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May 08

12th Issue New Voice For Politics

12th Issue New Voice For Politics

In this Issue

Have Another Round: The Solution to College’s Drinking Problem If you want less binge drinking, you need to drink more.

Why You Will Pay Me $20 for Bottled Water Satisfying the thirst of wild beasts.

Ice Cream Death Spiral It can only go down from here

 

Have Another Round: The Solution to College’s Drinking Problem

Wayne Butler

When people think of college, many imagine half naked men and women in beer drenched togas chanting as beer spews forth from kegs like lava from Mt. St. Helens. From Animal House to Old School, numerous movies have described the drinking excesses of college students and for good reason; it happens. According to the National Institute on Alcohol Abuse and Alcoholism, 80% of college students have used alcohol (i.e. having a wine with dinner) and about half have engaged in excessive binge drinking (i.e. drinking one’s height in beer cans).

What is it about college that drives just under half of the students to consume mass quantities of alcohol? Have they cracked under the unrelenting pressure of Psychology 100 exams? Are they overwhelmed with home sickness and longing to spend more quality time with their parents? Do they simply lack the mental coping skills necessary to deal with stress after being coddled by over indulgent parents and grades school teachers that were more interested in building up self-esteem with 12th place ribbons than resilience and grit? What drives them to engage in such gluttony? The answer is simple, supply and demand.

In order to understand what motivates students to drink, we must remember that in general people like to drink alcohol. It is an enjoyable and relaxing activity for many people. This is why the alcohol industry generated over $400 billion dollars in 2010. Also, up until college, most students could not access alcohol, because vigilant parents watched over them like hawks. But once they moved away to college, the environment dramatically changed in a jiffy. With the parental cats many hours away, the college mice were now free to play, and some chose to celebrate their new found freedom by freely indulging in a few too many libations. When their access to alcohol went from zilch to limited, the binge drinking began.

It is interesting to note that not all college students engage in binge drinking. Some college students exhibit restraint by drinking responsibly while others did not, but why? One of the main reasons is supply. If you look at who is engaging in binge drinking, it is usually under age students who are unable buy alcohol for themselves. The government creates an artificial alcohol shortage by preventing college students under the age of 21 from purchasing alcohol directly from stores. The limited supply for those under 21 increases the demand that they have for alcohol. When an under aged student goes to a party, they know they will only be able to drink alcohol at this location. Once they leave or the alcohol runs out, they are out of luck. This results in underage students becoming highly motivated to consume as much alcohol as they can in a short period of time.

What then is the solution to this problem if an artificial shortage is causing an increase in binge drinking?  It is actually quite simple; all we need to do is increase the supply of beer by doing away with drinking age limits for college students. Many college presidents have already come to this exact conclusion. From the Ohio State University to Duke University, over 100 college presidents are in favor of lowering the drinking age to 18. This desire to reduce the harm of needless binge drinking has led to a movement called the Amethyst Initiative, which desires to open the debate about lowering the drinking age.

Despite the logic of lowering the drinking age, some teetotalling party poopers continue to poo-poo any change. But does such vehement opposition make sense? Let us examine the evidence; are people over the age of 21 engaging in as much binge drinking as those who are under? Is grandma getting plastered on the porch? Are police officers chugging brewskis in their cruisers? Do rocket scientists spend all day long doing keg stands? No, because they do not have a limited access to alcohol.

If people really care about reducing binge drinking on college campuses, they need to allow college students to drink alcohol. In order to end binge drinking, college students need to drink more beer.

 

Why You Will Pay Me $20 for Bottled Water

J. A. Gedra

On April 13, 2014, I and half of the city of Louisville visited the Louisville Zoo. Normally, half of the metropolis is not simultaneously moved to visit the zoo, but today was different. What made it different? It was Earth Day. Do not get the wrong idea; the throngs of people were not there to celebrate environmentalism, they were there because subsidies distorted supply and demand, which resulted in utter chaos.

Like all subsidies, people received the benefits before the horrible consequences kicked in. General admission to the Louisville Zoo is usually $16, but on Earth Day, Louisville Gas & Electric (LG&E) and Kentucky Utilities (KU) provided a subsidy to the cost of admission. Instead of the customer paying $16, the customer paid $3 and LG&E and KU paid the remaining $13. This resulted in LG&E and KU customers paying more for their electricity, and half of the city of Louisville entering the zoo after paying $3.

To most people, an 80% decrease in the entrance fee seems like a great reason to attend, but why does it lead people to act? Supply and demand is why. The demand, desire to go to the zoo, is relatively high in the spring when the weather is nice, but not everyone attends the zoo, because the cost of the ticket limits the number of people who will purchase a ticket. When the price of admission is dramatically decreased, because of an artificial reduction in cost (i.e. the $13 subsidy), people flock to the zoo to observe birds, because the demand has not changed.

The result of this influx of humanity was anarchy. The zoo became a zoo with so many people. Pathways resembled rush hour with traffic coming to a standstill. There were many accidents as strollers repeatedly ran into your shins and adults would run over children who darted out in front of them. Tempers flared as mothers pushed their weight around to make sure that their little cub saw the bears.

Such stress made one want to relax with a nice cool beverage, but unfortunately this was not possible. The zoo staff did not anticipate that a dramatic increase in patrons would increase the demand for drinks. If they had, they could have increased the supply of drinks and made a larger profit. Instead, they started the day with an insufficient supply that the hordes quickly consumed, resulting in the zoo turning into a desert. All pop machines were out; most were not even plugged in. All of the concession lines had at least 25 to 50 people in line. The situation became so dire that one woman collapsed and required emergency medical services.

With so much pent up demand, people would gladly pay a fortune for a cold drink, which is why zoo patrons will be buying bottled water from me for $20 next Earth Day at the Louisville zoo. When the demand is this high, due to a limited supply, entrepreneurs can easily step in and make a profit.

The moral of the story is when the cost of a product is artificially decreased with a subsidy, shortages will occur if the supply is not increased. This is why the zoo had such long lines for drinks and Venezuela has been running out of toilet paper.

kitty cat zoo

 

 

Ice Cream Death Spiral

Patricia Smithe

What is better than ice cream on a hot day? All-you-can-eat ice cream on a hot day. In Philadelphia, a person can eat all of the ice cream they want at the Super Scooper All-You-Can-Eat Ice Cream Festival. For two days, an individual can eat unlimited ice cream for $7.

Based on the success of Super Scooper, my friend decided to replicate their model at his ice cream store. After paying $50, a patron could eat as much ice cream as they like for the rest of the year. What could go wrong?

At first, business was booming. Cash was rolling in like the ocean at high tide, as people bet they could eat more than $50 dollars’ worth of ice cream in a year. But after the first month, my friend started to notice a problem. The people who were signing up for his program were not healthy individuals who preferred eating asparagus over ice cream. Much to his dismay, the vast majority of the signers on were of a vast size due to eating a vast amount of ice cream.

Within three months, his company was losing more and more money as his customers were gaining more and more pounds. In order to balance the scales, he had to increase the amount of money that people paid from $50 to $100. Regrettably, this resulted in even fewer healthy ice cream eaters signing up, because they knew that there was no way they would eat $100 worth of ice cream. The only people who signed up were individuals that ate a ton of ice cream, and these people were still eating more than $100 dollars’ worth of ice cream.

Finally, he raised the price to $250. At this point, hardly anyone could afford to go into his store at such a price. The only people who did were the individuals that ate way more than they paid for. In the end, he went out of business, because the average ice cream patron could not afford to pay that much for ice cream, and those who did still consumed more ice cream than they paid for.

My friend’s store failed because it had entered into a death spiral. This occurs when a company has customers that are utilizing more services than they paid for. When a company is placed in such a perilous predicament, they have three options to recoup the cash: find more customers, decrease the quality and cost of their service, or increase the price for their services. Unfortunately if you decrease the quality or increase the cost, fewer people will be willing to buy the watered-down, excessively-priced product. When fewer customers sign up, prices will have to go up, and the quality will go down. Every increase in cost will result in fewer new customers signing up; until eventually, no one can afford the company’s product, and they will go out of business.

Right now, health insurance companies are drifting downward into a death spiral because of the Affordable Care Act. The new law requires that insurance companies must accept any customer, regardless of their health. This has resulted in the very sick signing up right away for insurance, because it is a good deal for them, they receive more care than they paid for. Unfortunately, the healthy individuals that do not need or want insurance are not willing to pay for a product that they do not want; otherwise, they would have bought it already. This situation has resulted in insurance companies having an increase in expenses, since the increase in services received by the very sick new customers is not offset by the insurance premiums of healthy new customers who do not utilize health services. In order to make up for the increase in services, insurance companies will have to increase insurance premiums, which will lead to fewer people signing up. At this point, the companies will be caught in a death spiral. An ever dwindling number of people will sign up for insurance as the cost continues to increase. If the current system continues under the Affordable Care Act, care will no longer be affordable.

small black and white cone

 

 

 

 

 

 

 

 

 

 

 

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