Principles of Economics

I admit that I have a limited education in economics compared to real economists, but most of my friends know even less than I do, so I thought a few posts on the subject could be interesting. However, economics is called "the dismal science," and cynics say that economists "know the price of everything and the value of nothing," so to make my explanation more enjoyable I made it... silly.

Economics is ultimately all about the allocation of resources, because everything from metals to energy to mangoes is finite, and what we want far exceeds what we each could have. To understand the allocation of resources, economists have come up with all kinds of definitions for specific aspects of this process. For instance, the fact that resources are finite while desires are infinite is called scarcity. For a very long time the way this was dealt with was that whatever you could produce was yours, and you could trade it for things that other people produced, which is of course called the bartering system. Eventually your efforts were rewarded with bits of shiny metals with some guy's face stamped on them, and this system is called price rationing. Up until recently, if you were living in certain areas there would be no reward for your production, and instead you would get a share of total production, which we call communism but economists called central planning. Today we still use price rationing, although modern money is made out of paper, the person depicted is often dead, and on Canadian $5 bills there are kids playing hockey.

But I'm not done defining yet. In an earlier post I mentioned opportunity cost, but I'll define it again as the specific cost resulting from a choice. In our system, every resource that has an opportunity cost associated with it has a price. Things like air and water are free because you don't have to give up beer to have air, but because pollution has an opportunity cost, clean air and water are not free. In fact, if you pay taxes then you're paying to keep air and water clean. Resources that you can hug, lick, and generally touch are called goods, such as steel and teddy bears, whereas resources like banking are called services. You cannot lick your bank account, and if you lick an ATM you will probably get sick. The sum of our general transactions for a given resource is a market, and a bunch of markets and some policy wonks form an economy.

In economic theory, demand and supply govern the functioning of a market. Apple products are in high demand, so although I'm not entirely sure why they are they all cost hundreds of dollars. Teddy bears, however, are in high supply, so they're fairly cheap. In reality, you can't measure demand and supply, and not many people apply economic theory to their weekly grocery shopping. Incentives explain the everyday choices that we make, and they are a very important part of economics because they bridge the gap between theory and reality. As you may have started to see, economics is involved in every aspect of our lives because it can be defined extremely broadly.

The study of incentives, called behavioral economics, is closely related to psychology, while international trade combines law, politics, and finance. Unfortunately the broader your scope, the less accurate you'll be when it comes to specifics, which is why the study of human behavior is better left to psychologists and the running of businesses is better taught in business classes. What economics does is that it ties all these different areas together to explain the very simple concept of resource allocation, but its study is important because resource allocation is so complicated. And ultimately, no matter what you think of economics, you have to acknowledge its importance.

Rationalism and Empiricism

Commentte, all ye who entter here, and do so on all ye postts ye finde.

I seem to have a knack for pretentious titles. I blame the TOK classes I took because they gave me jargon to use instead of trying to describe the words. Rationalism is the ideology that the world should be described by reason, and similarly empiricism believes it should be described through observation. Like most ideological bookends, everyone's beliefs fall somewhere in between, since no one rejects all observation and likewise no one can escape logical thinking. Our brain uses both rational and observational processes, so neither one can be discarded.

My personal beliefs are hard to place because although I highly value reason, as a scientist I also find observation very important. I cannot say which way I lean, so I'll just describe my philosophy. Like many atheists, if not all, I am a functionalist, i.e. the world is described physically and there is no mind-body dualism. (This is the gist of functionalism as I understand it. It's also called materialism, I think, but with different implications than the consumerism-related materialisms. Erk, too many isms.)

I do not believe in a separate "mind" or "soul" or other non-physical representation of ourselves, so all our experiences are defined by sensory input and the brain. Our behavior results from evolutionary processes, which is why I've been trying to describe morality so that it has a natural origin. Many people believe that existence cannot be adequately described by physical objects, but the reason people think so is because consciousness is so far removed from its physical origins. We are all 100 trillion little cellular robots, in the words of philosopher Daniel Dennett.* Our reality results ultimately from physical processes, and so reality can only be defined by observation. I am therefore, ultimately, an empiricist.

However the world can be approximated mathematically with fancy formulae, and since mathematics is based purely on logical consequences of given axioms, the world can be described logically. The world is still empirical, rather than rational, because even the best formulas result in approximations within a certain margin of error, but in the sense that the result always falls within the margin of error for good approximates, the math is still valid.

I'm also, in a paradoxically rather emotional way, quite rational (there's no reason why I require reasons.) I'm not as logical as many others, for example my roommate Himanshu makes conscious decisions is worth befriending, but I am certainly more rational than the norm. I love science because it is explanatory and it brings order to chaos (as well as chaos to the occasional seemingly ordinary phenomenon,) and I'm generally stable emotionally, being able to rationalize away most of my worries and be happy most of the time, but unlike Himanshu I respect my emotions as well. My respect probably results from the fact that when my rational, explanatory, stabilizing method breaks down, I become highly emotional indeed. You've witnessed this happening if you've ever seen me irritated or angry without any obvious reason to be. Seeing me truly angry is apparently an unpleasant experience, and I'm not proud of these occurrences, and I'm trying to keep a better hold of myself when I am emotional. At least you know what causes these outbursts now.

In employing Occam's Razor I require neither God nor souls, only what I can observe, and interestingly Occam's Razor is reason applied to observation. Succinctly, my beliefs reduce to rational explanations for an empirically derived reality.

*- If this post is at all interesting, or if you like optical illusions, I would suggest watching this presentation by the above-named philosopher.
**- I consider logic to be only "deductive" when discussing rationalism because inductive logic combines empiricism with deductive logic. Inductive logic is where predictions are made based on evidence, i.e If A and B and C and D etc. then Z, where A, B, C and D are observations and Z is an explanatory conclusion.)

This is Delicious

It's my lunch hour at work, and I'm digging into what's left of the ratatouille I made on Monday. Besides having a cool name ('ra-ta-too-ee' which I used to call rata-phooey when I was younger and everything with vegetables was gross,) it tastes great and is really easy. So I decided to share the recipe.

Ingredients
1/3 cup olive oil + extra

2 cups onions
3+ cloves garlic
2 cups quartered tomatoes
2 1/2 cups peeled, diced eggplant
2-3 cups zucchini in 2 cm slices.
4 green peppers, sliced thinly

Rice, couscous, pasta, or whatever.

Preparation

1. In a large pot, saute (fry) garlic and onions in 1/3 cup olive oil until golden. Reduce heat when they're almost done.
2. Pour garlic and onions into a bowl. Add vegetables to the pot in layers (two or so of each,) adding salt and pepper as you do. I'd suggest salting and peppering every other layer to avoid overdoing it.
3. Add garlic and onions back into the pot, drizzle olive oil over mess. Cover and simmer at very low heat for 45 minutes, stirring occasionally. Then remove lid and simmer for another 10 minutes to boil off (some of) the excess liquid.
4. Cook whatever you want to go with it. Rice works quite well as it absorbs the liquid and turns into super-rice. Pasta does not absorb quite so well.
5. CONSUME.

Now you know how to make it, so go. No really, you should make it some time. Even if you're like me and you don't like eggplant or zucchini, it'll still be good. Just make sure you peel the eggplant if you don't like eggplant. If you don't like vegetables at all, then there's something wrong with you and you should try it anyways.

Cooking, the Oliver Way

I have a unique cooking style, which I will demonstrate through the use of examples, contrasting the standard method and mine. I've included some baking examples

Pasta Sauces
Standard method: Chop up the vegetables you need. Fry onions and garlic etc., fry meat if using some, add liquids and simmer until ready.
Oliver method: Slowly but methodically chop up the vegetables. Take twice as much time as suggested in the recipe. Heat frying pan, burn garlic. Turn down heat, slowly warm onions to death. Turn up heat, burn more garlic. Add too much oil. Add other vegetables, cry as frying pan cools down too much again. Give up and add sauce. Have sauce refuse to boil. Turn up heat, sauce boils ferociously. Fiddle with heat, put the lid on, give up and have a glass of beer or wine. End up eating an hour later than intended. Wonder why, after all the mistakes, it still tastes great.

Omelettes
Standard method: Beat eggs. Pour over pan, cook, flip half and cook both sides.
Oliver method: Beat eggs. Pour over pan, cook, disintegrate half trying to flip it, swear, convert into scrambled eggs. Wonder why the hell people bother with omelettes when scrambled eggs are just as good.

Muffins
Standard method: mix dry ingredients, mix wet ingredients, combine, spoon into muffin tins, bake.
Oliver method: Take twice as much time to mix ingredients, spend half an hour spooning mix into muffin tins, bake. Wonder how a recipe for 24 muffins ends up as 18 muffins.

Bread
Standard method: combine ingredients, let rise, knead, bake.
Oliver method: Decide to make sourdough. Place in laundry room to turn sour. Check sourdough's progress daily as it grows, become sentient, and wages war against the towels.
Mix ingredients, let rise. Rub flour on hands to avoid getting dough stuck to hands and knead. Get dough stuck to hands. Add flour to dough. Add more flour. Add yet more flour and wonder how the hell the dough got so sticky. Give up and place on cookie sheet. Shape with hands, let rise more. Watch as bread turns into amorphous blob rather than pleasing shape. Wash hands. Spend 10 minutes trying to get all the goddamn dough off of hands. Cry into sink when dough is still covering hands. Finally free skin from sticky captor, bake bread. Mmm, bread.

Unfortunately, the Oliver method is losing originality and becoming more like the standard method as I gain experience, so one day I will no longer know the pleasure of soaking my hands in water for extended periods trying to get bread dough off, and my dishes will lack the subtle hint of slightly burned garlic. It only took me 5 minutes to dedoughify my hands this time!

Hey look, it's bread:

"Do no evil"

The title refers to Google's motto, an ideology that came under fire when it included censorship tools in its search software. As I've discussed before, corporations are mandated to act unethically if it is legal and profitable. Google had many reasons to expand into China that far outweighed the criticisms that it received, and while I ultimately agree with they decision, I don't think they should be allowed to keep their motto.

To launch Google China, the Chinese government required Google to filter out censored material, in order to maintain the "Great Firewall of China" that blocks content the government dislikes. Google claimed this was a necessary evil as part of the greater benefit of bringing Google's knowledge to China's many connected inhabitants, but many people disagreed with this claim and criticized the company for its action. Google's real motive was, as it should be, to expand into a rather large and profitable market, at the cost of some negative PR and no significant drop in searches in its other markets. I hardly doubt that many people decided to switch search engines as an act of protest, although critics should have done so to match their actions with their talk.

Obviously, Google's stated intentions can't always correlate to its mandated actions, but on the whole Google could argue that its ethics are part of its appeal and continued use, and are therefore necessary to remain profitable. Google's success, however, is based on its algorithms rather than its ethics, so it can hardly be expected to act purely ethically if The Body Shop, a corporation claims to be fiercely opposed to animal testing, sold products that were tested on animals! Minimizing evil is a perfectly acceptable action for the majority of corporations, as only those overlooked by the public eye can operate unethically without serious consequences, but no corporation can claim that it is entirely ethical.

(This post is something I thought about and could write up fairly quickly. I have a post, masquerading as an essay, in the works on extreme poverty, as well as one on the West's military-industrial complex, and one on my cooking and baking experiences. Guess which one's the funny one?)