A concise//explanation as to why the economy and your body need to be the same

Reading not only helps you think differently, but, on particularly clarifying occasions, it leads you to feel as though conceptual nerve endings have cohered within three pages.

Red doesn't scare me.

Mr. Chang–professor of Economics at the University of Cambridge–wittily organizes his selected arguments about capitalism into 23 "Things." Chapters progress by "Thing #"

Thing 1, Thing 2, Thing 3...

Each chapter name, or "Thing #," is followed by an argumentative sentence, summing the analyses that subsequently unfold. For instance, Mr. Chang includes the almost curt yet possibly alluring

Most people in rich countries are paid more than they should be (Thing 3)

Assume the worst about people and you get the worst (Thing 5)

Free-market policies rarely make poor countries rich (Thing 7)

More education in itself is not going to make a country richer (Thing 17)

Despite the fall of communism, we are still living in planned economies (Thing 19)

Kirkus Review says 23 Things "Shak[es] Economics 101 assumptions to the core." I feel grateful to have been suggested the book by a professor of Sociology 102.

I'm majoring in psychology, so I think a great deal about people. Naturally, I relate Chang's recurring points to my studies of the mind.

here we go.

Why the economy needs to be exactly like you

Scribbles of a purple sticky note, transposed:

General take-aways

-What is better for the economy regulates productivity for the long term.

-There hasn't been enough investing for the long-term (GM, a good e.g.; 195)

Redirect your attention to the hovering cookie. I did not include the pastry nor the recognizable "KS" of the Starbucks logo for aesthetic effect, but to visualize my point. If regulation benefits the economy, the human body can be used for comparison.

This cookie. This cookie was really good. I think it's a new type of those mass-produced Starbucks goodies, and it's good. (I don't say "mass-produced" with scorn, because how else could we feed all these people if we didn't mechanize some expedited easy-bake oven?!?)

Back to the cookie–"Toffeedoodle," it's called. I highly recommend it–a blend of cinnamon and sugar, using toffee pieces as the chocolate chunks consumers might be hankering after in a cookie. And these toffee pieces–they offer the salt. In concert with market enthusiasm for blends of sweet and salty, such as caramel sea salt and chocolate-covered pretzels, this Toffeedoodle pleases.

While reading the above description, you might feel hungry. After clicking on phrases like caramel sea salt and chocolate-covered pretzels, you might feel like you could eat an entire bag of halloween-sized Take 5 bars. But that wouldn't be good for you in the morning.

OF COURSE I wanted to eat all of it immediately; I watched the barista transfer the Toffeedoodle to her comrade, and listened for her comrade to rustle it into the patented paper bag. I wanted to get that instant gratification. and when I finished it, I wanted more.

But then I waited–sometimes, my body needs to catch up. What did I just do? I ate a cookie. Do I need another one? Could I even take another one? Maybe. 

As it turns out, I neither needed nor could take another one today.

What is regulating my cookie-eating activity here? My mind.

What regulates economy? Regulations.

In the words of Mr. Chang: "Sometimes regulations help business by limiting the ability of firms to engage in activities that bring them greater profits in the short run but ultimately destroy the common resource that all business firms need" (197).

So, in simple terms, if my mind did not regulate my cookie-eating behavior, you, blog-reader, would never have any cookies ever again.

On to Chang's examples. They avoid the mental image of Sarah Simon ransacking your cookie jars:

Fish farming: "regulating the intensity of fish farming may reduce the profits of individual fish farms but help the fish-farming industry as a whole by preserving the quality of water that all fish farms have to use."

Child labor: "it may be of interest of individual firms to employ children and lower their wage bills. However, a widespread use of child labor will lower the quality of the labor force in the longer run by stunting the physical and mental development of children."

THE 2008 FINANCIAL CRISIS: "Individual banks may benefit from lending more aggressively. But when all of them do the same, they may suffer in the end, as such lending behaviors may increase the chance of a systemic collapse."

Restricting banks and businesses may force them to act in the interest of the long-run. What do you to to preserve yourself for tomorrow?

My mama always said: honey, it's balance. And balance is easy to say, easy to recommend, easy to see the benefit of. But it's as if our survival depends on the ability to resist the flight of bodies and minds, and stay grounded. Restriction might bum out the individual, but it's in the collective interest:

So, Marx, why didn't the Soviets succeed? Because PEOPLE NEED TO FEEL LIKE THEY OWN SOMETHING. So let me have this cookie. Just regulate me in the act of eating it.

Communism has failed for the same reasons unregulated capitalism has ruined lives: These systems do not operate in accordance with the body. The former assumes us unselfish; the latter assumes us rational. We are neither one nor the other all the time. So how can an economy, a collective pooling of our interests, constantly be what we are not constantly, and succeed?

The only way humans would thrive in a completely centrally-planned or utterly unregulated economy would be if Dr. Walter Freeman II were resurrected and we all begged him for transorbital lobotomies.

The Dr. does have a sparkle in his eye.

for more information on what a transorbital lobotomy is, follow the embedded link. i recommend paying particular attention the first paragraph as well as the last 4 paragraphs of the page. the descriptions are graphic, though, so don't be eating cold cuts right now.

this is food's share of the blog post. see you soon. i promise there will be more food next time. and a special guest. if things go to plan.

trying to understand the economy with sarah simon

I have decided to write a post on the economy, given all this recent hubbub.

I'm like, what's going on?

ARE WE GOING TO CRASH

IS THIS 1929

IS THIS 2008

AM I GOING TO HAVE A JOB WHEN I GRADUATE COLLEGE?

I think a good thing to do–before we grab a paper bag and recreate the hyperventilation dramatized in sitcoms–is to try and understand the root of the issue.

For an informative video introduction, watch this: https://www.youtube.com/watch?v=h4Ns4ltUvfw

A SUMMARY

"real money and promises about money go back and forth; it's called CREDIT"

REMEMBER that teeter-totter analogy at the beginning of the video? Economically, we are all at the playground, riding that thing. In other words, we are contributing what we can to keep the economy going!

This is the glorious idea of untainted capitalism. 

The theory of capitalism is beautiful: it boasts an economic system in which everyone is giving money and taking money at different times, contributing to HOMEOSTASIS.

Like any ecosystem or body: IT'S A BALANCING ACT. You sleep and you are awake; you give money and you receive money.

Ever hear that capitalistic axiom, "you gotta spend money to make money?"

The idea is, you need to be out in order to be in.

THINK OF YOUR MOODS: could you ever feel AS HAPPY AS YOU DO SEEING SARAH POSTED ON HER BLOG TODAY if you didn't experience the despair you do WHEN SARAH DOESN'T POST?

Similar to capitalistic theory, you can't know happiness without sadness.

~~i declare my narcissistic episode done now~~

Given this exhaustive theoretical description, I wish to never hear an uninformed rebuff of capitalism. Capitalism promotes ideas we all ought to remind ourselves of, such as BALANCE.

but you don't have to show it off all the time.

Keep balance on the mind as we teeter.

(1) FIRST WAY A CAPITALISTIC ECONOMY OSCILLATES: HOUSE-BUYING

People buy houses and want to live in them as soon as possible. However, most house buyers can't possibly pay the entire price of the house at one time, so they set up a deal with the bank (which owns the house) also known as a mortgage or IOU.

IOU is literally "I owe you." Haha.

The mortgage is created when the bank pays the balance on the house that the house buyers did not pay. Therefore, the house buyers now owe the bank money.

Mortgages allow house buyers to pay back what the bank loaned out over a period of time.

For many buyers, this is a sustainable method of payment. 

Having the money to loan out is called DEPOSITORY BANKING, because banks need large sums, or deposits of money, in order to lend money.

But what do the banks get out of this? 

When entering into a mortgage, you agree to interest on that mortgage, or little fixed sums that you pay back to the bank in addition to the original amount that is owed (i.e. the price of the house). This goes back to the idea of balance: You lucky house-buyer take money now, but are expected to pay that–and then some–later.

The teeter-totter: In the long run, banks receive more money than they lent out. To make money, you must spend money.

(2) SECOND WAY A CAPITALISTIC ECONOMY OSCILLATES: BUSINESSES

People have ideas and think they're so good that they want to make money off of their ideas.

bet you haven't seen a meme in a while.

To make money, these innovative people start businesses. But to start a business–invest in a big capitalistic endeavor much like buying a house–you have to make promises.

The promises business starters make are similar to the promises house buyers make. As a bank invests in a house, expecting the house-buyer to pay back the remaining sum and then some more through a mortgage, an investor invests in a person's idea for a business, expecting to share in that innovator's anticipated profit.

Let's pretend I am trying to sell a new Toothpaste that I believe is superior to both Crest and Colgate.

haha, the SECOND meme you have seen it a while. it's a productive day for you.

The above meme illustrates the complex, world-bending issue many tooth-enthusiasts face. My product, TeethPaste, however, will eliminate the problem; it is both grammatically correct ("tooth" paste is singular–what's with that?) and effective at eliminating bad breath.

"I'll make money soon with TeethPaste! But hey, in order to get started and promote my product, I need money from you, dear investor. If you fund me now, I'll promise to reimburse you and then some with the profit I'll eventually reap." 

The promise I make as an advocate of TeethPaste is called a security. You invest in me now, and I secure you hold on future profit.

TO QUICKLY SUMMARIZE

DEPOSITORY BANKS (house-buyer deals): SELL MONEY FOR PROMISES
I will give you money now and you promise to return it and more to me later.

INVESTMENT BANKS (business deals): SELL PROMISES FOR MONEY
I will promise you a percentage of my company's profit if you give me money now.

This all seems orderly and good. So what's the big deal? What's the controversy of capitalism?

In 1999, the GLASS-STEGALL ACT, which separated Depository from Investment Banks, was repealed and replaced by the fancy-shmancy "Financial Service Modernization Act"

"This connected depository activities with investment activities"
oh yeah, cuz we're modern now and everything

EVENTS THAT FOLLOWED

MORTGAGES were now sold to investors, WHO EXPECTED TO MAKE MONEY ON WHAT ONLY THE DEPOSITORY BANKS USED TO BE ABLE TO: "mortgage-backed securities"

THE GOVERNMENT started helping people buy houses, creating the "housing boom"

The BOOM, or rapid increase in house sales, involved people who normally wouldn't have been allowed to purchase houses suddenly purchasing houses.

To be allowed to buy a house, one usually went through background checks. In the case of faulty credit score, low income, or whatever indicator that pointed to the risk the person not being able to pay his or her mortgage, some were barred from house-buying.

During the boom, LESS ATTENTION was given to background checks, so people who were very likely to NEVER BE ABLE TO PAY THEIR MORTGAGE IN FULL were expected to.

Why were these risky investments allowed?

Quick money for investors. 

Since demand for houses increased during the boom, the supply, along with the price, of houses increased. Investors saw this as an opportunity to profit off a lucrative market.

But when there's an up, there's always a–

Recall Balance.

As you probably expected, with all these risky investments made in doubtful mortgage deals, people defaulted, or failed to pay back on their loans.

When people default on their mortgages, their houses foreclose. When foreclosure really picked up following the boom, there were too many houses and not enough people to live in them. So, house price drops. The supply of fancy houses is exceeding the demand of fancy houses.

Now, houses suddenly became not worth as much as their corresponding LONG-TERM mortgage payments (PEOPLE COULDN'T PAY BACK THEIR PROMISES) so the banks tried to quell investors' woes by using their own deposits.

its deposits?

THE MONEY YOU AND I KEEP IN OUR BANKS THAT WE THINK IS SO SAFE AND CUDDLY IS USED FOR THINGS

I used to think that the money I kept in my bank account went untouched. But no honey, that isn't the case. We keep money in the bank for beautiful capitalism–spending money to make money. The price you pay for keeping your money safe is the bank's ability to use it.

No wonder when the economy goes up, you gain a little extra money in your account. But when it goes down, you lose some.

So, what happened in the 2008 financial crisis? The banks really had to use its deposits to pay back private investors who muddled up the capitalistic theory in order to make quick money and get rich.

Now i sound as cynical as my father. But that's what happened.

My father's pretty wise, I think. I make fun of hi for being a geezer but he's pretty keen on these subjects.

In recovery from economic failure, what happens? The government holds a lot of responsibility:

help banks, investors, or people?

"How do we fix this, and restore responsible balance between money and promises?"

TeethPaste.

P.S. many of these concepts can be hard to understand; I know I don't fully understand them; here's another video that may be of some financial aid:

https://www.youtube.com/watch?v=N9YLta5Tr2A