Apparently last night's South Park episode had some great economic insight. Thought I'd share the article with you guys.
Imagine an entrepreneur really finds out some business venture is making large profits by taking advantage of people. Imagine he is as depraved as Cartman, and he enters the same line of business, what would happen? First, he would drive prices down to compete with the home network. As there is a large discrepancy in the cost and asking price, this would certainly happen. Second, the price of the cheap jewelry would go up as Cartman (and other businesspeople) increase the demand for cheap jewelry. As a result of this arbitrage, the profits the home shopping network makes would disappear.
Itís unclear if South Park was trying to make this point, but they certainly laid the ground work for it. Stanís dilemma with his grandfather was a family issue with economic repercussions. Imagine the limitations of a government solution: a new law that would take ages to pass and get votes, and months more to implement and enforce. And after all that, Stanís grandpa would still look for a cheap way to buy his grandsonís affections.
A better solution is the one provided by markets. Let entrepreneurs like Cartman (however disgusting) bid the price of jewelry sold to the old folks down and the cost of the jewelry from India up. This would eliminate the profits. Itís a chilling conclusion, but in their haste to take advantage of people the scumbags stop making windfall profits.
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