Wood Prices

John Balzar reports on those who want to resurrect the Say’s law, which states that supply will create its own demand (“Raising Wood Value Might Slow Harvest of Old Firs,” Oct. 31).

Fortunately, this economic theory was put to rest more than 50 years ago by John Maynard Keynes, who argued that the Great Depression was caused in part by economic policies based on Say’s theories. The Depression witnessed many businesses going bankrupt because they had supplies without adequate consumer demand.

The article seems to suggest that lumber producers in the Pacific Northwest should defy the free market and halt the manufacture of 2x4s and plywood from old growth. Instead, they should cater more to “designer use of wood.”

According to your article, this radical shift would increase the supply of “old firs.” Increase it indeed! In the process the industry would go broke trying to dispose of a glut of ceiling beams for which there has always been a limited market.

Any long-term, viable manufacturing and marketing strategy must acknowledge consumer choices. This is the major reason why producers continue to supply the growing demand for lumber and panels. But there is another reason. While holding down production of lumber might increase prices in the short run, eventually consumers will grow tired of paying high prices and switch to substitutes. The alternative materials--plastic, steel, aluminum, brick and concrete--require more energy to extract, process and deliver. Besides, those materials are not renewable.

CON SCHALLAU, Chief Economist

American Forest Resource Alliance

Washington, D.C.