Cinematic Concerns

Wow. In one paragraph, Malthus explains why subsidies for the poor doesn't work. He uses the example of the working class man - if he earns only 18 pence (or 1 shilling and 6 pence) and the rich men pool together and give the working class man a further 3 shillings and 6 pence = 5 shillings (I'm still wondering, why so generous?), does that mean the working class man can then buy more meat?

No. Coz all you've succeeded in doing is raise the price of meat to like 500% extra. In one word, INFLATION. Boom. That's why you don't give subsidies willy nilly. Or just simply print more money. (Look where that got Germany in the 20s and 30s. Or even, Malaysia in the dying days of the Japanese Occupation.)

Malaysian ministers dealing with economy and trade take note.

Okay, Malthus goes further. Some would say, well, the working class man would feel richer and go out and buy more stuff, which signals to the market to increase supply. But now it depends on how much the market CAN increase supply. Malthus then supposes that the working class man will, with his new paycheck, decide to take more time off (to ... finish that sentence), which means he becomes less productive than before. Which means the market, in fact, cannot increase its supply. I think this example is assuming full employment. But even if that isn't the case, the point is there are these restraints, limits, things the economy can't do no matter how badly you want it to. The idea is to keep such models simple so that you can see the results of these thought experiments.


Then Malthus goes on to rail about something very specific to his time (for a few pages, no less) - something about parish assistance to the poor. The point is that it creates a certain dependence (or faith, rather) of the poor on such institutions (but it comes with conditions), that they can always be counted upon to help them in case they're suddenly unemployed or they couldn't afford to feed the family with what they're earn ...

So I turn now to Thomas Malthus' An Essay on the Principle of Population, as it Affects the Future Improvement of Society with Remarks on the Speculations of Mr. Godwin, M. Condorcet, and Other Writers, Second Edition. Do try and say that all in one breath ... and with a British accent.

As with many ideas, Malthus here begins his hundred or so page paper by stating that it initially began with a question discussed with his friend. All he had wanted to do was to write a letter to his friend on his thoughts about the matter, and instead it became this.

He goes on and on about truth, and how it's his desire to seek that that prompted him to write this, and that he'd gladly retract it if people find the views he propounded wanting. As if to pre-empt the big lash-out against this particular piece of paper in the following two centuries. Interestingly, as much as Malthus was derided as anything from pessimistic nerd to tyrannical monster, people still quote him nowadays.

Especially since we're in the middle of a rice price hike crisis these days. How topical.

It seems that the discussion begins with utopia - the validity of such a concept. Malthus compared two camps of people: the people who want the status quo preserved, and the 'speculative philosophers'. The former would claim that the latter paint rosy pictures of a potential fantasy society in order to fatten the population for kill, i.e. their revolution (French Revolution was all the rage then) ... or just plain mad scientists. The latter accuse the former for being beneficiaries of current systems and obviously not wanting that to end, or people of small mind.

Doesn't that just remind of current Malaysian politics? Right? Damn Malthus ...

Anyway, Malthus then goes on to say - what's the point? If neither side are talking to the other, and instead just spewing out sentiments about how the other side are wrong, then how are we getting closer to the truth of the matter? Gee, imagine if Malaysian politicians were THIS matured. We'd be back on track towards Vision 2020 in no time.

Then he goes at length - at LENGTH - about conjectures and under what conditions they are or aren't acceptable. The guy is really scared of what he's writing ...

... and then he lays out two postulations.

First, food is necessary to the existence of men.
Secondly, that the passion between the sexes is necessary and will remain nearly in its present state.

And he argues, reasonably, that as far as we know none of those two have changed much over time.

Which leads him on to the part that you all know already. Agricultural produce (he goes by the term subsistence) increases are arithmetical, whereas population increases are geometrical. Oh come on, no need to have studied Econs - your KH textbook mentioned it somewhere. (I have no idea why.) Now, don't say you don't remember.

Point it, "this natural inequality of the two powers of population and of production in the earth, and that great law of our nature which must constantly keep their effects equal, form the great difficulty that to me appears insurmountable in the way to the perfectibility of society".

These leads to what he calls 'checks', manifested in the form of oscillations in the survival conditions of the poor/lower/working class. Pressure on food supply and prices from population increase among those who are barely surviving will be such that people will either die, or consciously make less babies (so as not to make life so hard on themselves), while at the same time wages will be lower due to increased labour supply. Eventually that levels out, since lower wages encourages employers to employ more, increasing food production (among others), and thus lessening the pressure ... at which point the cycle begins again. (This seems to be inspired by Adam Smith, who is often going on and on about how things tend toward equilibrium levels.)

Then he goes on to explain why we don't observe such oscillations clearly (during his time, which is on the cusp of the 19th century). One (very good one, actually) is that histories tend to be written of the higher classes. The obvious one is that food production isn't the only thing affecting mankind - war and plagues and natural disasters, for example, more quickly displaces people's priorities.

Chapter VII, and we move into demand and supply territory. Yep. But first, he sets up the idea of natural price and market price. That natural price is unwavering - it always is the value of commodity aggregated from the labour, capital, land and entrepreneurship required to produce it. Whereas the market price, which is the Price we talk about in econs in general, will vary, going higher than its natural price when there's higher demand, and vice versa. When demand = supply exactly, then market price = natural price. You got it - equilibrium on the demand-supply graph.

Perishables and durables. In a high supply situation, prices of oranges, say, will drop more proportionally than prices of iron. Due to competition.

Smith goes on to talk about the mechanisms that explain why prices tend toward equilibrium - econs students will know how that works already. (When there's an increase in demand blah blah blah ...) This is laying the groundwork for the 'invisible hand' thing people love Adam Smith for. People love it because they thought he had explained at least ONE thing in the world that seems automatic and free, a shortcut. The same people should be shot, which is quite a lot of people.

Chapter VIII. Labour productivity tends to be pretty high during a depression period.

Chapter X. Now, Adam Smith was talking about his time, relating to apprenticeships and such, but interesting parallels can be extract if I paraphrase what he is saying. Basically, in many professions, it is tedious and unnecessary - perhaps wholly unnecessary - to go to a university to study for it. It would be cheaper and less time consuming and works better for the motivation of the person to just jump straight into it - be it law, business, arts, and so on ... but probably not medicine - and learn by trial and error, or just go ahead and shadow someone at work (fine, then it's an apprenticeship ... point is it shouldn't be formal, i.e. comes with some piece of paper). Then that person would be working and successful by the time he turns 21 - i.e. the time when we lemmings are still in university writing final dissertations.

So in fact, universities are there for a particularly sinister purpose - to raise wages of certain jobs. Ooh, you went to university, here, you get 2000 for a starting salary. Now, imagine if everyone didn't go to university - then it depends completely on the person's talents in getting it right and doing it to the customer's satisfaction. The public would benefit as a whole as they would have to pay less for any service. In short, university is like the middle-man. It creates huge cost for the person ultimately offering services - and that's the passport allowing the person to demand a high wage. Thus increasing costs for everyone.

Maybe the non-monetary economy idea (as in, no money and all-altruism for exchanges; which has the added bonus of rendering the finance industry nonexistent ... I like ) that I had imagined during university should be further pursued ...

Okay, that's it. I give up. Can't take Adam Smith any longer. The fellow's like a boring old grandfather - you can only take so much at a time.

Chapter IV is about why money exists. Divisibility. We kind of know that already. In fact, all those Form 1 History textbooks in Malay talking about salt and cowrie shell bring primitive forms of money just took those examples (very indirectly?) from Smith talking about Abyssinian salt and Indian shells. The new knowledge is this:

The word value ... has 2 different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called 'value in use'; the other, 'value in exchange'. The things which have the greatest value in use have frequently little or no value in exchange, [and vice versa]. (He proceeds to do that other econ cliche, that water and diamond comparison.)

Chapter V starts with an intriguing concept. That money notwithstanding, the REAL price of everything is measured in labour, or in longer words, "the toil and trouble which it can save to himself, and which it can impose on other people"... which kinda explains why the Chinese are getting richer all the time. (But individually, the prince who barely works is still richer than the industrious peasant. Oh yeah, Keynes has mentioned that as an economist you will need to hold contradictions in your head. Just to contradict that, Orwell warns against using contradictions in speech and writing for it corrupts the whatever. There, I've just done in the head of whoever's reading this.)

So anyway, labour can't be used for measurement in practice though coz it's so abstract, so money (commodity) is used coz it's tangible. Money's disadvantage, then, is the fact that its value goes up and down over time - unlike the value of a person's labours (but then it's not mathematically measurable so ...). But then, some people value their own labour more highly than others (the arrogant vs the down-to-earth?). Anyway, these characteristics mean that to an employer, the cost of hiring an employee fluctuates - but that's not because of the fluctuation of value of labour, but of commodities (money).

Which is why Smith goes on to talk about the 'real' and 'nominal' value of labour, and he thinks it's "of considerable use in practice". Sigh. "... real price may be said to consist in the quantity of the necessaries and conveniences of life which are given for it; nominal price, in the quantity of money". Now, the part that most people forget and think that rich people are rich and poor people are poor (erroneous, sort of), is that how rich or poor a person is depends on real value of labour.

And after all that, Smith goes on at length (a lot of length!) about shillings and guineas and pounds for the next half of the chapter, so much so it reminds me of having to read those so-and-so begets so-and-so Jr. sections of the Bible. So I skipped it.

Chapter VI is really about how we can split up a price of commodity into its components, based on the fact that any one commodity is worked on by multiple parties. What Smith is talking about then, in modern terms, we're talking about entrepreneur, employee and landowner - hence profits, wages and rents. It also talks about how interest from money-lending (let's just call it interest rates) is always a derivative revenue, derived from either profit or rent or wages. Or, when someone borrows money, it's always for some activity that should make the borrower some profit, and part of that profit will go to the lender (as interest) while whatever is left is the borrower's profit. Smith goes on to say all taxes, ... all salaries, pensions, and annuities of every kind, are ultimately derived from some one or other of those three original sources of revenue.

Okay, so I'm starting to read Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations. Go on, laugh.

Chapter I contains that econ cliche about a single pinmaker scarcely able to make 20 pins a day, "perhaps not one, even", while ten pinmakers practicing division of labour can produce up to 48,000. Then there is one amazingly-written, must-be-seen-to-be-believed, huge paragraph which seems doggedly intent in proving that no one person can survive alone economically, with an example of the woolen coat, the production of which is facilitated by such diverse professions as the shepherd, dyer, dresser, merchants, sail-makers, mill, miner, timber-feller, brickmaker + bricklayer, (and just when you think you've definitely gotten the point) the forger, the smith, the bedmaker, the baker, etc. And believe me when I say that is an abbreviated list of professions Mr Smith throws at us.

Chapter II explains why division of labour happens. Coz of humans' tendency to trade/barter. Huh? Well, it's the idea that people have talents (tendency to be better at one particular thing than the rest). And then he goes on to state, rather intriguingly, that in the modern debate of nature vs nurture, he subscribes to the latter. Anyway, long story short, humans trade and make contracts. Dogs don't. Humans practice division of labour. You don't see the mastiff, greyhound, spaniel or shepherd's dog (why on Earth did he call them that?) use their stereotypical advantages to assist each other in the service of canine progress.

Chapter III makes the point that division of labour is limited by the size of the market. In a nice little hamlet somewhere remote (say, the Scottish Isles where I once cycled), there is no point in splitting up the tasks of a pinmaker to produce 48,000 x 365 pins a year when they'll barely use one day's worth in as much days.


Well, I guess the thing I'm just beginning to realise, is that books by Adam Smith and other great economists like Thomas Malthus and Thorstein Veblen aren't meant to be dry textbooks (as hard as they are to read) ... in fact, not meant to be textbooks, period. They're all just observations, no pretensions about trying to prove a point. (Apparently Veblen just lists his cynical and often ironic observations without explaining why or how or even bothering to prove his point. But I'll mention that when I get there.) Certainly they didn't try to be mathematical, like ALL FREAKING ECONS TEXTBOOKS these days. Mostly that's why I thought I should take the time to actually read these texts. Even though most econ students (and possibly a good number of our lecturers) never bothered to read them completely.

Unlike for other categories, I find it impossible to order the songs in terms of preferences. I get obsessed with them, and then I get obsessed with them again from time to time at different times. Also notice how there are no repeats in terms of the singers. I find that I tend to like only one song from any one singer, and quite often the singers are really only famous for this one song while the rest are just album padding/fillers (for instance, The Verve, or Vertical Horizon).

Now, this doesn't mean I don't listen to other songs along the way, like from radios in cars or shopping centers, or people forcing their songs on me. (Bjork ... bleh.) Look, I enjoy The Girl From Ipanema as much as the next guy. It just means that about 85% of the time, when I'm listening to songs these days, it'll be one of these fifteen.


BITTERSWEET SYMPHONY
The Verve

CLOCKS
Coldplay

COME WHAT MAY
Ewan Mcgregor & Nicole Kidman

DREAMS
The Corrs

EVERYTHING YOU WANT
Vertical Horizon

HERE WITH ME
Dido

HOPPIPOLLA
Sigur Rós

IRIS
Goo Goo Dolls

JUST MY IMAGINATION
The Cranberries

FEAR
Sarah McLachlan

MY CULTURE
1 Giant Leap feat. Robbie Williams & Maxi Jazz

MY HEART WILL GO ON
Celine Dion

PORCELAIN
Moby

TAKE MY PICTURE
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WORRY ABOUT YOU
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