# Barstool economics

Discussion in 'Members' Lounge' started by eg6sir, Oct 28, 2008.

1. ### eg6sirSupa ModModeratorVIP

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got this in an email

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 first four men (the poorest) would pay nothing.
The fifth would pay \$1.
The sixth would pay \$3.
The seventh would pay \$7.
The eighth would pay \$12.
The ninth would pay \$18.
The tenth man (the richest) would pay \$59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve.

'Since you are all such good customers,' he said, 'I'm going to reduce
the cost of your daily beer by \$20. Drinks for the ten now cost just
\$80.

The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected.

paying customers?

How could they divide the \$20 windfall so that everyone would get his
'fair share?'

They realized that \$20 divided by six is \$3.33. 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 by roughly the same amount, and he proceeded to work out the
amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid \$2 instead of \$3 (33%savings).
The seventh now pay \$5 instead of \$7 (28%savings).
The eighth now paid \$9 instead of \$12 (25% savings).
The ninth now paid \$14 instead of \$18 (22% savings).
The tenth now paid \$49 instead of \$59 (16% savings).

Each of the six was better off than before. And the first four

But once outside the restaurant, the men began to compare their savings.

I only got a dollar out of the \$20,'declared the sixth man.
He pointed to the tenth man,' but he got \$10!' 'Yeah, that's right,'
exclaimed the fifth man.
'I only saved a dollar, too.
It's unfair that he got ten times more than me!' 'That's true!!' shouted
the seventh man.
'Why should he get \$10 back when I got only two?
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 surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat
down and had beers without him.

But 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!

And that, ladies and gentlemen, journalists and college professors, is
how our tax system works.

The people who pay the highest taxes get the most benefit from a tax
reduction.

Tax them too much, attack them for being wealthy, and they just may not
show up anymore.

In fact, they might start drinking overseas where the atmosphere is
somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

For those who understand, no explanation is needed. For those who do
not understand, no explanation is possible.

2. ### E_SolSiMember of the 20 nut clubModeratorVIP

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these emails have been going around since clinton

3. ### eg6sirSupa ModModeratorVIP

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i wouldnt doubt it..

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being the 10th man sucks

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x2

6. ### BigJI'm just about that action Boss.VIP

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My professor was actually at georgia for years for strategic management. He uses this same thing all the time, but for businesses.

7. ### reikosheaHS Troll...And ModModeratorVIP

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im only the nineth man right now...im sure by the time im 28 ill be the tenth man.

8. ### SlushboxTeggyIt's only stupid if it doesn't workVIP

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One of my professor's voted for Bush twice and was proud of both decisions. Discredited the profession for me a little bit.

9. ### reikosheaHS Troll...And ModModeratorVIP

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I couldnt vote for al gore the first time (not like it would of mattered in texas). The second time i just kept thinking "Is this the best person the democrats could come up with....REALLY!?" and voted for george bush...again, not like it mattered in tx.

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11. ### UNDR8D...has a job!

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Obviously you are referring to him being beaten.

How so?

12. ### eg6sirSupa ModModeratorVIP

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i think because the more you make, the more you pay

13. ### SlushboxTeggyIt's only stupid if it doesn't workVIP

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I should clarify, this was my favorite professor who I agreed with on everything except this. He agreed with cutting taxes and spending money like it was going to go bad. He didn't believe we were in a recession, just a "down trend". IDK, I couldn't vote the first time and the second time I voted for the lesser of two evils. Seriously though, this will be my second time voting for president. Can I get a candidate that I actually feel good about voting for? Seriously.

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probably not until 2038

15. ### nootrac22Well-Known MemberVIP

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the year is wrong...

17. ### eg6sirSupa ModModeratorVIP

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haha.. good one

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should be 2028 or something else more reasonable. 2058 will make me 78. lol screw that, i'll be dead.

19. ### UNDR8D...has a job!

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no you'll be mccain

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