Tuesday, December 18, 2012

Economists for Dummies

I don't really understand why I did it, but I graduated in economics, so in this post I could go a little bit deeper on the ideas of the great economists, but I won't. The intent of this text is to allow the reader to enter  the sea of ​​knowledge of the great economists, but only until the water reaches his/her waist. Let's keep it shallow... (Oh, and we will once again understand the influence of these guys in popular music and also in football, or soccer, if you are american).

Adam Smith - Scottish sociologist of the 18th century - the guy of the "leave the market alone and in the end everything will fall into place"

Smith argued, among other things, that if we left each economic agent (each of us) alone, each agent would act in a "rational" way, following their own interests, and that would result in a perfect economic balance.

There was, for Smith, an "invisible hand", that united the individual interests of each economic agent. The invisible hand would bring balance and stability to the economy, and the government should interfere as little as possible.

Followers of Smith in Football:

You can not speak of the invisible hand without remembering Maradona's goal using the hand against England in the quarterfinals of the 1986 World Cup. The Argentine player preferred the term "hand of God".

Another famous follower of line A. Smith was brazilian midfielder Gerson, the "golden lefty" was one of the stars of the Brazilian national team that won the World Cup in 1970. Smith's influence is clear in the famous (in Brazil) "Law of Gerson", an unfortunate statement he, then retired player, made on a television ad in the late 1970's ("After all, the you gotta take advantage on everything, right?"). For Adam Smith, Gerson was only reaffirming his role of a rational economic agent in pursuit of his own interests.

Followers of A. Smith in Music:

Pink Floyd (personifying the government as "teachers")
"Hey, teachers, leave the kids alone"

The Offspring (about government and the economy)
"You gotta keep 'em separated"

The Beatles (claiming against governmental interference)
"Let it be, let it be, I whisper words of wisdom, let it be ..."

Frank Sinatra (assuring the market can take care of itself, even on difficult times)
"Yes, there were times, I'm sure you knew
When I bit off more than I could chew.
But through it all, when there was doubt,
I ate it up and spit it out.
I faced it all and I stood tall;
And did it my way." (see? no bailouts for Sinatra here)

Karl Marx - German Sociologist and Economist and from the 19th century - the guy of the "workers united will never be defeated"

Marx's theories about society, economics and politics, collectively known as Marxism, argues that all the progress of societies always happens through class struggle: an eternal conflict between a class of capitalists, who control the means of production and a lower class, the proletariat, which sells its work to the capitalist for a wage.

In Marx's theory, the proletariat always loses because the capitalists take all the "surplus value" of the work, since the value of the worker is higher than the wage being paid.

Marx predicted that capitalism's own flaws would lead it to self-destruction and capitalism would be replaced by a new system: socialism. He believed that socialism would, in turn, eventually be replaced by a classless social system, which he named communism.  That transition, though, wouldn't be peaceful, so Marx claimed for the workers to unite and revolt against the system.

Followers of Marx in football:

"Manchester United": They are united, and are rarely defeated.

Followers of Marx in music:

System of a Down (revolting against the system)
"War! Fuck the system! War! Fuck the system!"

Lily Allen (revolting against the system in a girlish way)
"It's not fair and it's really not ok, it's really not ok"

The Beatles (agreeing with the revolution idea, but kind of in a lazy way)

"You say you want a revolution
Well, you know
We all want to change the world"

Jefferson Airplane (trying to unite the workers in a cheerful mood)
"Hey, people now
Smile on your brother
Let me see you get together"

Eric Clapton (thinking of doing the revolution by himself)

"I can change the world"

Bob Marley (always ahead of his time, preaching revolution on the information age)
"Emancipate yourselves from mental slavery;
None but ourselves can free our minds"

John Maynard Keynes - English economist of the 20th Century - The guy of the "it's not enough to govern, you've got to participate"

Keynes was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, and had great impact on the economic policies of governments.

In the 1930s, Keynes caused a revolution in economic thinking, criticising the mantra of neoclassical economists, which advocated markets should be left alone as much as possible.  Keynes, instead, proposed the use of fiscal and monetary measures to mitigate the adverse effects of economic recession and depression.

Finally, Keynes argued that the government not only could, but should meddle in the economy, the invisible hand was gone. He believed government intervention was crucial in some strategic sectors of the economy.

Followers of Keynes in Football

General Emilio Garrastazu Medici (former Brazilian President during the military regime)

Excited with the Keynesian theories that advocated government intervention, Medici decided it was time to intervene in football. Less than a year before the 1970 World Cup, Medici gave public statements demanding the coach to include "Wonder Dadá" (a famous brazilian forward at the time) on the national team.

Joao Saldanha, the coach at the time, who was a communist and harsh critic of the military regime fought back: "Tell the president to select his cabinet and leave me alone to select my team."  Saldanha was, of course, fired from the job soon after and replaced by Zagallo, who eventually leaded the team to win the Cup.  Dadá went to Mexico as part of the group of 22 players, but didn't get to play a single game.

Followers of Keynes in Music:

Placebo (admitting the failure of neoclassicism and asking the government for help)

"Protect me from what I want... 
Protect me protect me"

Nina Simone (preaching for government intervention)
"So you just do what you gotta do"

When in Rome (predicting a "Big Brother style government intervention)
"Take a look all around, And I'll be there"

The police (proposing an even more suffocating approach on government intervention)
"Every breath you take
Every move you make
Every bond you break
Every step you take
I'll be watching you"


For those who never watched or don't remember, check out below Maradona taking advantage of the "Invisible Hand"

No comments:

Post a Comment