T H E F L IGH T PAT T E R N
of D ragon s And other theoretical studies...
W
hen I was a university student I elected to study Economics as one of my first-year subjects. It soon became clear to me that studying economics was akin to studying the flight patterns of dragons. It was entirely theoretical because nobody has actually seen a dragon, let alone studied its flying habits. Economics is about drawing pretty graphs that show what would happen in a theoretical world where people and things behave logically. We drew graphs that showed, for example, that as the price of a commodity rose the demand would drop until a point would be reached where any further price increase would make it uneconomical to produce that commodity. In real life there is no commodity which follows such a graph. You can, for instance, increase the price of petrol as high as you like and people will still buy it, although there might be another line on the graph indicating that the level of anger rises as the price goes up. Can you think if any commodity whose demand decreases steadily as the price rises? Maize? People will buy it regardless of price because people need to eat. Cars?
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goodtaste.co.za
Strangely there is always a demand for unrealistically expensive cars. If you want to buy a R3-million rand Lamborghini Gallardo you have to put your name on a waiting list. There is no waiting list for a Tata Indica. Watches? The buyers of fancy watches regard big prices as an important part of the deal. The whole point of wearing a Rolex is that people will see you have paid a great price for a watch that tells exactly the same time as
‘Economics is about drawing pretty graphs that show what would happen in a theoretical world where people and things behave logically’ watch that costs R65. Wine? It seems wine sometimes follows the Rolex model when it comes to economics. In almost any wine conversation there will be mention of the legendary Chateau Petrus and somebody might even boast that he actually tasted the 1953 vintage. Everyone else will sigh enviously. One of its claims to fame is that Petrus is astronomically expensive— probably about R10 000 a bottle—but there’s a waiting list. The Lamborghini of wines.
If economic theory was anything close to reality a bottle of Chateau Petrus would provide the same amount of pleasure as 100 bottles of good quality South African Cabernet Sauvignon. This is obviously nonsense. By the time you’re into the 10th bottle of SA Cab you’ll have forgotten what the Petrus tasted like. But you will still have that proud, smug knowledge that you’ve actually tasted it. Maybe that’s what you really paid for. As far as I recall there were no graphs showing how the level of smugness rises with the increase in price. That should be rectified. In the end it all comes down to clever marketing. If you can convince enough people their lives will be enriched by owning an electronic, satellite-linked, gold-plated, remote-controlled corkscrew with digital display you’ll make a fortune. I suspect you’d sell a couple of thousand cases of Tassenberg if you bottled it under a fancy label, put on a R2000 a bottle price tag and told customers there was a six-month waiting list. It might be a worthwhile marketing experiment. Maybe it has already been done. Are you sure that really was a Chateau Petrus?