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. :)