Every once in a while, I feel a need to get all misty eyed for the field I studied for five years.
I was listening to NPR's Planet Money, a fantastic show everyone should listen to by the way, and was enthralled by their episodes discussing their t-shirt. I was so enthralled I signed up for Kickstarter just to back them, and have since sunk 200$ into other projects like a god-damn junkie. What stuck out to me, aside from the super interesting story of the t-shirt, was their mention of John Maynard Keynes and his description of "animal spirits."
A quick rundown for those who haven't done history of economic thought: For most of time, the dominant way of thinking about economics was the "rational actor model." It carries with it the assumption that all people are blessed with perfect information and perfect rationality, and that all decisions they make are done so in the interest of minimizing costs and maximizing utility. Generally speaking, it worked out pretty well. This sort of thinking isn't 100% accurate, but it does a damn good job of aggregating millions of personal decisions into an understandable form. Keynes wrote in the 40/50's about this idea of "wild animal spirits," this idea that people are far from rational. They are impulsive and impassioned, and make decisions based on things that cannot be quantified by numbers. Recent years, and in fact the 2012 nobel prize in economics, have started to centre around attempts to rehabilitate the rational actor model or at the very least improve it to more accurately simulate real people. One of the topics we discussed in game theory was this concept of asymmetrical or inaccurate information, the idea being that everyone wants to use perfect information but something stops them. This is a line of thought I've always really enjoyed, because it offers some solid explanations for why people make bad choices.
So I look around my house right now. The TV furniture is from Italy, the dvd towers are from poland, my water bottle is from china, my t-shirt is from Vietnam. And these are just the final stages of production. The dvd towers had to be bought from a store, which had them shipped to calgary from a port which received them from poland. In poland, the lumber had to come from somewhere. The tools had to be made elsewhere, and the machines built from parts built somewhere else. In turn, those parts are constructed from metal which had to be mined. All in all, for me to sit where I am at this moment, looking at what I am looking at now, there had to be hundreds of people working in concert.
For the most part, each one of these people played their part because it was the best decision available to them. Somehow the insane, roundabout, varied path necessary to get from metal in the ground to water bottle in my hand made every single turn because it was the least expensive. Dozens of steps, all across the world, all the cheapest available, to put this water bottle into my hand. We live in a world where that is easier than building a water bottle factory in Canada to sell water bottles to Canadians. And still, somehow, this entire process can be totally mocked by me making the decision that I am willing to pay $2 more for a green bottle than a black one.
That is crazy. This entire complex chain of events still relies on my impulse being the correct impulse, manipulated via advertising or otherwise, in order to justify everything that has happened.
Pick an item nearby. Ask yourself "why did I buy it," and "how many people touched this for it to be here?"
Economics. Surprisingly inspiring sometimes.
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