“economics”
65 posts under this tag.
The recent (April 16) revamping of TED.com around their famous talks provides the perfect excuse for me to finally write about them. And what I want to say boils down to one thing: watch them. They’re free. They’re one of the most exciting things content-wise to happen to the web of late. They have a cumulative effect. The audio and video quality are superb. They are raw, distilled passion. Their speakers are truly among the world’s most talented, most inspiring people (passion begets passion).
And if you only have time for one talk, let it be Eva Vertes’s—probably the best video I’ve seen, ever. Not only does she (very convincingly) puts forth a fascinating (and, oddly, satisfying) theory of cancer in less than 19 minutes, making it all seem as the simplest, most logical thing in the world, she also does it with a naive, youthful spunk that disarms you right away. I swear if I had seen this in high school I might have thrown it all away and study medicine. She’s that good. Now I’ll settle to try to convince my brilliant med-studying sister to tackle cancer. She too is that good.
Also not to be missed are…
Considering several friends have bantered—semi-seriously—about starting an online Mexican porn ring, alluding of shocking wind-fall profits, and considering that last year “about 13% of website visits in America were pornographic in nature.. while search engines account for about 7% of site visits,” (Economist, Devices and Desires), it is quite a shock to find in the same article 2002 estimates of the (admittedly hard to track) online porn industry measuring it at only a billion dollars. Shockingly little, I’d dispassionately say.
Thought I had already written about this obsession of mine but since I can’t find the post I’ll assume a better part of me reigned in and I had spared you. Most friends, however, haven’t been so lucky and usually win me to point it out in the hope that I shut up quickly: the oh-so-unnecesary “www.” bit one sees in most URLs. There was a time when it may have been needed—like, 1995—but why now? Now, some URLs actually won’t work without it, but that’s usually because of net administrator negligence; in most cases doing away with the appendix is a very minor setting. Once you know this, you die a little (literally!) every time you’re forced to stand it—and you’ll start to notice how often you are.
Today I just found there are in this topic—as in, we are remembered everyday, everything else—fellow anal freaks (tongue-in-cheek-ly, this ones). They even set up a website to spread the meme:  . Of course I had to oblige. Even learned that there were futher Super SaiyanWP levels to attain. So as of now, this is is a ”class B” website, which is the “classification [that] helps remind users that, while the www subdomain is accepted, it is not necessary. In Class B, www.example.net is a valid address, but it redirects all traffic to example.net.”
Ultimately, the debate about choice is not about markets but about character. Liberty and responsibility really do go together; it’s not just a platitude. The more freedom we have to control our lives, the more responsibility we have for how they turn out. In a world of constraints, learning to be happy with what you’re given is a virtue. In a world of choices, virtue comes from learning to make commitments without regrets. And commitment, in turn, requires self-confidence and self-knowledge.
Bloody good quote.
The other day dad told me he considered Mexico’s relative economic self-sufficiency—that if we had to, we could, more or less, feed ourselves and scrape some living with only our national resources—one of our greatest strengths. I didn’t buy it. At all. Self-sufficiency seems to me a much overrated, much idealized kind of economic independence.
I’m not self-sufficient, neither is my father, and I’m willing to bet that if you’re reading this, neither are you. Neither is anyone that lives in a city. The only truly self-sufficient people left in Mexico (and in the world)—indians who mostly grow and tend their own food, weave their clothing, and build their huts—live in what we call extreme poverty. Not all poor people are self-sufficient but all self-sufficient people are poor. The more self-sufficient the poorer. The more self-sufficient the more bounded to their own meager abilities, to their own fragile circumstances, to the weather (now when’s the last time you worried about it?).
“Rather than its opposite, competition is cooperation’s complement.”
We, the codependent, have made a different bargain with the world. We betted on specialization and cooperation, and I stand by that decision. It has given us far more wealth and independence than our forebears dreamt of. I don’t think you wake up at night scared of how much the butcher has over you because the only thing you know how to do is sing. Modern cooperation is breathtaking, isn’t it? This MacBook from which I write you, this computer in which you’re reading me—they required the work and talent of thousands of people around the globe.
All this begs the question: Why? What ties these invisible threads of people around the world into building the things you need? Why don’t you fear your butcher will extort you? Why are we all so reckless as to depend on each other for our very sustenance? The answer is trade and competition. Trade is simply the name we’ve given to peaceful cooperation and is the fiber that binds the world. On the other hand, competition, as much as it’s been demonized, is simply the prerequisite of cooperation—rather than being cooperation’s opposite, it is its complement. You don’t fear your butcher because you can always go to another one (or become one!)—it’s as simple as that. Cooperation without competition is indeed the fragile, vulnerable dependence most people rightly fear. Cooperation and competition—free trade, that is—is the resilient, magic codependence to which we owe our wealth and our freedom. (Think about it the next time you hear of a trade barrier of any kind, realize how it ultimately makes you more dependent, more subject to the whims of the special interests pandered.)
So no, I don’t think our relative national self-sufficiency is anything to be particularly proud of. It’s a blessing that we live in such a fertile, bountiful land. If we turn it into an excuse for isolation it’ll be our curse.
Here 2 examples—a graph and a paragraph—from a typical article (about the paper industry’s dire prospects, of all things) in this week’s edition of The Economist.
Restructuring in the paper industry is proceeding at a furious pace. The first thing some paper companies have jettisoned is ownership of forests. International Paper (IP), one of the world’s biggest pulp-and-paper companies which is based in Tennessee, used to be the largest private landowner in America. A year ago the company sold 5.7m acres, or 90%, of its forestland—an area larger than Massachusetts. The $6.6 billion sale was “probably the hardest decision that I’ve had to make since I became CEO,” says John Faraci, IP’s boss since 2003. Most buyers were financial investors, but 5% of the land went to conservation groups.
Starting with the graph: it’s a 16-year window to worldwide newsprint production that drives home the article’s main point with eloquence: North America’s newsprint production (a fifth, you will notice, of the world’s; used to be a fourth) is slowly but decisively dwindling; production in the rest of the world, on the other hand, is increasing, albeit not in a hurry.
It’s full of conventions too, but they’re so well thought that you never need to be consciously aware of them as a reader: Take the upper-left red patch, a gentle way to guide your eyes to the graph’s title and instructions. The source always goes at the bottom, smaller-typed, and the y-axis is always labeled at the right, which I find more natural than the common left convention (it makes you look at the graph first, notice its pattern). The x-axis is usually the time axis, its gridlines usually obviated for clarity’s sake, and its labels, usually years, presented in a simple format that marks millennia only when needed. And graphs are always in this blue scheme—a convention to avoid color misinformation that still allows for meaningful distinctions between color shades: darker blue for the main variable under discussion, the foreground; lighter, fading blue(s) for the background variable(s).
As for the paragraph, it’s brimming with fascinating facts about the world. Did you know who the world’ biggest pulp-an-paper company was and that it was located in Tennessee (WP)—of all places? Did you know it also happened to be the largest private landowner in America? (A paper company! The largest private landowner in America!) Did you know it recently sold, because of restructuring, 90% of its forestland, 5.7m acres—an area larger than Massachusetts? Did you know it sold them for $6.6 billions? (Surprisingly cheap, considering it’s an area big enough for many a country.) Did you know most buyers were financial investors but 5% were conservation groups? (A wonderful example of how trade allocates resources, peacefully and quietly, to those who care about them.) Now you know.
That weird phone call I got weeks ago was from the prim (but ambitious) lil’ supermarket near my house (they got my number from my blog, go figure). Out of the blue they demanded, not rudely but not friendly either, my “cooperation” in taking down pictures of them I had uploaded to Flickr (for I wanted to write a review of how innovative and important the store really is—“The income level of a country is determined, above all, by the productivity of its largest industries. High productivity in the unglamorous “old-economy” sectors—retailing, wholesaling, construction—is most important, since more people work in them.”). Anyway, it sure looked like a big boatload of crap to me then. They weren’t giving me even hints of good reasons and still they threatened me—me, their most ardent former enthusiast—that they didn’t want to pursue the matter in a different way (wtf?). I instinctively groped for the freedom-speech martyr role, willing to fight the crusade against dimwitted, Pleistocene shopkeepers to its bitter end.
And so it would have likely been. But then father and Dragonball intervened ELZR. “If you do something that you later find upsets a friend, what you do is stop,” was father’s simple but crushing argument. Dragonball’s was more subtle in its nonverbalness but you could word it into this feel-good motto: “enemies are future friends waiting to be made.” I’ve never kept enemies and so it simply kills me to have one. I can’t. Because even if they never actively hurt me, I’ve always been aware that there will come a time when their help would come in handy—and I need all the help I can muster. In the case of this shoppe, I saw them immediately as customers. If this harebrained scheme I hatch of creating an ad-based online interface to Guadalajara is ever going to take off, I will need the help and patronage of every local business I can find.
It took me weeks to visit them (see previous fear post) but when I did, yesterday, it couldn’t have gone better. I went there and defused the whole thing by admitting error from the very beginning and promising to take down the pictures as soon as I came back home (which I’ve done). What followed was two persons trying to outapologize each other. My caller revealed himself a friendly, good-natured man. Most importantly, I finally got to understand what got them so upset. To begin with, being somewhat new to the retail business they’re paranoid about security after lots of bad experiences and it totally unnerved them when this random guy was able to sneak behind guards (some of them undercover) and take pictures nonchalantly. The crux of the matter, though, was that it turns out my Flickr page was the first Google hit for the store (that happens a lot whenever I talk about something from Mexico, Google gives me a totally disproportionate pride of place—Imagery’s aftermath, I suppose) and that, combined with the anxiety of having problems with their webdevelopers (who haven’t been able to upload anything—not even a lousy banner—in six months), got them all worked up—how can it be that some random stranger is the one that tells the world what we are?
Now I offered myself up for the job and I may be the one building their web presence, which I’m sure would be a fascinating job. Amazing isn’t it?
Fees in malls’ parking lots are a recent development here in GuadalajaraWP that has been welcomed with the fervent outrage one would have imagine reserved for true wickedness. It is all the more interesting then how quickly the new mode swept the city—I can only think of two malls that remain complimentary, Plaza Acueducto and Plaza Outlet, and it’s clear that they refrain from charging only to attract customers to their rather forlorn premises.
Despite the somewhat frequent calls that something should be done about this, that some new law should be passed to protect us customers from yet another new instance of capitalistic rapacity, I take them as nothing but inconsequential bursts of anger at the inconvenience. I take it as a given that we can all see clearly that mall owners have the obvious property right to charge whatever they want for the use of their premises. We, in turn, have the corresponding right of shopping wherever we want.
So instead I want to discuss here the deeper question of whether or not these parking fees better society. Is the money Parking Lot Operators (PLOs) earn the reward for a valuable service or ravenous plunder hiding under the banner of property rights?
A vast, motley mishmash humanity is.
On Reddit, one of the most influential users is 12-year-old Adam Fuhrer. At his desktop computer in his parents’ home in the quiet northern Toronto suburb of Thornhill, Mr. Fuhrer monitors more than 100 Web sites looking for news on criminal justice, software releases—and the Toronto Maple Leafs, his favorite hockey team. When Microsoft launched its Vista operating system this year, he submitted stories that discussed its security flaws and price tag, which attracted approving votes from more than 500 users.
Besides an electric guitar and an iPod, “my favorite thing in the whole world is my computer,” says Mr. Fuhrer, who has lately also been studying for his bar mitzvah in June. In spite of a content filter his parents use to block him from viewing certain sites (including YouTube), he has managed to consistently make it onto the list of Reddit’s highest performers.
“I watch my son’s page while I’m at work,” says his father, Gerald Fuhrer, and “gush about his achievements to my co-workers.”
Speaking of prodigies, Michael Dell is back at the helm (well, he never really left) of his (rather relatively) ailing companyE. That’s exciting news, I remember reading Dell’s semi-autobiographical book, Direct From DellAM, particularly the first and some of the second chapter, and thinking of, well, MozartWP—here was a marketing prodigy, a gifted boy who could play the market like Mozart could play the piano.
I remember being completely, utterly floored when reading in Henry Hazlitt’s Economics in One Lesson about how, at bottom, supply and demand are one and the same.
Those who think that the destruction of war increases total “demand” forget that demand and supply are merely two sides of the same coin. They are the same thing looked at from different directions. Supply creates demand because at bottom it is demand. The supply of the thing they make is all that people have, in fact, to offer in exchange for the things they want. In this sense the farmers’ supply of wheat constitutes their demand for automobiles and other goods. All this is inherent in the modern division of labor and in an exchange economy.
This fundamental fact, it is true, is obscured for most people (including some reputedly brilliant economists) through such complications as wage payments and the indirect form in which virtually all modern exchanges are made through the medium of money. John Stuart Mill and other classical writers, though they sometimes failed to take sufficient account of the complex consequences resulting from the use of money, at least saw through “the monetary veil” to the underlying realities. To that extent they were in advance of many of their present-day critics, who are befuddled by money rather than instructed by it. Mere inflation—that is, the mere issuance of more money, with the consequence of higher wages and prices—may look like the creation of more demand. But in terms of the actual production and exchange of real things it is not.
Yes, it was obvious. Ridiculously obvious. But I had never realized it. A whole semester of economics in high school plotting gratuitous graphs and fondling equations for what? They should have put this in big, bold black letters at the very first class and let us go afterwards. My twenty something dollars per hour would have been far better employed.
But yesterday I stumbled on Wikipedia’s trade pedia and realized, mind blown, I had only scratched the surface of it. It only took the first, luminous paragraph. (Its scary how good Wikipedia is becoming.)
Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.
Buying and selling are concepts that only acquire meaning when we bring in money. At its essence, trade (barter), is fundamentally reciprocal—providing no ready way to distinguish between its participants.
So simple and yet so deeply buried by mindlessness. Don’t forget it and watch countless everyday fallacies come tumbling down, naked.
(Notice also the definition of market: “a mechanism that allows trade”—a mechanism that allows for voluntary exchange. There’s untold beauty and nobleness in free trade.)
|
RSS
email
