MTV and missiles (that's what they want)
About a week ago some cockeyed study made the papers, claiming that as many as ten percent of Americans are going hungry. As usual, the data wasn’t published along with the news stories, and the whole thing smelled like statistical garbage upon which some odious social crusade was to be built. Still, it did bring some interesting issues to mind.
In the United States 98 percent of all households have television sets, and 99 percent of the those TV owning households have a color TV.
If someone is starving while watching his color TV, how do we approach the issue?
The apparent story behind the story is how the land of Uncle Sugar seems to have confused luxuries with necessities. Which would seem logical enough, until we consider that if someone prefers a television set in the living room to food on the table, then television–not food–would be the necessity.
Some people, then, will choose television (or booze or drugs or stereos or cigarettes or whatever) over food. There’s nothing in economics that would dictate otherwise. When choosing to spend money on “A,” we do so at the cost of being able to buy “B” with that same money. Even if you’ve got plenty of food in the pantry today, the ten bucks you spent on a movie ticket means you can’t spend that money on a few cans of Spam to sock away in case times get tough.
Of course, storing Spam is a simplistic way of going about things. Better to store money in the bank with which to buy Spam if you need it. But the money angle can muddy the waters, and gloss over the plain fact that buying “A” means that you choose not to have “B.” The technical term is “opportunity cost,” which simply means that when you choose one thing, you wind up rejecting something else.
A wordy but useful definition of opportunity cost is “the value of the best forsaken alternative.” In other words, on the list of things you’ve missed out on by choosing “A,” the opportunity cost is what you would have valued the most on that list.
Starving television watchers are up against a variety of opportunity costs. Obviously, the money they spent on the boob tube could have been spent on food–opportunity cost number one. The time they spend vegetating in front of the television could have been spent working (or fishing or farming or whatever)–opportunity cost number two. The money they had tied up in the television could have been earning interest in the bank as it was saved against the day that the cupboard ran dry–opportunity cost number three.
Societies, like people, face opportunity costs. It’s the old “guns or butter” situation. The more resources you devote to producing guns, the less available to produce butter. Money spent on missiles is money not available for cancer research. Of course, most people don’t see the tradeoff in those terms. That old bugaboo of opportunity costs sounds simple, but it’s often overlooked and downright ignored.
