. We drive too much. Fine. Can most people change that by switching to public transportation. The answer is no! The infrastructure simply isn’t there! There’s very little America can do today to cut that consumption without at the very least a better public transportation system. The technology to actually cut our addiction is still many, many years away, so what the government really needs to start doing is to start creating initiatives to begin to expand our public transportation so that it’s available to the masses. This is a wide-scale problem, and one worthy I think of federal government intervention. Not all states are prepared to handle this sort of crisis, and yes, I do believe we are nearing the beginning of a major crisis here.

The federal government of course also needs to start putting more money into technology that will help us end our dependence of oil. That’s easier said than done, since big oil is still a big industry in America, and it’s hard to simply cut them off. If McCain and Obama truly are trying to distance themselves away from lobbyists, then I hope that maybe when we get our new president that oil companies will have a much smaller voice than they do now and that the government can start focusing on the people and what the general masses need. It’s too bad we got involved in a War with Iraq, we really could have used that money to help with researching into new technologies…

It’s a shame that my generation has to take on the burden of everything that is occuring today. It’s not fair that others are dictating policy that can potentially screw me over. This is why the opinions of younger voters really does matter. I’ll never get to fully enjoy gas that’s under two bucks. It’s just never going to happen again. Young voters can help make a huge difference as to how the government proceeds by helping to elect officials that can get the job done. There are those in office who are seventy or even older. Do you really believe they are going to be much affected by rises in gas price? I’d have to say no. They aren’t going to be around for too much longer, and certainly not as long as most younger voters, so I’d say the issues are more important to us than to most people, as they have the potential to impact us for the longest period of time. Is it possible I will live to see the day when gas runs out? Yes. Most certainly. In order to prevent that, I have to be responsible enough to do something about it. So does every one of us. The government cannot be responsible for anything it does contrary to what you want it to do if you do not participate in the political process. And certainly, if you ever want to have cheaper gas again, or at least gas prices that wont eventually skyrocket astronomically, you need to let the government know. I know I will.

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