Economics @g-cast-blog - Tumblr Blog

Hopefully this works.....

Topic 2:

Concept: Labor Force

Poisonings and other accidents involving concentrated laundry-detergent packets continue to be a problem in the U.S., despite changes made to packaging and labeling.

Topic 4:

Concept: Supply and Demand

Despite multiple repackaging and relabeling campaigns, the amount of poisoning incidents associated with the individually concentrated laundry detergent packets continues to rise. The Wall Street Journal’s data revealed that at least seven people have died after accidentally consuming part of a laundry detergent packet. Consequently, consumer product manufacturers that produce these detergent packets as their main marketing strategy for laundry detergent sales have had to intensify their product’s packaging and warning labels. Approximately 30 accidental exposures to poisonous substances with young children are reported daily to United States poison centers. This has consistently been an all time high for severe poisoning incidents since the introduction of single-dose laundry detergent packets into the marketplace. Children are not the only demographic affected; several recorded incidents have involved senior citizens with dementia who in some instances mistook the capsules for candy. One such manufacturer, Procter & Gamble Co., is presently defending itself against multiple lawsuits on the matter. The company asserted that millions of people safely utilize their product and the manufacturers have already enhanced their protocols for the prevention of unwanted access to the detergent. The domestic sales of concentrated laundry detergent packets have risen close to 30% in one year holding 12% of the overall laundry detergent market. Products like Tide Pod® have recently restructured its product’s container to be more child-proof and placing even more warning labels. Procter & Gamble Co. has stated that each incident is being taken seriously and that they are striving for a better solution to prevent future accidental exposures.

This incident has a great deal of influence on concentrated laundry detergent packet sales. It will affect the supply and demand for the product and therefore affecting the product’s price. As more and more cases of poisoning are reported, the public’s demand for individual packets of laundry detergent may decrease and therefore supply of the product has to decrease. If this ensues, the companies that sell this product will experience a decrease in their products price and therefore company revenue will also decrease. Nevertheless, at this stage the collective population who use the detergent pods is substantially larger than the population affected by poisonings that the effects on the laundry detergent market is actually dismissible. The demand and supply scenario is a hypothetical reaction to the market’s behavior.

Game Theory Explained

Task 3:

Concept: Game theory

Game theory is a particular branch of mathematics interested in the analysis of strategies created for different competitive situations. It studies interactive decision-making between multiple participants and their end results that are conditional to the actions of everyone. As a participant in such a “game”, accounting for the choices of others is just as crucial as determining a game strategy. Avinash Dixit, a professor from Princeton University, explains that game theory influences everyday situations and that its principles are functional in a wide variety of disciplines including everyday social interactions, economics, law, diplomacy, biology, and many more.

Work on the concept of game theory began in the 1920s by John von Neumann and eventually appeared on John Nash’s radar where he developed an instant interest in the topic. Nash’s work lead to the proposal of the Nash Equilibrium; this concept is the constructed notion of an equilibrium between the players of the game and their game strategies. A player would choose the best response to the plausible chosen reactions posed by other players. Nash’s equilibrium initiated the framework necessary for further applications of game theory.

One of the most popular demonstration of game theory is the Prisoner’s Dilemma. In this demonstration, the police interrogates two suspects separately and informs each of their opportunity to testify on his cohort. Thus providing each suspect with two possible game strategies: testifying or keeping quiet. Consequently, the dominant strategy for the two suspects is to testify against each other because the consequences for that option is the most advantageous out of all four possible game outcomes. The same is true for real-world dilemmas like between two oil drilling companies and how much both should charge for a barrel of oil. In this scenario, the dominant strategy for Oil Co. 1 and Oil Co. 2 is to charge the lower price.

Another example of the Prisoner’s Dilemma is the decision Han Solo faces when Luke Skywalker pleads for his help with the Rebel Alliance’s battle against the Empire. Han Solo refuses at first; but after a much needed chat with Chewbacca, Solo decides to help the Alliance fight. He changed his initial decision after using game theory principles to analyze and calculate the most beneficial outcome of the scenario. His thought process is most likely illustrated like this:

Han Solo finally saw that to fight with the Alliance would be in his best interest; therefore (Fight, Fight) solution supplies both parties with the best outcome.

Additional Sources:

www.youtube.com/watch?v=3Y1WpytiHKE (credit for picture)http://freakonomics.com/2009/12/15/star-wars-game-theory/ (credit for picture/example)

Task 1:

Concept: Keynes (Keynesian view) vs Hayek (Classic view)

In response to the economic turmoil generated during the Great Depression, John Keynes, a British economist, developed an influential theory for the behavior of an economy specifically in regards to a period of recession. His viewpoint, taught today as the Keynesian economics model, has been endorsed by the United States government since its initial introduction into the economic sector. This economic theory prefers markets to be steered and strictly directed not released to freely do as it may please. Keynes’s theory blames the emotional reactions or predictions of the market’s investors on the market’s behavior just like the bull and bear market trends. The centralized idea behind Keynesian economics is its promotion of boosting aggregate demand and government stimulus or deficit spending to maintain and improve the overall attitude of the economy.

Counter to the Keynesian economic theory is another theory proposed by an Austrian economist, Friedrich Hayek. Hayek’s idea supported the liberation of the markets not the absolute control over them. He also suggested that there is a mathematical or logical element that is to blame for market behavior like low interest rates. Instead of unleashing aggregate demand, this opposing economic theory explains the importance of placing a speed limit on it; aggregate demand can’t grow too fast or too slow without negative consequences. Too slow and nothing will be changed. Too fast and a speculative bubble will result along with an influx of naїve investors and poor investing decisions. The solution to aggregate demand’s speed is interest rates being able to control it.

Both economic theories are viable and pragmatic tools for handling an economy in recession; however there is no straightforward and absolute victor. *Disregarding that the US economy is currently molded by the Keynesian economic model.* In order to resolve this quandary, economists must review each opponent’s priorities; Keynes prioritizes speed, actively fixing the system, and centralized control and Hayek prioritizes stability, perseverance, trust in the system to work itself out, and individual freedom. Nevertheless, Hayek’s theory could prove to be too slow in restoring an economy thereby sacrificing individual opportunities and ultimately personal freedoms.

I think that in today’s economic climate the United States should endeavor to find different economic theories on which to interpret and restore the nation’s economy. The Keynesian economic system does indeed seem too mainstream; it’s time for something new to reinvigorate the country’s economy. That does not necessarily have to be Hayek’s Classic economic theory; that was provided as an example of theoretical differences and how to choose between contrasting views.

I should really be doing something productive.....but this is more fun

More puns!!!

Yeah! history puns

Today we have fallen into a dark unending abysmal cycle where we only strive for safety, prosperity, comfort, long life, and dullness; we have lost what it means to be alive and apart of nature. The things we strive for is not how life is programed; life should be fully lived and not dissected to fit a time schedule. We believe that every part of our lives is so momentous and possibly life-altering but in all actuality we couldn’t have a smaller more minuscule effect on the planet if we tried. That is why Earth Day can be so irritating. This nationally recognized day is not about our helping the planet but about the connections of nature all around us that we easily forget to acknowledge. This life is short and inconsequential to the prosperity of our planet. Nevertheless, just as Mr. Abbey and Mr. Leopold have written about, we still need to slow down in order to live more fully. It almost sounds like and oxymoronic statement, but even though we are tiny microscopic parts of the universe, we can still live each moment with great purpose and fulfillment.

So what should be our take on the coexistence of economics and the wilderness? Everything can be packaged and sold. But should it? Then again can a business afford to not utilize an important resource? It all comes down to what a company considers ethical. If one company doesn’t use it, someone else will. In a market scenario, something is always altering the market and sitting back to contemplate and analyze every little piece is futile because someone else is simultaneously changing it. Millions of actions take place every second, do we take the time to slow down and understand our place and relationship with the natural world in the grand scheme of things?

Raul Castro, the 1st Hispanic Governor of Arizona

Raul Castro’s life was not that of a typical young immigrant to America. As a political refugee from Mexico, Raul and his family crossed the border at Naco into the United States fully welcomed by border patrol agents. But this come-on-over welcoming attitude was short-lived. As a young Latino student, he and his friends experienced racial discrimination firsthand. The school bus was allowed to transport the white kids while any minority kid was made to walk all the way to school.

One circumstance of Raul Castro’s full life and journey to the governorship of Arizona that struck me was his family’s great poverty especially after his father passed away. At twelve years old, Raul was expected to help provide for his family; his mother had 12 kids to take care of and did not know where their next meal would come from. Raul had to scavenge for prickly pear cacti and other edible plants in the desert for food. This level of poverty is very drastic to a lot of us and predominantly dissociated from our part of society; all the more reason why Raul’s ascent into Arizonan political office is so inspiring.

Another circumstance that stood out was his encounter with Arizona’s first governor George W. P. Hunt at a park in Douglas, AZ. Governor Hunt had addressed the group of “barefoot Mexican boys” and stated that even they could succeed to become the next governor of Arizona. Castro felt empowered that his future was placed in his own hands. This occurrence is a surreal foreshadowing of Castro’s journey.

Lastly, the educational opportunity that Raul Castro was granted were large contributors to his laudable success. His primary school teacher that took an interest in him helped him work hard in school. This attitude continued through high school. And after graduation his quarterback abilities peaked the interest of a NAU representative who asked Raul if he wouldn’t mind having a college education paid for. Raul didn’t waste the golden opportunity and attended NAU, also getting involved around campus.

These three instances stuck with me but overall I was impressed by Raul Castro’s choice to not be bitter about how society treated him and others like him unjustly. He chose to get rid of that chip on his shoulder and accept that society was not fair and he had to prove his metal in order to be successful.

Raul Castro’s story is very unique and I believe the probability of something similar happening today is close to zero for several reasons. The self-conviction of people today is half the battle. Bitterness for the system takes away any spirit of perseverance and determination to prove oneself. The college education needed nowadays is more selectable and limited than 4-5 decades ago; paying for college, being accepted to the right college, and the opportunities available at that college are just a few limitations present more today than in yesteryears. Because of the escalated arguments on border protection and racial profiling and immigration overall in the past couple of years, it would be extremely difficult for a Mexican immigrant to say he/she wanted to be Arizona’s next governor (keep in mind it is a border state). Also even if such a person got so far down this path to governor, party lines aren’t as gray as they used to be therefore cross-party voting is not as prevalent. There are more reasons that such a successful journey to the governor’s office is not as feasible today.

Raul Castro’s life story will continue to be told as an inspiration for young people and immigrants alike.

Rest In Peace Raul Castro

Joe and Richard graduated at an unfortunate time for our nation's economy. The cycle of events looks like this: People don't earn as much --> Less tax revenue for the government --> Less government money handed out to public universities --> Higher tuition rates to pay for education because government is not off-setting the price --> More student debt to pay for higher tuition rates

Both these guys experienced this cycle; both had enormous student debt and no steady source of income after graduation. These events can grow to a larger scale that effects all parts of the nation's economy. The Vicious Cycle from Inequality for All explains the effects perfectly. Today we experience several negative effects, but we must strive to fix this economic cycle to depict the Virtuous Cycle and its more positive outcomes.

g-cast-blog

How is the country doing? Do we have a healthy economy?

Helpful Facts:

United States GDP: $16.8 trillion (2014) China GDP: $9.2 trillion (2014)

US GDP growth rate: 2.2% (2014) China GDP growth rate: 1.5% (2014)

US SPI: #16 (2014) China SPI: #90 (2014)

Okay, so in order for us to have the slightest chance of answering the question ‘How is the country doing?’ we must interpret the financial jargon that is spewed all over the place. In this case, the most important vocabulary phrase to hone in on is Gross Domestic Product or GDP.

The Cliff notes version: GDP is an estimated value of the total worth of a country’s production and services calculated over the course of one year. And for the mathematically inclined here is GDP laid out in a formula:

GDP = consumption + investments + government spending

+ (exports – imports)

GDP is the most widely used calculating method to measure an economy’s health. Now you might ask what is a healthy GDP… A healthy GDP has a long-term growth rate between 2.5-3.5%, however if the particular country has recently suffered from a recession a 6-8% range would not be uncommon but only for a very brief period of time.

Looking at our facts from above, the United States as of 2014 had a GDP growth rate of 2.2%. This is very near the optimal growth percentage therefore we could describe our country’s economy as healthy. Our nation’s GDP is close to twice that of the second highest GDP country which is China at $9.2 trillion and 1.5% GDP growth.

Unfortunately this method of thinking has one big flaw; GDP does not acknowledge the well-being of a country. Back in the early 1930s when the economist Simon Kuznets first introduced GDP, the world was concerned with different things particularly the Great Depression. Today our society has different priorities and concerns that strongly affect how our nation and its economy is run such as discrimination and climate change.

As the Ted Talks proposed (Michael Green specifically), the Social Progress Index is a viable solution for the flaws in GDP. SPI is designed to measure non-economic indicators of well-being; simply put it is a measurement of a good society. It measures things like literacy, infant mortality rates, potential environmental impact, shelter, access to water, etc. Here’s another formula to visualize this new idea:

SPI = basic needs + foundations of well-being + opportunities

If we were to study a GDP versus SPI graph, we would see the overall trend showing that as the GDPs rise higher SPIs should also rise however this is not an absolute. An example of succeeding GDPs with less than stellar SPI rankings are China and India. These countries are the up-and-comers of the global market, however their economic growth has not been evidently translated into promoting the well-being of their citizens. China is ranked 90 out of 132 countries in the Social Progress Index; it’s in the bottom third on the list. And India doesn’t even rank in the top 100 countries.

The Social Progress Index in addition with Gross Domestic Product could develop into a more holistic and applicable method of evaluating economic health.

Now back to the main question: In purely monetary terms, I would conclude that the United States is on a good path to economic success and is doing well. Although being ranked 16 out of 132 countries on the Social Progress Index is still impressive considering everything, in terms of national well-being the United States must make some improvements especially in the areas of healthcare and keeping kids in education.

jcastbc-deactivated20150602

How does one decide which areas of life are important enough to affect the well-being of a life? There are hundreds of thousands of things, possibly more, that affect a person’s happiness, but the SPI is only basing itself on a tiny fraction. The SPI is also based on someone’s opinions of well-being and happiness, whereas GDP is based on a monetary value to determine a monetary outlook. Wouldn’t basing a country’s well-being be better and more founded if solely examined by GDP?

g-cast-blog

Ok so first you should check out this website: http://www.socialprogressimperative.org/data/spi

Now after you've browsed the site you should have noticed a fairly large infograph that lays out everything that encompasses the Social Progress Index. The Social Progress Imperative is the organization that has established the 'formula' for calculating SPI. This formula is not about feelings. Basic human needs are not feelings. Ecosystem sustainability is not a feeling. Access to advanced education is not a feeling. These and others are solid statistics that all calculate the well-being of a country. SPI does not go around polling every citizen on how they 'feel' about their country. If that were the case then the rankings would be very different.

jcastbc-deactivated20150602

GDP conversation with gcast

When asked how the country is doing, many people refer to its GDP, or Gross Domestic Product. This is the total value, in dollars, of the nation’s income created in its boundaries. It does not include that which is produced over the borders. It includes the values of all households, institutions, and government production. A GDP measures the economic performance of the country, and good economy usually means good life. The United States’ GDP as of 2013 was $16.77 trillion. Comparatively, China had $9.24 trillion, and Japan had $4.92, according to the World Bank. These were the top three countries two years ago. By GDP, then, the United States is the greatest country in the world. No other country even comes close.

g-cast-blog

That is correct but what about the factors that are involved in a country's society? You wrote that "good economy usually means good life" but that's not entirely true. The country with the best economy in the world could theoretically have high infant mortality rates or harmful environmental impacts or even gender inequality. So how would that country be doing? By your thinking it would be the greatest country in the world...but how can it be if the well-being of the country was overshadowed by those negative factors? I don't think countries should solely be judged on their economic performance.