The Unbroken Window

If we paid more attention to the nuances of our everyday lives, we would all be going crazier than we already are. Did you ever go to a restaurant that serves lobster and think carefuly about what the menu is saying? I was at a wonderful Italian place in Newport a few weeks ago when I finally did so myself. As I considered the items on the menu, I was deciding among the $12.95 gnocchi, the $24.95 filet or the lobster, which was listed at “market price.” Why the heck does lobster not have a static price listed? Now, this would not that interesting a question to many of you, particularly if you understand why it’s bad that the government is allowed to print money, in that the price of lobster changes rapidly – as costs and demand change rapidly for that particular foodstuff. However, if we accept this and are wiling to pay the “market price” for a lobster,then what kind of prices are the gnocchi and filet selling for? “Non-market” prices? You Keynesians out there will just say that this is evidence that transactions costs give rise to sticky prices and that there are no such things as market prices- but I am not buying it. Do gnocchi costs and demand not change rapidly – perhaps, but I don’t believe that is also true for filet? Why aren’t filet’s listed at “market prices”? They are, after all, “luxury” foodstuffs, just like lobster – so why are they treated differently? I welcome your ideas on this one …