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Bar Stool Economics

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Bar Stool Economics

Postby deerayfan072 » Wed May 16, 2007 7:02 am

An oldie but goodie - and how sadly true:



Finally...simple economics that even I can understand.



Bar Stool Economics - So the lefties can understand.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until on day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
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Postby Omaha Red Sox » Wed May 16, 2007 7:09 am

:-D
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Postby deerayfan072 » Wed May 16, 2007 7:13 am

Omaha Red Sox wrote::-D



why did i know you would enjoy that :-b
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Re: Bar Stool Economics

Postby Atog » Wed May 16, 2007 7:15 am

deerayfan072 wrote:
An oldie but goodie - and how sadly true:



Finally...simple economics that even I can understand.



Bar Stool Economics - So the lefties can understand.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until on day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.


Somehow I doubt that part...
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Postby joelamosobadiah » Wed May 16, 2007 8:32 am

Perfect analogy. I have heard it before and it is sooooo true.

And this:

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.


Is going in my sig. :-D
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Postby moonhead » Wed May 16, 2007 8:44 am

i'm not buying it.
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Postby BGbootha » Wed May 16, 2007 9:37 am

joelamosobadiah wrote:Perfect analogy. I have heard it before and it is sooooo true.

And this:

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.


Is going in my sig. :-D


Yeah I loved that line.
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Postby Madison » Wed May 16, 2007 1:17 pm

BGbootha wrote:
joelamosobadiah wrote:Perfect analogy. I have heard it before and it is sooooo true.

And this:

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.


Is going in my sig. :-D


Yeah I loved that line.


Same here and it's definitely sig worthy. :-b ;-D
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Postby joelamosobadiah » Wed May 16, 2007 11:29 pm

Madison wrote:
BGbootha wrote:
joelamosobadiah wrote:Perfect analogy. I have heard it before and it is sooooo true.

And this:

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.


Is going in my sig. :-D


Yeah I loved that line.


Same here and it's definitely sig worthy. :-b ;-D


It's just so true in so many areas of life. There are many times I don't feel like giving an explanation because the person doesn't seem worthy if they can't figure it out. :-b
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Postby Santacruzer » Thu May 17, 2007 7:22 pm

All I can think about when I hear Economics is the Laffer Curve.

Anyone else remember the the reference in "Ferris Buellers Day Off"? Anyone? Anyone? :-)
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