By : Mathew Cherian, Research Associate/Analyst, Western Michigan University
Functional Area : India
Activity: 1 comments 138 views last activity : 03 15 2012 09:17:52 +0000
Insights into Economics
The first week of my coming back from US I figured out we lack lot of things and the reason I found that there is no one who understand Economics as a practicing profession. My ideas hasn’t changed even after almost 22 years of my post American stay here and I believe this although one of the prime areas of administration of a Nation State is kept dormant ill taken care off by our nation.
So now I decide to expose why Economics and what for in a series of expositions into future and feel free to learn at your on pleasure. Please bear with me I can do it only at my on leassure.
We never had a good Economist to start with post independence and all those who built up a name for themselves did it by going abroad and learning from abroad like Prof. Amritya Sen and Bhagawathi.
So every exposition starts with a definition of the concept being exposed. So the definition of Economics. It is the study of efficient investments and how optimal logistics which is transportation and financing can be set to meet such efficiency.
So if optimal investments need to occur, the person who indulge in it should have an expectation to make private profits from his labor to invest and create profits which he need to reinvest. This he can achieve only if there is adequate demand in an economy. There arise the demand and suppy phenomenon. When the price of a product supplied is higher than one can afford (above ones endowment can accommodate) then one who has the need forfeits consumption now for a later time hoping to consume later when he hopes to improve on his or her endowment level. The suppliers are inturn willing to supply as the prices rise. Thus we have an upward slopping supply curve and downward slopping demand curve on a Cartesian co-ordinate graph with Price on y-axis and Quantity on x-axis.
Now if the environment is assumed Democratic the supplier cannot supply at a price beyond anybodies ability to pay for the product in which case the product won’t clear the market and his inventories won’t rise and he will fail in his mission. So it is the duty of the government who administer the environment to make sure that the citizen are well endowed to afford the products being sold and make sure that the vendors sell at efficient price levels. Moreover other factors like quality of durability under the price levels, durability and affordability are maintained for longer sustainability and prolonging of economic welfare the prime objective through choice of a citizen in a nation state.
It is also the duty of the government to make sure that adequate supply of products and services are available to the citizen under affordability criterion which is done through adequate maintainence of value of the currency. These will be covered later as to how to do it.
So as a reprieve I describe the first steps in Economics, the deman/supply curve and the effects of affordability and cost effect on its formation.
The next will be the reason why government exists and how they regulate the environment.
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