Blog 7

"The IMF generally didn't show up unless a country was already in trouble. But still, I'm amazed how the IMF and other institutions kept getting things wrong." (p. 242) I think it is one of the most impressive phrases in Economix for me. And more you think about, more you see that it is actually true: the IMF doesn't want to help you, they only want to keep things bad, maybe even worse than they were.

How does it actually work? Country gets into trouble with their budget and has no money to pay on their agreements. The government of that country asks the IMF for some money. The IMF agrees to loan that money under some conditions: freedom of capital movement, privatization, minimization of social programs and so on. These conditions actually make the situation in the country worse. Free trade open doors for the giant international corporations that buy everything they can buy and start to sell their products that most of the time are cheaper than the same products produced locally. Because of that native population start to lose money and jobs. And they don't get aid from the government because the IMF said to close social programs. Also the government starts to lose money because now people buy cheap products from foreigners who don't need to pay taxes to the country they invaded. In this situation it is impossible to pay their debts so countries borrow more and more money. Now they are completely dependent on the IMF. Can we really call it help?

If you look on the distribution of votes in the IMF you will also see inequity of rights. You can get votes for the country putting more money into the fund. Only the US has 16.73% of all votes (next is Japan - with only 6.23%). Top 10 countries have 53.3% of all votes. The rest 178 countries have less than a half!

Also to get some decisions approved the Fund needs to get the super-majority of votes by 85%. The US can block any decision with its 16+% of votes. If the United States doesn't approve something it won't be done. Is it fair to give so much power to just one country out of 188?

So does the IMF help in reality? And who: the whole world, a country that needs help or just these giants in world economy (especially the US) that need more market for their goods?

Blog #7: Unemployment

Of everything in Economix that Goodwin covers, something I personally relate to is the topic of unemployment. My family, like a lot of other students’, was hit hard by the 2008 recession, and both my parents had lost their jobs by 2010 (although my mom, luckily (but really not so luckily for my poor, sweet mom), worked two more jobs at the time).

I’ve always seen the topic of unemployment treated simply as a statistic in the news and everyday conversations, and although I had some indirect, personal experience with what unemployment is like, what spoke to me in Economix was Goodwin’s contextualization of it. On page 207 in the bottom-right frame, Goodwin explains, “each 1% rise in unemployment meant 495 more deaths from liver cirrhosis, 628 more homicides, 920 more suicides, 3,440 more inmates in state prisons, 4.227 more admissions to mental hospitals, 20,240 more fatal heart attacks and strokes.” Each instance of unemployment bears enormous stress on individuals and their families – and I think that this sentiment often gets lost in a statement like “Unemployment today is at 6%.” I think it’s also worth mentioning that the data referenced by Goodwin here is from 1976 – and the U.S.’s higher population today would likely mean even higher numbers.

Goodwin’s tone surrounding the matter of unemployment is concerned and matter-of-fact, and he legitimates his claim by using the data from the 1976 congressional study. I don’t think that anyone discussing or reading about unemployment would take his position as seriously if he hadn’t referenced a specific data set; and, notably, I think that this goes far in assisting Goodwin’s claim that the harms of inflation can’t be justifiably juxtaposed with those of unemployment. And while I don’t think that his explicit taking of a political position necessarily brings what he writes closer to “truth”, I do think that it makes it a lot easier to discern the book’s truths from its opinions – since, to me at least, it’s more difficult to identify bias in texts whose authors claim to present pure facts.

I really liked Economix in the way that it presented information so thoroughly, yet palatably. But, really, what I liked most was Goodwin’s seeming authenticity. It feels as though he’s just giving you his opinion, but with a good amount of data and without any pretension. This also means that he brings a touch of (what I think is) much-needed humanism to an area as irrationally rational as economics. I hope that the book, in addition to teaching some important economic principles and historical circumstances, also got some other people to recognize the deeply human consequences of questionable corporate and national interests.

#7: Goodwin gets most of it right (Andrew Krump)

I enjoyed the format of Economix and I admire his attempt to make economics approachable to everyone. He makes compelling links between politics and economics and rightly points out that we cannot understand history without considering both. As an intervention, I think it's power comes from retelling history from an economic lens. This forces the reader to come to terms with the large effect that economics has has on history.

As a finance major, I began to take issue with some of Goodwin's claims in the later part of the book. I found much of what he wrote prior to the 1980s to be a fairly detached view of history that fit my world view well. It's not a coincidence that the parts of the book I took issue deal with our modern system of financial capitalism. While I agree that the financial industry should be more heavily regulated, I also think his anti-finance narratives in the last few chapters are overly simplistic.

Goodwin does do a good job of clarifying a widely held misconception: real wealth is measured by owning useful things. Money, and later financial assets, are just a way to help facilitate this process. Goodwin explains the mechanics of bond valuation pretty well (pp.263-265), but he doesn't say anything about what makes a stock worth what it is. Any business school course in finance will tell you that a stock (or any other security) is worth the cash flows it is expected to generate in the future (dividends or share buybacks for stocks) discounted back to today at a risk-adjusted interest rate. There are obviously huge sums of money to be made by more accurately pricing stocks so mutual funds, hedge funds, and pension funds spend considerable time estimating how the company will perform in the future and how risky the resulting dividends are. The value of a stock is essentially a best guess of the future profitability of a company. Therefore, when managers try to increase a stock price, they have to communicate a believable plan that shows a more promising future than the one already reflected in the price. To me, it seems like Goodwin treats "raising a stock price" as the result of waiving some magical wand. Short term thinking can't go on forever, and investors eventually come to their senses (watch the "Drug Short" episode of Dirty Money on Netflix to see how this has played out with Valeant Pharmaceuticals).

Goodwin frequently paints Wall Street as greedy and only focused on maximizing share prices. At least in theory, the corporate raiders, mergers, layoffs, and subprime mortgage lending activities that Goodwin demonizes were believed by a critical mass of investors (who try to determine prices as a career) to be reasonable at the time. Furthermore, many of these failures have been addressed by market forces (and sometimes legislation) after they occurred. Today, corporate raiding is substantially less popular than in the 1980s because many companies have created "poison pills" that make corporate raiding cost prohibitive or impossible. And is it possible that the banks didn't lend out the money they were given under TARP because they recognized they had too much debt before the 2008-2009 financial crisis? Absolutely.

The problem with putting the blame on the financial industry is twofold. 1) Finance is the way our society estimates and distributes risk and reward. This allows companies to raise money for real investments (factories, jobs, etc.) and understand and hedge their costs. It also allows individuals new options for saving their money. If you're willing to accept more risk, you can expect to earn more investing in stocks and bonds than in a savings account. It opens the possibility of a society where we can all own a slice of the wealth. 2) Blaming the financial industry negates the need for personal responsibility and the role of other parties. Wall Street is certainly not blameless in the 2008-2009 housing crisis. But just because someone is willing to write me a toxic mortgage, does that mean I should accept it? Don't I have a responsibility to try to understand what I'm agreeing to? Casting a villain is much easier than coming to terms with the fact that responsibility for the crash is shared between Wall Street, lenders, politicians, regulators, and consumers. Clearly the government has a role to play in setting the rules of the game. But to Goodwin's point, if we're going to be electing the people that set up the rules, shouldn't we try to understand these complicated issues holistically?

Blog 7--Callista Osley

My family does not pay much attention to the economy or politics. I know, we're 'bad Americans' for not doing so and we probably should pay more attention to these things, but we just really weren't ever interested. So, because of how I was raised not really paying attention to the government, economy, or politics, I never liked learning about those things in school and took as little social studies classes as possible. Now, after reading Economix, I feel like I have at least a little better understanding of the economy. One chapter in particular that stuck out to me was Chapter 8: The World Today (2001 Onward). Maybe I liked this chapter because it was all things I have actually been alive for, even if I don't remember all of them. When he talked about American intervention in Iraq, I was really surprised to learn about how much we tried to change about their country, and that we made such a show of it. I had no idea that we meddled so much in their economy and government. I connected to the part about Iraq because my uncle is in the Army and served there in the late 2000s-early 2010s, so learning more about the places he has visited has always been an interest of mine. It was also interesting how the military forces were kind of demonized (for protecting capitalists), when to me they are angels, but I may be a little biased. I found the tone of the narrator to be kind of funny, he's very sarcastic and ironic but still gets the point across. As a visual learner, the pictures help me understand the concept they are talking about. The pictures are so impressive with how much thought and irony are put into them. Like the Iraqi man that Uncle Sam is bossing around with new ideas on how to run Iraq is drawn to be really small and look like a stereotypical Middle-Eastern man. Uncle Sam is drawn to be much larger than whoever he is talking to because, like the country that he represents, he is large and in charge. George W. Bush is also drawn with a large head and sometimes a muscly body because he is in power and making big decisions. The transition from 9/11 to American policies in Iraq was new to me, as I mentioned before. I had no idea they were connected like that, I always just thought we went to Iraq to find the people who did 9/11, not to change their entire country. I think Goodwin taking an explicit stance on the topic does help him find answers and leads him toward finding reality. He is able to clearly state evidence that supports his side and evidence that doesn't. He doesn't need to act like he is impartial when he's not, and therefore can present all ideas and evidence. This leads him to some new answers/'facts', but also new questions. I wish all textbooks were like Economix because they would definitely be a lot more fun and easier to read.

Blog 7 - People are the real products

A particular comic strip in economix that really made sense to me, is a page 153 where the author talks about people being the actual product.  This resonated with me because when I think about our consumer economy I always think about how I am constantly trying to be convinced that I need certain commodities.  The companies cannot make a product that people will not want, so I can only imagine how much time and money is put into researching their real products, US!  It is similar to our talks about drugs, people need to be convinced they have this issue that a drug will fix or will be the cure all to their unhealthy lifestyle.
The extent in which companies have invested in their product (US) is outrageous.  Earlier today I went on Petsmart to look at fish tanks; I was on the site for maybe 5 minutes, but in that 5 minutes I had already been analyzed as their product and now they were going to try and convince me I NEEDED a new fish tank.  Right now, I have ads from Petsmart on the side panels on just about every website I visit; some even offer a discount if I 'CLICK NOW'!
Data mining is part of our everyday lives and our normal economy now, whether we think it is okay or not; I for one think it is downright creepy.  It almost seems like an invasion of our privacy that has been slid under the rug of what is the 'I accept the terms and agreements' button, which has been deemed okay by society.  But who actually benefits, I for one have never clicked on the ad link and it does not influence how I shop.  With this in mind, I do not benefit from it.  Other companies do, however.  Over the years I can imagine there is quite the product profile on me and everyone else that companies use.  It is not hard to believe they are selling our information, their product that is 'US'; because in case you did not it, people are the real products.  My only question is, how far will this go and to what extent has it gone already?

Blog #7- Preston Bradsher

I was surprised by just how much I enjoyed reading Economix; in fact, I nearly read it in a single sitting. I've never understood economic concepts largely because I've never seen them explained so plainly and with so little jargon. I really appreciate Goodwin's work on this book, and I think his approach to writing it mirrors one of the ideas inside: sometimes it isn't best to do something the proper way if there is another way that works better practically.

Two panels in particular stood out to me in the book. The first is on page 121 in the bottom right corner. It shows two economists in their academic robes insisting that the depression is going to end "any day now!" while a distressed worker cries that it isn't ending at all. The academics appear so sure of themselves while the worker is in utter disbelief that they can't seem to see the facts right in front of them. I particularly appreciated this point, which was illustrated repeatedly throughout the text, that we cannot rely solely on books, theory, and numbers. People and the dynamics between them go beyond numbers, and it is impossible to predict human reactions on paper. Goodwin demonstrates how utterly ridiculous it is to ignore the reality of a situation in order to preserve a dated theory. He insists that theory make space for the practical and the real, and that lawmakers and their advisors be willing to step outside of the known theory entirely in order to search for innovative solutions.

The second panel that hit home for me is on page 229 in the top left corner. It shows Hilary Clinton as First Lady indignantly yelling at a corporation about her proposed health care plan. The plan proposed a compromise between public and private healthcare that aimed to make less Americans die due to exorbitantly expensive privatized health care that would not cover them. She exclaims "But the plan gives you so much!" to which the corporation replies "it doesn't give me everything"! This panel sums up yet another of Goodwin's major points which really affected me: the source of so much of the problems and suffering in this country is pure greed. He heavily emphasizes the power of corporations over small businesses, workers, and even the government itself. This power is so enormous that they can refuse to bend unless they are given literally everything they want, effectively holding the country hostage for the gain of a very small number of people. To me, the book wants Americans to compromise. If everyone insists that they get everything they want, we will remain in so many of the vicious cycles which currently imprison our political system. If entities would look more at the larger picture than at their present comfort, a lot of real change could be made.

As depressing as this book was at times, it actually gave me hope. It helped me to understand the sources behind the deep frustration I feel at this country, and let me start to see the potential ways that things can be improved.

Post #7 Hui Lin Zheng

As someone who nearly failed economics in high school and despises the subject, I've learned to appreciate it after reading "Economix". Goodwin is a genius by deciding to write about economics in comic book form. People love comics and using cartoons to describe economics makes it more light hearted, engaging and easily accessible. It's not only easy to understand what he's saying but he makes it a fun read by using loads of humor throughout the comic. It's clear what the significance of learning economics is and why we-consumers need to understand economics. I had always thought that it was not important for me to understand economics since I'm not interested in business. However Goodwin expalains that economics affects politics, worldwide relationships, and consumer/buyer relationships; so basically economics affects everyone! It can even explain why countries go to war. Everything is tied to economics. I enjoyed the brief history lesson in his book and it was shocking to find out that many of the bad decisions worldwide leaders have made was because of economics. People have used their knowledge of economics to taken advantage of others. Similarly people with a lack of understanding of economics have made bad decisions. Many people like myself never understood the complexity of the economy and have brushed it off as something we don't need to understand because the professionals will make good decisions. But that is not always true and if we want to look out for our own well being as well as that of others than we need to understand how our economy is run.

Blog #7 - Economix is Important

I have thoroughly enjoyed reading through Economix compared to other books on economics. I was especially happy to have been showed this as I really had no grip on how the economy actually worked. I’ve found that my brain has trouble with understanding how Wall street works, the dow, and the stock market. Even though it has most likely been explained to me a few times, the information certainly wasn’t retained. With this book though, I have found it much easier to understand what’s going on, and I actually think a lot of it has to do with the pictures honestly. When dealing with something as complex as this topic, at least in my mind, for someone to be able to convey the subject in comic pictures is pretty great, and I think is a great way to get people reading and even interested in the history of economics. One of my favorite parts of the book was the 1914 - 1945 period where things fell apart. The reason I liked it so much was because I’ve always wanted to understand more about the great depression, and how huge recessions like that happen. The term definitions are great and they make them really easy to understand.

Blog 7: Moneyball

I always thought the economy was a structured system that involved lots of math with people in suits using their calculators to understand and improve the economy. However, the more I actually pay attention to what is being said by the adults around me, I realize that I actually have no idea what the crud is going on. For example, If someone asked me to describe how the stock market worked I think I would say "People invest. Stock goes up and down. Uh...other stuff happens. Some more stuff." and then run away to avoid talking more about the subject. So it's safe to say I'm not a expert at the economy. But reading this book, the Economix, did help clear a few things for me. I knew Adam Smith was the guy who advocated for the free market approach but I never learned, as the author points out on pages 25-28, that he also argued for government action against monopolies. He understood that without regulations, companies could extort more money out of the population due to ultimate control over a certain product or good. He also comprehended that economy is based on the people, not just numbers, and that a good economy means that relatively everyone is doing well, not just the business moguls and stockholders.  Therefore, Smith was not a 100% Laissez-Faire but more of a mix of mercantilism and free market which makes sense because a system that depends on the actions of the people is due to experience random fluxes in the economy. We're not exactly a predictable group of people.

So that's one of the things I learned from reading this book. Another thing, was that Thomas Malthus kind of seems like a jerk. He argued against giving to charity, adopted a belief that served to blame the poor, and believed that war and disease helped keep the population in check (although since there are no direct quotes here I can't say for certainty if he, Malthus, was stating it as a fact or as an advocation). Also, if he's all for keeping the population down, then why go against birth control? War is ok but god forbid if someone uses birth control to avoid a 13th pregnancy. How can war or disease be seen as a better alternative? How??? Anyway - ahem - that's my two cents. The structure of this book is definitely better than reading a textbook and I like how the author interjects the dry parts with humor. Makes it easier to avoid falling asleep and all.

Blog #7

I have not taken an Economics course since high school, but Michael Goodwin’s Economix was a very nice refresher (the pictures were even more helpful, who woulda thought). The section about Competing Monopolies on Pg. 167-168 reminded me of a discussion I had with a friend recently about an article they had read about millennials being extremely brand loyal. This made me read further into the behavioral economics of brand loyalty and found that brands with high brand loyalty allows them to set price and, in a way, make a monopoly of their own.

Brand loyalty refers to the consumer's desire to continue to purchase a specific brand of product. It is the consumer's perception of a particular brand or name, developed through advertising and marketing efforts. Marketing for high brand equity will create advertising that attracts, fosters, and maintains an ongoing relationship between consumers and the product. This ongoing relationship and positive perception creates brand loyalty in the consumer's mind. People like a particular product for many different reasons, and they typically continue to buy the product if it keeps doing what it promises.

Brand loyalty is the result of an effective marketing or advertising campaign, or of good experiences with a particular product or brand, and it typically requires a lot of time — sometimes years — to build. There are many reasons that consumers develop loyalty to a particular brand, including a connection to some pleasurable experience or the use of a product or brand by previous generations in their family. The long process requires accumulated positive experiences over an extended period of time. I have noticed that I am brand loyal, and so are my roommates. Once we find a product we like, we are skeptical of trying something else out when there is a possibility of not liking it. The possibility of a less than pleasurable experience is not worth the risk to us. I do not recall Goodwin talking about brand loyalty in any other section, but I think it definitely fits in with discussion of monopolies. Some might argue that brand loyalty is a sign of perfect competition, but I would disagree since Goodwin states that every brand is a monopoly.

Blog #7: Let's play Monopoly

I’m more than ashamed to admit this, but if I’m being honest, I don’t know much about economics. While I did take an intro to microeconomics course during my sophomore year, I couldn’t explain pretty much any of the concepts that we learned in that course. I’ve always just brushed off the topic and told myself that I’d learn it eventually, maybe after graduation when I’m forced to be a real adult. Well, suddenly graduation is less than 2 months away and it’s probably a good time to learn about that economics thing that I’ve been brushing off. So my discovery of “Economix” through this class couldn’t have come at a better time. The book is fascinating and simplified to the point where a beginner like me can understand. The passage that I’m going to discuss is not new to me, or to anyone that’s been paying an ounce of attention in this class over the last few weeks. Although it’s not new, it gives a new perspective that is extremely important. The passage about competing monopolies stuck out to me because it took something that I thought I already knew and sort expanded my original understanding. If you’ve read any of my blogs in the past, you know that I’m currently a pharmacy technician and I’m about to start pharmacy school in the fall. That being said, the drug unit where we continuously harped on branded products versus the generic is an everyday occurrence for me. While we all should know by now that the generic is the cheaper equivalent to the brand, many American citizens are generally unaware. Just because it costs more, doesn’t mean that it is indeed better. But it’s not just with drugs, the same monopolies exist among virtually any consumer product on the market. Unfortunately, the big name companies in our country take advantage of us. It’s not entirely their fault that the average citizen is unaware of the difference between brand and generic, but these companies shouldn’t be able to market a product as something unique and “better” just to make an extra buck. While it is indeed unfair, I do feel that we need to do a better job of educating ourselves. The biggest lesson that I got from this passage was that brand/generic is not just limited to the pharmacy, and pretty much encompasses the entire consumer market. Additionally, this has been prevalent in our economy for decades.. and unfortunately I’m not sure if there’s an end in sight. While I’d like to think I wouldn’t take advantage of the general population if I owned a large corporation, a ton of money sounds pretty good too. It’s definitely a tricky subject, but I think we can all agree that the big monopolies aren’t being as ethical as they could be. The next time I’m stocking up on my essentials at Costco, I’ll probably take a closer look at the Kirkland products instead of Kleenex or Tide Pods.

Caitlin Barth; Blog Post #7

Economix wonderfully illustrates the blatant reality of our past and current economy. One of the many comics that stuck with me from Economix was on page 153, panel 3 stating, “The product of commercial television is not programs. If one thinks of making goods to sell, the viewers are not the customers, those who buy the product. Advertisers buy the product, pay money for it. Programs are not what they buy. What they buy, what they pay for, is audience.” This quote is correctly inferring the realties from the supply and demand of today’s advertising. For example, the infamous Doritos® (America’s favorite triangle) and Mountain Dew® (America’s favorite blood sugar spike) commercial collaboration during this past NFL Super Bowl. Most of these commercials, which ranged about 30 seconds long, cost more than $5 million dollars for their advertisers. And don't think Doritos®/Mountain Dew® didn't come prepared with some star power—they brought in Morgan Freeman, Peter Dinklage, Missy Elliott and Busta Rhymes who all play a role in making the commercial a success. If you aren’t familiar with this ad it is here àhttps://www.youtube.com/watch?v=QNzzJzdgUto. **WARNING**: it is, in fact, very entertaining. However today it is not only television that advertisers use to pay for an audience. Listeners and viewers are “bought” through many different social mediums in our present-day culture. Advertisers have a hay-day with their many avenues to real in their desired demographic. It’s difficult to imagine our economy without such abilities in advertising. Nonetheless, I think this quote from Economix applies to many of this issues we’ve discussed in class. Whether we consider the topic of obesity, body shaming, legitimation of diseases, or our war on drugs – much of this issues have percolated multiple times through advertising in hopes of buying their audience. And indeed the advertisers have succeeded.