Monthly Archives: January 2008

Bar Stool Economics

Via my brother-in-law, a joke that is certainly making its way around the blogosphere.

So, thanks Mark, and a happy tax-paying season to ya…….

Our Tax System Explained: Bar Stool Economics

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 one 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 got”

“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, ladies and gentlemen, 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. In fact, they might
start drinking overseas where the atmosphere is somewhat friendlier.

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

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Cafeteria Trays – A Conservation Program

From the Wall Street Journal, an idea that, in a slightly altered version, seems to be gaining traction on my campus. Here, the push is on to save water; the advice is that the non-use of a tray reduces water consumption by 30%. Perhaps there is also the unintended, but welcomed, opportunity for weight reduction on the part of your scribe…..

Do cafeteria patrons waste food because of the ubiquitous food tray?That is the conclusion of some university administrators, who have found that removing trays from dining halls cuts down on the amount of food and drink that gets thrown in the trash. The idea is that without the convenience and space that trays afford, students don’t get overly ambitious when it comes to portions.Tests seem to back this up, Elia Powers reports in online publication Inside Higher Ed. At Alfred University in upstate New York, food and beverage waste dropped between 30% and 50% on two days when trays were removed.At Colby College in Maine, roughly one-third less waste is generated on days when trays aren’t available. The drop is so predictable that dining officials know to purchase less food for those days.Students generally haven’t enjoyed going without trays, dining-hall administrators say. Some come up with enterprising alternatives. Varun Avasthi, director of dining services at Colby, has heard of students piling food onto chair seats during trayless days. He says members of Colby’s woodsmen team (who, according to its Web site, mixes traditional woodsmen skills like “standing-block chop” with “newer events such as axe throw”) have crafted their own wooden trays. – Robin Moroney

I Guess We’ll Know What Hit Us…..

The latest near miss…..

tu24_greenbank.jpg

Asteroid 2007 TU24 passed by the Earth yesterday, posing no danger. The space rock, estimated to be about 250 meters across, coasted by just outside the orbit of Earth’s Moon. The passing was not very unusual — small rocks strike Earth daily, and in 2003 a rock the size of a bus passed inside the orbit of the Moon, being detected only after passing. TU24 was notable partly because it was so large. Were TU24 to have struck land, it might have caused a magnitude seven earthquake and left a city-sized crater. A perhaps larger danger would have occurred were TU24 to have struck the ocean and raised a large tsunami. This radar image was taken two days ago. The Arecibo Radio Telescope in Puerto Rico broadcast radar that was reflected by the asteroid and then recorded by the Byrd Radio Telescope in Green Bank, West Virginia. The resulting image shows TU24 to have an oblong and irregular shape. TU24 was discovered only three months ago, indicating that other potentially hazardous asteroids might lurk in our Solar System currently undetected. Objects like TU24 are hard to detect because they are so faint and move so fast. Humanity’s ability to scan the sky to detect, catalog, and analyze such objects has increased notably in recent years.

Not very reassuring.

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