A Stitch in Haste

I don't typically rely on Slate for in-depth economic analyses, but one would have hoped that, in an article on how wine has become more "popular" than beer, one might have seen a single occurrence of even one of the following words:

--supply

--demand

--price

--substitutes

--glut (as in "wine glut")

But, alas, no. Not one occurrence of any of those words.

Instead we see gobbledygook terms such as "connoisseurship," "populist," "pastoral," "passion," "refinement," "lifestyles." All of which are, to an economist, eunuch words: impotent and meaningless.

It's quite simple really: The price of wine is going down due to a supply glut; the price of beer is going up due to the agricultural crowding out that has come from the (government-imposed) ethanol mania (a farmer can't plant barley when he's planting corn instead).

There is no real reason to think that the demand curves (i.e., tastes and preferences) for wine and beer are changing — no matter how much wine snobs would like to pretend otherwise. Wine and beer are substitutes — imperfect substitutes, to be sure, but substitutes nonetheless. Therefore, as the price of wine falls relative to beer, consumers will switch to the former from the latter. No sociology (or "connoisseurship") required.

Not every consumption trend has to reflect some deep "the world is changing" phenomenon to be explained by "experts." Indeed, often it is the very fact that things are not changing — that the laws of economics endure over time — that best explains the world around us.

Prost!