There is no given formula. When I was a kid, gold was $32/oz ... Coke's were 5 cents .... and our first fast food hamburger place in town was Burger Chef, 15 cents. Why did those prices rise?? Most would answer inflation, and yes, it could be defined as a product of inflation. But what brings on inflation? Devaluation of the US Dollar due to excess government borrowing, world crisis, catastrophe with the weather, regulations placed against industry in obtaining materials ...... the list could go on and on.
Many people equate inflation to tangible goods and the cost to obtain the materials necessary to manufacture that commodity. But industry has to consider the intangible aspect of doing business and the near yearly cost of being able to provide that product to the public.
The cost of litigation incurred by a company can not only become unpredictable, but for many companies, unsurmountable. Why do you think that many of the major corporations throughout the world are diversified in ventures that have nothing to do with the core company. They need to spread out the risk of loss over a wide spectrum as to not take a major loss and be out of business.
But let's discuss protection from loss .... well I'll just buy insurance. We all know that in its basic form, insurance is a crap shoot. You either need it when something goes wrong or you don't. Was it money well spent? It is when you need it, but when you haven't had a major claim in years, you want it cheaper.
Can insurance rely on the history of past payouts to predict future premiums? To an extent ..... but insurance companies fall into the same boat as major corporations. They must diversify (or spread out their risk) and not have all of their policies located within a specific geographic locale or type of insured. Yes, they may specialize in certain types of coverage, but most if not all insurance companies must be broad as to spread their risk.
But they must also be able to have enough foresight to be able to predict the future. No one's been able to master that yet. So in essence, companies that intend to do business with other companies or individuals purchase insurance to cover the liabilities they may encounter, and they do so annually not knowing for sure what those premiums will cost.
WOW!!! What I've discussed is high school economics. Try and put your mind around the complexities of many of the other costs incurred ..... healthcare, utilities, import/export fees, legal fees, pay raises, and equipment replacement .... to name a few.
So yes, prices have raised throughout my lifetime. Some products have improved, some have not. Government policies come and go. But the spirit of humans prevail ..... we all have needs and we surely have many wants.
I guess what sets my mind to wondering has some bearing on what Greg and Daniel discussed today ... an ever growing society of instant gratification with little regard to how it is obtained. Some of what I'm seeing today in America and other so called "civilized societies" I've only witnessed in other countries while I was in my youth. From the 1950's, along with the Civil Rights movement, we as a country worked towards the unification of our country. In time, any economic class and all races were allowed to walk in a building, ride in a bus, drink from a water fountain of their own will. Today seems to be heading in the opposite direction, segregating and cancelling cultures. My outlook of the American society today is so confusing to me. Sorry for my personal ramblings.
Well, the song from the 60's "The Times They Are A Changing" ..... we have it within ourselves to help steer the country's course, God only knows what it will take and how long we must persevere. An optimistic outlook driven by truth and endurance is a life well led. Like the old Motel 6 commercial ..... we'll keep the light on for you!
