Topic 14: My Future as an Economist

I used to think that economy is boring: who cares about the theories when you pay the prices? But as the materials we covered grow, I gradually realize that purchasing an item is not only simply paying the money. It involves a more complicated process of manufacturing, taxing, and the flowing of the money. The basic concepts of economy are not only related with other subject, but also appeared in our daily life. Buying an item from a store might be a simple decision for a consumer. Yet when the decisions of all consumers gather, it brings a huge impact on the demand, increases the economic growth, and thus makes the government to do actions. At the beginning of the course we were introduced to some fundamental ideas, however, as the class went further, we received more and more complicated information. Although in the college I am not aiming for an economic major, learning high school economy definitely benefits at a certain degree. I would prefer to develop more detailed concepts in microeconomic since it relates more to personal economic application than macroeconomic does. Even I will not be an economic major, knowing how the tax system works is essential, after all.

Topic 13: Supply or Demand?

I prefer the government to intervene and stabilize the economy by using Demand-side policies.  Demand-side policy focuses on government intervention to shift aggregate demand in or out depending on whether unemployment or inflation is the most pressing issue. The government can adjust the aggregate demand by either change the tax rate or changing government spending. I think using demand-side policy is more effective in keeping the economy stable because what matters the most is what’s the consumers thinking about (since they are the ones who pay the money). Government can decrease the tax rate in order to increase the demand for purchasing. The government can also increase its spending to stimulate the demanding. For example, in the 1930s depression, President Roosevelt increased the government spending for constructing infrastructure thus provides job opportunities for civilians. In the end, it showed that it did work. Meanwhile, demand-side policies have their weakness: time lags. Demand-side policies are useful for getting out of a recession, but by the time the government is able to determine where the country's economy is located, it is too late to fix things. Congress is too slow to act. Government policies often come too late and it can cause inflation.

Topic 12: Role of the Government

When the term liberalism first introduced to Western economics, many Western countries adopted this idea and became what they are now--strong countries. I think government indeed should believe in market, putting their hands out of the economy. Their role is only limited to keeping people safe, defending the country's borders, and providing a fertile environment for markets. With the hand of government interference “removed from markets, the invisible force of supply and demand can work out the most efficient patterns of production, exchange, and consumption” (Goldstein & Pevehouse 286), prosperity would be brought to people. One recent example of government interference causing inefficiency is the Taiwanese taxation of capital gains on securities. The government put tax onto the stocks, so when stock increase its value to certain points, stockholder have to pay the tax. The government set this system is primarily for “social justice”, which wealthier people have to afford more tax. Yet, it turns out that people are discouraged to participate in economic activities (since they have to pay more money) and the government can’t earn the revenue from this system because everyone will sell their stock before it cross over the set point. As a result, the best way for government to deal with economy is leave it along.

Topic 11: Unemployment

Jobs that are more resistant to unemployment are the ones that the society needs. Careers such as doctors, cooks, engineers…etc. are the ones people need. People would always get sick, would always need food, and would always want more advanced technology. As long as people want to live, the demand exists. Workers in those fields thus are hard to be replaced. Oppositely, jobs are less resistant to unemployment are the ones that don’t require skills and easy to be replaced. Since everyone can do it, the employer can be relatively easier to find cheaper worker who wants to do the job. As a result there is a higher chance for the worker to get fired at any time. For my future career I want to be a psychologist. As people’s physical needs are fulfilled, they start to require cares for mental states. Since psychological treatments gradually become the society’s need, psychologists might be more resistant to unemployment. Yet, one concern is that there are more and more people study in this field, which increase the supply and make the competition harder. It raises the potential risk for unemployment. Despite concerning if I can survive by doing that career, interest in studying psychology plays an important role in motivating and pursuing me of being a psychologist.

Topic 10: How to Boost My "GDP"

Productivity refers to the ratio of the amount of output produced to the amount of input. It means how many products a labor can produce. There are 3 factors that could contribute to the economic productivity: quality of labor, technology and innovation, and energy costs in the financial market. As a student, increase one’s productivity by the quality of labor. Increase the quality of students means that they should gain more human capital such as paying attention in class, reviewing after learning, and going to cram schools. Paying attention and reviewing enable students that they are processing and retrieving the information. Going to cram school makes sure the students can re-learn everything just in case they missed it in class. Students could also increase their productivity through the use of advanced technology. For example, computer is one of the equipment students now have to take with them. Computer and internet bring convenience to information research and discussion. Comparing to go to a library and search for books, computer is much quicker, allowing the students to do more work in a less time. Lastly, students can enhance their productivity by lower energy costs. Lower energy cost indicates that students can use electricity for a longer time. Students can study comfortably in a room with air conditioner, sufficient light…etc.

Topic 9: Financial Markets

I would be most likely to invest in stocks (50% of my investing money) and pension accounts (50% of my investing money). Stock is a share of ownership in a corporation. Stockholder can receive dividend, the part of a corporation’s profit that is paid out to stockholders. Investing on stocks is risky. Yet it has high returns. It could either result in losing the money or earning the money. Despite the high risks and high returns, investing your money on the stock might be the fastest and simplest way to earn potentially large money. Earning money from stock investment is greatly depending on the correct evaluation of the company’s performance, the condition and situation in the market, and a little bit of luck. Driven by greedy, people always fail to earn money due to the fact that they often over-estimate the growth of the stock’s value, resulting in not selling the stock while its value falls in the next day. As for pension accounts, it is fairly easy to earn the money. You just need to put the money in the account for a certain time; the interest will be added to your original money. However, the interest rates are often small; the returns are low. Nevertheless, pension accounts might be the safest way to ensure you will earn a profit from this investment.

Topic 8: Money

To me, money not only represents the medium people use to exchange goods and the ability to afford goods, but also represents the national identity of a country. Money is both economic and political. Money is characterized by its uniformity, divisibility, durability, portability, scarcity, and acceptability. Money has to be uniform for the sake of convenience when exchanging. It also needs to be divisible when talking about trading. Durability and portability make money last a certain amount of time with stability and people may use it everywhere. Just as every other goods and services, money is scarce; people always need to make choices of what to buy, how much is it…etc. Also, money has to be accepted by everyone so people can compromise on the value of what they are selling. I often use money to buy things I want, or sometimes “loan” it to my sister and earn some interests. Monthly pocket money and Chinese New Year events, especially playing ma-jiang, are my primary resource of money. I would consider money as a very important aspect in my life. When I just simply turn on a light in my room, I need to pay for the electricity. When I go to bathroom and wash my hand, I need to pay for the water. Without money, it’s pretty hard to live. I am satisfied with my condition right now. I don’t need excessive money, sufficiency is enough. Though money cannot buy everything, without money, you cannot do anything. I can basically do anything for money as long as it is not illegal nor against integrity.

Topic 7: Change and the Future

The biggest change so far is to transfer from local school to an American-institution school. Under 9.5 years of Taiwanese education, it is pretty hard at first to adapt to American school. Not only the language is different, but also the cultural differences. In spite of the differences I have to adapt, I also need to face new challenge such as SAT. Applying foreign college is lots more complicate than I thought. Also even after college, I need to worry about what job to do. Parents would expect their children to become doctor, lawyer, or engineer. The social expectations for Asians are also jobs that require good math ability. However, interested in human mind, I want to do the types of the job that can help people to cope with their mental problems. Though for now it might somehow be hard for Asian to be a psychological counselor in United States, since most of the Whites would prefer not to share their feelings with an Asian psychological counselor (at least my dad said so, which is totally nonsense). However, I think the working environment in the future will be totally different from now because the whole society is changing. In the future it seems that Western countries will be inhabited with Asians and Eastern countries will be inhabited with Europeans. Working environment might also change in the sense that people are not that discriminatory.

Topic 6: Who's Running the Show?

PAS is both a corporation and a cooperative. It is a corporation because it hires professional workers to teach the students and officers to run the office. It is a cooperative in the sensed that it is non-profit. It aims for preparing the children to be compatible in going into States College.

 

PAS is created by Ms. Pamela (I am not sure) and, apparently, all decisions are made by her. I am not sure about how PAS really started; the following would be based on hypothesis. The fund (tuition fee) might be contributed by parents who also want to make their children get into foreign college but lack of a person who help them to organize everything. They might need to hire teachers, set up the school, and follow the governmental regulation. PAS has unlimited liability: those parents only need to pay for the money they wanted to contribute. PAS also has unlimited life, even the parents’ children go to college, they can still invest the money for the good of later students or just simply find other parents to give the money. At first the school might need to borrow money from banks. Yet, after the debts are paid, the “profit” will stay the same since it’s non-profit based. Being a corporation-school also has the advantage for the better access for resources. Though it’s going to face lots of government regulation, corporation is one of the business organizations that could forever.

 

If I am going to start a school, I might choose to run a partnership. We can start with a smaller class and provide intensive quality education. There would be fewer governmental regulations and it is easy to open and close.

Topic 5: A Different Phone?

To compete with the saturating cell phone market, Nokia has to develop mobile TV by the means that it needs to differentiate the product in order to increase the sales. Not only Nokia, more and more cell phone producers include many features in the phones in an attempt to attract the consumers. Manufacturers are more likely to offer differentiated products in old markets. It is because the consumers in the old market are somehow “adapt” to ordinary cell phones. Those consumers need featured phones to meet their specific interests. For example, a business man might need a cell phone featuring well-organized contact list and agenda software so that it can remind him what need to be done.

 

For my wanted features cell phone, I’d like to have a cell phone featured with 3D projection. It would be like Tony Stark’s technology in Iron Man II. You can touch the icon not on a screen, but a 3D projection. Also when someone calls you, it would be like the contacting system in Star War. You can see the projection of who is calling. If this technology is available, we no longer need to “bring” a phone but “wear” a phone. This technology can be put on small accessories such as necklace or watch, it will be very convenient.

Topic 4: Ripple Effects and Elasticity

Aware of the ripple effect is extremely important since a simple change in a good or service can have an impact on many other aspects. The change of oil price influences other parts of the economy because oil is the material of many products and oil is the essential factor that we use in everyday life. Oil is the raw material in producing plastic, and plastic is everywhere in our daily life. So if the price of oil increases, the price of plastic might also increase. It will increase the cost of consumers, making them reduce their quantity demanded for anything involves with plastic. Other goods that have a ripple effect are critical things in our everyday life such as gas, water, and electric energy. Take water, specifically, for example. We need water every day: we drink it, use it when taking a shower and washing dishes. Once the price of water rises (either due to shortage, pollution, processing cost increase…etc.), the capability for us to afford it decreases. Cost of having meals in restaurants might rise because the money that pays for water washing dishes increase. The drinks the restaurants provide would also be more expensive. A single change affects everyone.

Topic 3: Where Choices Lead

In analyzing the benefits and costs when making choices, many tend to ignore the things that they need to give up---opportunity costs. As a student transferring from other school to PAS, I have to give up my original high school—HGSH. As for getting into the HS Econ. class, I have to give up the Public Speaking class. To tell the truth, indeed both decisions aren’t my own decision. Getting into PAS is apparently a decision from my parents. To them, it might be a “rational” decision because I can go to foreign college that can increase my opportunity for finding a better job. However, to me this decision distant my friends and me –physically and mentally—and the educational system I grown up with for 16 years. This decision just suddenly threw me to an unfamiliar system. The higher intuition fee and less schooling hours seem to be costs that can never balance out with any benefits. Yet, I might be wrong. Though the intuition fee is high (and much higher than that of local school), but it ensure quality intuition. Also, the potential benefit (going to foreign college rather than staying in Taiwan) could outweigh the costs. A typical Taiwanese stereotype: graduating from foreign countries is far “cooler” than graduating in Taiwan. If I could take the full control of making this decision, I might choose to stay in the original school. Though getting a foreign degree might indeed increase job opportunities, I believed that one can achieve whatever goal he wants as long as he has single-minded determination.

Topic 2: Scarcity at School?

Scarcity always exists due to the human nature of unlimited desire but limited resources. As a result, making choices is important and necessary for our everyday life. In PAS, everyone has to make decisions, especially upon the use of time. The students have to decide what is their priority, academic career or leisure. Teachers also need to make choices between doing the painful grading works and sitting down and read a book. When we ask some students, “what have you down over the weekend?” the answer often ends up with “I sacrificed 1 hour of playing League of Legend in order to prepare for the test today.” Since the time is limited, they have to decide the distribution of time.  To get a good grade, these students have to give up the time playing computer games, instead, they need to use that time for studying.
I also need to manage the time between duty and fun. Finishing all the homework and being responsible on your grade are what a student supposed to do. However, it’s hard to do those things all the time without relax. The problem is: how much time am I going to spend on studying? And how much on resting? Although we always expect the time is endless, the truth is it’s not. There’s always a deadline. There’s always a due date. If I want to have a better grade, I have to remove some of the fun time to studying. Yet if I spent more time on having fun, I might have to pay a decline on the grades.
Scarcity, as the resources never fulfill the wants, always exists.

Topic 1: Big Questions

In the small community of PAS, everyone is both a producer and consumer. In PAS, the school produces its service of education for the students and provides educated graduate for college. The students, of course, are the consumers that pay for the education. However, they also play a role of producer that sometimes gives lessons to teachers. The teachers thus always "updated" due to the reciprocal relation. The school produces the education through lectures as the students provide their latest information through the conversation during classes. It is ultimate the producer to choose what, how, and for whom the goods and services would be produced. The profit motive makes the producers choose the most efficient way to produce and targeting the potential consumers.

 

Every producer made their decisions out of self-interest. In the PAS example, the teachers might pursue their interest of desiring teaching and getting salary. Their interests could be achieved by working in PAS. They will give lectures while the students will pay the tuition. Thus at the same time the teachers can both fulfill the desire for teaching and receive payments. Also, the students are making the choice out their self-interest. They wanted to be educated (or at least their parents want them to be educated) and get into a good college so they choose to get in PAS. Not wasting their payments, they might work hard during class so that they could ensure they have a better chance for applying college.

Both the students and the teachers reflect that their self-interest can benefit the social interest. Social interest is seeking for pursuing the most efficient and fair use of resource. Efficiency can be achieved when the available resources are used to produce goods and services at the lowest possible cost and in the quantities that give the greatest possible benefit. Self-interest can provide this efficiency because of the profit motive base. The producer tends to try to minimize their cost and maximize the profits. Therefore it can make the best use of scarce resource thus fulfill the social interest.

HW Ch.1 Questions

Sec. 1, p. 11, #5
Q: Describe how the owners of a computer repair store might use the four factors of production to run their business.
  To run a computer repair store, the owner firstly needs a land to set the shop front. He then needs to hire emplyees to do the repairing jobs. Also, he needs capital such as money and tools to start and assist the service. Lastly, he needs a strategy to organize the shop, workers, and money.

Sec. 2, p. 17, #3
Q: Think of some of the options you have for spending time after school-- sports practice, hobby clubs, work, or extra study, for example. Which option would you choose? What is the opportunity cost of your choice?
  Some of my options for activity after school include doing homework, club performance practice, and playing video games. I would choose doing homework after school. However, my opportunity cost would be the club performance practice since it is my second best choice.

Sec. 3, p. 23,#3
Q: What economic data does a PPC bring together?
  PPC combines the four factors of production to show the "impact of scarcity" between two competing goods. Under the condition of fixed technology anf fixed resources are fully employed, it represents the maximum number of one good can produce relative to the number of the other. The PPC can also tell us the efficiency, underutilization, and the opportunity costs of production.

Sec. 4, p. 31, #7
Q: Making Inferences How do you think politicians might use normative economics statement?
  Normative economics involves in judgements of what economic behavior ought to be. A politician in a develped country might promote free trade within the country because he believes that eliminatine the trading barriers can bring the largest and most efficient profits for the country's economy.