C

http://en.wikipedia.org/wiki/C_(anime)

[C]: The Money and Soul of Possibility is one of the anime that I had watched recently. It basically talks about the story of an economics student name Kimimaro Yoga and his economic tournaments in the financial district, a parallel finance world that links to the real world, in order to win lots of money to pay for his tuition. In this weekly tournaments, each participant (entrepreneur) will be forced to compete (invest) with each other using their funds; the winner will gain more funds (Midas Money) which can be converted to money in the real world, while the loser will lost his "future" (the collateral). At the starting point, he allows his "future" to be taken as collateral in order to borrow lots of money. However, as the tournament goes on, Kimimaro Yoga realizes that "future" is something more precious than the money that he gained through the tournaments. The top entrepreneur of this tournament Shouichirou Mikuni thinks that the money that he won can be used to save the deteriorating economy of Japan even if it costs the disappearance of millions of "future" of his defeated entrepreneurs.

I think it is really an interesting story because it points up a few economics concepts very clearly:

1. greed and moral vs nothing is free
In this anime, each young entrepreneur is given the chance to choose whether they accept the offer to get lots of money while allowing the "future" to be taken as collateral or reject it. Taking for instance, the economic teacher of Kimimaro Yoga who accept the offer thinking that it's free in order to gain more money for his family. Soon after he lost the game and his future, his children just disappears literally and he feels utterly regret and realizes that nothing is free. He commits suicide in the end. But the thing is that what draws the line of greediness? The main character Yoga also joined the game out of greed but he wins eventually.

2. Laissez-faire
In the story, Shouichirou Mikuni is the top player and he wins everytime. With the money that he won he controls the market by constantly bringing in the money from the Financial District into the Japan's market. With his huge financial capability he keeps assisting the government to plan for the development of the economy. In the end it just becomes worse and worse. Future's disappearing. People become poorer and poorer. Of course as a person he couldn't plan for everything. I wonder what can the real world happen if we can seriously bring in alien currency freely and be changed into the real currency?

3. Trade is a zero sum
This is like the obvious rule in the game. If someone gains more money means that his opponent will lose money. The increasing of the property will cause someone to bankrupt, which leads to his future disappearance. If our real world is based on the system which every trade will definitely be a zero sum,what would our world become? A war zone like the anime has shown?

4. Interest and incentives
Everyone is incentivized by his/her own self-interest that makes the financial district works. It needs people to be constantly battle against each other in order to have more funds and investments. By giving such a huge incentives to the participants, the financial district manages to incentivized each and every single character in the district to fight.  Some are incentivized by their own future at sake, some are for heroic purpose like saving the real world economy, some are just purely want to have their own pocket money for their own reasons. Can anyone in the real world be incentivized by things that couldn't be seen such as future or truth?

Personally I think that the story depicts the economics concept well in a very entertaining way. The most important question that can be asked myself based on this anime would definitely be "would I allow my future to be taken as collateral to gain money?"

http://www.youtube.com/watch?v=9PUfkAJVvMs
http://www.youtube.com/watch?v=4s4ZZpMQQrM&feature=relmfu
http://www.youtube.com/watch?v=ia2HBTtn2eg&feature=relmfu
http://www.youtube.com/watch?v=Ag5AGu2XCCQ&feature=relmfu
http://www.youtube.com/watch?v=S_AMciHQpEk&feature=relmfu
http://www.youtube.com/watch?v=6Vx3RGzVUNw&feature=relmfu
http://www.youtube.com/watch?v=rnA0NyNfv_E&feature=relmfu
http://www.youtube.com/watch?v=WrMRnIZ0RXo&feature=relmfu
http://www.youtube.com/watch?v=W6NBWoeTjus&feature=relmfu
http://www.youtube.com/watch?v=SVFPPYBG0Gs&feature=relmfu
http://www.youtube.com/watch?v=lgOcXJWSBt4&feature=relmfu

Class 13: Adam Smith and Capitalism

Today, Mr Rizzo introduces us about Adam Smith and the summary that he learnt from reading his books. With this, he speaks about  laissez faire and how it relates to the source of wealth through spontaneous order. He concludes that these are the elements that give rise to the current capitalism which is able to produce for the masses and give them freedom to access to all types of necessities.

Class 12: Hume VS Mercantilism

Today, Mr Rizzo compares two different ideologies between Hume's and Mercantilism in terms of the source of wealth and the mechanism behind two different perspective on economics. Besides, Mr Rizzo also introduces us several books written by Hume. With the reasoning given in the books, he concludes that Hume's right and his idea in trade and commerce is the reason why we are rich and wealthy now.

Class 11: Industrial Revolution

Today, Mr Rizzo speaks about the Industrial Revolution and the direct causes of Industrial Revolution. By talking about the causes, he brings out the idea of merchantilism, an economic system practiced before the industrial revolution which the political system seems to regulate and plan the market system to protect the people. He also brings out the idea of "circular flow" which states that there is always a constant flow between individual and firm.

What Social Science Does- and Doesn't- know

What social science does- and doesn't- know is an article written by Jim Manzi on how social science like economics can be so scientific and yet so not scientific, mainly because social science could not have a control experiment like natural science can, which makes social science hard to be predicted and calculated.

However, the interesting part of this article is that social science, in regardless how not scientific it is seemed, has its own way to make its own experiment to prove something out of it. Although the society follows a general pattern, there's still unpredictability that can be found in human's behavior. Every person is somehow unique in itself, so how can an experiment conducted be called legitimate when the result couldn't represent everyone in the world? Why would experiments carried on social science always fail even until today? Conclusively, we are certain that the study of human society is beyond our scientific realm, then how can we know for sure that everything Mr. Rizzo has said in lectures is scientifically true when there is basically no absolute scientific approach to understand human society?

A video that contradicts to what Mr Rizzo has said for the past few lectures.

Based on this video alone, I don't think that Malaysian has become really poorer because of technology improvement alone. Nowadays we are able to bpuy mcdonald around everywhere in Malaysia. Transportation has improved and commute time has become shorter. Malaysian has greater holiday time as compared to their grandparents generation. International trade allows us to enjoy different types of cars produced by different countries. Although currently we have to work longer to earn an equal amount of gold, but it is due to inflation and there is a limited resources to gold. Gold becomes more expensive, which becomes a form of incentives to drive more people to work harder. The incomes of current Malaysian seriously understates the economic growth of Malaysia as Malaysia has experienced a stable economic growth that is never in the history of malaysia 50 years before.

Class 10: Safer environment

Today, Mr Rizzo points out that we are living in an environment that is so much safer as compared to the past and the world. The crime rate keeps decreasing, albeit in some part of the world the crime rate is still relatively high as compared to that in US.

Class 9: We are indeed richer

Today, Mr Rizzo used lots of data and graph to show us that we are indeed richer as compared to the past. The income that we have now has seriously understates the extent and magnitude of economic growth as things get cheaper, we spend half of our budget on only necessities as compared to those from 1750. These space, however, is free out for other expenditure, making our lifestyle even luxurious and enjoyable than the past.

Class 8: Income is very important

Today, Mr Rizzo emphasizes the importance of income (incentives & profits) in our daily life. As compared to the past, we work less to earn things what we care. We have more personal time for vacation, we live longer, and we can even learn new things that we were not born with.

The Economic Revolution

The Economic Revolution, a chapter taken from the book " The Worldly Philosophers. The Lives, Times, and Ideas of the Great Economic Thinkers" written by Robert L. Heilbroner, illustrates that economic is basically a modern concept that undergoes a multitude of changes and evolution. The current economic system, which we are educated in the modern perspective, is based on a market system with really invisible and intangible concepts on demands and prices that the old society could not possibly grasp. The old society depends largely on planning, rules, rituals, and so on; there's always a place for all types of people like philosophers, scientists, farmers, but never economists. So the very interesting part of this chapter is basically on how do economist and the study of economics in modern perspectives appear into the picture of today's world? Economics ways of thinking is just not something that fits into the picture of the mindset of the people. The people just don't need to think like that. And then the people began to slowly accept the new ways of thinking, which is giving the freedom to the people to do things that benefits them the most on their own. Economic revolution comes into the picture, still how can the world begin to come out of their own comfort zone and let the invisible hands taking care of their transactions and the market? I think it takes more than just a single event for me to move out of my own business well taken care, well planned by the authority and just go and make the thing that is out of my highest interest. It's just crazy, the world will definitely be a mess without something to take care of it. Besides, the religious institution has to react in certain ways when the economic ways of thinking penetrate into the conventional economics system. How were they modify with the system? The thinking is used to be that it is sinful to earn the highest benefits for your own. It's just weird and surprising to come into a realization that, in spite of everything that the economic revolution had gone through, the system works GREAT and we are so used to the modern market system until we become ignorant to the background and history of modern economic ways of thinking.

Malaysia's sustainable economy

http://biz.thestar.com.my/news/story.asp?file=/2011/9/17/business/9511941&sec=business

Personally, as a student from Malaysia, I think that Malaysia can achieve this economic growth mainly because of this few principles taken:

1. More freedom and less restriction from the planning of government. Government could not possibly know every minute details about the market. Freedom is given to the people and allow them to do whatever they want in order to maximize their profits. In few years back because of the affirmative actions in policy making, businesses for certain type of people are restricted. Now, as there is a greater realization that becoming rich does not come in the expenses of others, policies made have become more merit-bases, allowing everyone to work to maximize their profits. Though there is still planning from the government, a more optimal market is created based on this principle.

2. Prime minister of Malaysia has been visiting to several countries, including Japan, China and UK in order to strengthen the current business relationship between Malaysia and foreign countries. Malaysia relies heavily on foreign investments and international trades become integral for malaysia's economic growth. Malaysia is rich in natural resources like trees and petroleum, has relatively cheap labors, and is advance in technology. These give us the advantage as we are able to process these raw material rather cheap and efficient.

3. The latest MRT system build in the capital city of Malaysia is going to improve the economy of the country as it allows a greater movements of the people across the borders and cities. It improves the productivity of the people by allowing them to move freely from their residential area to working zones in the least amount of time and money, and subsequently improves the GDP per capita.

Class 7: old days vs current

Today, Mr. Rizzo tells lots of stories about the present and past. By comparing the present and the past, we can see that at this current era we get all things cheaper. The old society just couldn't sustain the living improvements in mass quantity.

Class 6: income and wealth

Today, Mr. Rizzo showed us lots of data that illustrates that technology improvements does not necessarily bring economic improvements. The two major economic changes,agricultural revolution and industrial revolution, have changes the way how we have transactions and how we sustain ourselves; we don't get rich at the expenses of others, but getting rich together.

Class 5: Coffee bean story

Today, Mr. Rizzo used an analogy of coffee bean in order to point out the main points of I. Pencil: impersonality, self-interest, cognitive issue wand who gave the orders. Through this analogy, he illustrates the points of invisible hands and tacit knowledge.

EWOT: Friendship

Friendship, in my definition, is a form of relationship when you have a trade with someone in a social content. Each one of us is a form of supply and demand. We require attention, however we couldn't really be self-sufficient. Therefore we have to socialize in order to meet the demand within ourselves. For instance, when someone who I have never met before introduces him and begin a conversation with me, he might be lonely or he just wants to talk to somebody to fulfill his social needs. Coincidentally I am also a supplier and I can supply what he needs. I talk to him. In exchange, he talks back to me and fulfills my social needs as well.  By looking at this we can say that we just have a mutual beneficial relationship.

Taking this logic a bit further down, how friendship bonds become even stronger. People act purposefully and responses to incentives. We can say that in the form of friendship an incentive can be a compliment, an encouragement, a secret shared, and many more. When I receive a compliment from a girl who I just met I become very happy and I response to it even happier, subsequently fulfill her social need or the attention that she wants from me. Moving on, we might ask each other out to have dinner together. I might ask her out because her presence or her speech makes me feel good. It's a form of incentives. In return she might be lonely and just want to have someone to accompany her as well. It's another trade in between a friendship.

Of course different people reacts to incentives differently, some might point out that it takes more effort to win a girl's heart to be her best friend forever. Other might not require any big physical forms of incentives because he truly wants to be your friend. Because all these forms of social "goods" (like chatting, hanging out, playing together, so on) definitely have no forms of intrinsic value, it is up to the supplier and consumer to determine their own reasonable price over these "goods".

Has friendship becomes cheaper in today's society, given that we currently have so many social network like Facebook, Twitter and Myspace? In my opinion it is kinda true, though you don't really have any statistical support to proof this. Because of the existence of new social network, our social needs can be fulfilled even more easily than before. Just by receiving a few click of like on my Facebook post and we are pretty much satisfied. Our friendship becomes more casual and simplistic.

Maybe by understanding friendship in an economist perspective can't really teach you how to make new friends to meet your social needs but it can surely explain to you why you end up having thousands of Facebook friends without anyone whom you can share your deepest secret with.



*Just some rambling thoughts that pops into my mind.*

I. Pencil.

Leonard E. Read in "I, Pencil" talks about how a pencil is made in great details and how it can be a lesson to us. What I found interesting about this piece is that a pencil is such a simple products of mankind yet it is a complicated product made from so many people across the globe. Who would have thought that a simple pencil. Comes from such a complex origin? The point is, no one, and that's the point. The pencil comes from the hands of many people across the world, but does the people around the world who were part of the process in making this pencil actually know what they are contributing? People have absolutely no idea what their actions will lead to, yet a pencil can be made from the clueless action of mankind. It goes to the other more complicated stuff that mankind has ever made, like cars, rocket, etc. Then, why should economics be left out from this logic? There shouldn't be any forms of interference from any forms of authority in the market as well; the market will somehow just be okay.

However, what I think is that Leonard E. Read does not bring in the idea of third party into his writing. What is the role of the authority then if the free market brings into a negative effect, like pollution (the third party) into the system? I understand that in a capitalism system market system is based on solely demand and cost but we couldn't ignore the fact that sometimes third party is involved as well.The authority has certain responsibility to stop or reduce these negative effects.

I also wonder about how free is the free market free? How much freedom can a person have in the market? If the authority has to be completely free from the market then it also means that the bubbles that free market create, the corruption and patent issues will not be regulated by the authority. All these problem will need to be solved by the market itself. Can we really trust the market to solve these problems by itself?

With the intrinsic value rules that there is actually no real value to everything in this world, what would happen if everyone knows what's their action will lead to? Since people work for incentives, would those people, who have worked throughout the process of making the pencil, realize their actions consequences, will the price of the pencil go up? Will consumers pay it for a higher price or a lower price? After all, human acts with purpose.

Class 4: intentions does not equal to results

Today, mr Rizzo introduces a few ways to analyze issues around the world through the lens oaf an economist. One of them will be to compare the change of price and benefits. Although by this method we could not really solve the problems around us, we understand the concepts and laws behind how everything happens the way it is. With that he comes out three reasons to study economics: have a sense of wonder about the world around us, understand the concepts of how things work and know the facts. A good intention doesn't really bring good result into the equation unless we understand the facts and concepts of how everything works out.

Class 3: Heaven and Hell

The idea that Rizzo shared today really sparks my mind. The very concept of why there will be no Economist in heaven and hell brings out the idea of what is it mean to be an economist and what does the study of economics really means. He defines economics in a rather unconventional ways. Economics is usually defined as the study of scarcity but in his opinion, it makes economics sounds like focusing just on expected benefits and expected costs. Economics should include about both prudence and temperance. Therefore, economics can be better defined as " the study of the emergence of order and wealth and creation and the consequences of the choices we made as part of the extended order of human cooperation. So, obviously, no room for economists to be in heaven because everything is in abundance. No room for them in hell as well because there is just no growth.

Class 2: Petroleum Conspiracy?

Given the data of 531,000,000,000 barrels of oil storage found beneath the earth and 16,500,000,000 barrels of oil used in an annual basis, when will we used up the storage of oil beneath the earth? It seems that the answer will be 32 years. In 32 years, which is by the year of 2043, we will used up all the storage of oil that can be found underneath the earth.

What if the data is actually found in 1970's?


We would have finished our oil resource by the year of 2002, but we are still drilling out oil consistently, and even more and more. The annual usage of oil is crazy all over the world. Statistics shows that, by January 2010, we still have 1,349,000,000,000 barrels of oil storage found beneath the earth, which is a triple to the data shown in 1970's, and an annual usage of 30,500,000,000 barrels of oil, which is a double to that of 1970's. How could this ever happen?

Maybe resources are unlimited, but people response to incentives, and as the incentives grow, so does people's action in order to gain more resources, and eventually more incentives to feel good. When the volume of oil decreases, the price of oil increases because of the demand of oil in the market. Higher price means a higher return to those who sell oils. These returns (a form of incentives) drive people to invent more powerful technology to drill more oil, which dramatically increase the volume of oil barrels that can be found beneath the earth.

As stated in previous class, the action of people is purposeful. Economics isn't really about the study of money and money, but rather the study of how purposeful people with unlimited desire response to limited resources. From this we can come out with the definition of economics as the study of SCARCITY.

The lightbulb consipracy

A documentary on planned obsolescence.

Generally this video is about planned obsolescence which the manufacturers intentionally create products that has short life spam in order to increase demand among the consumers.

Personally I think that this video really challenges my mind towards the relationship between the consumers, the manufactures and the economy of the country as a whole. From the perspective of economics, I think it is perfectly logical that when products can last long, like a few generations, then consumers would not buy new products produce by the manufacturers. When the demands of the products becomes low due to the long life spam of the products, manufacturers would not continue to produce goods, which is one of the channel which jobs and careers are produced. When people are out of job and the manufacturing industry becomes stagnant, that's the period that we call an economic depression.

Planned obsolescence provides a channel to support the economy. By shortening the life spam of the manufactured products, consumers have no choice but to dump their products and buy new one as substitutions. This raises the demand of the products in the market. The higher the demand the better the economy as more jobs are created to support this demand. More jobs opportunities will improve the economy status of a wider range of consumers as they are better paid and have higher buying power.

However, this engenders a hidden problem: the earth resources cannot support such consumerism. As shown in the video, wasted electronics are thrown into the developing countries as "second hand products". Natural resources of the earth are continuously used up to produce new goods for the market. Marketing strategies have influenced our ways of consuming products. We tend to change our phones, laptops and cameras in a yearly basis, or even in a monthly basis. Unlike the natural cycle which living organisms are dead and are being broken into nutrients to support the creation of new organisms, we don't reuse or recreate from the used products that we created initially. Not only does it damage our environment, but it also creates a future that our economy just couldn't support anymore.

I believe that planned obsolescence should be carried out to maintain the economy. My reasons are that jobs opportunities are required to sustain the economy and one of the most effective ways is to increase the demands of products from the consumers. When consumers consume, manufacturers can produce more goods, which results in more extensive products research that can be more environmental friendly and recyclable. Based on the law that people act purposefully and react proportionally to incentives, I believe that manufacturers will manufacture products that complies with the natural law: there is a balance cycle to the created and the dumped.

Hey yo. So this is my blog to write about my economics classes that I have just recently taken at the UofR. I think it's kinda smart. Everything can be organized in a really systematic way. To my friends who are taking economics 108 feel free to read my blogs about this class. Do share your notes with me as well. :)

Happy reading my blogs. You can post comment to correct any mistakes that I made in my blog. All comments are welcome. :)