Labour Market, the most supplier-unfriendly market

Labour market is the most brutal market for the suppliers, the workers. In a labour market, workers are supplying their workforce to companies. However, due to imperfect effort inspection, the companies tend to keep the market at a level of oversupply in order to push workers to work harder. Because of the oversupply of labours, there are also some people out there who are looking for jobs. When someone is out of employment for two years, he or she would be considered as unemployable. In addition, in a labour market, firms have mutual interests; but workers do not have mutual interests, as finding a job is a zero sum game, as one wins the job position, all the other competitors lose the position. Therefore, the firms can cooperate with each other to keep salaries low; however, some worker may use low wage requests as their sale points, leading to a further decrease in wage levels. To conclude, labour market is a market that the power of demanders dominates the power of suppliers, and some skilled workers lose their skills due to the increased level of competition caused by the firms.

Cuba is open, but the US is locked out

Investors from Asia, Europe and Latin American are eyeing the opportunities in Cuba; however, the US investors are left behind, due to the long history of hostility between the two countries. Would the US investment bring benefits to Cuba? Of course, yes. The US investment would be the same as the investments from other places. However, most of the ordinary people hardly accept to receive investments from a country, they had believed as their enemy for about half a century,  and the central government has to be aware of the public opinions. In this example, we can see that creating an extreme relationship is not a good idea. Having a very close ally needs the government to compromise on many issues and throw the benefits away in order to maintain the good relationship. Having an enemy is also not a wise thing to do. There is no enemy for ever; just like the US and Cuba nowadays, they are no longer hostile to each other, but because of the historical issues, they cannot cooperate with each other easily.

Some hypothesis of voting system

When there is an election, we usually vote ourselves that whether we should buy some politicians’ ideas or not. The word we use ‘buy’ does not mean we use our money to en charge for this politician idea; however, can we really use our money to buy politicians’ ideas? My answer for this question is YES.

I believe when people have immediate costs, they will act more rationally and sensitively; therefore, if people choose different amounts of credits that they are willing to pay for one political party, they will carefully judge how much more they can get from this party compared with other parties, and they will pay the amount which is equal to this different to support their political party. We also need to set a maximum and a minimum for the contribution people can pay for their supporting parties in order to achieve equity as we might know in the near future, the top 1% will be richer than the rest 99% of the population.

Different groups of people are treated differently in the election:

1, the group below the minimum income will gain free credits which equals the difference between the minimum income and their actual incomes. As I believe that the government is responsible to help them achieve the minimum income level. If any party can achieve this goal, this party should gain the credits. Even if they choose not to vote, their credits will still be counted in the election.

2, the group whose income is below the taxable level, but above the minimum income level is free to choose if they want to participate.

3, the group whose income is above the taxable level is compulsory to involve in the election by pay at least the minimum contribution, even if they choose not to vote.

If a party wins the election, it can hold a dominated numbers of seats in the parliament for a period of 5 years; however, it can be challenged by the opposite party after 3 years in a “challenging election”. The dominated party will be in an advantageous position, meaning if people choose not to vote (people are indifferent), all the credits will go to the dominated party, as a political stability is assumed to be socially benificial. If the dominated party wins, it will have 3 more years (the seat number will be changed) instead of 2 more. If the opposite party wins, the opposite party will start its 5 year period, and can also be challenged in a 3-years time. If one party finishes its 5 year period without being challenged, then a fair election will hold, the credits coming from people who are indifferent will be equally split between the parties.

The cost of propaganda should be subtracted from the total credits earn, as propaganda might make policies be overestimated. Each party will gain a proportion of the credits earned as income, the ratio of their income will be the ration of their seats won in the election. Party with the most credits will gain a bigger proportion of the credits earned compared to the other parties. This can ensure the winning party gets a dominated numbers of seats, so policies can be passed smoothly.

The maximum contribution should not be higher than the median income. If someone gets benefit which is above the median income from the government should be concerned as annual benefit which does not benefit the equity.

The income of the political parties can increase the independence of the parties from the sponsor from the minor super-wealthy groups.

Digital products have difficult issues of copyrights because of their "public good" properties

Digital products, like music, video games, are "non-rivalrous" and "non-excludable". These are the two properties that we use to refer to public goods. Digital products are "non-rivalrous, because due to the modern technology, we can almost have infinite copies of any digital product. Therefore, the marginal cost of production is infinitely close to zero. Digital products are "non-excludable", because once one consumes the product, one can always share with his friends or even everyone else by uploading to the Internet. Of course, such action is illegal, but it is too difficult to check every uploading. So it is reasonable to say that legal forces are hardly to protect the copyright of a single digital product without any services afterwards because of its public good properties. In conclusion, I think that it is never profitable for firms to earn money purely based on digital products but the services combined with the products.

Will couples be willing to have their second child?

China has abandoned the one child policy, which had lasted more than three decades. The policy targets human right issues and aging population and its relative economic issues. However, are couples willing to have their second child? Couples make their decision based on various reasons, including economics reasons. Having another child means the wife has to leave her job for about one year. In the labor market, many people argue that gender discrimination exists because employers believe female employees will leave their jobs during their pregnancy periods and spend more time on caring their children. The policy of allowing a second child may widen the gender discrimination. Moreover, couples have to choose between earning more incomes or having another child. Having another child will require parents to spend more on their family, more time with family means less time at work, then lower incomes. In addition, daily spending will increase; therefore, less money could be spent on luxury goods and services, leading to a lower living standard. In conclusion, we can see that couples, especially the middle classes, who have relatively comfortable lives but are still not wealthy enough to leave the labour market, have very high opportunity costs; therefore, they may not like to have a second child.

war is negative sum game

Fed dropped its previous warnings about the global financial and economic crisis, this act calms the markets, but also raises the question of whether the Fed decides to raise rates in December or not. Previously I predict that the Fed will raise rates in December, now I will hold onto my prediction. As my last blog mentions, the challenge will come after the major countries annouce their 2015 GDP growth rate. My prediction is based on the current economic affairs, excluding the political conflicts between countries, especially wars. I here want to discuss wars in an economics way. War is a zero-sum game, or even negative-sum game. Wars push countries to produce at their maximum capability, even produce a quantity that is out of their production possibility frontier by issuing huge amount of government bonds. If one country loses its war, the resources it used for the war are wasted, the damage caused by wars shrinks the country's production possibility frontier, and the defeated country will be forced to pay the losses of the winner, sometimes overpay the losses. The resources used in the war usually do not add onto the post war economy. And when the scale of war is very big, the winners will find that the defeated countries just have no ability to pay back their losses in the war. The two World Wars are very clear examples that winners and losers are eventually losers and the spectating countries are the true winners.

the financial market will turn gradually warming till the end of this year, the problems about the Fed's rates and other issues will add shocks on the markets after the major countries, like the US, German, China, report their growth of 2015

Many firms' earning reports have been released. The financial industry had a poor performance last quarter. However, many other industries have relatively good performances, especially the technology and internet industries. For example, Google, Microsoft and Amazon have had very strong reports, the share prices all have reached their highest in recent ten years. Even suffering from the Chinese economy slowdown, Apple still beats the predicted revenue. This shows that, just like what I predicted before, the financial market did suffer from the loss, but ordinary people's life would not be affected by the loss from the financial markets. The unemployment rate is stable, the inflation rate is low. Moreover, the possibility for the Fed to raise the rates becomes less likely, due to the low inflation rate and the increasing issue of the US debts. Based on these facts and predictions, I think that the financial market will turn gradually warming till the end of this year, the problems about the Fed's rates and other issues will add shocks on the markets after the major countries, like the US, German, China, report their growth of 2015.