Studying some more (look at me go!)

Alright, I’ve got to get through two more countries for my Comp Econ review: Japan and China. The ignorant American in me wants to say that they’re basically the same. The ignorant American in me is mostly wrong, and I’ll tell you exactly why.

Japan is like that really smart, but mean kid in elementary kid that would get a perfect on all his spelling tests and would shove it in your face every time. But it’s okay, because that kid always ends up getting picked last in freeze tag.

Japan took a lot of China’s culture and made it their own in the beginning. Then they got all offended, and basically shut itself off from the world for 250 years starting in the 1600’s because apparently a bunch of other areas tried to control it, or whatever. Really, Japan? Grow up, that’s what bratty 5 year olds do. Anyway, once it decided to play nice with all the other surrounding countries, it paid off its samurai (most of them became business men), gave farmers land, and opened the country to outside influence.

Through the early 1900’s, Japan really wanted to take over other places, and mostly succeeded.Their economy grew rapidly through the 1930’s, mostly because of the army buildup. Then they tried to screw with the United States. Haha, they lost.

America then took over Japan in 1945, demilitarized it, and made Japan more capitalist. Japan used to have these things, zaibatsus, which were basically huge conglomerate groups that worked together. Well, America stopped that, and made corporations fend for themselves.

1955 marked the creation of the Liberal Democratic Party, a conservative group. Fun fact, this group still rules Japan! That’s a super long time.

Japan’s economy has been pretty successful for a while. But why? Some attribute it to it’s familistic groupism, where basically everyone acts like one great big family, and everyone has each other’s backs. In firms, this is acted out by way of the three sacred treasures. These treasures are unfortunately metaphorical (bummer I know), but they are: lifetime employment, seniority-based wages, and enterprise unions.

Having a job guaranteed for life may seem awesome, but in reality it’s only guaranteed for about 30% of the labor force. And if it’s guaranteed, the company basically owns you. This theoretically creates loyalty, and makes people more productive.

Seniority-based wages also is supposed to build loyalty, and is built of the Confucian belief of respecting elders. However, when wages aren’t built off of productivity, productivity tends to decrease. Many firms are moving away from seniority-based wages and towards efficiency-based wages.

Enterprise unions are labor unions within a specific corporation, as most workers just move within one single firm for the majority of their lives. These unions account for the small wage differentials between the higher-skilled workers, and the low-skilled workers within a firm.

The Japanese use a different kind of industry organization as well, called the keiretsu. Horizontal keiretsus are pretty much like zaibatsus; they’re firms in different industries linked through one bank and a trading company. Horizontal usually follow the three sacred treasures. Vertical keiretsus are usually a set of suppliers linked to one major producer through a long-term contract. These keiretsues don’t usually follow the three sacred treasures.

It’s also said that the Japanese follow a J-mode type of organization. This J-mode is characterized by the attitude of sharing results horizontally. For example, companies getting together and telling each other what worked and what didn’t from their own experiences. This depends on long-term relationships between workers and firms, and banks and firms.This is also carried out through consensual decision making – basically making sure everyone involved in a decision on board. that’s why the Japanese take forever to make business decisions. Something else that is encouraged? Ringi-sho, which is basically the little people of the company sending memos up to the big guys, letting them know what they’re doing wrong. I think that’s pretty cool, you know? Everyone gets a voice! Yay!

The rapid growth of Japan may also be attributed to the Ministry of International Trade and Industry’s industrial policy, which involves them investing in promising parts of the economy and getting the pay off from it.

Japan also saves a lot, creating a lot of opportunity for investing, but with the population aging like it is, this may decrease saving significantly.

Japan was been characterized as a market capitalism with elements of a traditional economy, and indicative planning and guidance. They’ve got a huge debt problem right now, as they keep spending more money, since the people aren’t.

The income in Japan is equally distributed better than most other countries, probably from the set up of labor-firm relations. However, the Japanese also work a helluva lot more, and take less vacations. Not to mention their pollution problem, and their lack of fossil fuels. The fossil fuel problem is opening up a new efficient energy market in Japan, which may offer more growth for their economy.

On top of all of this, Japan is mean. Women don’t get paid a lot, and they really don’t like foreigners, which really doesn’t help their trade relations, at all.

Japan’s slowing growth is worrying the Japanese government – and so Abenomics is born. Abenomics is the combined expansionary fiscal policy, increased monetary policy, and reform heavy plan that Abe, the current prime minister of Japan, is trying to use to turn Japan around.

This could fail miserable. Who knows how successful “reforms” actually are in the political realm, and Japan is already in tremendous debt.

Uh oh Japan, better start playing nicely with all your trading buddies, and stop spending all your money in one place!

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Indirect Studying

I don’t know what it is about a little box to type in in a Safari window, but this is so much more fun than typing in a Word document. Therefore, I’m going to tell you everything I know about Germany’s economy so I don’t fail my Comp Econ Exam.

This class is pretty interesting, you just really have to get into it and focus (which I’m really bad at).

Germany is like one of those people you grew up with that went through a really weird phase in middle school, then got semi-normal in high school, but you still won’t talk to them because you’re still a little bit scared of them.

And when I say that, I mean it. First of all, Germany in the beginning wasn’t even a Germany, it was a bunch of little tribes hellbent on ruling all of Europe. I’m sorry, but if you want to rule an entire continent, you should at least get your tribes together into one uniform state first, I mean am I right. Otto von Bismark was just that guy. He got all of the little tribes together to make the German Kingdom in 1871.

After 1871, it was pretty much smooth sailing, that is up until WWI (oh lord). Germany grew astronomically after that, mostly because the Germans are pretty awesome with science and technology.

Moving on to 1919. The Versailles Treaty was just signed. Germany’s got a lot of debts to pay, and a lot of land being taken from them. The government thought it would be a good idea to start printing money to pay these debts. Hint: never do this if you are pres of the Fed. It will basically devalue your currency. The country went into a huge hyperinflation, with the currency decreasing in value almost by the hour in the really intense bouts. Luckily this was brought under control by 1923 – just in time for the Great Depression to take over the assault of Germany in the 30’s.

The Great Depression hit Germany, and hit it hard. Things were so bad, the people were looking for anyone that could fix their situation. Who could blame them? Hitler came in, and was all “I can totally fix this guys, chill”, and instead took power, outlawed all other political powers, and oversaw the Holocaust. Seriously, worst person ever.

It hurts me to say this, but Hitler’s economic choices did help Germany out of the Depression. Germany’s GDP doubled between 1932 and 1938. Hitler imposed a command capitalist system, and held corporate state standards (basically, Hitler made corporations and workers get along, no matter what). He imposed price controls, dumped a ton of money into the war, created a ton of cartels to keep people employed, controlled trade with other countries and tried to dampen that to become more self-suffiicent as a country, and built a lot of highways and bridges and stuff.

World War II happened, and Germany was split up faster than you could say “Ya lost, Nazis.” The country was split up into 6 zones. West and East Germany was created. The West, called the Federal Republic of Germany, was helped by the US, and the East, called the German Democratic Republic, was owned by the Soviet Union.

It’s sad really, because the FRG focused on becoming for of a laissez-faire economy, but with a huge sector for helping people out (technically speaking, a social market economy), and the GDR was basically stripped of it’s factories, infrastructure, and resources, and kept it as more of possession than an area to be fixed and you know, not repressed. Compare to: Dudley as FRG, Harry Potter (pre wizarding world) as GDR, and the US being Dudley’s parents.

Let’s ignore our poor wizard for a second, and talk about Dudley. Some great things happened to the FRG after the split. First of all, Ludwig Erhard is the man. He believed in a strong government that could split up cartels, and support free markets, and large social safety nets. Basically, the best of both worlds.

Erhard had this crazy idea, to create a new currency which was equal to previous wages, but basically devalued all debts, to remove all but a few price controls, all in the span of a few days, and without telling anyone. Now that is power. And guess what? It worked. Boo yah. This was deemed the Big Bang approach (in german words – Wirtschaftswunder), and the economic awesomeness and growth that ensued was called economic miracle. 

With that much growth all at once, there was bound to be a slowdown. Unemployment is rising again, and some problems are starting to surface, which could be blamed on a number of things, including the global slowdown, or the European Union slowdown.

Meanwhile, poor little Harry Potter was stuck in the cupboard under the stairs, AKA the GDR was being ransacked by the Soviet Union and basically left for scraps. The GDR adopted a command socialist system, so basically the state owned everything. They had these things called Kombinats, which were started in 1979. The Kombinats were huge combines owned by the state that were directed by steering mechanisms, which were not focused on gross output.

Let’s stop and think for a second. Germany was split in two. One was taken over and made into a command socialist economy, with the state owning basically every part of production, and the other was taken over by a guy who believes in the invisible hand. Two very systems, two very different outcomes.

The GDR had really low unemployment, greater large-scale economic stability, a little more extensive social safety net, and greater income equality. The standard of living was lower, and productivity was lower. The FRG was way more efficient, had a higher standard of living, and took care of their environment more. Comparatively though, both the FRG and GDR had pretty similar social safety nets.

In 1990, the two parts of Germany were unified. Yay right? Nope. This was really expensive and complicated since one was socialist and the other was capitalist. The tried the big bang economic transformation again, to try and get the socialist part to become capitalist. This was really lame and difficult, because they adjoined currencies, and they were SO not worth the same amount in either area. The GDR currency was overvalued, and the FRG became undervalued. The output of the GDR collapsed. Unemployment rose in the East. The THA was created to privatize in the East what the Soviet Union messed up. Germany reluctantly gave up their own currency and now use the Euro through the ECB, which is located in Germany.

Germany’s labor market is a littler weird too. They do what’s called codetermination. The workers are elected to both an advisory board that overlooks worker’s day to day worries, like wage, hiring, firing, etc. Workers are also elected to a supervisory board which oversees higher management things in bigger firms (500+ employees).

Nowadays, Germany is trying to spur growth again, but is also scared of the impending shrinking of their skilled engineer pool. They still have a pretty extensive social safety net, and pretty high taxes, but not anywhere close to Sweden’s burden. They rely heavily on exports, and manufacturing. Bonus points for: having the biggest economy in Europe, and having the highest  GDP per capita (even higher than the US, good on you!), having the smallest government deficit, AND having the highest growth than most of Europe, even though their growth rate is slowing a little.

Good job Germany, you go. I will not be judging you for your awkward weird phase back in middle school (AKA the Holocaust and Nazis). 

 

Shout Out to Finals

This finals week is a little weird for me, because I’ll have had 6 full days to study before my 1 exam on Friday, and 2 exams on Monday. I am still feeling the stress though, and when I get stressed, I start thinking about really weird things.

This week’s theme is things in my life that don’t get nearly enough praise for just existing. Here’s a list of things that’s been helping me through this odd week:

1. Rain boots.

Rain boots are so awesome. It miserable outside all of Monday and Tuesday, and I got to wear my bad-ass boots all around campus. These things are literally vehicles allowing you to walk in any kind of terrain. On my way to Kent, I walked in all sorts of mud, with no repercussions to my outfit whatsoever. 4-inch puddles? Whatever. Plus, mine specifically are super cute, and I got them at Target, so I mean, bonus points there too.

2. Schaefer’s White Board Room

photo-4I don’t know about you, but I’ve used a LOT of white boards around campus for the past two years. You wouldn’t think this, but there’s a lot of variety of quality as well. Some boards (like the one on the second floor in the very back study room) are impossible to erase all the way, and have a really weird texture. It makes you want to stop studying for the sole purpose of not having to use that weird board anymore. Others are pretty average. But this one, holy crap. I’m pretty sure it’s new or something, because it is so smooth. Which maybe wouldn’t make a huge difference, but I was only going to go through half of my micro notes today, and BAM, I did all of them. Add to that the fact that there are already markers in this room for you to use (some of them even have a ton of ink in them still!), the fact that the tables in this room are ALSO white boards (with chairs included), I don’t know why I don’t spend the majority of my time in this room.

3. M&Ms. 

Because who doesn’t love that nice pick-me-up walk over to the grind to drown yourself in your own personal comfort food. Mine just happens to be the best candy created: Dark Chocolate Mint M&Ms. Plus they’re only 95 cents. That’s 4 cents less than R Kelly’s sheets, people.

4. The free-food lady in the library.

Literally as I was writing this, a woman came around the library with candy and cookies in a laundry basket and let us pick whatever we wanted. She knows what’s up. Best librarian award goes to you, ma’am.

5. Daily Odd Compliments.

I was bored out of my mind last night at work, and I found this website with little sayings that are supposed to make someone feel better about themselves, but could also creep you out a little: dailyoddcompliment.tumblr.com. I was laughing out loud at my computer screen. It was awesome, and I would totally say any one of these to my significant other.

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6. The river. 

 Even if you’re coming back from the library at 2 AM, brain dead and ready to collapse, rest assured, passing the river will instantly calm you. I don’t think people realize that the views here are SPECTACULAR. Added bonus: sometimes you see nature in action. One time, it was around 1 AM on a random Tuesday, and I was all alone walking past the pond. I saw a heron just chilling in the pond, doing it’s thing. We had a moment.

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7. My friends. 

Yeah, it’s corny, but we’re pretty awesome. We dance when there’s not music on, laugh uncontrollably about nothing, make fun of each other to no end, eat copious amounts of food, and are completely content with laying in grass in silence for hours. So yeah, that’s fun.

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Scavenger Hunt: Done, Thank God.

Amanda and I just finished the scavenger hunt, big thanks to everyone who helped us (which was a lot of people). We’ll post all our clues later!

If anything, this scavenger hunt made me realize that I cannot do math by myself, especially under a time limit.

And that math majors are super nice and always willing to help, even if you ask them a random calc II question in the middle of the green bean.

Unrelated to anything ever

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It’s the last Thursday of classes, and I only have one class left for the semester, which thankfully is FOM. I’ll be on the other coast next semester at California State to fulfill ELAW, so I won’t be back on the river for something like 8 months.

I’m the type of person to embrace change, but dang, I will really miss the river and this campus.

Procrastination

Okay so I have this Comparative Economic Systems final in 13 days. It’s 25% of my grade, and cumulative. I basically have to know everything about capitalism, socialism, and the economic framework and history of 7 countries to the point where I could compare and contrast any aspect of them with any other country.

So instead of starting to study the insurmountable amount of information I’m required to know, or finding more clues for the scavenger hunt, I’m just going to prove that thing we talked about in class on Monday.

Using the definition of limit given, prove:

lim (x→0) x² = 0

lim(x→17) x² = 17²
The definition of limit as given before in class is: (∀ε>0)(∃δ>0) such that if 0<|x-a|<δ then |f(x) – L|<ε.
We’ll start with lim (x→0) x² = 0. First, let’s define some terms/match them up with the definition of a limit.
f(x) = 
a = 0
L = 0.
So based on the definition, if 0<|x|<δ, then |x²|<ε. Since the definition says that this definition must work for all ε>0, we just need to choose one δ that makes this statement true. If δ ≥0, this statement works, since x is approaching 0.
0<|x|<1, then |0-0|<ε, which is true because ε>0.
For lim(x→17) x² = 17²,
f(x) = 
a = 17
L = 17².
Based on the definition, if 0<|x-17|<δ then |x² – 17² |<ε.
Adding 17 to both sides, we get that if -17<x<17, then |x² – 17² |<ε, which is true, because ε must be greater than 0. No matter what you put in for x, because of the absolute values, cannot be less than 0.
That’s really all I’ve got. I thought these would be much easier to prove since we’re given a definition to plug things into, but I don’t think I proved either of these. I’m ignoring the fact that I need to assume the hypothesis is true and focus on the conclusion, and I’ve lost sight of what needs to really be proved in this statement, since we’ve got δ and ε to prove.
Dang it. And I thought I was being productive.

Clue #1

So the first clue has something to do with marbles and distributions. Amanda figured out that it has something to do with Pascal’s triangle, where Pascal’s marble run distributes the marbles in a bell shaped curve.

Also when I googled Pascal’s Marble Run this picture came up:

Is this what we’re looking for??

How to Brighten Someone’s Day: FOM Edition.

Because who doesn’t want to compliment someone/pick someone up while showing off their knowledge of mathy math?

  • “I like you more than the power set of the power set of the real numbers.”
  • “My mood tends to turn into a strictly increasing function when I’m around you.”
  • “We relate better than the bijection relating the integers to the naturals.”
  • “I’ve been working on the induction of my life for a while now, are you my k+1?”
  • “I’m hoping the intersection between the two of us isn’t the empty set.”
  • “I’m contrapositive you’re the one for me.”

“Casual Thinking and Hardcore Drinking”

The above quote is one of the many reasons I love FOM/Casey. Anyways, Casey wanted us to work on proving a theorem as part of our homework this weekend, and I am 75% I figured it out last night.

Cantor-Bernstein-Schroeder Theorem: 

If ∃ injective functions f : A → B and g : B → A, then ∃ a bijection b: A → B.

Okay, so first of all we’re assuming that those two injections exist, and we’re trying to prove that those two injections mean that a bijection exists.

For f : A → to exist, there must be at least as many outputs as there are inputs so that f(a)=f(b) ⇒ a=b can be true. If there were more inputs than there were outputs, every input would not have a unique output, and would therefore not be an injection. So, based on this |A| ≥ |B|.

But, there exists another injection  g:B → A, which means that |B|≥|A| based on the same reasoning above.

For both of these functions to be injective, we need to combine |A|≥|B| and |B|≥|A|, which means that only way both injections could be true is if |A| = |B|.

For a function to be bijective in between two sets, they have to satisfy onto and one-to-one. For one-to-one, as said before, there needs to be at least as many inputs as outputs. There can be more outputs not mapped to with injectivity. But with onto, all outputs must be mapped to, so there must be at least as many inputs for all outputs. This means that for a bijection to exist, |A| must equal |B|.

Hey! We just proved that it does if there are two injections in existence!

I think this proves this, right? Word. Happy Saturday ya’ll.

Models – Micro ∩ FOM Edition

Blah blah blah, yes I talk about Micro a lot.

But these two classes have been overlapping like crazy to me lately. They’re both using ambiguous models that tend to confuse the crap out of me.

In micro, we’re talking about oligopolies. Oligopolies focus on the most important firms in a market. It’s pretty much in between perfect competition (with a lot of firms fighting for consumer money) and monopoly (with one big guy making production decisions), but it’s categorized more towards the monopoly end of the spectrum.

Like FOM, Micro uses a lot of models for more of a self-reference tool to see how economics works in theory, only to apply it to real world situations later. The three models we’re talking about right now are the Cournot Model, the Bertrand Model, and the Stakelberg Model

Kickin’ It With Cournot

With every economic (or other any field really) model, you’ve got to assume some things first. This model keeps it simple, and only keeps up with two firms in the market, which is called a duopoly. You’ve also got to assume that each extra unit of output produced costs the companies nothing (Marginal Cost = 0; but the model can compensate for positive, constant marginal coast if need be). The last assumption is stretching a little, but it’s crucial to make this model work. We need to imagine that each firm assumes that the other (it’s rival) will continue producing at it’s current level.

Basically this model shows how each firm will react to it’s rival’s output, through two reaction functions. Through brutal algebra, we can take a total demand function and marginal cost, and tell you how much each firm will produce, what price they’ll charge, and even how much money they’ll probably make out of it.

pic002This graph shows the stable equilibrium of a Cournot duopoly. At point E, there is no need to react any differently and revise output, because both firms are acting according to the other’s assumptions. This equilibrium is called the Nash equilibrium, named after a really cool (but crazy) math/econ dude. If you have not seen A Beautiful Mind, you need to.

Ballin’ Bertrand Model

The Bertrand Model is much simpler, and makes most of the same assumptions the Cournot model makes, but imagines that firms are reacting off of announced prices.

Say Firm 1 announces their price on a product. Firm 2 has three options. They can charge a higher price, and sell nothing. They can charge the same price, and split the market with Firm 1. OR, they can charge a lower price, and capture the whole market. Both firms obviously want to make the most amount of money, so both of them strive to undercut prices just low enough to make some money, but to be lower than their rivals price (think price matching at grocery stores).

This actually works against both of them. Both firms will end up cutting prices so low, that price will be set equal to the amount it took to make that one extra unit (MC), and the firms will split the market.

Silly firms.

Stackelberg Swag

The Stackelberg Model is probably the most realistic of all three models. It considers two models, but takes into consideration that one firm is more experienced than the other. We treat the follower’s output level as given, and substitute the follower’s reaction function into the market demand equation to find the leader’s output.

This makes sense intuitively, because the follower firm is really the only firm doing the reacting. The leader firm is the one making the big decisions.

The take away message from these three models is very simple: the more competition you have in a given market, the more output and lower prices you’ll get. Competition is a good thing, people. 

Anyways, these models all seem simple enough, but when put to the real-life application test, they seem to break apart. You can’t just assume that companies will act rationally.

I’m just thinking about all of the high-school algebra I have to work through to make any three of these models work for my Micro final.