"Save the neck for me, Clark."
Perhaps no movie depicts 1980s Americana better than the dinner scene from "National Lampoon's Christmas Vacation." Clark Griswold, portrayed by Chevy Chase, sits at the head of the table carving the Christmas turkey while Cousin Eddie, who is hilariously played by Randy Quaid, eats Jell-O garnished with cat food further down the table. This was – and remains today – pop culture at its finest.
One of the movie's funniest moments occurs when Cousin Eddie kidnaps Clark Griswold's stingy boss and dumps him tied up in the Griswold living room as a Christmas present.
Eddie performed the Class B felony after hearing Clark angrily proclaim that he'd like to have his boss hog-tied in the living room in order to give him a piece of his mind; Eddie kidnapped the boss based off of a fallacious assumption.
How does this tie in with economics for students at UTK?
Economic fallacies, through the laws and government programs that arise from them, impact our lives every day. And when it comes to economic fallacies, one in particular stands out: income and income distribution.
The very term "income distribution" is misleading. To the unfamiliar, it implies that there exists some arbiter of income – someone who doles out the dollars to members of society. Economist Walter Williams satirizes this view:
"There is a pile of money intended for us all," Williams writes in his essay, "From Whence Income?" "The reason why some are rich and some are poor is that the greedy rich got to the pile first and took their unfair share. Clearly ... justice would require a re-dealing, or redistribution, of the dollars where the government takes the ill-gotten gains of the few and returns them to their rightful owners."
In reality, wealth is allocated as a result of millions of individuals making different choices based on what they value.
Take Peyton Manning, for example. I personally would love to play quarterback for the Denver Broncos and make millions. However, my fellow football fans would not pay several thousand dollars for season tickets to see me play in the NFL, because I have don't have the capacity to please the fans that Peyton Manning does. He breaks records; I would just break bones.
We need to think of dollars as "certificates of performance," because one of the functions of money is as a store of value. Essentially, when one buys something – like season tickets to watch the Denver Broncos – a good or service is exchanged for a particular value or price. Fans pay money for the pleasure of watching Peyton dissect a defense, and in return, Peyton receives a portion of the accrued value he provides to the fans in the form of a paycheck.
While this example seems frivolous, it proves why a free-market system of exchanges is such an incredible system.
Firstly, it demonstrates that every transaction within a free-market is a zero-sum game. In other words, no one loses. You pay for tickets to see the Broncos play football, and in return the Broncos are compensated with your money. Both parties benefit – as long as no one is forcing you to make the transaction.
The brilliance goes beyond a mutually beneficial transaction; in order for an individual to receive monetary compensation, he must first serve his fellow man by providing them with a good or service that they deem valuable. Most of us wouldn't pay $100 for a Big Mac at McDonald's, because that price is too expensive. In other words, we don't value the compensation we receive from the Big Mac at $100.
The vast majority of individuals with higher net worth than you or I have served their fellow man by providing a good or service consumers deemed valuable; they did this in a manner which allowed them to accrue the aggregate value they provided – or got rich.
After all, the money supply isn't like the turkey Chevy Chase carves in the first scene of Christmas Vacation – an equal portion to be given to all. Instead, income and its "distribution" is the net result of mutually beneficial transactions born out of service to one another.
We should focus on enabling others to develop skills necessary to serve in a better capacity – and rest assured knowing that in order for one to lay claim to what others produce, he must first earn it.
Adam Prosise is a senior in economics. He can be reached a email@example.com.