75-02-A2
- Main Page \ Reagan Radio Commentaries \ 1975
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Supply and Demand[edit]
Transcript[edit]When government meddles, it can't stop meddling. When it doesn't, some amazing things happen in the marketplace. I'll be right back. When the federal government began tinkering in earnest with the free enterprise system in the 1930s, it really opened Pandora's Box. We've learned time and again since then that government tinkering must lead to more tinkering. It was William Blake, the 18th century English poet and scholar, who said, "If you will do good for me, you must do it in the minutest particulars." Where government is concerned, the process is endless. Despite reams of regulations from the Washington bureaucrats, designed to control every aspect of a given situation, American ingenuity and that marvelous incentive to production, the profit motive, have found ways to still let this law, supply and demand, work. Think back to the wage and price controls imposed in August 1971. In the months that followed, mysterious shortages began to be felt in various common, everyday items. Most of them were caused by the freeze on prices. If you were only breaking even on your basic products and couldn't raise prices, you'd consider making alternative products that sold at higher prices. So, for example, we had fewer paper bags, but lots more greeting cards. When government pulls its hand out and let's the law of supply and demand work, that law works naturally. If prices go up, demand slacks off, prices slide down, demand goes up. The process is self-regulating. In the case of new products growing popularity and demand brings about a lowered cost of production per unit, resulting in a lower price to you and me at the store. Take color television sets, for example. When they first came out several years ago you'd pay seven or eight hundred dollars for one. Today, they sell from about two hundred dollars up. In the late 1920s, a long distance telephone call from San Francisco to New York cost $28 for three minutes. For the same amount of money, you could send 1376 letters. Today you can make that same telephone call for only $2 and a half and for that amount you can only send 25 letters. So the government's suing the phone company. Right now, there's another example of the genius of the American system at work. It's the small, handheld calculator, that little gadget that today helps the homemaker stretch your shopping budget, helps junior in his math class and aids thousands of families in paying bills and reconciling bank statements. Just two years ago, it was a luxury item, some two and a half million small calculators were sold in the U.S. and Canada. The average price: a $150. The product was so popular and filled so many diverse needs that by last year, sales had jumped to twelve million units and the average price dropped to $45. In fact, some manufacturers are selling them for as little as $13. Maybe we should send some of these calculators to the Washington bureaucrats, so they can learn something about the arithmetic of free enterprise. This is Ronald Reagan. Thanks for listening. |
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