Kamis, 22 Maret 2012

HOW AN ECONOMY GROWS AND WHY IT DOESNT?? (BY IRWIN A. SCHIFF)



Posting ini didapat dari film komik yang wajib ditonton oleh peserta kuliah teori pembangunan, ini baru sebagian dari isinya karena panjang sekali ternyata...semoga bermanfaat ^^

o   fish story
      once upon an island lived three men who fished for food everyday...
            a:  able, b:  baker, c:  charlie
      but after much trouble they each managed to catch one fish per day
      and everyday able, baker, and charlie consumed the fish each had caught, enabling them to survive to the next day to catch another fish...
      this is survival, and that's about all...and so, in this super simple island society there are..no savings, no investment, no credit!! everything that is produced is consumed!
      one night, looking up into the star-studded sky, able is struck by a thought...there must be more to life than catch,eat,and catch! >.<
      his think box started grinding... and the idea for a fish-catcher is born...
            a: i'll call it a net!
      so the next day...
            a: i need net materials!

            able is living out a few every basic economic priciples in order to improve his way of life... he is underconsuming and he is taking a risk!!
      his friends snooze contenedly toward a new day of hand fishing...
      at day's end able has completed his net! he has created capital through his self sacrice! while able cant sleep for hunger and worry about his risk taking experiment...
      the next day baker and charlie make much sport of able's invention, the laughs soon fade to gasps...
      and by days end able has caught  2 fish ... baker and charlie each the usual...

o   able's saving create capital
      since the island society had no store of savings the island's first piece of capital equipment was derived solely from able's willingness to deny himself food for 1 day!
      without a supply of savings (capital) an economy cannot grow!!
      baker and charlie soon realize that they too could benefit from able's net...  his capital!
      but able is nobody's fool! he remembers his self sacrifice!! hunger...risk...
      baker and charlie's think boxes mesh geras... and a financial idea is born! interest!!!
      two way benefits: but it's not only able the "capitalist' who gains...

o   able's saving options
  1. he simply might hold onto his savings for possible future emergency use, but of course, then they wouldn't grow..
  2. he could indulge himself and consume all his savings...
  3. he could loan out his four fish to baker and charlie and get back eight fish if they succeeded in building nets!
  4. but still another possiblity struck able...
            a: instead of loaning fish (consumption goods) to baker and charlie to sustain themselves while they build a net (a capital good), why not use the fish myself? i'll consume one fish per day for two days while i build two more nets... then i'll still have two fish and i'll own three nets.., next, i can rent a net to baker and charlie for 1/2 a fish per day, a reasonable fee...
baker and charlie will each be able to catch two fish per day with the nets!
c: since i wouldn've caught 1 fish without the net, and substracting 1/2 fish rent... i'm now 1/2  fish richer!
b: it beats the hard work of hand finishing whereby 1 can catch only 1 fish per day! ^^
a: ... i can retire and work again, with fish per month rental fees coming in! it beats loaning 4 fish to baker and charlie to build their own nets! that would have earned me a total of only 4 fish! of course baker and charlie might only rent the nets for 2 days... then use their savings to build nets for themselves.. i'd be only 2 fish ahead! what to do? ... loan out 4 fish, so baker and charlie can build their own nets, and get 8 fish back, or... eat two of my fish while building 2 more nets for rental that might bring back only 2 fish but possibly steady retirement earnings?
            decisions... decisions! but no matter which way he goes, if baker and charlie are succesful, able will have increased his and society capital!

o   review
      able (and society) has only five things he can do woth his savings gained by self-sacrifice...
  1. he can save what he has saved
  2. he can consume what he has saved
  3. he can loan out what he has saved...
  4. he can invest what he has saved... b&c: we've got food... let's take a day to build nets!
  5. or he can try a combination of all four choices!!
whatever able does it will be based upon the relative risk and profitrewards & his personal economic needs!

o   saving options:
  1. save savings
  2.  consume
  3.  loan out
  4.  invest
  5.  combination

o   moral right:
      so only able has the moral and equitable right to decide how to use his property!!
      whatever choice able makes eventually will enable the community to generate 3 extra fish per day, assuming they all continue to work just as hard!

o   what about greed??
bird 1: won't it be bad if able turns out to be a greedy guy, wanting more and more wealth?
            bird 2: bad for who??
      the only way able's wealth can increase is if he makes his wealth available to members his of the community!
            able shop: equipment rental!  fish loans!
      the noble thing about private capitalism is that it forces those who may only be motivated by personal gain to raise the standard of living of others!
            owl: otherwise his wealth will stay the same or get smaller as he personally uses it up!
      so able decides to loan 4 fish to baker & charlie...
            b: now we have fish to eat while we build our own nets!
      the nets are made...and they now catch enough fish to eat and to pay back their loan to able..now able has profited from his loan, and so have baker and charlie...
            a: i'm 4 fish richer!
            b&c: we own nets we did'nt own before!

o   expansion
      now b and c fish for a full week, saving enough fish to enable them to devote another week's effrot on a still bigger capital project...this much larger project requires more and new materials... plus ingenuity...
            the better fish trap
c: out big trap foh continually!
            b: outside of a few repairs now and then, we only have to gather the fish we want to eat each day,,, plus some extras to save!!
            b:now we have plenty to eat and lots of leisure with savings to boot!
            c: we dont have a care in the world!
            c: huh? what do you know about the fush bussines owl???
            owl: i know plenty about disasters chump!>.<

o   natural disasters...
      acts of god...these may disupt the island's economy by damaging its capital... the big fish trap...
            c: the flood has destroyed our trap!
            b: there go my savings!!!
            owl: but when we find "hard timed" (such as recession and depression) in the absence og natural disasters, their cause is man made!!

o   unnatural disaters
      throughout histroy unnatural disasters have been caused by nonproductive politicians meddling in the natural economic order to steal the productivity of some for the benefit of others , "inflation“
            people: let's take from the "haves" and give to the "have nots"!

o   island consume debt
      suppose baker and charlie approached able for a "vacatiuon loan" instead of a loan for building nets...
      can able expand credit? politician and bankers frequently refer to "expanding" or "easing" of credit! but can anybody do this at command? can a statist magician really make more wealth available to loan by a merewave of his magic wand?
      the obvious answer is no! nobody can loan out something they dont have! any attempt to do, so is trickery and fraud!the island's total supply of credit is limited by its total supply of fish!

o   emergency loan for consumption
      able has wisely rejected baker and chalie's request for a vacation (consumption) loan, and a week later... baker and charlie cannot fish because of a storm or sickness...
      now, out of compassion, able makes a consumer loan out of his sacrificially accumulated savings so that baker and charlie can eat and live to work another day
      but suppose able had granted the priginal & needless consumption loan for a vacation..baker and charlie squander the island's savings having fun on the beach... and then a storm strikes in their weakened condition disease could take over...
      result... the island society could be totally wiped-out, thanks to "consumer debt", the great waster!

o   survival of the savers
      if on the otherhand, able refused to make the "vacation loan" he would have had "emergency funds" available to weather the storm...
      a depression or a recession has set in! yes, savings can mean the difference betweet the life and death of society!

o   capital loan risk
      of course, not all investments or capital loans work out, and this can also bring about a reduction and a waste of society's store of savings! but the ones that work make up for the ones thaht dont!
      able may have made loans to bakre and charlie to build nets, but...
            b: i'm a poor net-maker!
            c:where are all the fish today?
      or able may have used up his capital builiding more nets for himself, but..
            a: i cant find enough supplies! baker and charlie irrationally refuse to rent my nets!
      goverment programs encouraging loans to poor quality and high risk applicants develop a higher degree of capital failure, and waste society's savings in the same way as granting consumer credit!

o   enter the bully
      but now let us suppose, that, while baker and charlie were attempting to negociate a consumer loan from able for a vacation fanklin dee the island's bully showed up...
      today, in america, the influence of politicians on loaning institutions operates in much the same way as franklin dee, to:
  1. waste savings by encouraging the uneconomic use of credit
  2. discourage savings by reducing if not completely eliminating the rewards of thrift

o   the island economy growns
      now lets see how the same economic rules that  operate in a simple economic society also apply to a more complicated one
      able's initial willingness to create capital throug his own personal sacrifice has benefited many other islanders.
      now there are many "ables" fishing with their own nets...but not everybody has the skills of netmaking and fishing...
      some islanders borrow fish to sustain themselves while they build the tools of other trades...boat builders..buggy builders..
      the islanders continued to use fish as a medium of exchange. all wages and prices were quoetd in terms of so many fish: as were the terms of loans. and since each person on the island consumed one fish per day, the island's price structure was related to their daily consumption of fish!


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