Sunday, April 20, 2008

I was sent this in an email. Not sure who the credit goes to, but I have modefied it to more accurately reflect the current state of things, and what might happen if certain persons are elected to lead our country.

Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:
The 1st four men (the poorest) would pay nothing.
The 5th would pay $1.
The 6th would pay $3.
The 7th would pay $7.
The 8th would pay $12.
The 9th would pay $18.
The 10th man (the richest) would pay $59.

So, that’s what they decided to do. Unfortunately the cost of beer continued to rise. Soon the bill came to $200. The men got together and voted that the 7th through 10th man should pay the extra cost, since they made more money than the 1st through 6th. And besides, they out-voted the other group anyway. They also decided that since the 9th and 10th men made more than all the other men combined, they would pick up the bulk of the extra costs.
So the first 4 still paid nothing for the beer,
the 5th $1,
the 6th $3
7th now would pay $13.72,
the 8th $23.52,
the 9th $37. 24
the 10th man $121.52

The ten men drank in the bar every day, but hard times came, and some of the men in the group couldn't afford to come in every day. The bar, having done very well having this group come in so often felt the effects severly. The owner tried to think of a way to get the men to come in every day again, so he came up with a plan. ‘Since you are all such good customers, he said to the group, ‘I’m going to reduce the cost of your daily beer by $40. Drinks for the ten now cost just $160.”
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 $40 windfall so that everyone would get his ‘fair share?’
They realized that $40 divided by six is $6.66. 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 according to his financial status. Since it was harder for the men in the middle incomes to make ends meet, they would get the biggest reduction, and so he proceeded to work out the amounts each should pay.
He proposed:
The 5th man, like the first four, now paid nothing (100% savings - he lost his job, so could no longer pay).
The 6th now paid $2.40 instead of $3 (20% savings).
The 7th now paid $10.88 instead of $13.72 (20.6% savings).
The 8th now paid $18.72 instead of $23.52 (20.4% savings).
The 9th now paid $29.76 instead of $37.24 (20% savings).
The 10th now paid $98.08 instead of $121.52(19% savings).

The men began to compare their projected savings.
‘I'll only get 66 cents out of the $40,’ declared the sixth man. He pointed to the tenth man,’ but he'll get $23!’
‘Yeah, that’s right,’ exclaimed the fifth man. ‘I'll only save a dollar. It’s unfair that he gets twenty times more than I!’
‘That’s true!!’ shouted the seventh man. ‘Why should he get $23 back when I get only three? 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 shouted to the bartender, "It's not fair that the rich man gets so much more than all of us. If you do this, we'll never come back to this bar!
So the bartender thought some more, and came up with another plan.
The bill would still cost $200, but he would give each man a rebate for thier beers. To be "fair" (placate the poorer men) he would distribute the $40 dollars they would have saved to the nine lower-class men, according to thier need. So:
The 1st through 5th men got back $6.89
The 6th and 7th men got back $2.22
The 8th and 9th got $.55
The 5 poorest men decided they liked the plan, and convinced the 6th and 7th that it was only fair that they receive less, so they voted 7 to 3 for the new plan, and each received his rebate from the bar. As the bartender handed out the cash he said, "From each according to his ability, to each according to his need!" Since the poorest men not only could not afford beer, but also dinner, the bar tender paid for thier meals as well.

The next night the tenth man didn’t show up for drinks, but the nine sat down and had beers and meals without him. 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, even with the free food. So they convinced the bartender to write up a tab for them. The next night the nine came in and put thier bill on thier tab again. Soon, the men had run up a huge bill. The bartender warned that the men would have to pay or he would go out of business. Not having the cash, the men refused, so the bartender sold his business to a Chinese man, but was hired as an employee.

No sooner had the bartender been hired that the men pleaded with him to let them drink $200 worth of beer, but only pay whatever they had on them. The tough times had continued, and it was beginning to wear on the men. The bartender agreed. But he felt so bad for the men that he also continued to spot them thier dinners. After the men left, he balanced the till with his own money. This continued night after night until even the bartender was broke. He went to his Chinese boss and got an advance on his own salary. But even this wasn't enough. So he convinced his boss to give him a loan. Soon, the bartender was in deep debt to the Chinese owner of what was once his bar. The Chinese man demanded payment for the loan, and when the bartender couldn't pay, he was arrested. The men came in the next night, expecting to get thier dinner and a beer or two, but were met by a new bartender who promptly kicked them out of the bar.

Enjoy that "rebate" check that's coming...unless you make over 75,000. In which case, tough luck.