Stability v. elasticity
There has been much complaining of late about how the oil companies are ripping people off, and how unfair it all is. That is a load of cow manure.
Yes, prices are high, yes, the companies are making a profit. That is their job. They are supposed to make a profit. They owe it to their shareholders, the little old ladies in Omaha who put their savings into oil companies.
You know what doesn’t make a profit? Medicare — the government health insurance program for the elderly. And do you know how they support that? With your taxes. That is an entitlement. If you live long enough, and if Medicare survives in its present form, you will then be “entitled” to receive benefits.
Gasoline, home values, rents, good jobs, these are all controlled by a market. How you do in that market is in many ways beyond your ability to decide, granted. But, nowhere in our U.S. Constitution, state Constitution, local municipal codes or in our society does it say that you are entitled to cheap gas, low rent and a high paying job.
Those of us who choose to live in Santa Monica, picked it because of its beautiful weather, small town feel, proximity to the beach and the lifestyle that it affords us. We choose to live here because our life is short and we want to live in the best place we can afford.
That’s a key thought, “what we can afford.” Because so much of our position in life boils down to our income, and our income is an outgrowth of the work that we have put in, to get to where we are, and the choices that we make.
I’m an entrepreneur, I’m a lawyer, I like being self-employed. I enjoy the freedom that it affords me to enjoy my life. It comes at a price. I never know for certain what my next week’s income is going to be.
We go through lean times, periods when there are no new clients coming in with divorces, no new child custody battles. It is those periods when the thought occurs to me that a regular salaried job sounds really good.
The security of working for someone else is a safety blanket that many of us choose, for all sorts of reasons. When I was in law school, I needed to have a job because I did not have the time to go find clients, do the administrative work of running a company and be able to study. So I took a job waiting tables at Rusty’s on the pier.
It was a good job, tips were decent, my hourly rate was standard minimum wage and it got me through the hell that is law school.
For those people who have a family, you need to have the security of knowing where the next meal is coming from. You have chosen to put someone else in charge of worrying about the overall health of the business, and you get to enjoy your kids.
The price for your stability and security of income however, comes at the price of elasticity of your income. So long as you are working for someone else, there is an agreed upon, set wage schedule.
This stability allows you to budget and plan, but the problem is that you have no elasticity in your income. That is why a spike in the price of gasoline hurt so much.
For someone who is a regular wage earner, they don’t see an increase in their income until their annual review, and then it’s likely to be a small percentage of their wages. This is the trap of being a wage earner.
Self-employed people on the other hand, those who don’t have security in their income stream, who do have to worry about where their next clients are coming from, have the flexibility, the elasticity in their income to adapt to price increases in gasoline, food and housing.
As a self-employed person, I have much greater control over my income, but I also have more risk.
Life is all about balance, so is the mar-ketplace. For years we have had cheap gasoline in America, the market is finally catching up to us.
The whiners amongst us need to lose their sense of entitlement and recognize that the choices they make are nothing more than a tradeoff. Some of us chose security over risk — that gives stability in income; it comes at the cost of adaptability and elasticity in income level.
Originally published in the Santa Monica Daily Press print edition on May 13, 2008. Read the original PDF.