I enjoy living in a mountain sanctuary that seems removed from faraway politics, but the reality is that campaign promises made in Washington or Denver might have a big impact on us in Summit County. Politicians sometimes promise the impossible, so we should arm ourselves with common sense economics so we can judge the impact of “help” from the government.

Three useful rules: in a free market supply and demand will determine prices, prices allocate scarce resources, and people react to incentives.

All resources are scarce, having a limited supply, whether it is wheat, oil, labor, land, housing, healthcare, or investment capital. Real estate prices are higher in Frisco than in Fairplay because there is high demand for homes close to a ski resort where there are jobs and lovely vistas but only a very limited supply of those homes.

Free markets and supply and demand generally work to everyone’s advantage. If a business tries to charge $10 for a gallon of gas or $12 for a latte customers will take their money elsewhere. Why does coffee or gasoline cost more in Summit County than in Denver? Gas stations and coffee shops in our area have higher expenses for labor, transportation of goods, and rent than on the Front Range, and those costs are passed on to consumers.

Some politicians blame the high 2021-22 inflation on corporate greed, but the usual suspect is supply and demand issues such as the $5 trillion in COVID stimulus funding that caused a surge in consumer demand and global supply chain problems.

Playing Santa Claus to voters, both Donald Trump and Kamala Harris have suggested eliminating income tax on tips. Setting aside the unfairness of this policy for the vast majority of workers who have no tip income and also the resulting loss of tax revenue needed to fund government, what would the effect of this policy be in our community? There would be a stronger incentive for workers to want lower taxed jobs waiting tables or bartending and less interest in other fully taxed jobs. This distorting of supply and demand for workers would be a mess for Summit County businesses.

The current unemployment rate in Colorado is quite low at 3.9%, and many communities struggle due to the shortage of workers. Donald Trump has proposed deporting millions of immigrants. This would result in an even greater labor shortage in Summit County and the nation and hinder the local and U.S. economy. 

The Federal Reserve just cut the prime rate. A decrease in the cost of money will increase borrowing and boost the U.S. economy, giving consumers more income that could be used for vacations to places like Summit County. Mortgage rates have generally been falling since late 2023 and are expected to decrease into 2025. A lower cost for mortgages will boost demand for real estate and home construction in our community.

Local government has put a limit on the number of short-term rental licenses in an effort to increase the supply of long term housing available for local workers. This should increase the supply of local labor and slow the rise of long-term rental rates. On the flip side a decrease in the supply of short term rentals available for tourists could result in increased prices for visitors in existing short-term units.     

Sam’s No. 3 has been a favorite diner in Denver since 1927. The Denver Post reports that in spite of Sam’s popularity its downtown location has been running in the red for the year because of the high minimum wage in Denver. Sam’s suburban Glendale location operating under the $3.87 lower Colorado minimum wage is running profitably. The article notes other Denver businesses that are also struggling due to wages being set artificially high by the misguided Denver City Council. We should be thankful Summit County officials have not dictated what businesses should pay employees, letting supply and demand for labor determine wages.

Businesses have a strong incentive to meet the needs of their customers. Free market competition and supply and demand forces them to charge fair prices, offer good products and have attentive service or they will lose their customers and their profitability. There aren’t enough political candidates who see the virtue of taking a hands off approach to businesses and the economy. We should favor the local and national candidates who propose no significant changes in taxes or regulations that will hinder our already thriving economy and only promise to take a cautious, sensible approach to government.