© 2007 UrbisMedia
Would you fill up your SUV gas tank with 2% Low Fat Milk at $2.99.9 (there’s always a .9 on fuel prices)? Remember, currently gasoline is now averaging $3.29.9 per gallon in the good ole U of A. So filling up on some moo juice would be quite bargain wouldn’t it? [1]
Too bad my car doesn’t run on milk, you just might be saying to yourself. Right? Well, in a way it does. It’s just that you need to grasp a few principles of what I call “Whack-a-Molenomics” to understand why. But to understand that you need to understand Whack-a-Mole, the kids’ game on which it is based (economists are really just kids at heart [2] ).
Whack-a-Mole is a game where moles pop their heads out of holes in the ground. You have a mallet and, yup, you whack a mole on the head to drive him down. But when you do another mole pops up from another hole. Whack him and you might get some others popping up. That’s really all you need to know. It’s like that in economics, too. You whack one thing and something gets affected some place else; like push down the price of one thing and it goes up for another, for example.
Milk, moles, mallets! This guy’s getting irrationally exuberant, you’re thinking. Hold on there, dude; this is economics, it’s all about making simple things complicated. So let me bring in something else. Like when I used to ask my urban affairs students how the Russian Wheat Deal helped the San Diego economy, since San Diego doesn’t grow wheat. (Yeah, they thought I was nuts, too.) This was back in the Nixon days when there was a Secretary of Agriculture in the good ole US of A by the name of Earl Butz (you don’t wanna skip this footnote [3] ). Butz negotiated something called The Russian Wheat Deal. Basically, the idea was a Cold War notion that it was better to feed Russians with ICBM’s than to have them starving. [4] So a lot of wheat was shipped out to them. [5] Since wheat is something we eat, too, there was now less of it and the price went up (simple supply and demand stuff here.) There are grains we can substitute for wheat and they came into greater demand, so their price went up. Some of these grains are used to feed cattle, so the cost of beef went up. When the cost of beef went up people began to look for protein substitutes, one of which was tuna, and tuna, at that time, was still something that San Diego produced. So, there were more jobs for tuna fisherman and money came into the San Diego economy. [6] This was sort of Whack-a-Russkie Economics.
But you get the idea now, right? We have a lot of talk these days about “bio-fuels” substituting for our addiction to foreign oil, which necessitates our going to the Middle East, whacking the locals, and having Haliburton take over their oil fields. [7] The problem with getting our cars to run on (cheaper) milk is that we could well end up paying for our driving habits with more expensive milk for our more costly Wheaties for breakfast and higher-priced Big Macs for lunch. In economics moles are always popping up when we mess with the system.
We’re trying to find ways to whack both the oil dependence mole and the greenhouse gas mole. It will be good if we can find some stuff to shove in our SUVs that doesn’t have the problem of substitutability attached to it. Like us, automobiles are at the top of the food chain, they use processed stuff, be it crude oil to gasoline, or corn or soybeans to bio-fuels. Therefore there are processing costs as well. At least letting cattle turn this stuff into burgers is less costly.
I also have the feeling that the Whack-a-Mole effect applies to more than economics. Even if we solve the problem of finding a fuel source that does not have the problem of substitutability costs associated with it, and we are all driving happily around in our Toyota Tofus and Pontiac Trans Fatty Ams, there is still going to be heat produced. The ecological system can be just as complicated and vexing as the economic system. Everything has an effect, and everything has its price. Newton and Einstein taught us that about energy; in the physical world there are substitutability effects in the biosphere as well. Damn moles are everywhere!
So that’s Whack-a-Molenomics, the concept that is going to win me the next Noble Prize in Economics. But this economic concept won’t be so difficult for you to understand. The next time you pull your SUV up to a cow at your local dairy and fill up you will find out when you drive off to your local McDonalds that, in the world of Whack-a-molenomics, there really is “no free lunch.”
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©2007, James A. Clapp (UrbisMedia Ltd. Pub. 6.15.2007)
[1] Particularly for you idiots who bought Hummers.
[2] Except for Alan Greenspan, who is an irrationally exuberant ditherhead. Oh, and Arthur Laffer, Ronnie Reagan’s favorite economist, who showed Ronnie the elegant principles of “Piddle-Down Economics.” That’s where you give tax breaks to the rich so they have so much goddamn money that some might just fall out of their pockets and piddle down to the poor.
[3] Butz was, like so many Republicans, a butt-head. In 1976 he was forced to resign after it was widely publicized that he had made a racist remark. Butz’s statement had been: “I’ll tell you what the coloreds want. It’s three things: first, a tight pussy; second, loose shoes; and third, a warm place to shit.”
[4] Russians seem to be incapable of growing anything, or maybe that was just on the collective farms.
[5] I forget what they gave us. Those nesting Matryoshka dolls, I think.
[6] This advantage—that San Diego was the closest American city to the tuna that swam by S. America in the Humboldt Current. But that’s another story. We partially substituted for it with Sea World.
[7] Well, we’re not quite there yet, but we’re trying to surge toward that noble goal. This is called Whack-a-Politics; you whack the nation that didn’t attack you, and hope oil will squirt out instead of insurgents. (It doesn’t work.)