Inspiration from Economics

While I was working on my Econ Portfolio, I realized that I have been influenced by studying Economics in different ways.

As an art student, I tend to find inspirations from various sources here and there from news, magazines, exhibitions. However, I never knew that Economics could influence me in doing my art work. After hearing comments from interviewers from the National Portfolio Day held in New York, I was trying to create another piece regarding my Korean background. Then I related my thoughts to Protectionism, which we even had a debate session in class. I thought that I could create a piece demonstrating Korea’s trade with other countries. After such brainstorming, I could finish a piece illustrating Korea’s acceptance of foreign cultures and protection of its traditional culture by using Korean traditional paper and pieces of American goods at the same time!

In the art schools I am applying, they mostly focus on art but I think it is also very important to study other areas as well to expand my view to be more creative and imaginative in produce my own original art works. I think I have made a progress just by collaborating my knowledge of very different fields together.

Red Shirt and Yellow Shirt

http://www.nytimes.com/2010/04/19/world/asia/19thai.html?scp=2&sq=thailand&st=cse

Pro-government, ” yellow shirt” and anti-government, “red shirt” are creating more and more tension in Thailand. Thailand should quickly solve this problem because this conflict is bringing the economy spiral down. “Due to the political crisis, the economy may slip into contraction in the second quarter from the previous three months,” said David Cohen of Action Economics in Singapore.

The conflict between the Red Shirt and Yellow Shirt is a serious problem because it would decrese the number of tourists from foreign countries. Famous cities in Thailand, such as Bangkok and Phuket, are one of the world’s top tourist attracting cities. The Red Shirts are moving here and there in Bangkok, even ner the shoping district where many tourists go. If the protest continues, less tourists would visit Thailand because of the fear and fright that the tension that red shirts and the yellow shirts are creating. I was in Thailand about a month ago for Habitat for Humanity and that was during when the Red Shirt and Yellow Shirt were on their protest. Because the Red Shirt suddenly moved here and there in Bangkok, places we could visit were limited. We tried to stay away from the groups as much as possible. On top of the protest, the volcanic dust is interfering Eurpean tourists from going to Thailand. Europeans are one of the main visitors from foreign countries and if they are not able to go, even less people would visit Thailand.

The protests of Red Shirt an Yellow Shirt demonstrates decrease in AD.  Aggregate demand is the total expenditure on the national output at different values of the price level over a given period of time. An AD diagram looks like this on the bottom. As the output increases, there is a decrease in the price level.

However, in this case where there would be a recession due to decrease in the number of travellers in Thailand,  the AD diagram would shift demonstrate a recessionary gap.The area between Ypotential and Yequillibrium is the deflationary gap.

What I think is that the Red Shirts should stop trying to take away the throne of the king and try to live with the tradition. It would be hard to take the king down the throne by this protest anyway because they have had a king for a long time. Therefore, instead of brining the country to a disaster and leading into recession, the Red Shirts should give up trying to win over the king.

Earth week- Did paper saving work?

Last week, it was Earth week at our school. From monday through Friday, there were certain things we could not do, such as no food wasting or no eating meat. However, among the five days, I think no paper day was the most challenging day. I think this was the hardest challenge for other students too because we use a lot of papers. As students, papers are important source for us so there is an inelasticiy in demand for papers. Inelasticity means that one variable is unresponsive to changes in another.

However, the problem is that the majority of the students used all the papers they could not on the following day. Banning paper usage on a day triggered pent-up demand on the next day. Pent-up demand is when the demand for a service or product is unusually strong. Pent up demand is used by economists to describe the general public’s strong return to consumerism following a period of decreased spending. Some students displayed the behavior of pent-up demand and intentionally wasted excessive amount of papers on the following day. Because of these students, I don’t think “No Paper Day” brought any change in paper saving.

If the students had the incentive for saving papers, they might have cooperated better. For example, our school sometimes gives pizza for the class that did well in Spirit Days when we need to wear certain color of clothing for a day. Therefore, if our school made the No Paper Day like the spirit days we have and give a reward in return, I am sure that the students would activey participate in saving papers.

50,000 Travelers have no where to go

http://www.dailymail.co.uk/news/article-1268677/Iceland-volcano-50-000-Brits-stranded-abroad-volcano-ash-chaos-home-May.html

50,000 Britons are stranded abroad from volcanic ash that has covered their country. Many cannot go back home until next month. Some are staying at the airport, spending time on sleeping bags without any food supplement. British airways was putting extra flights from countries such as New York, Hong Kong, and Bangkok. However, it turned out to be that BA was selling extra seats at premium prices from airports where passengers remain stuck. 

This is a picture of Bangkok International Airport. As you can see, it is very crowded with Brits waiting to go back home. I can imagine how much chaos this is because I have been to this airport about a month ago for Habitat for Humanity trip.When I was at the airport, it was crowded with many people even though it was before the volcanic ash eruption. I can assume how much confusion is going on in the airport.

Many were left to sleep on cardboard mats after their money ran out because  airlines including Thai Airways – the country’s main carrier – declined to  offer them the hotel accommodation that must be provided under EU regulations. The travelers shouted ‘Tell us the truth!’ ‘Give us the information’ and ‘Get us out of  here’ and angrily gathered around the check-in desks.

Due to the irresponsible behaviors of Thai Airways, the demand for that airways would decrease in a long run. Thai Airways have been known for providing cheap and decent service but they seem to be providing cheap and unacceptable services to the homeless travelers.

Japanese economy faces great challenges

The first challenge the Japanese economy is facing is the decreasing productivity growth. From 1980s, Japan’s productivity growth gradually fell. While they have been recovering for a few decades, other countries like China and India grew fast. Japan should take an action for preventing deflation. Falling prices seem to help the Japanese citizens but actually it indicates that the citizens are not spending money. Spending no money does not help the economy.

Another challenge is the debt the Japanese government possesses. 45 percent of the government budget will be financed by new borrowing. It is important to also note that the Japanese population is aging, meaning that there will be more spending on health care. Therefore, the aging problem can be another challenge. However, some have a positive view for this situation because 95 percent of government debt is financed by Japanese savings. Unfortunately, this will only work is more women workforce and babies enter the economy.

Moreover, lack of risk-taking business culture is also a challenge that the Japanese economy is facing. Japanese individuals are not brave enough to express their ideas and share it. This led to Japan’s loss to South Korea in contracting with the United Arab Emirates but Japanese saw this as “taking too much competition.”

The last challenge Japan is facing is that financiers are very gloomy unlike the confident foreign policy advisers. This is very different from US and Europe where foreign policy officials are gloomy and economists being confident. The situation in Japan will only create discomfort where nobody is urging to bring a change.

Toyota: Climbing Rocky mountains

After not keeping 3 rules that it has made, Toyota is going through “tough road” to redeem itself. Safety, quality, and sales were the three factors that Toyota considered important. However, after recalls and recalls due to the safety and quality problems, it has been concluded that Toyota put sales as their most important factor in production. The CEO of Toyota, Akio Toyoda went to the US Congress and apologized in tears “for accidents and injuries involving its cars and acknowledged it had lost its way in its pursuit of growth.” Toyota, 73-years-old car company had to show tears to US Congress, a foreign congress for apology. I think this would have hurt Japan’s pride because they had to “bow” to US. However, the US seemed to have understood Mr. Toyoda’s deep apology.”He should have come forward earlier, but his sincere attitude was understood by the audience. I would guess the flow of negative news on Toyota has reached a peak,” Kazutaka Oshima, president of Rakuten Investment Management said.

What an affair

‘We no longer see a role for Tiger in our marketing efforts and have ended our relationship. We wish him all the best’

While athletes in Vancouver Olympic 2010 were striving their ways to make the best result they can, Tiger Woods made a public appearance to apologize for his affairs with a number of women. Although Wood’s long best friend Nike decided to continue supporting him, Gatorade ended the contract with Woods saying that they no longer see a role for Tiger in their marketing efforts. Gatorade is the third company that ended its relationship with Woods. AT&T and  Accenture previously cut their sponsorship deals. Gilette and Tag Heuer  also backed off from Woods. Overall, there was a decrease in quantity demanded for Woods and therefore price would have gone down. This diagram illustrates Wood’s situation now where quantity is deacreasing and price is decreasing as well.

Just a gold medal?

New York Times:Report: Games Impact “Marginally Positive” on Vancouver

Some view that Olympic is just an event that countries gather to enjoy competing against each other, but Olympic can be seen as a “Marginally Positive” tool which some countries are trying to benefit from.  On the other hand, others think that Olympic “has been mostly unaffected or minimally affected in a negative way.” Overall, the report finds “a very slight positive impact” on Vancouver by the lead-up to the games.

I think that Olympic definitely benefits an individual or a country rather than harming them. For example, it is predicted that  Kim Yu-na, an ice skater who won gold in figure skating with overall score of 228.56, will bring enormous economical benefit to Korea. Korea already loved Kim Yu-na even before the Olympics. She made great results in competitions such as Four Continents Figure Skating Championships, World Figure Skating, and Grand Prix Final even before the Olympics. From the top of my head, I can remember 7 commercials of her that I saw when I went to Korea for summer and winter breaks. Also, she appeared on tv shows or had her own charity ice skating show to raise money for the poor. However, now she won the Gold Medal in Figure Skating, I am expecting to see her 24/7  in Korea. It is estimated that Kim Yu-na earned about 800 mllion won and this has risen to at least 1.2 trillion won ahead of the ongoing Olympics through commercials and tv shows.

Moreover, it has been reported that Kim Yu-na will receive $1 million from Lloyds Insurance Company in England for breaking her preset record which was 207. Her Gold Medal is not just a medal. It will bring more “Marginal positive” outcome than expected. The world is now interested in Kim Yu-na, therefore gaining interest in Korea at the same time. I am excited to see changes that Yu-na will eventually bring.

Therefore, I think Yu-na’s gold medal will bring more demand for  Yu-na as well as Korea, creating a positive shift in a demand curve. The income for Yu-na Kim will increase and if people demand Yu-na from outside of the country, the income for Korea will increase as well.

Happiness shoos away heart disease

US researchers have discovered that happiness directly influences heart disease. They have found that people were at the highest risk of the disease when they were the most depressed and stressed. It can not be proven that happiness prevents heart disease but the researchers emphasized that people should try to enjoy their lives. The researchers also suggested that people should try to find happiness in daily lives but not wait for two weeks of vacation to have fun. The research indicated  that happier people have better sleeping patterns, suffer less stress, and are able to move on from distressful situations. I think one externality is decrease in productivity. First of all, because people will try to be happier, like shows as one of the examples, they will try to go to bed early. If people go to bed early, they will not be able to do their jobs done as much as before. Then they will not be able to be productive. Also, if people try to suffer less stress, they will seek for easier jobs and not work hard in order to gain less stress. People might be happier by not gaining much stress from work, but they will not be able to be productive. Overall, the externality for trying to be happy for all the time is a decrease in productivity. People will attempt on focusing too much on” being happy” that they will not be able to be productive in work or school.

http://news.bbc.co.uk/2/hi/health/8520549.stm

Toyota: Recalls after recalls

Due to the problems with the accelerator pedals on vehicles, Toyota is facing a serious recalls, which expanded to Europe and China. Because Toyota was originally known for good quality, the damage has been largest of all problems the company has faced over the century.The committee said sudden unintended acceleration in all Toyota vehicles had resulted in 19 deaths in the United States over the last decade. That is nearly twice the number of deaths associated with similar events in cars built by all other automakers combined. The Toyota vehicles had resulted in 19 deaths in the US over the last decade. This number is twice the number of deaths that has occurred with cars built by all other automakers. Therefore, Toyota temporarily stopped the production of several models that have been recalled. The chairnman of National Highway Transportation Safety Administration required Toyota to show the document when they first learned about safety defects to investigate and resolve them. In addition, the Ford Company said that it had stopped production of some vehicles in China because they used the same accelerator pedals. However, Toyota has showed that it is welcomes the criticisms and investigation because they think ensuring safety of customers and restoring confidence in them is very important.