RSA Animate
By Kevin
RSA has discovered a way of making talks really interesting by giving a life to the content of the talks. My personal favourite is this one on the crisis of capitalism:
There are other wonderful animations on many different topical issues found here.
Ultimate Network Effect
By Kevin
Old and lousy, but everyone uses it...
Economics lecture on demand brought about a short discussion on network effects. It is about how the consumption or use of particular goods/services has a positive value on the good/service to other users. Goods with strong network effect has to rely on mass adoption by the market to take hold and they tend to persist especially strongly until displaced or rendered obsolete by technological advances. The classic example would be the telephone, where you would only want if people around you had them. As a result, there is a strong path dependency in that competing products succeed or fail almost solely because of their initial ability to amass a large user base.
It has been argued that Windows Operating System enjoyed network effects because software developers started developing softwares for the Windows platform only when many people use it and people use it because most softwares released in the market only runs on Windows. How this started was entirely because of the pricing of Windows in its early days, partly due to piracy and also a bit of luck. Taken to the extreme, the network effects can suggests that people might be using a product or service only because many many other people are using it and not because it is really good. For some time, Windows was considered to be enjoying network effects to this extent: everyone thought it suck but continue using it because the softwares they needed to run only ran on Windows. It takes the rise of the internet and emergence of many mobile devices to reduce the dominance of Windows.
Social Networking sites such as Facebook or MySpace or Friendster also depend on network effect. Obviously, the ease of switching between these platforms (they're free, anyone can sign up for an account) meant that there's still a degree of competition in terms of the quality of the service but essentially there will come a day where it gets really difficult to lure people away from Facebook because they have got so much of their lives in there and all their friends are on it.
Yet the most powerful network effect have been overlooked by most of us. It was that of fiat money, paper currency issued by government backed by nothing. The reason you accept them is because everyone else accept them and we all need a medium of exchange.
Aging Happy
By Kevin
If you're old (like me), you'll probably be happy to learn about the U-bend theory of happiness currently forwarded by some experts in the field, suggesting that people generally gets happier and more satisfied with their lives after mid-forties (the average is exactly that figure).
Jobless?
By Kevin
Need Jobs?
A recent issue of The Economist had an article on the unemployment issue in America and it describes the plight of a family surviving on savings and unable to secure income. It discusses how the period of unemployment has increased and the efforts by the state to extend support for these people. On the print edition, a couple of page later, there's an article on the migrant farm workers United States who came from Mexico.
The later article describes the plight of these people, their motivation (the main mother featured had her first son died of illness because she had no money to bring him to the doctors and now that she has another son, she want to make enough money) and the hardship they suffer while trying to cross the border. More importantly, it tries to show that the hardship of people just began after they cross the border successfully. Work at the farms were tough and seasonal, and they were constantly living in fear of being deported.
Towards the end of the second article, The Economist mentioned about how the Americans always believed that these illegal migrants are robbing them of their jobs, worsening the unemployment that they are already facing. That is obviously not true given how the Americans refuse to take up many jobs because they were either part time or that they didn't provide the benefits they wanted - farm jobs were simply out of question because they were extremely unpleasant and definitely incapable of compensating the locals. In other words, the unemployment is wholly structural. The Take Our Jobs campaign by the UFW is an extremely intelligent means of conveying the message that Americans need to recognize the structural issues revolving around unemployment learn to expect that life will no longer be the same (jobs will be different, benefits will be reduced, pay will be lower) if they are not going to improve themselves or be willing to suffer more hardship.
The essence of the American Dream is that of freedom to pursue success and happiness; it is the idea that free competition allows you to achieve your potential. There is nothing unfair about someone who suffers more hardship, working harder and achieving a little more so that they are better off than the past and in so doing, outlasting and essentially beating you in the competition. It seems that if that as Americans get wealthier they believe that it has become their right and new competition no longer seemed 'fair' to them. They need to know that getting their way all the time and crying foul when others beat them at competition is not exactly the world order anyone desires.
Distribution Effects of Queues
By Kevin
Smart Choices
This really is just a piece of random economic musing.
In a shortage, rationing is adopted sometimes and queues result when it is not possible (socially or legally) to raise the price of the goods in question. This means that price is used as a resource allocation mechanism up to a certain point ('zero' if the resource is given out, the price ceiling if it is subjected to a price control) and after that, the rationing distributes goods not based on people's 'ability to pay' but on people's 'ability to wait'.
This could mean that goods wind up in the hands of those who exhibit the lowest productivity in the economy (because the opportunity cost of their time is just too low) though in reality, this is usually not the case (even highly productive people who need the good would have to queue). Isn't it strange that the distribution of goods should end up resulting in severe loss of productivity and therefore forgone output? The question, simply put, is who do you want the goods to end up with. This is not so much an obsession with efficiency as a questioning of the effectiveness of a means of distribution.
Model Power
By Kevin
Side-by-Side
In the recent report on China's rise in the world, The Economist featured a long discussion about China coming into the world order/framework that America has built and operated within as a new power. It then mentioned a problem:
But the picture is flawed. America has indeed been willing to be bound by rules in ways that 19th-century European powers never were. That is one reason why so many countries have been prepared to live under its sway. However, when America thinks important interests are at stake, it still ignores the rules, just like the next hegemon. In 2005 the bid of the China National Offshore Oil Company to buy America’s Unocal was, in effect, blocked after a public outcry. When America wanted a nuclear deal with India, it rode a coach and horses through the NPT. It fought in the Balkans in the 1990s and again in Iraq in 2003 without the endorsement of the United Nations. It may yet go to war with Iran on the same basis.
This is not to dispute the merits of each case, though some of those decisions looked foolish even at the time. Rather the point is that superpowers break the rules when they must—and nobody can stop them. Over time that logic will increasingly apply to China too. America must decide whether “accommodating China” means living with this or denying it.
Perhaps America would do better if it starts abiding by its own rules more and set a good example of what kind of superpower a nation ought to be in its perspective and allow China to follow. If they are hoping to influence the power equation of the future, the first step would be to behave (in the world affairs) in they way they hope China would in the future.
Demand & Supply
By Kevin
Raise Prices
KOI Bubble Tea is cheaper in Toa Payoh than in town. Fans of KOI would immediately point out that it is untrue, given that the menus and the pricing of the products in the outlets are the same (or is it already different to reflect the demand differentials?).
As it turns out, when a firm refuses to raise prices at times of huge demands, supply will continue to stay below demand (shortages ensues) and while consumers enjoy the good at same prices, the ones who are more willing to pay the high price would jostle their way through, pit their patience in waiting lines with the less willed customers and even throw out their attitudes to buy their bubble teas. This is the implicit costs of the product when there is a shortage. And even when things are less tough than what I described, the fact that the area surrounding KOI at Illuma has turned into some sort of mini crowded park shows how the implicit costs have manifest itself as waiting time. Those willing to pay more would spend more time waiting (then again it may be influenced by the 'exchange rate' of time).
This brings me back to the point of why KOI bubble tea are more expensive in town: the queues are longer! When you factor in the implicit costs of stuff, you'd understand the reality of demand and supply. Our market has lots of friction despite being largely efficient and transport/transaction costs sometimes messes up price signals (from our perspective). I believe that a good way of solving the 'problem' here is to raise prices of the bubble tea in the town areas (in short run) and then try to raise the capacity of their production so that the supply of KOI bubble tea would increase in town if they would like to keep the current prices.
Price discrimination in different branches may actually be a combination of cost differentials, a genuine effort to price discriminate as well as demand differentials. In fact, other bubble tea shops practice that. Sweet Talk at Teck Whye Crescent is priced lower than the Sweet Talk at Lot 1 or Bukit Panjang Plaza (if I'm not wrong) and MacDonalds long offered value meals at slightly different prices in different branches. It is normal and paying more supposedly reduce your waiting time. If you rather pay it with your time, then feel free as well.
On Consumption
By Kevin
What to put into your trolley?
Now that I'm in London and wholly in charge of my personal finances, prices of stuff becomes more of a preoccupation to me. In Singapore, we're really lazy, but that's because the market is really small and prices are pretty much the same everywhere. It's as if the market competition operates more at a off-pricing level. In London, you really can hunt for bargains and get them.
Price labels in the supermarkets include the unit price of the goods so that you can better compare the deals you're getting. This also helps a lot when the packaging features weird sort of quantities. The milk here are sold in 'pints' and not litres. And apparently 2 pints is about 1.136 litres so you got to do the calculations yourself. I reckon most people just approximate 1 pint to 500ml and 2 pint to 1 litre. Then you're confronted with a huge choice of different foods to buy to prepare for your meals. You can get the ready cooked ones which are for lazy people, and also the raw food to prepare yourself. Sometimes I really wonder how my parents' generation made all these purchasing decisions. You wonder whether you're really maximizing your utility based on your budget constraint. And then again, how do you allocate your budget constraint amongst the many different categories of stuff you need to buy?
Maybe Economics is more useful to merely study the behaviour more as a retrospection of the outcome of the markets and also predict the general direction rather than serve as a means to compute the decision you should be making. In any case, you'd realise that as one grows up, consumption plays an ever-increasingly important role in your life and sharpening your ability to consume correct 'bundles' would be helpful. Think about what you're trying to maximize each time you purchase things. A good awareness of your preferences would be helpful and it is useful to change your preferences according to your budget constraints and the changing prices.
Tube Strikes
By Kevin
Protesting against meat...
London is an amazing place. At least to young Singaporeans who've never known of strikes or street protests. Kids in Singapore studying social studies might actually think of them as the same or at least share the same elements but that's not true.
At the point of writing, the London Tube, which refers to the underground transport service, is experiencing a strike and would suffer from service disruptions in many locations. The beginning of their advice for passengers reads:
The RMT and TSSA unions have called a strike on the Tube starting on the evening of Sunday 3 October. If the strike goes ahead, disruption is likely throughout Monday with services returning to normal on Tuesday 5 October.
It's amazing how robust their system is, capable of planning for such a disruption and working so hard to ensure that the public transport service don't quite fall into disrepute (at least in short run). The website prescribes alternative means of transportation and even expectations of the performance for each service. As a smart student should infer, a strike is then a mere stoppage of work, usually as a means to get a pay rise across the labour. In this case, the strike is organized by the unions.
A street protests/demonstration, on another hand, is a mass of people walking on the streets to show support for a certain idea or a stand in a certain issue. Yesterday, during a walk from Piccadilly Circus to Trafalgar Square, I experienced first-hand a protest march where the people were campaigning for people to be vegetarians. To me, it was pretty surprising that people actually do this. They were handing out flyers, holding banners and protest boards, making loads of noise from their drums and chanting 'Meat is Murder, Stop the Slaughter'. As a means of raising awareness about the movement, I guess they've achieved it. The police had to guide the mass of people and traffic is held up by them as they walked through the cordoned roads slowly, chanting. The peaceful march went on as I returned to my hall.
Londoners seem to have become quite acquainted with these things. The bicycle shop I passed by had a poster that says 'Tube Strike Promotion', featuring a foldable bike at something like 50% discount. At the same time, the drivers drove on the roads, waiting for the mass to pass without horning (which would probably be the case of any minor inconveniences to the driver in Singapore).
Think Questions
By Kevin
Think, then Ask
Writers often draw or attract the attention of reader by posing interesting questions which they then seek to explain in their writing content. But then how about the readers? Could they also pose questions for themselves or other readers so that they make the reading experience a little more active?
So when you're reading, you might like come up with interesting questions that will lead readers to those articles. Here are some attempts of mine:
Article 1: Does drinking water make you slimmer? Even when you maintain food intake?
Article 2: Is spying on your spouse going to keep him/her faithful?
Article 3: Are corporate giants necessarily clumsy innovators?
This activity helps you identify key interesting elements of an article that you think is worth highlighting and then forces you to come up with a means to attract people's attention to it. In this case, you can only use a question out of your toolkit (which might include graphics, data charts, a different font colour or font size). A question draws attention through it's interaction with mental processes and thinking rather than through visual content and so is much more difficult at times.
The question trains you to draw your attention towards interesting areas of a topic you might not exactly be particularly interested in and then, you may see it in a different light.
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