William Hamilton – Econ 101: Nothing happens until a sale is made
April 20, 2010
Recently, a great book of newspaper clippings called “Days of Glory” brought back memories of this writer’s earliest involvement in the newspaper “business.” (Yes, newspapers are businesses with costs that must be met in order to remain in business.)
After school, we paperboys folded the papers we would throw on dozens of doorsteps before dark. Back then, the pressmen poured molten lead to make the galley plates. To avoid burns from splattered lead, you soon learned not to walk through the pressroom.
As the junior paperboy, I had the most economically depressed part of town. On Saturdays, trying to collect for the papers in an area of mostly poor whites and then segregated blacks, was an interesting exercise in socio-economics. The latter almost always paid right on time, but some of the former required some adult supervision.
My route included several anti-social canines who took a keen interest in boys on bikes. But a very mild solution of vinegar dispensed via water pistol caused them to lose interest in my particular bike.
The smell of newsprint and printing presses and even getting splattered with hot lead has a certain allure. After a break of about 30 years, I was back in the newspaper business, writing a weekly column syndicated up and down the Great Plains. Fondly, I recall that the first newspaper to join the syndicate was The York News-Times.
Eventually, Wonder Wife and I became part-owners of a community newspaper. My role as editor-in-chief led to a long string of writing assignments for the nation’s largest-circulation newspaper.
But we soon learned part ownership of a community newspaper wasn’t all glamour. Every column-inch of printed surface must be supported by advertising. If a news story takes up, say, 20 column-inches of space, then at least 20 column-inches of advertising must be sold to recover the cost of producing that news story.
In a free-market economy, nothing happens until a sale is made. For our economy to function, willing buyers must be put together with willing sellers. Bringing sellers and buyers together is the essential function of a community newspaper.
Unfortunately, in today’s economy, few sales are being made. While government is growing, hiring more government workers only grows the economy for those particular workers and their families.
Government has no wealth other than the taxes it can extract from taxpayers. With 47 percent of the population paying zero federal income tax (the federal government’s revenue source), April 15 was Tax Day for 53 percent of us and was, as the Heritage Foundation points out, Pay Day for the 47 percent who are enjoying “free” federal government services.
Professor Thomas Sowell suggests we are approaching “a point of no return” when newly minted citizens (formerly known as illegal immigrants) are rounded up by ethnic- and union-activists to vote in a permanent radical-Left majority. A majority that pays no federal income tax would be able to elect even more politicians who promise them even more government “pork” at the expense of the tax-paying minority.
Currently, commercial lenders are uncertain what big government is going to do to them. Community banks with high debt-to-equity ratios are trying to get rid of non-performing liabilities so they can start making small business loans again.
Small business owners who can’t obtain financing are reluctant to hire. Because ObamaCare negatively impacts businesses with 50 employees or more, one solution is to cut the work force down to 49 workers, or fewer. Ouch.
Newspapers are not public utilities that can raise their rates willy-nilly to recover their costs. Printing more news pages to attract more readers cannot be done unless there are advertising pages to support the news pages. So, until sellers are able to sell and buyers are able to buy, these are perilous times for America’s community newspapers.
– Syndicated columnist, William Hamilton, studied at Harvard’s JFK School of Government. Dr. Hamilton is a former assistant professor of political science and history at Nebraska Wesleyan University.
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