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Economics:Exact Science?

by Joel Quashie on 02/05/12

So, what is economics? The most commonly used definition of economics is: the study of how society chooses to allocate its scarce resources to the production of goods and services in order to satisfy unlimited wants
Society can  be defined as - a group of humans with a common culture and way of life sharing common economic and social structures including: government, businesses, institutions (financial, educational, religious etc.)
Resources consist of three categories in economics : Land - with all its natural attributes of nature;  Labor - the mental and physical capacity of workers to produce goods and services; Capital - plant, machinery and equipment used by workers to produce goods and services.
Unlimited wants describe the human condition of incessant wants. Therefore unsatisfied wants, finite resources, and population growth result in scarcity. 
How then can economics justly fulfill the assignment of 'allocating scarce resources to the production of goods and services in order to satisfy unlimited wants?' Unlimited wants are precisely representative of human behavior - a confluence of conflicted, confused, competitive, yet, survival-oriented pursuit: buying, selling; spending, saving; likes, dislikes; security, insecurity; investing, divesting; optimism, pessimism; greed, contentment; hoarding, banking, etc. It seems highly improbable that any economic formula or  set of economic theories can adequately predict, and accurately provide remedial control to the complexity of the human survival instinct.
Accountancy, unlike economics, has a basic equation that determines whether or not the books are balanced: (total debit - total credit = 0). There may be questions raised regarding the treatment of a particular expense or revenue, but these questions can quickly be remedied through a review of organization or taxation policies. When these questions are rectified, the accountant would proceed to complete his/her task of compiling a set of statements regarding the health of the organization for the owners and shareholders.
However, economics, to be fair, do have a set of useful theories, all of which, I am convinced, are workable. Yet, each of which  may not work for every economic problem. There are three macroeconomic theories that are very contentious  in today's economic environment: Classical Economics, Keynesian Economics, and Monetarist Economics.
Classical economics introduced by Scottish economist Adam Smith, dubbed 'The Father of Modern Economics,' and discussed in his book, The Wealth of Nations (1776),  promoted the economic theory of a 'market economy.' He argued that in an economic downturn, a market economy would, in time, automatically correct itself to full employment, and there would be no need for an infusion of fiscal policy.
Keynesian economics introduced by British economist John Maynard Keynes, dubbed 'The Father of Modern Macroeconomics,' in his book General Theory, emphasized the use of fiscal policy to affect interest rates, which in turn affect investment spending, aggregate demand, prices, and employment. Keynes, in criticizing the 'classical economics' often states that to wait for the market to, in time, correct itself "we may all be dead."
Monetarist economics introduced by American economist Milton Friedman, who won a Nobel prize for his monetary theory, theorized that changes in the money supply determine economic performance; that maintaining money supply at a proper level prevents inflation and unemployment. The monetarist argued that the infusion of fiscal policy would have little or no impact on output or employment, instead it would have a 'crowding-out effect. The 'crowding-out effect' is usually described as, a reduction in private-sector spending because of government's budget deficits financed by loans from the US Treasury.
Now, these are three distinctly different remedial approaches, by three world renown economists, designed to solve  economic problems. This, I believe, is what angered President Harry S. Truman into concocting his famous phrase: "GIVE ME A ONE-HANDED ECONOMIST! All my Economists say - on the one hand , on the other."
At the beginning of the Great Depression, in 1929, the Classical Economics theory was the prevailing economic model. In 1936, 7 yrs. into the depression, and 4 yrs. into President Franklin D. Roosevelt's presidency, John Maynard Keynes introduced his Keynesian Economic Theory to President Roosevelt who initially dismissed the Theory with 2 words: "Too easy," and proceeded to try other models. By 1939, on the emergence of World War II, President Roosevelt  utilized Keynes theory particularly  using the concept of 'private sector, public sector partnership' in response to an influx of overseas orders, pertaining to the war, for munitions and armaments. These activities ushered in the beginning of the end of the depression, which ended completely in 1941, when, after the US was drawn into the war, economic war related activities were in full throttle in the country.
So, it seems responsible to state that economic theories are theories. Then, what is a theory? A theory is, according 'The American Heritage Dictionary:' 
  • a systematically organized knowledge 
  • a set of assumptions or statements devised to explain a phenomenon or class of phenomena 
  • an abstract reasoning or speculation
  • a set of rules or principles for the study or practice of an art or discipline
  • an assumption or conjecture
If then, we are willing to accept the dictionary's definitions of 'theory,' we are, in the same token, compelled to accept the fact that economic theories are not designed to be exact solutions, but tools that can be utilized to assist in the possible easing of economic problems on to normalcy.
However, it would be highly irresponsible to totally discard any of these economic theories. Economics is a very complex subject. Complex because it has the onerous task of predicting and providing  possible solutions to the intricacies of the mathematics of unlimited wants and scarcity.
Therefore, it is wise to keep all the economic theories in our economic tool box. These are the works of very educated economists whose extensive studies lead to workable theories. If we discard one, we may just as well discard all, because they are all imperfect, yet all usable, and we have them at our disposal to use whether or not they fully satisfy our needs. 
Finally, it is economically sound policy to wait on the market to correct itself in an economic slow-down, because the market's business is  profits. However, it would be economically unsound policy for the government to sit on the couch and wait on the market to correct itself, if there is an economic melt-down, because the government's business is the well-being of the people. 
Government of the people, for the people,  by the people.

Are PCs becoming obsolete?

by Joel Quashie on 06/11/11

Are smartphones hastening the demise of the desktops?
That's the prediction of John Herlihy, Google's European boss-man, in a speech he gave  at a conference held  at the University College Dublin. The supposedly creeping death of the PC has been the buzz among technocrats for some time, but Mr.Herlihy   seemed to have quickened  it's route to the grave by allocating a remaining lifespan of 3 yrs. What do you think?

The Obama Impact: an instrument for, or a coincidence of change?

by Joel Quashie on 05/30/11

In a previous post I suggested that in the emergence of President Obama, we may be witnessing history in-the-making. I feel compelled to continue that dialogue because maybe, just maybe, an opportunity is present where we can usurp the territory of historians and write history while it is happening.
Taking a serious view of President Obama's impact on the world's stage en route from becoming the 44th and 1st black President of the United States of America after 235 yrs. of US history, one must conclude that this is no simple achievement. However, looking beyond the political discourse of the day, without being dismissive of open debates that are part of what makes America the greatest country in the world, it seems no  coincidence that:
-after  several presidents, from Harry Truman in 1949, have tried and failed to reform the  American healthcare system, Obama passed healthcare reform within
  two years of his presidency
-after the failure to apprehend Osama Bin Laden over a period of sixteen years and
   two presidents, Obama got the job done within 2 1/2 years of his presidency
-after decades of dictatorship governance and oppression, the people of the Middle
  East and North Africa have taken to the streets demanding  the removal of these
  regimes in exchange for democracy and freedom - from Tunisia to Egypt, Libya,
  Bahrain, Syria, and Yemen.
Is it really coincidental that at the beginning of Obama's presidency the people of so many countries, after many years of oppression, have risen up to expel their oppressors?
How does the emergence of Obama's presidency influence the rush for change in these countries? Some argue that Obama's speech in Cairo Obama Speech                spurred the upsurge. Others say that it's a coincidence in time. However this debate is decided, it seems very clear that the election of Obama as president of the United States of America, compounded by his powerful campaign speeches of change, and his motivating campaign slogan of 'yes we can,' have sent a resounding echo of hope and expectations throughout the globe.
It can be rightfully  argued that Obama is both an instrument for, and a coincidence of change, but these occurrences are without doubt larger than one man. Let us not forget that the United States of America is undeniably the leading nation on  this planet, and all the countries and people of this planet look to the United States for leadership. Well, the world witnessed the United States of America voted overwhelmingly to install a colored man as  president for the first time in its 235 yrs of existence.This was phenomenal and had an empowering effect globally. Therefore, America by its very act of electing a colored man to its highest office, given its history, have inadvertently influenced the changes that are occurring in the Middle East and North Africa,  Obama being the instrument.
The United States  would always be the greatest nation on the world stage, but it is very important that individuals who enhances America's greatness on that stage, be properly recorded in the annals of history.  If President Obama's contributions are not recognized as they are occurring, that would be  the deceptive nature of history in-the-making. If they are, in the future,  that would be the premise of historians.
Mark Anthony, in Shakespeare's renowned eulogy of Julius Caesar, said, "The evil that men do lives after them, the good is oft interred with their bones." Many great men who made major contributions to society and were ostracized during their lifetime,  posthumously, their works were found to be invaluable:
Galileo Galilee the famous Italian mathematician, astronomer, and scientist, who is recognized  today as the father of modern physics, was, in the 1500s  accused of heresy and  held in house arrest until his death, for proving the accuracy of Polish astronomer Nikolaus Copernicus's theory that the earth revolves around the sun. Galileo's revelation was contrary to the views held in Rome at that time, which was that the earth is  static and is the center of the universe. Today Galileo is ranked amongst the geniuses of all time, and his theorems are taught throughout the universe.
Wouldn't it be wonderful if we can perceive greatness when it is unfolding before our very eyes, so that honor can be bestowed on the individual in life as well as in death?
"Be not afraid of greatness: some are born great, some achieve greatness, and some have greatness thrust upon them." (William Shakespeare)


Obama: History in the making

by Joel Quashie on 03/29/11

History in its stage of evolution , consistently devises a  way to conceal the true meaning of its structure and intent from its contemporary onlookers, observers, and even to its very creators. Then, History in later years, would ostensibly reveal its achievements through the analytic lens of historians, many of whom, back then, were onlookers, observers, and creators themselves.
President Obama's speech on the conflict in Libya must have provoked the thought in many that history is in the making. One would recall President Obama's statement during his presidential campaign in reference to ending the wars in Iraq and Afghanistan, quote: "I don't want to just end the wars, but I want to end the mindset that gets us into wars in the first place."
This campaign pledge coupled with his speech on the US air strikes in Libya, where he explained to the nation that the intent of those strikes was to avert the Libyan attacks on its civilian population and not to enter into a war with Libya which he emphasized would be "a mistake."
This type of language to many is very un-American. The pundits and  political analysts quickly labeled it: 'the Obama doctrine.' This president, it would seem, is determined in spite of mounting criticism  within and without his party, to reserve the enormous power of this mighty nation, less it becomes expendable. If he succeeds, historians would pen his sojourn in office quite favorably.

Non-monetary economy - a possible remedy for current universal economic chaos

by Joel Quashie on 02/20/11

Earlier human beings have utilized many different items deemed valuable which they possess, to exchange for needed items that others possess: gold, silver, beads, domestic animals, vegetables, fruits, and even land. It is a fact that this process was limited to the coincidence of needs. Therefore, as societies grew larger and needs become greater, there were, of course the urgency to serve the emerging needs of a larger society. However, the accumulation of debt was a very under-utilized act and word in the lives of humans back then.

Later, the entry of money, paper money in particular, as the primary source of exchange in  modern economic systems has without doubt become the the unintended consequence of the current economic catastrophes. Paper money certainly provides a faster way to transact business across societies and countries. However, the emergence of paper money and its ability for easy exchange seems to have increased humans' gullibility to acquire 'wants' as opposed to the acquisition of real 'needs.'

Everyone can now fulfill his or her 'wants' expeditiously, because money has become the valued medium of acquiring things, and new inventions accompanied by very compelling marketing strategies further propel  modern humans toward the acquisition of 'wants' instead of needs.

But it doesn't stop there! A new monetary phenomenon, plastic money, or 'credit card', as it is commonly called, made a gallant entry into the economic milieu. The benefits, as advanced by the proponents of this new phenomenon: easier to carry around; deterrent to personal robbery, are all valid. These reasons and others like: emergency spending, where cash is not readily available, or accessing quick cash where cash is readily available, are also undeniably true. However, on the flip side, plastic money provides the easiest medium for the acquisition of 'wants,' and a deceptive pathway to the accumulation of debt.

So, in effect, modern economies allow humans to purchase goods and services with debt. The result is: the entire world, its governments, and its people are all entrapped  in insurmountable debt. It is doubtful whether the teachings of the late Adam Smith, one of the world's leading economist, can provide any solution to this universal debt crisis. The universe possibly needs an epiphany. Either that or, as paleolithic or even neolithic as this may sound, a return to the days of  non-monetary economic systems. The price of progress is high.   J.Q.

N.B. Lookout for J.Q's upcoming book : Wealth vs Riches

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This page was last updated: January 20, 2013
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"The best things in life really are free! Love , knowledge, art, music, literature, community have no bottom line. I worry when I see the leaders of our great cultural institutions - universities, publishing houses, museums, libraries - measuring out our hopes and possibilities in the homogenized hash of cash. With the momentum of technology these assassins of the bottom line can impoverish our lives by removing from our daily experience countless passenger pigeons and whooping cranes which once enriched our view."     D.J. Boorskin