It Costs What it Costs!

All around me I hear people complaining about how expensive things are. Gasoline is $3 a gallon and rising. Electricity rates are through the roof. Housing prices are out of sight. Sticker shock for new cars is incredible. Public transportation isn’t affordable. Food isn’t even cheap anymore. Many believe it’s a big conspiracy, but as my former business partner used to say; “It costs what it costs!”

My business partner was wise beyond his years with that comment. We owned a small manufacturing business where people would come to us for custom metal parts. The customer would have the drawings of a part. Our job would be to take what he had on paper and actually create the physical object, usually out of some kind of metal. We would look at the drawing and figure out how many man-hours it would take to make the part. Our machinery costs, factory overhead, and a modest amount for profit would have to be covered. Then we would give the customer an estimate. Many times the customer would say, “My gosh, $3,000 for that part? That’s four times what I thought it would cost.”

These were the times when we wanted to be cynical, but it isn’t good for customer relations. You felt like saying, “Well, Pete, I’ll have to pay my worker $2,000 for his wages (including payroll taxes and fringe benefits) because it will take him 100 hours to make the part; I’ll have to pay $500 for utilities, building rent, and other factory overhead; it will cost me $300 for materials and I’d like to make a $200 profit on the job. What the heck, you’re a nice guy, Pete. I’ll sell you the part for $750! I’ll lose $2,250 on the job, but as a gift to you and to make your life easier, I’ll subsidize your existence! I won’t be in business long, but Pete, it’s all about you!”

My partner’s analogy extends far beyond the parts quotes of a small manufacturing business. It is a mirror for society in general. His comment, “It costs what it costs” is a common-sense rule of life, whether we’re talking about the price of a subway ride or the cost of a head of lettuce. In Chicago people are complaining about a proposed rise in subway fares. Right now a typical fellow living on the north side of Chicago pays $2.00 each way for a 20-minute train ride to his office downtown. That’s $4.00 a day for his round trip commute. By riding the train he saves a $25 a day on parking and $10 a day on gasoline. The train gets him to work in less time than he would spend sitting in his automobile, but he still complains when the Chicago Transit Authority (CTA) wants to raise it’s fare from $2 to $3. It would cost him $35 per day, plus wear and tear on his car to drive downtown to work. The CTA now wants to raise his daily commute expense from $4 to $6 per day. He complains about the increase. What a bunch of thieves they are down at the CTA!

But wait a minute. The CTA maintains hundreds of miles of overhead rails, employs the workers who are needed to drive the trains and man the stations, purchases expensive engines and passenger cars, prints the system maps and schedules for their customers, and on and on. It costs what it costs! There is no magic bullet. If poor people are negatively affected by higher commuting prices then let’s subsidize their fares. But those who have the income need to step up and pay the difference. Someone has to pay the costs!

Gasoline is now $3 per gallon and naturally, people complain about its price. But gasoline doesn’t just ooze out of the ground. Crude oil must be discovered and extracted. It takes men and machinery to do this. Men demand wages. Machinery costs money and must be installed and maintained constantly. Once extracted the crude must be transported and refined. Have you ever noticed the complexity of an oil refinery? Again, it costs what it costs! Yet, despite the complexities and real costs associated with the production and distribution of gasoline, most of which originates as crude from half way around the world, gasoline is still cheaper per ounce at your local convenience store than a bottle of water! Greedy oil companies!

The next time you think that peaches or lettuce are too expensive, go out in the field and pick them yourself. The next time you think a car, a house, or utilities are too costly; remember that these things are not manna from heaven. It isn’t easy making these products or providing those services. You have to put together capital equipment, pay the salary and benefits of both skilled and unskilled workers, pay for raw materials, and take business risk. Buck up, brother. Face the facts. No manner of complaining will change it. As my business partner used to say, “It costs what it costs.”

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