Economics 101 and Lower Prices–Simple and Common Sense Solutions In Life

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I am not an economist nor am I even remotely smart about anything economics related. I’ve always believed that economics is for real smart people, much smarter than me and it was such a complicated discipline that only a select few could really speak on the topic with authority.

I’ve heard many times that a great way to keep consumer prices low was to offer competition to the buyer. But I heard so many people say that was a much too simplistic solution for keeping prices low. It made sense to me though; offering competition to lower consumer prices but many folks who fancied themselves as academics or intellectuals, seemed to balk at that simple idea.

While reading the paper today I saw a headline that jumped out at me. It shocked me and I think it will you as well. The headline said, “Report: Ohio Auto Coverage Cheaper than Decade Ago.” I thought, this is amazing, something as important as auto insurance cheaper today than 10 years ago! Really? Wow! I thought nothing is cheaper today than it was ten years ago . . . or so I thought.

The article went on to report that the reason Ohio had some of the lowest auto insurance premium averages in the nation was because of the significant competition in the state. Only two other states have more auto insurers than Ohio and that competition makes the companies work hard to get Ohioans to do business with them. In turn, companies drop their prices to get business. Simple. Not a lot of pie in the sky theory stuff here.

I bet some economists or intellectuals will denigrate this theory even though it’s not really a theory but I imagine some who believe that life is quite complicated and success in most anything, especially something like economics, must have more in play than just simple competition. But I disagree in that way of thinking. And the way of thinking I’m talking about is that only simple minded people believe that simple solutions are the answers to perplexing problems and that only elites can really ponder and solve them because they’re, well, smarter.

I spend a fair of my time with highly educated individuals such as academics, doctors and I suppose even a scholar or two and what I find is that the real good ones are the simple ones. They talk in simple terms and mindsets just like folks who haven’t spent a decade in college. In fact, the best trial attorney in America, Gerry Spence, is so simple in his lawyering it is absolutely amazing, yet he has taken on the Federal government numerous times in extremely high profile cases and won. In addition, he’s won many humongous civil settlements for his clients and has never lost a criminal case. And the clincher for simplicity’s case is Albert Einstein. The gauge of smartness was quoted as saying, “If you can’t explain it to a six year old, you don’t understand it yourself.”

Life is quite often what it appears to be. It is not the complicated mess that so many say it is. The understanding and solutions to many, if not most of its problems are simple, much simpler than many say.

Steve Kovacs
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Steve Kovacs

Steve is a bestselling author with his latest book being, 'Protect Your Kids! The Simple Keys to Children's Safety and Survival'. Steve has also written hundreds of articles on a wide variety of topics.

Steve's a three-time survivor of violence in his youth and was an award winning police officer being the recipient of the 'J. Edgar Hoover Foundation' award for Fidelity, Bravery, and Integrity. Steve was SWAT trained by the FBI, FBI Hostage Rescue Team, and the LAPD.

For several years, Steve also did radio political and current event commentary and taught college Criminal Justice. He is the former host of the long running 'The Kovacs Perspective' Internet radio talk show.

Presently, Steve is the owner and Managing Director of one of the oldest martial art schools in Ohio, 'The Mayfield Academy of Self-Defense'.
Steve Kovacs
Follow Steve
Steve Kovacs

About Steve Kovacs

Steve is a bestselling author with his latest book being, 'Protect Your Kids! The Simple Keys to Children's Safety and Survival'. Steve has also written hundreds of articles on a wide variety of topics. Steve's a three-time survivor of violence in his youth and was an award winning police officer being the recipient of the 'J. Edgar Hoover Foundation' award for Fidelity, Bravery, and Integrity. Steve was SWAT trained by the FBI, FBI Hostage Rescue Team, and the LAPD. For several years, Steve also did radio political and current event commentary and taught college Criminal Justice. He is the former host of the long running 'The Kovacs Perspective' Internet radio talk show. Presently, Steve is the owner and Managing Director of one of the oldest martial art schools in Ohio, 'The Mayfield Academy of Self-Defense'.
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4 Responses to Economics 101 and Lower Prices–Simple and Common Sense Solutions In Life

  1. Nice article Steve,

    There is, in my mind, a very serious problem with the way economists view economic conditions because of the fact they economists will look at a given set of circumstances and base their conclusions on what should be – if this happens, then this should happen, followed by this, this and this.

    One of the many hats I wore during my career was that of corporate accountant and I look at a given set of circumstances not based on what should be, but what ‘is’ and what ‘could be’. In the world of economics there aren’t a whole lot of variables, that’s why economists are wrong so very often in their predictions. They are fairly rigid in their thinking that if this happens, then this, this and this will likely follow. In accounting, you can add variables to change the outcome.

    I was going to let it go at that, but the the more I thought about the subject, the less likely it seemed that insurance rates would be lower than 10 years ago, since medical costs have skyrocketed over that same period and they’re a big portion of auto insurance rates. Don’t know what news report you read on the subject, but neither the PR put out by the Governor’s office, or the Ohio Dept. of Ins., made that same claim (see attached).

    The Cleveland Plain dealer is stating auto insurance is $1 less per year than 11 years ago according to NAIC – the problem with the NAIC report is you have to pay to obtain unless you’re a member. I was able to obtain the numbers from 2006 and the cost then was $737 so I suppose it’s possible it was cheaper in 2003, but seriously should a $1 a year savings make a headline? 🙂

    Have a good day,

    Pat

  2. Steve KovacsSteve Kovacs says:

    Hi Pat,

    Pat, how did I know you were going to find an issue with this article, ha!

    Anyway, twas from the Plain Dealer on March 15, 2014.

    You also mentioned though that a savings of a dollar (even if that’s all it is) is not much to headline about. But to me, even if that was the amount, something so important going DOWN in ten years, not going up, is pretty cool.

    I’m sorry you have to be a member of that organization (to get their stats) so you can’t get their particular stats easily. There are many ways to get stats though if the issue is important but I would suggest that there is no need but just believe in simplicity and out of the traditional box thinking and thank God, at least in Ohio, rates have dropped. That’s a good thing!
    Be well…

    • Patricia JohnsonPatricia Johnson says:

      lol – I’m sorry – I truly don’t look for things, they just sort of jump out and grab me. The problem I had was neither the Governor’s office or the Insurance Dept commented on the lower cost in their respective press releases so it may be wonder what the deal was.

      OF COURSE anything that is cheaper today than it was ten years ago is a plus. I just thought it was funny that with as many things as are going on in the world a $ difference would a headline make.

      If you think a buck is a big deal, you should move to Illinois because our insurance rates are even lower 🙂

      Steve, I really didn’t mean to nit pick your article – please forgive!

      Have a good weekend,

      Pat

      • Steve KovacsSteve Kovacs says:

        I was just psychic I guess that’s all- knew twas coming from ya! They jump out and grab you,oh oh. Suggestion: don’t let things grab you–you choose what YOU will grab and utilize–lol……Actually, our Governor himself not his office has been talking bout the big picture in Ohio lately. Surplus, more jobs, lower prices, businesses moving to the state. Good stuff. And how great to know Illinois is lower too–possibly even lower than my example!

        No need for my forgiveness, Pat
        Be well….

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