All I really need to know I learned in Economics

            It occurred to me while practicing English with my nephew from Ukraine that not everyone has a taken a course in economics. 

            Try teaching an English learner the law of diminishing returns – it’s not exactly English basics.  Our biggest fear was that he would have to interpret an economics lecture as part of his final English exam.  Thankfully, it didn’t happen.

            Nevertheless, I gave him one of my old economics text books to brush up on economic theory.  For some reason he hasn’t taken me up on it since passing his exam.  He prefers John Grisham.  Sheesh!

            The theories of economics are actually quite interesting, never mind the horrendous formulas that prove these theories.  Economics can be broken down into simple concepts, which help explain so much about our world today.  In fact, economics is so basic, it can even be taught to children before they set foot into school.

Like a true nerdy parent, I’ve come up with my own economics lesson plan for young children.  Feel free to use these rudimentary lessons on your own children, if they are of age (and no, 40 is still not too old).  You can improvise, but the lessons would go something like this:

            Lesson #1: Why Do Toys Cost So Much?  Remember the dolly you’ve been saving up for the last three months, where every penny (I mean, nickel) from your allowance was put in your piggy bank so you could buy it at Christmas?  Well, the cost has gone up by $5 and you probably will have to save for one more month before we can go to the store and pick her up.  Don’t cry, this is a simple reality of life – it’s called INFLATION.

            Lesson #2: Why Can’t I Have Both?   I’m going to give you two choices, but you can only pick one because you only have one dollar to spend.  You can either have the candy, or you can have the toy.  You want the toy?  Okay, then you can’t have the candy – no, you can’t, and stop crying.  The candy is the OPPORTUNITY COST of spending the dollar on the toy.

Economics: it's so much better than playtime

            Lesson #3: When Cookies Hurt.  How much did you enjoy that first cookie?  You really enjoyed it, didn’t you?  Here’s another one – is it better than the first?  Here’s a third, how about this one – is it even better?  How about the fourth?  You like it even more?  Are you serious?  Oh, now your tummy hurts.  Okay, so what did we learn?  With each additional cookie, your overall enjoyment level diminishes.  In consumer and production theory, this is called THE LAW OF DIMINISHING RETURNS.

            Lesson #4: Where Does Money Come From? (For advanced learners)  Let’s say that you borrowed some money from your friend so that you could buy some candy at the store.  Your friend wants her money back tomorrow, but you get your allowance only in three days.  You know it’s wrong, but you go into Daddy’s wallet anyway and “borrow” some money to pay back your friend.  This is very bad, but governments do it all the time.  This is a form of MONETARY POLICY called QUANTITATIVE EASING.

            And that, my child, is the wonderful world of economics.  You still crying??

Technology creeping me out

            I started reading a book about the “creepiness” of today’s technologies.  Since I was using the non-technologically advanced method of reading a book by borrowing it from the library, I didn’t quite finish before it came due.  But I read enough to get the gist: technology is slowly eroding our privacy.

            In Technocreep: The surrender of privacy and the capitalization of intimacy, Thomas Keenan talks about some of the creepy issues resulting from new technology.  Take, for example, that Smart TV you just bought with the built-in camera.  Sounds like a novel idea, if you like to see over-sized images of your friends on Skype.  But it’s also relatively easy for a hacker to get into your TV and watch you from that camera.  Same goes for your smart phone, laptop or tablet.  There are websites now that show real-time videos from hacked laptops, where a new form of reality TV is occurring.  

And about that smart phone you own... There are now technologies that can monitor shoppers’ movements in malls, by setting up transmitters that collect the “pings” sent automatically from your cell phone.  This is a way to pick up on customer’s shopping patterns. While this may sound somewhat benign, I’m sure there are many other ways to track people with the built-in GPS in your phone.  The feature can be great when wondering why your spouse is late to pick you up, but imagine a stalker tracking your child’s whereabouts through his or her smart phone.

            Understandably, there are always safety issues that arise with new technologies.  But for young people, especially, it seems a little too easy for them to be lured into unsafe places, without even leaving the home.  Amanda Todd is a prime example of this, a young teenager from BC who was stalked online and black-mailed by a person in the Netherlands, eventually leading to her suicide. 

            It’s easy to be deceived on the Internet, much more so than in person.  We can keep our kids away from those on the street much easier than those lurking in chat rooms and other social media sites.

            I was always a little leery of Facebook and how much privacy you give up by participating, but I would feel a bit ostracized if I didn't have access to all my social contacts goings-on (yes, I spy on you through Facebook).  If I feel this way as an adult, imagine how a teenager must feel, when so much of their worth depends upon being accepted in social circles.

Private information on websites can potentially be used by anonymous people who want to cause you harm.  But it’s not only creeps on the Internet, it’s private companies, too.  Insurance companies are loving these new technologies.  They can monitor you like never before, and aren’t hesitant at looking on social media sites to find out anything they can to build a case against your claims.

            Keenan relates the example of a woman whose disability insurance was cancelled because her Facebook page showed pictures of her on a beach while suffering depression.  The insurance company concluded that she was having too good a time to be seriously depressed.

            It’s Big Brother monitoring like this that not only violates our privacy, but may also not tell the whole story.  That picture that your friends took of you doing a jig on a bar table without your pants on 10 years ago may not be the same person who is applying for a job today.  Yet that might be the first image that comes up when the company does a quick Internet search on you (and no, I'm not admitting to anything!)

            The author talks of a whole host of issues that could come up in the next few years, as people find new ways to invade your privacy, whether you participate in social media sites or not.  Google Glass is one such technology, where Google has invented a pair of glasses that serve as mini-computer and video camera that can record without you knowing it.

            According to the author, it won’t be long before facial recognition technology is so advanced that you’ll simply have to do a scan of someone with these glasses on, and you’ll know exactly who they are.  You’ll be able to do a quick online search to have all their background information at your fingertips (like that picture of them doing a jig at the bar 10 years ago).

            It’s one creepy technology I hope doesn’t become mainstream.

A conflict without end

           The crazy thing about the conflict in Ukraine is that no one could foresee it happening.  It was unpredictable.  Politically, there had always been a divide between the east and west, where the east was more pro-Russia, and the west, more pro-Europe, but it was never a source of violence.
           What started out as a peaceful protest against the rejection of closer ties with the EU has now evolved into a violent clash between citizens of the same country.

            Our eldest nephew from Ukraine graduated from a military high school in eastern Ukraine that is no longer functioning as a school.  He heard that it’s now housing pro-Russian rebel forces.  Some of his family in the city of Lugansk have been forced to flee their homes and business because of their political connections to a pro-western political party.  Others have been able to stay and now support the rebels. 

Some of the people we know in Ukraine are surprised by the public support for the rebels in the region which they control.  It may stand to reason that if your homes are shelled enough by the Ukrainian military, you will start to form hostility towards the government.  There are also strong economic ties to Russia in this region that many fear will be severed by signing an agreement with the EU.

            But it’s also been reported that the rebels have instituted a reign of terror in the eastern region, where those who disagree with their exploits are quickly dealt with.  One million refugees have fled the region, and those who are pro-Ukraine and still live there, are likely remaining silent.

            It’s difficult to know the truth with the propaganda being pushed by both sides.  What is clear is that Putin is in complete control of the Russian media, thereby holding control of the Russian public’s mind.  The view that the Ukrainian government and Western forces are perpetuating this conflict is a reality to most Russians.

            Our younger nephew had the misfortune of being sent to the front lines of the conflict one month ago.  The only way he could afford his university education was to attend a military college, where after he became obligated to serve in the military for five years.  He’s in his first year of service after graduating.  At the time, there was no way to foresee that he would ever be sent into a conflict zone. 

Our youngest nephew in the trenches in Ukraine.

For 45 days and nights, he spent his time in trenches, guarding a position that should have not seen any gunfire since the signing of a ceasefire agreement in September.  As the Ukrainian government is short on funds, the soldiers had to rely on nearby residents to supply them with their meals.   

During this time, he became well aware of the fact that they were not fighting against some home-grown Ukrainian militia.  They were fighting a well-supplied army with considerable expertise, one that was certainly receiving support from Russia.

            While we were extremely relieved to have him home again, it remains uncertain whether he will be sent back out to the front lines.  The conflict does not appear to be ending anytime soon.

            The new president of Ukraine finds himself in a very precarious position, pressured to push back against the rebels and instigate peace at the same time.  All of this while Ukraine’s economy continues its downward trend, a fundamental problem that lay the groundwork for the conflict to erupt in the first place.

            We may want Russia to suffer as well, here in the West, because of Putin’s exploits and what he has taken already from Ukraine.  But in the end, like all conflicts that begin over a political clash in views (this was about a trade agreement initially), the innocent will pay the price.  They have already.

            Most Ukrainians just want peace and to have a better life.  But this conflict will affect generations to come, whether peace is achieved in the near term or not.

           

When car buying goes bad

            I always tended to think of myself as a shrewd car-buyer enthusiast who knew how to spot deals: buy, sell, trade, swap and make a mint in the process.

            But I’ve been thinking of my track record more recently and it doesn’t look like I’ve shown much promise in my ability to wheel and deal.  Now I never thought myself as a good negotiator, but I thought I could at least spot a deal when I saw one.

            The problem is I like to be sold on what I’m buying.  I like someone to tell me all the good things about the vehicle before I buy to give me that feeling that I’m getting my money’s worth.  I also like cars too much to be objective.  You can throw out any leverage I might have when I start to drool over a newer (yes, never new) vehicle.

            And when you’re a teenager, it really doesn’t much matter what kind of car it is – you want it.  Who else would want a 1988 Pontiac Firefly with 200,000 kms?  To be clear, this kind of car was only meant to function until 150,000 kms.  But my Dad and I ponied up $2400 for this gem, and after its motor job, it did serve me well for another thousand kilometres.  Sadly, its life came to a tragic end one snowy October day.

            My next car was a step up: a 1991 Honda Accord.   Almost having completed my university degree, I jumped on this opportunity to own a real man’s sedan.  The person selling it got high marks for his presentation – he could’ve been a used car salesman.  And it was a nice looking car.  Now whether he neglected to mention it was a car from Quebec because he didn’t know about that, we’ll never know.  It wasn’t even an issue of rust; as you might know, out East they salt their roads like Laird arena fries.  It was an issue of basic reliability.  Normally you buy Hondas for this very reason, but this Honda, sadly, was a lemon of epic proportions.

            So after thousands in repairs, I finally got rid of the Honda and bought a used (of course!) 1997 Acura 1.6.  A very economical car with few issues.  My one solid buy.  Sadly, its life came to a tragic end one snowy October day.

            As I entered parenthood and abandoned my university-day ideals, I decided to be a real man and buy an SUV (used, of course!)  It was quite a step up for me, costing almost half the price of a new vehicle!  Still, I got persuaded to buy the car with the engine light on (they said they would fix it, which they did a couple weeks later) and paid the full $500 “service fee,” which I’ve since learned is a bit of a scam.  Little did I know at the time that the salesman was desperate to meet his quota for the month, and I was in the proverbial driver’s seat.  Lesson learned.

            But I’m not telling the whole story here.  One year earlier, I actually decided to throw away my manhood and buy a mini-van.  Just a short-term buy, mind you, one that I would buy and resell when we no longer needed the vehicle capacity to drive around relatives on a summer vacation. 

            It’s much easier said than done, to buy and sell a mini-van.  You see, mini-vans at the price range I was looking at aren’t really much to look at.  And they typically have some serious issues under the hood.  Add to this older owners who think their vans are worth a whole lot more than what they actually are, and it becomes a problem finding a deal.  After much deliberation and pointless haggling, I finally settled on a Honda Odyssey with tons of mileage that smelled like dog.  It was a fine driving machine.  But it caused me lots of stress, and when I sold it, three months later, the buyer got a heck of a deal (I guess I can’t really sell vehicles either).

            It’s one vehicle that should have come to an end one snowy October day.