Sunday, March 07, 2010

Imagine, if you will....

Imagine, if you will....

by Stuart Zechman

Imagine, if you will, that the only food that people have to eat comes
from McDonald's.

Now imagine that a strange phenomenon occurs, in which it is noticed (but, oddly, not widely reported) that Americans on the Canadian border seem to stream across into Canada to buy their Big Macs

It is discovered, and the information spreads through word of mouth on the internet, that a Big Mac in Grand Forks, North Dakota costs $7.40, but --incredibly-- McDonald's sells that same Big Mac in Winnipeg, Manitoba, Canada for $3.90.

Many people continue not to notice this strange situation. After all, most people get their information about McDonald's from the television commercials McDonald's airs, and they don't advertise their Canadian prices during Meet The Press, they advertise their "6 Dollar Menu!" specials. A huge population of Americans don't live near the Canadian border, and so remain unaware that they pay so much more than Canadians for the same sandwich. And, again, somehow these disturbing facts don't regularly make it into newspapers, magazines and television shows that depend on McDonald's for the advertising dollars for which they're starting to starve.

But, more and more, word spreads via new communications technologies that this is the case. Economic data that previously sat in dusty reports waiting for reporters to notice, and publishers to publish, is instantaneously available to anyone online. It is by this new channel that the shocking information starts to come out: the price that McDonald's charges for Big Macs in the United States is almost twice that of every other country that has McDonald's restaurants

The data shows that it's not just Canada. A Big Mac in Switzerland costs $4.41, in France it's $3.61, in Germany it's $3.58, in the UK it's $2.99, in Italy it's $2.68, in Spain it's $2.67, and --unbelievably-- in Japan it's only $2.58 for the same Big Mac.

What's different about these countries?

Lots of things, but one thing they also have in common is that their governments have special ministries set up to negotiate the price of a Big Mac with McDonald's every few years for the entire nation of tens and tens of millions of people.

The reason that the price of a Big Mac in Japan is so low is that their government has decided how much a Big Mac should cost, and told McDonald's that, if they don't like it, the Japanese government will fund a project to make their own McDonald's, complete with Golden Arches and Special Sauce, and that they're pretty confident they can make Big Macs, if they had to. Plus, they don't really respect McDonald's "worldwide patents" on Big Macs. They just don't care. So McDonald's takes the deal, otherwise they'll lose the money, and they know that the Japanese are not f*cking around.

So now it comes time in the United States to deal with the fact that McDonald's expenditures are taking up, like over 16% of the nation's wealth, because we're overpaying for Big Macs, and as the price stays low in other countries, McDonald's keeps raising the prices here to compensate and make more profits. Gradually, and then suddenly, it's getting ridiculous...and scary.  Nobody can continue to bankrupt themselves paying for Big Macs, and so something must be done. The Federal government's "Medi-Mac" program, which feeds people over 65, is going broke in ten years at a desperate pace.

What does the government of the United States do?

Well, they ask economists. The economists put up big, long, complex math equations with Greek letters in them up on white boards and Power Point presentations, and they explain what the symbols mean to government officials.

One of these symbols is for the price of Big Macs, one is for the number of people who need Big Macs, and one is for the number of Big Macs. Then they draw a graph of what that equation looks like, just like kids are forced to do in algebra class. The graph radically curves upwards, like the trajectory if you shot a balloon out of a cannon.

These economists come from different schools of economic theory, so some economists say "Set the price of Big Macs lower, then run the equation!" Unfortunately, the government officials say "We can't do that! That's off the table! You're fired. Somebody shut them up!"

Other economists, though, say "Set the number of people lower! Now run the equation.", and the officials say "Sure. Now the graph looks like a cannon shot of a balloon that's got a slow leak. Great!".

The problem is that the government officials are trying to make a new Federal program called "Fast Food Reform" that actually increases the amount of people who can buy Big Macs a little bit, because those poor folks are going to get a tax break at the end of the year for all of the Big Macs they buy.

So these officials go back to the economists, and say "We've got a problem here. How do we get that number of people who need Big Macs lower again, so the graph doesn't go back to exploding?" These helpful economists say "Well, why don't you tax some of the people who buy Big Macs now? Then the resulting decrease will offset the increase you're planning by a bit. That will keep the people who need Big Macs number more or less the same!"

Did you get that?

These economists can "bend the cost curve" on that graph of Big Mac spending, if they can offset the number of new Big Mac buyers with those who are taxed, and therefore can buy less. How much will the graph change? Not much, but enough so that that the government officials can say that it's "historic legislation".

Everybody in Washington goes home happy, job well done, live to fight another day. The economists, in particular, are pleased with their equations and graphs. Science! $700,000 in US Dept. of Health and Human Services research money! Science.

Meanwhile, back in Grand Forks, North Dakota, people hear grand statements about "bending the cost curve" and "historic" and "31 million people now able to buy Big Macs", and get increasingly irritated --and desperate. They still have to go to Winnipeg to buy low-cost Big Macs, and they don't understand why they can't just go to Walmart, and get them cheap there.

They also know that, in addition to having to go to Canada to get McDonald's food, they're also paying taxes to supply revenue for the government's "Medi-Mac" program, and they know that the Feds aren't paying Canadian prices for that, so they're getting soaked no matter what. They hate the political party in charge of Washington that did this to them. Their incumbent Senator from that party actually declines to run for office again. This scenario plays out similarly in many other states, just with different degrees of anger and disappointment. The price of a Big Mac in the United States begins to climb skyward to $8.00, $9.50, $15.90, $21.20, just like a cannon shooting a leaky hot-air balloon at the horizon.

Many middle class people who used to be able to afford a Big Mac start to starve.

That's the story of this Health Care Reform legislation, if it were about Big Macs instead of health care, and McDonald's instead of Pfizer.

I hope that you all enjoyed this little novella. 18 and over,
entertainment purposes only.

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