Thursday, December 24, 2009

The Conscience of a Conservative

What is a conservative? I don't think I am a conservative but I sometimes wonder what the idea of a conservative is like. Let me tell you about it:

Longman dictionary says that a conservative means a person who dislikes changes. My definition of a conservative is a little different: Generally, a conservative has three principles of behavior, or beliefs.

(1) To love his or her own culture, custom and tradition

That's natural to what is called a conservative. There's always such a person no matter which part of the world he or she lives in. Such a person always says that he or she loves and tries to protect his or her own tradition.

(2) To be tolerant

When you meet someone who doesn't agree with you, if you blame him or her, you are not a conservative in my definition.

What a conservative is like is tolerance for disagreement or misunderstanding. I know if you are hard for someone to understand you feel bad with him or her. But try to keep calm and to listen to him or her because someone who doesn't agree with you probably has a different point of view from you that might sometimes help you broaden your outlook. (It is difficult to keep calm when you are harshly blamed. That's our nature!)

A conservative is basically not a violent one, rather a gentle and kind one in this way.

(3) To know that changes are sometimes needed

"Change to remain the same!" Ichiro Ozawa, a politician of the Democratic Party, now a ruling party in Japan, likes this phrase. Ozawa has been considered to be and called a neoconservative, who believes the power and dynamism of freedom. I like this phrase too.

When we see the world in which we live changing fast, we should not stick to our own opinion or idea. We should first rather learn how the world is changing and what is changing in the world. And then if we feel the need to change the way in which we behave due to changing social and economic surroundings, we should try to change our idea, or if needed, ourselves to remain the same as what we are and how we live on.

Change is not always a good choice, though. We should think of the effect of the change we make on our life and society. I know it's a difficult task. It's not a simple matter of cost-benefit analysis. It can be said that it's a great decision to make a change in our present life and society.

Friday, December 18, 2009

The Peter Principle

It's very interesting! The Peter Principle says that the less productive a worker, the more likely will she succeed.

...There are, though, perhaps more basic messages here. Competition needn’t necessarily yield optimum outcomes; “survival of the fittest” mightn’t be the most efficient principle. And the organization of corporate hierarchies might be inefficient, not (just) from heterodox perspectives, but from the perspective of conventional neoclassical economic theory itself.

Now might be the time for us to study such a kind of economics; Just before, Koizumi and Takenaka tried to conduct an economic policy of a traditional neoclassical version of competition and privatization(Reaganomics), in order to boost up the stagnant Japanese economy.

Recently a lot of people have doubt on an attempt to make such a policy because the Japanese economy is still stagnant. The Peter Principle would not be a key solution to the difficult problem of the Japanese economy, but greatly influence the ideas of political and business leaders.

Thursday, December 17, 2009


Paul A. Samuelson died. (The picture is from NY times.)
When I was a freshman at college, I took a course of international economics. The lecturer introduced one econ textbook to the students. That was the Samuelson's economics. Of course, it was the one written with Nordhaus and soon I dropped from this course because I felt it was enough to read it.

I can't talk about Samuelson and his work because I don't know what he really did in economics. However, he is so famous in the area of economics that most of people should find his name in any introductory econ textbook.
Of course, Japanese economists of older generation studied economics with his textbook and if they were asked who wrote a great econ text, they would definitely answer "it's Samuelson". He is certainly a brand name in Japan too and influenced them so greatly. Unfortunately, I have never read his economics (I've read Mankiw's one instead.) but I heard most of econ textbooks have followed his style of economics by introducing micro, and then macroeconomics.

Recently, I have been wondering what's the true meaning of the distinction between micro and macroecon. Well, I think it's easier for econ teachers to teach beginners economics. But as an econ beginner I struggled to understand what econ is like; Micro seems very different from macro in intro econ textbooks. To be precise, Keynes theory(AD-AS analysis) seems different from New Classical one(Demand-supply diagram).
I know Barro of Harvard tried to integrate them into one. I am not somewhat happy with the Barro's style of economics and I cannot give alternative version of econ(it's really a big task!), but I would say there's no more need than to make the distinction.

I would say macroeconomics should be described as an applied microeconomics and this trend has been already accepted. Why have many of intro econ textbooks still followed an old-fashioned Samuelson's style of econ text? It might be a stable equilibrium of econ style.

Tuesday, December 15, 2009

Tax Cut Or Spending?

This is one of the conventional themes in macroeconomics and most of students in introductory economics class may study which policy is more effective on the stagnant economy, tax cut or government spending.

As introductory macroeconomics(say, the Keynesian Cross) says, government spending is more influential, more likely to increase the national income(GDP).

The reason is quite simple: government does a debt-finance.

Imagine two people earn income of $100 a day, buy food from each other at a cost of $10 and the income tax imposed is $10. Thus each of them has $90 in hand and spends $10 on food a day.

In this economy, the total income (the sum of two people's incomes) is $180.

Due to economic stagnation, one of them becomes unemployed and earns $0 a day. If the government cuts income tax (-$10) to stimulate the economy, the employed will have more(she has now $100 in hand a day) but the unemployed will not. So the unemployed has no food to eat this day. (In this case the unemployed can earn money to sell food to the employed, because both eat nothing.)

In this tax-cut economy, the total income is $100.

Alternatively, if the government provides the unemployed with a job that makes him earn $10 a day, that is, increases the government spending, then the unemployed will get the benefit(he has now $10 a day in hand) but the employed will not (her income remains $90 in hand) .

In such a spending economy, the total income is $100. The same! This is not more effective than tax cut.

The reason is in government-spending economy, she is still imposed income tax of $10. The point is, in a tax-cut economy, income distribution is done through the exchange from each other, whereas in a spending economy through the government that just takes $10 from the employed and gives $10 to the unemployed.

If there were no income tax on her(government made a policy of debt-finance) in a spending economy, the total income would be $110 and thus more effective than tax cut policy (of course, later a tax increase will come). Keynesian policy is always a debt-finance policy!

Wednesday, December 09, 2009

Money and Life

I read a comment from one of the readers of Yomiuri Shimbun, a major newspaper in Japan, and it caught my eye:

Yomiuri shimbun, 09/12/2009

A letter from a mother in her 40s says,

"I have two children, one is an elementary school student, the other a junior high school student. The older one is not good at plugging at study, but quick in understanding, and began to go to cram school and the grades are going up.

We need more money in education for my children. My husband's income was always low and due to recent recession, it is even lower. Less overwork and work on holiday made him stay longer at home. My husband is a good man and kind to our children, but his income is low!

I am working part-time and have a lot to do for children, but I am so nervous that our low income may be going to give them few accesses to good opportunities. Looking at his face, I feel hatred for him. I am worried that our conjugal life may be broken and may do our children harm. First of all, I feel so sad that I cannot give my husband a smile."
(Translated by Taro)

During the economic stagnation, people feel so nervous and disappointed at their future life. "Money can't buy happiness", some people say, but nobody disagrees that money is very important for life. What is really needed for good life? Money! Probably, but probably not at the same time.

Money can buy good education and good access to good career and good life. That's why many students go to the US to get MA or PhD at higher-ranked university. However, they know that school may not guarantee happy life with good partner and children. They feel after graduation they may be unemployed or poor or alone all their life.

Some economists may say that economics gives a good hint on what and how to do for living a good life, but I don't know it clearly. I know while many people are seeking for better and happier life, very few people really know what and how to do for it.

Which is better for you in your life, a poor life with warm-hearted partner or a rich life with a cold-blooded partner? As Milton Friedman says, "free to choose!". The point is what you need most all your life. If you need a stable life, you should choose to work for government, and if you need an unstable but, if you are lucky and good at business, a rich life, you should choose to become a business entrepreneur.

If you think happiness is to put up with any hardship both for your good life and for your children's life, you should choose a partner who agrees with you. If you think happiness is not to be miserable or not to be poor, you should check your partner's bank account and payroll before choosing him or her as a lifelong partner. Anyway, free to choose, right!?

Tuesday, December 08, 2009

When Was Japan Born?

I think if you drop in at this blog, you will probably be one who may be interested in Japan or other Asian countries. I happened to see the Japan page, NY times, I knew that I hadn't known
the birth(or independence) year of Japan. Here's the page;

Japan at a Glance

Official Name: Japan

Capital: Tokyo (Current local time)

Government Type: Constitutional monarchy with a parliamentary government

Chief of State: Emperor Akihito represented by Yukio Hatoyama, prime minister

Population: 127.43 million

Area: 145,902 square miles; slightly smaller than California

GDP Per Capita: $33,100

Year of Independence: 660 B.C.

Since I saw "Year of Independence" here, I haven't known what year Japan became dependent. In fact I can't remember if I learned at school when Japan appeared in the world history. At the beginning of the histry class that most Japanese people have, the origin of the Old World is first introduced and after that the dawn of Japan is introduced, but never is that Japan was born in 660 B.C. taught! We just learned that early Japanese used stone tool at that age.

What's "the Year of Independence, 660 B.C."? To be sure, it comes from part of the Nihon Shoki, and Wiki says,

"Most scholars agree that the purported founding date of Japan (660 BC) and the earliest emperors of Japan are legendary or mythical."