Thursday, October 30, 2008

Fundamentals Are … Fundamental (Jim Fedako)

Fellow homeschooler Jim Fedako writes on the unchanging fundamentals of the market economy:

Imagine that you and a friend are sitting on a bench across the street from a construction site. In quick succession, two trucks arrive and dump a pile of sand, one pile next to the other. Moments later, a bulldozer appears and pushes the two piles together. After some thought, your friend has an "a-ha" moment.

"Interesting," he notes, channeling Jacques Derrida, "one and one are no longer two."

His comment slowly invades your thoughts. Finally, you respond, "What did you just say?"

Repeating his statement, only with more certainty and strength, "One and one are no longer two, under all circumstances. See that pile of sand. Before it was two piles of sand, and now it's one. So, one pile plus another pile is just one pile. One and one are no longer two."

Floored, you stare at your friend hoping to find a sign of jest.

He continues, "This isn't the first time that fundamentals have changed. During this past year, we've witnessed the fundamentals of economics — you know, supply and demand — rocked by oil speculators. It is no longer supply and demand setting the price, it's now the speculator. The fundamentals changed. Times have changed. We are living in a different world."

Taking a deep breath, you slowly note, "Fundamentals are just that: fundamental. By definition, they can't change, regardless of the time or place."

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