Taking Shortcuts; A Good Thing?

Do you ever take shortcut way while you are driving to some place. My guess is that most of you do it, especially in Jakarta where traffic crowded oftenly. Surely, taking shortcut make you consume less time and gasoline. Most of the shortcut is not a main street. It could be a narrow street in the middle of public housing.

When traffic on a main street often get crowd someone will attempt find a shortcut way. And then when they find a shortcut, at the begining it give some credit because they drive more efficient. But then, the information is spreading symetricly and more people are taking shortcut. In the end that shortcut way become crowded. And that crowded way will spread into the another main street. That is clearly not a Pareto-Improvement. You can find numbers of public housing street easily in Jakarta transformed into crowded shortcut street and became main source of traffic jam.

Experienced traffic jam is the consequences of driving. Most people don't realize that because they only see problem in narrower stand point despite think about what result to others. Taking shortcut won't reduce traffic jam because it's only transfer crowd to some other places.

Common Enemy For The World

This world today is a mess. People killing each other for various reasons. Afghanistan, Irak, Palestine, Somalia have been changed to killing field. High tension relationship between "nuclear country" is threatening the whole world. Is there any way to stop this war?

I recently saw Watchmen and have to say that it was a very good movie. In the edge of nuclear war between Soviet and United States which could destroy earth, Nite Owl (Patrick Wilson), set up an ultimate plan to stop it. The plan is to destroy New York City with a super power energy. The goal is to deceive and make both country realize that there does exist other dangerous side which is stronger than them. One option left for them is to merge and united to face the common enemy together. In the end, peace prevail on earth.

A shortcut to make peace in this world is to create a common enemy, whatever it is. Common enemy leads to common purpose. Trying to convince this world about aliens existence, would be good way to unite this world.

Weeds Market : Illegal goods in illegal competition

I've just finished watch TV's serials call Weeds. It's a story about suburban mom (Nancy Botwin) embraces a new profession: the neighborhood pot dealer. From this movie I've got some information about how weeds market really works. Like other goods, weeds also has a market. As long as there is a demand and supply for any goods, market will always occur regardless legal status of that goods.

From my analysis as an amatuer economist, weeds market is a monopolistic competitive market.Monopolistically competitive markets have the following characteristics:

+ There are many producers and many consumers in a given market,
and no business has total control over the market price.
+ Consumers perceive that there are non-price differences among the
competitors' products.
+ There are few barriers to entry and exit.
+ Producers have a degree of control over price.

There are some drug dealers (producers) and consumers in that serials. Some producers divided according to their race. There are black dealer, mexican dealer, white dealer, Ukranian dealer and some others mixed race dealer. Because there is less producers than perfect competition market, dealers have some power to increase price without losing too many customers. Dealers have a power to take more market shares also by differentiates their product. In Weeds serials there are so many type of marijuana with different quality. With high level quality, marijuana price is high. But they can't increase price too much, because it will make some customers move to other dealers. That's the reason why individual demand curve has a negative slope in monopolistic competition.

In case of weeds market we have to make a special analysis because, of course, weeds is an illegal underground markets product, the place where there are no rules exist to guard market mechanism work fairly. There are another source of competitive power in weeds market beside amount of producers and differentiated prodect. The other source is what I call Gang Strength. In one episode, the mexican dealer burn out ukrainian dealer place to kicked them out of the competition. In other episode the ukrainian shoot one of black dealers leader. The more Gang Strength the dealer have will discourage gangs rival from entering the market. The less amount of dealers the more dealer has a power to increase price and more market share available.

In illegal underground economy, producers have more option to beating up competitors in order to prevent competition and create barriers in market so they can increase their profit. Moreover, not like in legal market where high profit will always attract more producers, in illegal market some competitors candidate will reckon another alternatives source of profit.

Sceptical thinking on student activism: Idealism or self interest

In many country, student (college student) identic with student movement or student activism. Not only to making changes in university but student activism also have major role in broader political event. In Indonesia, student movement repeatedly play a key role to brought down bad government. But what motivate student to do something like that. Are they really care about this country. Or there is other motives behind them. Every action must have motivation.

Every people need a recognition by others because it will make them feel good. College student also need it in colleges lifes. According to my supervision there are three type of how student attract others attention in order to get some recognition and respect. First, some students enjoy to show off their opulence. For example car, cellphone and apparel. Second, some students choose to be the best in academic activity. That will make them feel smart and be recognized by others. Third, the other students prefer to be activist in campus. Join student demonstration and yelling critical oration will make them looked care, brave and, of course, cool. Similar case in high school students street fight (Tawuran) in Jakarta. High school student also want to looked brave, cool and recognition from others. The more you brave and got injured the more respect you get. Hidup mahasiswa, hidup rakyat indonesia (hidup rangga cipta).

You smoke you go to hell.....

Today, January 26th 2009 MUI has just announced fatwa about smoke prohibition. New task for the angel to record new type of sin. I don't want to argue about does smoke really proscribed (haram) or not. I will focus on how really MUI make their decisions. Is it true that their decision based on Islam perspective. Why smoke proscribed don't applied for everyone and every conditions? I don't going to answer that question instead I will give some fact. First, Indonesia is the forth largest population in the world with 222 million and about 80% of them is Muslim. Indonesia also the largest muslim population in the world. Second, cukai revenue from cigarette industry in 2008 is Rp74 trillion approximately. Remember that government levy high cukai to cigarette not because they care about their peoples health but because smokers are addicted or we can say "not very sensitive to price. This industry also absorb about 6.1 million worker in 2007. Tobacco industry also in 10th position biggest industry according to Susenas 2007.Third, Indonesia will held general election in 2009.

Based on all fact that I mention above, we can get some direction. Microeconomic basic theory said that in short run non-durable goods price and income elasticities is lower than long run. Because people need time to change their behavior. But how if there is some change in what goods is not-allowed to consume by your religion. In my opinion, MUI's fatwa will affect muslims consumption behavior really fast. Not only fast but also massive, 80% of smokers would stop to smoke suddenly. Moreover 6.1 million worker is in danger. So in the end cukai revenue will drop and unemployment will rise suddenly. That will be very bad condition for this country and also for government performance. They will lost their supporter and it can thretening victory changes in 2009 general elections. So what government can do. Can they intervence MUI's fatwa. Smoking is proscribed to muslims but in some note. I think that will be fair enough for both of them.

Being a Teaching Assistant

I remember one of my teaching assistant's story about why he being a teaching assistant (TA). He said that he loved to dedicated his life to serve for unversity and also he very proud to be part of it. Very emotional and inspiring story for me in that time. In the next semester I became a TA. And the one million question is, what is the motives for me for being a TA. First, I think I will get some respect and pride from everybody especially mw fellow. TA identical with smart and smart is sexy isn't it. Second, I will be paid for teach eventhough it not very big but more than enough to buy me lunch and cigarette. Third, I will be helped to recall my memory about some basics economic lesson which is I need to finish my minithesis.
I always believe that people moves by incentives. I think to tell emotional story in front of the class could be a motive. Some of your student will proud and give some respect to you. But just some of them, excluding me of course.

Economic Crises and My Life: Part I The Direct Effect

I won't talk about how US financial crises affected this whole world or how Indonesian Government reacted to prevent those economic downturn. Newspaper and Magazines gives you that news almost everyday. Here I'm gonna' shares how crises has ruined my life. First, value of my financial assets, which 100% consist of stocks, dropped almost 50% from initial value. Thats makes me to changed my strategy from daily trader to investor or I preffered to say, to extending my investment term. Second, as economic slowdown and production shrink, unemployment will increase or at least company won't hire more worker. Unfortunately this year I will graduate, expected BA economics in August. One additional jobless in Indonesia, a country with 10 million unemployment, it's not a big deal I think. Third, this crises also changed my consumption bahavior. As a student I'm very depend on pocket money from my parents. When economic growth is expected to be slow down, people will save more maney and consume less. They will cut current consumption for future consumption as future income expected to decrease. Unfortunately my parents behaves such as homo economicus. As consequences, me, which is my parent son, will follow their changing behavior. It's bad...it's sucks. I usually smoke when I feel bad but now I would rather just write it down. This is what I call an adjustment.