Friday, June 20, 2008

Do You Want Someone That Wants you?

To mark the release of Sex and The City in Jakarta, its time for another post on relationship economics (The issue of fuel raise has reach fatigue point anyway, at least for me)

The main plot connector in SATC is whether Carrie will end up with Mr Big. She (and the audience) is taken to emotional roller coaster along the path to find the answer.

But why she did not settle for a-less-emotionally-draining-but-sufficiently-good-and-rich-man ?

Groucho Marx once quipped that,”I don't want to belong to any club that will accept people like me as a member.”

The logic of the statement is when a club willing accept him, without needing him to go through lengthy verification of good credentials/network, then it is not exclusive enough and good enough for him to join.

Change club to relationship and we got the Carrey dilemma. Should she wait until the flashy-and -almost-perfect -but-unfathomable Mr Big to proposed or to “lower” her standard and go for another man that clearly want her.

The problem is unobserved and asymmetric information. People can’t really know the inner quality of other people and his/her as partner in romantic/marriage relationship until they are in it.

But selectability is a good cue and signal. If one person has many possible suitors then maybe the quality for Mr/Miss Right is there. They can’t be all wrong.

But if one is too eager or too wanting then the targeted person is justified to wonder whether that is the best s/he can get. Couldn’t I do better (note: the notion is subjective as it is multi dimension)?

So what to do in this conundrum? If one don’t want person that want them then nobody get together with anyone.

One gateway is quality certification. So the two know that they are both in the same range of desirability level and could not do much better. It requires an independent arbitrage trusted by both parties to do the assessment.

In a classic proverb, that’s what friends are for.

Thursday, June 05, 2008

Gender-in tuh BLT...

Rame-rame ngomongin harga minyak naik, mikirin nasib subsidi yang mau dikasih ke orang miskin. tapi ngomongin isu gender kaitannya ke BLT sepertinya masih jarang. silahkan baca dan komentar disini

Tuesday, June 03, 2008

A Case for Price Control

I know that economists are supposed to be against price control. Let market decide what is the appropriate value of goods and services.

But there is exception for every rule.

Galbraith wrote a little known gem entitled, Theory of Price Control. He was the price czar and ‘kind of” economic advisor to Kennedy in addition to be longtime economic professor at Harvard.

In essence he argued that price control should be in inverse proportion of market perfection. The worst the market function, the more price control can do to improve general welfare.

After the rise of fuel price in Indonesia, we fitness price of goods and services are rising. The bus transportation even pushes for 25 % increase for bus fee despite the fuel price increase "only" 28.7 %.

So we face some kind of prisoners’ dilemma in here. Everybody is raining the price of their product in anticipation of the rise of other products in order to protect there purchasing parity in addition of cost transmission.

In human term, the price increase is happening partly because increase in price of inputs and partlyattempt to maintain ability to consume similar bundle of items.

Considering the market for public transportation and agricultural goods are hardly perfect then what is needed for the expert (and economist) to start calculating the multiplier impact tof fuel increase, with solid methodological foundation, to the economy (especially tran sport and agricultural goods) and come up with just and appropriate price.

The Central Bank could help with a bit monetary tightening.

Somehow the public and newspaper overlook (again) that most people in Indonesia are public transportation user and food consumers that will bear the brunt of the price increase.

If the government need to step in to calm the irrational exuberance, so be it.