Bar stool economics

JJ Kien

Well-Known Member
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100 and they paid the 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." So 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 pay $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, ladies and gentlemen, 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

For those who understand, no explanation is needed..
For those who do not understand, no explanation is possible.
 
Re: Bar stool economics

Thank you for that enlightening post. I hereby declare all wisecracks, criticisms and insults about me, my GGGCB and nuclear aircraft carrier as well as my pet humpbrokebackwhale are off limits. Otherwise, I may take my postings over to the honda forum overseas instead :lol2::lol2:
 
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Re: Bar stool economics

So what happens when 30 men from another town is passing through and joins the 10 men for beer ?
 
Re: Bar stool economics

Moral of the story is the ones dat contribute nothing are the kbkp ones feeling most entitled. Sound like anyone we know?
 
Re: Bar stool economics

Indeed an academic paper that is only valid in the ideal world.

In the practical world, price of the beer would have gone up.

The first four are hardly affected because they didn't have to pay anything in the first place. The tenth is so rich that the increase doesn't even scratch him. The "median 5" are the ones that will struggle.

Of course, if I am the owner, I will only sell the beer to the top 5 earners of the 10- Just like how the "foreign talent" scheme was supposed to be. Do half the work, get 99% of the revenue. Huat ah.
 
Bar stool economics

Red_Bean_Bun;1045103 said:
So what happens when 30 men from another town is passing through and joins the 10 men for beer ?


They all insert straws into the 10 mugs and take turns to sip. If it was 30 women passing through... the 10 men HUAT ARH!!

On a separate note, every time we lim kopi with old classmates the 'poorer' few of us end up paying. Kiam kanas FTW.
 
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Re: Bar stool economics

seanskye;1045148 said:
They all insert straws into the 10 mugs and take turns to sip. If it was 30 women passing through... the 10 men HUAT ARH!!

On a separate note, every time we lim kopi with old classmates the 'poorer' few of us end up paying. Kiam kanas FTW.

The "poorer" few are the Bros with the BMWs .......
 
Bar stool economics

Red_Bean_Bun;1045151 said:
The "poorer" few are the Bros with the BMWs .......

No lah, but maybe M6 or X6... Most of them became doctors, bankers, lawyers, future PMs... I was the black sheep who copied the homework before class every morn!
 
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Re: Bar stool economics

Serious ...... CCS never pay for kopi ?

seanskye;1045168 said:
No lah, but maybe M6 or X6... Most of them became doctors, bankers, lawyers, future PMs... I was the black sheep who copied the homework before class every morn!
 
Re: Bar stool economics

Most of the people I know feel sour and bitter like the 9 men who missed the bigger picture.....
 

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