China and America, Yuan and Dollar: The Saga Keep Continues

Few weeks ago, Timothy Geithner has come to visit China for, ehmm, I called it a concert, Hu Jintao listening, sounds like an old song. Sounds like Beatles:
"...
Uncle Sam comes to China
Speaking words of wisdom , let it float.
Let it float, let it float.
This will be an answer, Let it float
Let it float, let it float,
Whisper words of wisdom , let it float."

Adapted from Let It Be (The Beatles), click here for the original lyrics

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S&D: Now, I feel stupid

Okay, we're all (economics student) must know about Econ 101, Principle of Economics. I assure we met supply and demand (S&D) for the first time on this class. I got A, as I remember, but facing these two questions I feel like an idiot:

Question 1: What would happen to demand for the tea, if there was a health scare regarding coffee?

and more though one,

Question 2: A survey shows that on average 100 people go to the movies when the price is $6 and 300 people go when the price is $9. Does this violate the laws of supply and demand?

Thank you Prof. Scott you awaking me from "A" mark illusion. Now, i realize how useful "other things hold equals". Yeah, S&D are complicated. Maybe I must consider to took Econ 101 again. Sigh

But, i hope you (reader) have a better answer than me.

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Are Our Humanities Diminishing Too?

The most fundamental concept of neo-classical era is marginality. Marginal concept lead us to understand what know we called it the law of diminishing marginal return. It happen on many occasion. The most simple example is on utility function. Our marginal utility are diminished along addition of utility value (classical evidence are the utility of a glass of water).

Few weeks ago, I just finished reading The Lamb and The Fuhrer (Ravi Zacharias). A quotation on this book obsessing my mind.

"The death of one person will lead us on deep sadness, but death of one hundred persons was no more than statistics" (Unknown, Germany)

Seems harsh, but poorly sometimes I feel that statement may be a truth. How about you?

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Summer Reading Club

I recommend a list of books for this holiday:

-Undercover Economist. Tim Harford
-Freakonomics. Steven Levitt
-Why England Lose. Simon Kuper and Stefan Szymanski
-Mendobrak Sentralisme Ekonomi. Rizal Mallarangeng
-Pelaku Berkisah. Thee Kian Wie
-Asas Moral Politik. Ian Saphiro

and for more religious session:

-The Lamb and the Fuhrer. Ravi Zacharias

Most of them can be found on Amazon.com and Gramedia.com, but nevermind, just simply use the almighty Google.

Feel cheapo? Try Gigapedia . But, I won't recommended it.

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Why Ibra Move? A Rationale of Footballer

This summer transfer was shocked. Surprisingly, Samuel Eto'o (plus 48 million euro) has been part of exchange to release Ibrahimovic from Inter. It was a huge number. But, I more interested on more personal effect.
Did you now that Samuel Eto'o will get paid around 10-11 million euro per year, but Zlatan poorly can't get more than he get in Inter (9 million euro)?. Are Zlatan irrational?, Are he solely pay attention on Barca's prestige and achievement, thus sacrifice his wage? (FYI: Zlatan before this transfer was considering to move because his negotiation about renewing contract value, including wages, was in deadlock)

An article from BOLA have a good answer.

"..Notes that the Swedish striker got higher take home pay, than the Cameroonian striker...Why? Income tax cut rate on La Liga is only 23% but in Serie-A it is about 43%. So, Eto'o will get 6.27 million euro in real and Zlatan can take 6,93 million euro after tax adjusment."

For this terms, I can say that Ibra point out rationale choice. He looked indifferent on nominal wages, but not after tax treatment. Maybe, that would be the same reason for Kaka and C.Ronaldo. Who knows? But, it was interesting if you remember my previous post.

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Cheapest Transportation

Baru saja kigendeng menempuh jarak 445 km menggunakan kereta api Gumarang* (kelas bisnis) menuju rumahnya yang sudah 6 bulan ditinggalkan. Dengan ongkos Rp 70,000, duduklah kigendeng diantara ratusan orang lain yang duduk di kursi masing-masing. Masing-masing? Tidak. Terlihat pemandangan beberapa orang duduk di lantai beralaskan koran. Apakah mereka tidak kebagian kursi? Kenapa bisa? Pertanyaan itu terjawab 30 menit setelah kereta berjalan.

Kondektur datang mengecek tiket penumpang. Saat melewati salah satu orang (sebut oknum A) yang tidur di jalan , sang penumpang memberikan uang RP 15.000 langsung ke kantong pak kondektur, sambil berkata " Telu (bahasa indonesia: tiga) ya mas". Dan kondektur berlalu.

Wow, Rp 15.000 untuk 3 orang. Seorang hanya membayar Rp 5.000! Mengapa kondektur itu mau? Kenapa saya harus bayar tambahan Rp 65.000 untuk sebuah bangku?

Dalam tiap gerbong ada sekitar 10 orang yang berperilaku seperti oknum A. Kereta Gumarang terdiri dari 7 gerbong kelas bisnis dan 2 gerbong eksekutif. Fenomena itu (sepanjang pengamatan kigendeng) hanya terjadi di kelas bisnis. Maka ada sekitar 70 orang oknum A. artinya Sang kondektur mengantongi 70*Rp.5000 = Rp.350.000 dalam satu perjalanan. Gumarang memang beroperasi tiap hari (tapi pasti sang kondektur tidak tiap hari). Bayangkan jika sang kondektur bekerja tiap hari maka ia mendapat tambahan sebulan sebesar Rp.350.000*30 = Rp 10.500.00 (tentu asumsi kondektur tidak diganti).

Sang oknum A dan kondektur better off , artinya tidak terjadi market efficiency di sini. Memang, masalah ini lebih ke arah masalah lemahnya aturan tapi perlu dicatat hal sebagai evaluasi tingkat upah pegawai kereta api. Saya pun merasa rugi dalam arti harus mengeluarkan biaya yang besar padhal fasilitas tidak jauh berbeda. Perlu paduan insentif dan disinsentif bagi pihak konsumen dan petugas yang berpeluang memanfaatkan lemahnya sistem kontrol di dunia kereta api Indonesia.

*KA Gumarang adalah kereta dengan trayek Jakarta-Surabaya

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The Economics of Terrorism

Terror Incorporated!

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Menu Cost? Use Blackboard

In the short-run (spesifically on classical perspective), we know that firms face sticky price. Simply, product price fluctuation must be less than inflation (which is change everyday). Why? We learn one of the factor is menu cost. Firms can't instantly change the price because they must add additional cost to print out new menu list, updating menus, price lists, brochures, and other materials when prices change in an economy (this example precisely happen on resaturant). It's relevant? My answer, bigger the size, of a firms this assumption more close to reality. But, in small firms situation, blackboard ought to be an answer.



All you need no more than a set of chalk and an eraser.

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Menjawab Peran Pemerintah

Apakah pemerintah perlu campur tangan?

Tentu kita sudah mengenal berbagai tanggapan atas pertanyaan ini lewat ekonom-ekonom besar macam Adam Smith, David Ricardo, Keynes hingga Milton Friedman. Namun, kali ini tidak ada salahnya memberikan kesempatan bagi ruang intelektual kita, menyimak tanggapan Abraham Lincoln (mantan presiden Amerikat Serikat), seperti yang dikutipkan di salah satu pidatonya pada 1 Juli 1854:

Sasaran sah pemerintahan adalah "melakukan untuk rakyat apa yang perlu dilakukan, tetapi mereka sendiri dengan upaya perorangan, tidak bisa melakukannya sama sekali atau melakukan dengan cukup baik untuk mereka sendiri" ... Dari sini tampak bahwa kalau semua orang itu adil, pemerintah masih diperlukan sedikit, meskipun tidak begitu banyak.

Sebuah jawaban filosofis yang kental semangat liberalisme dari seorang abolisionis yang cinta damai. Tidak lebih buruk dari komentar ekonom-ekonom di atas.

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After The Election

First, let me congratulate our new (not officialy announced yet, in waiting KPU's calculation) president dan his vice, Susilo Bambang Yudhoyono and Boediono,Phd. In believe, that it must be the first time we had both "Doctor" to lead our nation.

Yes, it was incumbent winning, but it still interesting to predict who will take charge on cabinet specially on economic area. Given inflation rate yoy (June 2009) 3,65% , appreciation on exchange rate, that seems to keep going on, and positive signal from financial market (reflected on IHSG), we just can hope this must be our chance to bounce back our economy. Simply by got right man (or woman) at the right place.

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When economist listen to MP3

One ordinary day, kigendengwaras (yes, it's me), the drunken economist, listen a list of songs. While he enjoy the music, his economist instinc just come to realize that how these songs are told so much about economics. On half insanity, let us enter our (beloved) young economist thought:

Rolling Stones: "You can't always get what you want" -- Okay that's why we called it trade-off

Bon Jovi: "Bad Medicine" -- We talk about quota, subsidies, tariff, and dumping isn't it

The Clash: "Career opportunities" -- Definetly, we talk about opportunity cost

U2 : "Stuck in a moment You can't get out of" -- remember on Great Depression on '30s, you need "intervention"

Michael Bubble: "Everything" -- Ouhh, that the answer for What economics can explain about?

for last,
Cindy Cenora: "Aku Cinta Rupiah" -- Beware! Neo-Protectionism..maybe this song inspire China on Yuan policy..

That's why I love music an economics. Sadly, I learn that I also face indifference curve, it means I couldn't listen to the musics along day, I must sacrifice my time to listen my teacher..

nb: I indebted to Prof Daniel S. Hamermesh for his inspiration that Economics is Everywhere

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Consider this before you go abroad for holiday

Update: my friend Rangga Cipta remind me that the list could be a good evidence for Japan's dumping policy.

Update.2: an article taken from Kompas

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