Forsyth Explains it All, Part 2
Jan. 7th, 2005 09:04 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
forsythToday, I'm going to talk about hidden costs. Yeah, more boring economics, sorta.
Hidden costs are really easy to understand. They're costs to something, that are hidden. Bow before the power of tautology! But yeah, they're really that simple. As a couple examples.
One of the hidden costs in Windows is the poor security and ease of virus infection in most version of Windows. When you buy Windows, you end up paying for it, plus paying for anti-virus, firewalls, tech support when it crashes, time lost to computers clogged with spyware, etc.
Or, in RPG terms, if you find a nifty magic sword, then later on it turns out to be cursed and make you a berserker, or if it's being searched for by powerful baddies, that's a cost of it you didn't know about when you got it.
Let's say you buy a lamp, and the lamp turns out to need light bulbs only made by the manufacturer, and those light bulbs cost five times what normal ones do. The salescritter would never mention that to you, so it's a hidden cost.
There's hidden costs all over, the costs you don't think about when you get something. Sure, you can avoid some of them by research and thinking about things, but you'll probably still miss some.
So, let's take a look at a hidden cost that's built into almost everything in modern society, and doesn't get considered much, if at all. Transportation. Yes, for the picky out there, transportation costs get counted into the costs of things you buy... Sort of. There's other costs besides just the amount it cost the trucking company to fuel the truck and pay the driver. The thing is, most of those costs are big, but averaged out, they're small on each item. Highway construction and upkeep, for example. Averaged out over millions of miles of road and millions of cars, it seems like nothing. But it's not. The US spends hundreds of millions of dollars on highway building and maintenance each year. But most things go by more than just truck, they go by ship and/or plane and/or train, too. So infrastructure for them, too. And for the sea lanes, to keep them secure and keep ships from being raided, you have to have a navy, keeping sea lanes clear is a large part of the Navy's job. But who's going to count the Navy in with transportation costs? The Navy does a bunch of things, but many of them revolve around keeping things peaceful and set up well for trade.
Then we go back to the big hidden cost, the fuel for the truck. Obviously, you have refineries, and gas station infrastructure, which require MORE trucks. And of course, the biggie, oil. Oil has infrastructure costs, but much more than that. A good portion of the military budget has to do with keeping supplies of oil safe, because the world economy depends on it. Keeping the oil supply safe and steady means dealing with many unpleasant regimes, like Saudi Arabia. Human costs there in supporting despotic governments, plus the human costs of US soldiers killed in various oil-related battles. And the Navy, again, to keep the sea lanes clear for giant oil tankers. How much of the US military expenditure went toward being sure you could eat that New Zealand apple you've got? A tiny percentage, but multiply it by all the things we import and you've got a significant fraction of the military expenditures of the US. But these costs aren't ever factored into the costs of the items when you buy them, they're hidden in the taxes and military funding.
And I haven't even scratched the surface of the environmental costs of transportation and oil, which also includes the health costs, neither of which is counted in the price of the item or even usually paid by the person who bought the apple. And the costs to the people who manufacture things, depending on where they're made...
So, am I saying boycott imports? Well, no. I'm not really saying ANYTHING here, except to think about things a little more. Think about where the food you buy comes from, where the stuff you buy is made. There's lots of costs that aren't apparent at first glance. And because of that, they don't get addressed. Maybe they should. I think so. But the how depends on what it is, and what the alternatives are. Everything has costs, just make sure you count them all.
[meta: After-School-Special]
Hidden costs are really easy to understand. They're costs to something, that are hidden. Bow before the power of tautology! But yeah, they're really that simple. As a couple examples.
One of the hidden costs in Windows is the poor security and ease of virus infection in most version of Windows. When you buy Windows, you end up paying for it, plus paying for anti-virus, firewalls, tech support when it crashes, time lost to computers clogged with spyware, etc.
Or, in RPG terms, if you find a nifty magic sword, then later on it turns out to be cursed and make you a berserker, or if it's being searched for by powerful baddies, that's a cost of it you didn't know about when you got it.
Let's say you buy a lamp, and the lamp turns out to need light bulbs only made by the manufacturer, and those light bulbs cost five times what normal ones do. The salescritter would never mention that to you, so it's a hidden cost.
There's hidden costs all over, the costs you don't think about when you get something. Sure, you can avoid some of them by research and thinking about things, but you'll probably still miss some.
So, let's take a look at a hidden cost that's built into almost everything in modern society, and doesn't get considered much, if at all. Transportation. Yes, for the picky out there, transportation costs get counted into the costs of things you buy... Sort of. There's other costs besides just the amount it cost the trucking company to fuel the truck and pay the driver. The thing is, most of those costs are big, but averaged out, they're small on each item. Highway construction and upkeep, for example. Averaged out over millions of miles of road and millions of cars, it seems like nothing. But it's not. The US spends hundreds of millions of dollars on highway building and maintenance each year. But most things go by more than just truck, they go by ship and/or plane and/or train, too. So infrastructure for them, too. And for the sea lanes, to keep them secure and keep ships from being raided, you have to have a navy, keeping sea lanes clear is a large part of the Navy's job. But who's going to count the Navy in with transportation costs? The Navy does a bunch of things, but many of them revolve around keeping things peaceful and set up well for trade.
Then we go back to the big hidden cost, the fuel for the truck. Obviously, you have refineries, and gas station infrastructure, which require MORE trucks. And of course, the biggie, oil. Oil has infrastructure costs, but much more than that. A good portion of the military budget has to do with keeping supplies of oil safe, because the world economy depends on it. Keeping the oil supply safe and steady means dealing with many unpleasant regimes, like Saudi Arabia. Human costs there in supporting despotic governments, plus the human costs of US soldiers killed in various oil-related battles. And the Navy, again, to keep the sea lanes clear for giant oil tankers. How much of the US military expenditure went toward being sure you could eat that New Zealand apple you've got? A tiny percentage, but multiply it by all the things we import and you've got a significant fraction of the military expenditures of the US. But these costs aren't ever factored into the costs of the items when you buy them, they're hidden in the taxes and military funding.
And I haven't even scratched the surface of the environmental costs of transportation and oil, which also includes the health costs, neither of which is counted in the price of the item or even usually paid by the person who bought the apple. And the costs to the people who manufacture things, depending on where they're made...
So, am I saying boycott imports? Well, no. I'm not really saying ANYTHING here, except to think about things a little more. Think about where the food you buy comes from, where the stuff you buy is made. There's lots of costs that aren't apparent at first glance. And because of that, they don't get addressed. Maybe they should. I think so. But the how depends on what it is, and what the alternatives are. Everything has costs, just make sure you count them all.
[meta: After-School-Special]
