by Gene Callahan
My family recently acquired “Phil the High-Yield Turtle.” This came about because a friend of my wife, whom we will call Bill and who happens to trade high-yield bonds, saw Phil being sold on the street, presented in rather bad circumstances by his owner, and felt sorry for him. Bill took Phil and kept him (in much better conditions) in his office for several months before realizing that Phil was running out of space and needed a new home — at which point my wife volunteered to adopt him and… now we are Phil’s caretakers!
Well, Bill’s motives were certainly admirable: he wanted to help an animal he thought was in distress. Unfortunately, Bil”s attempt is likely to have the opposite effect to that he desired, since, by newly entering the market for turtles, Bill shifted the demand curve to the right. And that will increase the quantity supplied. In short, even if Bill had been moved enough and generous enough to buy every single abused turtle on the market, he simply would motivate the sellers to immediately replenish the supply. (Do you recall Milo Minderbinder trying to corner the Egyptian cotton market in Catch-22?)
In fact, the horrible thought came to me that this market could be largely driven by mercy purchases. And furthermore, such purchasers give the vendors a motive to make the conditions in which the animals they are selling are kept as bad-looking as possible!