Monthly Archives: February 2009

Profit Maximizing…(*Under the condition that you’re not unconditional).

Apologies for my lackadaisical blogging lately. I’m not sure how many people will actually enjoy my rants and abstract ideas…nonetheless my own personal expectations of myself have given me reason to apologize to everyone that does find this somewhat interesting. Classes, jobs, and social excuses are involved.

I’ve been doing a little thinking about the basics. My first theory was a leap and jump to development theory, and perhaps, for everyone who does not worship economics like a puppy dog with glossy eyes, I should pull back the reigns. Myrdal clearly wasn’t too difficult to understand–completely qualitative and simply a no-brainer– but development theory doesn’t come packaged nicely into macroeconomics 100. It’s not like I’m even trying to say I’m a genius here, either. Myrdal is clearly one of my favorites, simply for the fact that he is ambiguous and non quantitative in general. Word on the street says he got a lot of crap for that though.

People are Profit Maximizers.

I’m going to explain this assumption in the simple terms that it appears. People are profit maximizers. This means that businesses want the most profits that they can receive for the amount of input they put in, i.e. labor, capital. This assumption is further used for explaining the production function that compares the outputs of a firm in comparison to its inputs, further leading up to supply and demand–the quantity produced by a business versus quantity that people demand of what they’re selling, which becomes relative to the price.

I hear your blah blah blahs you non-econ fans.

Here’s the graph, if you dare to interpret what I’m getting at.

https://i2.wp.com/www.transwebtutors.com/economics/images/Technology_04.gif

The curvy line and it’s point on the graph means that this spot is where you will find the most profits for how much you put in and how much you put out. Notice how the curve levels off…  Which means there’s a maximum amount of money you can make for what you continue to put into producing it.

So, the question I ask is, are we all profit maximizers? And what does that mean in terms of my personal, emotional, and social decision making in my small-scale personal life?

Let’s think about profit maximizing in terms of our quality of life. There’s a running assumption in the American culture that if you put in an amount of effort into this world, you will obviously get something out of it. We go to school and put in the time to study so that we can eventually be hired (also known as investment). We spend an hour cleaning the house because we wish to benefit from feeling comfortable in a clean environment.

In the profit maximizing assumption though, we put in an amount of something because in the end, we think we’re going to exceed that input. We’re going to get more out of it than we put in. After all, why have an incentive to do anything if we didn’t have the idea that every year we’d be more successful than the last? Maximizing means using tools, putting in the effort, and getting as much as we can out of it.

I want to take this idea and apply it to the concept of relationships. Let’s take this massive, crazy word called “love.” This is one hefty concept. I am studying to be an economist and already trying to criticize or insult profit maximizing–the one assumption we’re supposed to brand onto ourselves  like a permanent tattoo.

..beh,..screw it.

In Chinese, the character for “love” is https://i2.wp.com/www.chinese-page.com/chinese_character_tattoos/love.gif, pronounced “ai.” The top part of the character represents an open hand, and the very bottom criss-cross represents a closed hand. The straight line with the slanted diagonal in the middle represents the sign for equality. In essence, the symbol all together means “the equality between the art of giving and receiving.” I am a fan of the Chinese character, because I think that love is one part of our lives that cannot be considered a rational profit maximizer. I see love as a constant, in which we are not looking to give and get more out of. We simply desire that what we give is what we get back…Or do we even do that?

There are a thousand theories attached to the concept of love. The literature is overwhelming, contradictory, and infinite. It seems we all have our own personal perceptions of love. Some maintain a belief that out of two people, there is the giver and the receiver, where a relationship is built on one heart naturally giving more than the other, and that there is no such thing as perfect equality. In the human element this can be very true. Equality may not even exist. It’s so unpredictable. If you ask me, it’s a hell of a mess.

My realistic approach rests on the idea that we all want something out of our input. However, love seems to be one of the only human elements that does not require a profit, or perhaps, as the “giver/receiver” model explains, not even an equal balance of return. That seems irrational doesn’t it? Well, there you go. It’s love. It’s the only thing we can’t explain.

This type of human behavior in economics is why they have to assume things that aren’t always true in the real world. There are simply things that we cannot explain. Love is why we will our profitable, booming corporate business to our son that lives at home and didn’t go to college as opposed to the qualified guy who applied with a doctorate. Love is why others leave their successful job to care for a child. Love is why someone will move to the Fiji Islands with their surfer boyfriend to work at a minimart earning minimum wage and living in a cardboard box. Love is why we give to someone else in general, in hopes that this giving will reciprocate the “happiness” factor of our quality of life. Most people make rational decisions and are influenced by economical and social constraints. Economics loves those kinds of people. On the other hand, there’s a handful of us that do believe in a thing called love, which comes with sacrifice.

My last blog dealt with relationships in terms of negative outcomes leading to others, which turns out cycling back to the beginning cause. This simple idea of irrational decision-making is how we let ourselves enter that cycle in the first place.  It’s a relationship imbalance that began with a sacrifice, a possible expectation to receive something in return, and its outcome, without clear explanation of its origins.

Thus, let us always remind ourselves that profit maximizing is conditional. Every time we assume that we are profit maximizers, let us add an asterisk next to it saying, ” this also relinquishes the vague and irrational complexity of  love, by all means.”  https://i2.wp.com/www.dustindiaz.com/archives/asterick.gif

Through this blog I will attempt to demonstrate how a graph can, at least qualitatively, demonstrate the possibilities of explaining human interaction. Love as a whole though, can remain our universal phenomena that’ll for all I know keep running circles in our hearts and minds.

-Virginia

(Look, even the jobs trends for love consultants are freaking haywire. Even more supports the point that you probably shouldn’t base a career on this kind of thing…)

http://www.simplyhired.com/a/jobtrends/graph/q-Love+Consultant/t-line

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