Economics Even I Can Understand

Photographer: Frank C. Müller

Image via Wikipedia

The following is taken directly from a website called Funny And Jokes. It is taken directly from the site, so please follow the link to the site and see what else is there.

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 paid $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!”

“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, boys and girls, 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

‘Nuff said.

Enhanced by Zemanta

21 thoughts on “Economics Even I Can Understand

  1. Youre so cool! I dont suppose Ive read something such as this before. So nice to locate somebody . realy appreciation for starting this up. this web site can be something that’s needed online, somebody if we do bit originality. helpful problem for bringing new stuff for the web!

  2. I am speechless. This is a very good weblog and very engaging too. Nice paintings! That’s now not really so much coming from an newbie writer like me, but it surely’s all I may just say after diving into your posts. Great grammar and vocabulary. No longer like different blogs. You truly recognise what you?re talking about too. Such a lot that you simply made me want to discover more. Your weblog has change into a stepping stone for me, my friend.

  3. Usually there are some fascinating time limits in this posting however I don’t determine if I see all of them center to heart. There is certainly some validity however I am going to take hold opinion until I investigate it further. Good article , thanks so we want extra! Added onto FeedBurner as properly

  4. I love the dear knowledge you be offering for your articles. I can bookmark your weblog and feature my youngsters check up right here generally. I’m quite sure they’ll be told a whole lot of new stuff right here than anybody else!

  5. Hey Guru, what entice someone to publish articles. This text used to be extraordinarily fascinating, especially because i always was looking for ideas in this particular subject last Thursday.

  6. This site post is excellent, probably because of how well the subject was developped. I like some of the comments too though I would prefer we all stay on the suject in order add value to the subject!

  7. This amazing site on the web is known as a stroll-by means of for any data you wished about this and did not know who to inquire about. Glimpse here, and you will then undoubtedly discover it.

  8. The post was able to express what it wants to convey to the readers. It has been a very effective approach which resulted to a profitable output for all who have been fortunate enough to come across it!

  9. Excellent read, I just passed this onto a colleague who was doing some research on that. And he actually bought me lunch because I found it for him smile Thus let me rephrase that: Thanks for lunch! “We know what happens to people who stay in the middle of the road. They get run over.” by Ambrose

  10. While things proceed horribly drastically wrong regarding one’s nation, along with the scenario with respect to the Usa, what on earth is primarily necessary is actually expect and also anticipation, certainly not frustration and lose hope. There is really a shortage in the the previous along with a binge with the second item inside afflicted region. The difference throughout mindset in between Clinton and also Barack obama in response for this turmoil lets us know just about all that individuals have to know regarding the a pair of presidents

  11. Hello, Neat post. There’s a problem with your site in internet explorer, could test this… IE still is the market leader and a good section of other folks will pass over your wonderful writing due to this problem.

  12. Any time points get badly wrong for one’s country, as they are the circumstance based on the America, what exactly is basically needed is definitely wish and positive outlook, not necessarily rage and also despair. There is a shortage with the the first sort along with a glut with the latter within the stricken state. The gap within mindset in between Clinton and also Barack obama in response for this situation lets us know most that any of us have to know in regards to the two presidents

  13. Evidently this subject can be quite touchy normally, my estimation is this : there should be a middle or mutual understanding that people all can learn. I actually do appreciate that youve added relevant and intelligent commentary here though. Many thanks!

  14. I am impressed by the quality of information on this website. There are a lot of good resources here. I am sure I will visit this place again soon.

Comments are closed.