Posts: 8705 (8704 all sites) Registered: 8/16/2005 Status: Offline
posted on 7/6/2017 at 03:19 PM
Rick Perry gives head-scratching explanation of ‘supply and demand’
by John Bridges, Austin American-Statesman, NCD
10 minutes ago
Rick Perry, the former Texas governor and current U.S. Energy secretary, toured a coal-fired power plant on Thursday to learn about the West Virginia energy industry. Then he proceeded to dig a hole of his own by offering a rather, um, simplified lesson in economics.
"Here’s a little economics lesson: supply and demand. You put the supply out there and the demand will follow," Perry was quoted as saying.
It didn’t take long for Twitter to pounce after energy reporter Taylor Kuykendall posted Perry’s quote.
Perry was soon mocked all over the internet.
Perry, it seems, was guilty of an Economics 101 misinterpretation of an economic principle known as Say’s Law. Here’s how Investopedia explains it:
"The Say's law of markets is an economic rule that says that production is the source of demand. According to Say's Law, when an individual produces a product or service, he or she gets paid for that work, and is then able to use that pay to demand other goods and services. Say's Law is named after the 18th-century French classical liberal economist Jean-Baptiste Say, who popularized the notion. Say was an advocate of laissez-faire economics and was heavily influenced by Adam Smith. Say's Law is frequently misinterpreted as "supply creates its own demand," which is evidently false. If it were true, anyone could do whatever they wanted for a living and be successful at it."
When he wasn’t teaching economics Thursday, Perry used his West Virginia visit to say that coal-fired power plants remain important for America’s future because they have "the ability to deliver a secure, economical and environmentally good source of energy."
I hate to defend Perry, but only to offer a different point of view...if a market was flooded with an extraordinary supply the price would drop from the supply glut which could increase demand depending how far the price dropped. As an example, does cheaper oil prices effect demand for oil? Yes, larger vehicle sales less efficient on fuel sell better when fuel prices remain low and demand for smaller more efficient vehicles goes up as fuel prices do. So lowering prices with an overabundance of supply can effect demand. I do not think Perry was taking that angle though. In this area more supply is not going to help coal demand. Regulatory changes can do that however.
The ALLMAN BROTHERS BAND name, The ALLMAN BROTHERS name, likenesses, logos, mushroom design and peach truck are all registered trademarks of THE ABB MERCHANDISING CO., INC. whose rights are specifically reserved. Any artwork, visual, or audio representations used on this web site CONTAINING ANY REGISTERED TRADEMARKS are under license from The ABB MERCHANDISING CO., INC. A REVOCABLE, GRATIS LICENSE IS GRANTED TO ALL REGISTERED PEACH CORP MEMBERS FOR The DOWNLOADING OF ONE COPY FOR PERSONAL USE ONLY. ANY DISTRIBUTION OR REPRODUCTION OF THE TRADEMARKS CONTAINED HEREIN ARE PROHIBITED AND ARE SPECIFICALLY RESERVED BY THE ABB MERCHANDISING CO.,INC.