To sum up briefly, economics studies the law of interaction between strangers.
Wan Weigang, who is also an economics teacher, wrote an article called "The Five Simplest Economic Wisdom", which may be because Wan Weigang has been engaged in English reading and writing for a long time, or because Mr. Wan acquiesced that all his readers have a certain economic foundation. The writing style and narrative logic of the article are not "the simplest" for ordinary people, but there is still a certain threshold.
I tried to restore the main points of this article with my own understanding. Interested readers can search the original text by themselves.
What are the five simplest wisdom in economics?
First, the country is not one.
This sentence can be said to be the starting point of all economic theories.
So what exactly does this sentence mean? The translation is: "except for family, it is all interest."
The word "economics", whether in Chinese or English, implies a meaning: saving money. It is the efficient use of resources and the same sum of money. Where can you spend it to produce more? This may also be the reason why some honest economists and economic theories are not very popular in China-they are cold and have no temperature to be human.
At that time, Professor Xue Zhaofeng suggested that the demand for train tickets in Spring Festival travel rush should be adjusted by price lever, that is, the price increase. He also said that voting for "scalpers" is beneficial and harmless to society, and the strong pressure of public opinion forced his old father to come from his hometown and cling to him, asking him to withdraw his views and eliminate the influence.
In fact, the overreaction of Professor Xue's old father can be said to be an inherent (or appropriate) attitude of China people, because it is determined by our cultural genes.
For more than two thousand years, Confucian culture has advocated "benevolence, courtesy, wisdom, faith", "filial piety" and "benevolence". Another feature of Confucian culture is that it is "ashamed of profit", and the ranking of social strata is "intellectuals, farmers and businessmen", and businessmen always rank last.
China is a typical agricultural society. In the past, we lived in an acquaintance society. Everyone was linked by family and blood, and the relationship spread outward at different levels. Everyone wants to do something, the first thing that comes to mind is to find acquaintances to find relationships.
Why? To put it simply: in the agricultural era with low productivity, materials are extremely scarce. Otherwise, it is difficult for individuals to survive. This is called "joining a group to keep warm".
In traditional society, "being in a foreign land" is a terrible situation, so China people will say "relying on parents at home and friends when going out". In modern society, even strangers who are far away from the world can cooperate well.
"Country is not home" tells us that we should adapt to the era of commercial civilization as soon as possible. The so-called commercial civilization era is to get used to large-scale cooperation between strangers. Although the feelings between people are not so deep on the surface, they are actually the most efficient. Acquaintances talk about friendship, while strangers talk about interests. Acquaintances talk about identity, strangers talk about contracts. Acquaintances speak of character, while strangers speak of credit.
People talk about interests without feelings, and the overall interests of people can be promoted the fastest.
Why is China a first-tier city? It is because these cities have achieved large-scale cooperation between strangers.
Why do young people have to stay in big cities? Because in these cities, as long as you can provide value to others, even if you don't know anyone, you can achieve something. In those small places, they still stay in the thinking of agricultural society. Without social relations and acquaintance resources, they will be unable to move.
Times have changed today. There is no so-called "holding a group to keep warm" in the superposition of the information age and the commercial civilization age, but only "strong alliance".
Believe it or not.
Second, there is no free lunch.
We all know that there is no such thing as a free lunch. But do you really understand the meaning of this sentence?
Can you refuse the free temptation of the merchants? Will you spend most of your time searching online because of a cheap 10 yuan product?
I believe many people will. Because they don't know what "there is no such thing as a free lunch".
In economics, the concept of "cost" is very different from that in accounting. The "cost" in economics is the option you give up when you get the greatest possible benefit. What do you mean? For example, the time you spend screening a product of 10 yuan online can be used to do another thing, which is your real cost. For example, you can write an article and post it online to earn 100 yuan, or you can earn 100 yuan by moving bricks. This is the cost of buying this product. In accounting, your income is 10 yuan. In economics, your income is negative 90 yuan.
In the eyes of economists, the world is completely different.
Economics believes that we live in a limited world. There are many beautiful things in this world that everyone wants, but they may not get. If you want something like this, you must pay the price. There are just some costs. You can't see it without the third eye of economics.
For example, we often see the slogan "Life is priceless, we should ensure safety at all costs". Of course, life is priceless, but who in the world can ensure their own safety at all costs? Every time we go to the street, there is a risk of traffic accidents, but will you stay at home and go nowhere all your life? The price is too high for anyone to pay.
Another example is environmental protection. Environmental protection is of course correct! As long as you drive, it will aggravate air pollution, traffic congestion and global warming. Some environmentalists specialize in commuting by bike. But should you really do this? We should consider that our own convenience is also valuable! As long as the value brought by driving is higher than the value of pollution and congestion, driving is right.
Some extreme environmentalists think that the earth should remain its true colors and it is best to erase all traces of human beings, but economists think the price is too high. As long as the cost of pollution can be guaranteed to be the most efficient, this pollution is acceptable.
Zweig said in The Broken Queen: "All the gifts given by fate have been marked in the darkness."
Attention, it's "secretly"! In other words, what you think is free may be the most expensive. There are some costs, but you can't see them.
There is no such thing as a free lunch, and there is no such thing as "whatever it takes".
Believe it or not.
Third, design the incentive mechanism reasonably.
If you want others to do something according to their own wishes, most people will persuade them by reason. And economists will design incentives reasonably.
The advantage of the incentive method is that as long as your incentive system is well designed, people will willingly do what you want them to do. Teacher Wan gave an example. His son likes watching cartoons and playing games very much. He holds the screen all day, and sometimes he can't hear anything when talking to him, which is difficult to discipline. At a parent-teacher meeting, his kindergarten teacher told us a way: all screen time should be earned: doing homework, eating well, doing housework and so on. Every time you do such a thing, you will be rewarded with 15 minutes of screen time. You can play games and watch TV, but if you don't earn money, you will get nothing. Teacher Wan really implemented this policy, and later changed 15 minutes to 5 minutes, and strictly timed it with his mobile phone, with good results. Teacher Wan said that looking after his son is like a profiteer looking at a corrupt official. He is not afraid that you are disobedient, but that you have no hobbies.
So the best way to change people's behavior is to change the incentive mechanism.
Regarding design incentives, I have another example here, which is more illustrative.
During the British colonial period, in order to solve the problem of insufficient population and difficult development in Australia, the British government came up with a way: extradite some local criminals to Australia, which can reduce the local crime rate and solve the problem of insufficient labor force in Australia. However, on the way to Australia, the death rate of these prisoners at sea is extremely high, and the number of deaths often exceeds 30% when they reach their destination. The British government paid a high transportation fee, but the goal was not achieved. Later, the British government simply sent people to the transport ship to track and supervise the whole process, but the effect was about equal to nothing. The officials sent to supervise were either in cahoots with the ship owners or disappeared inexplicably on the way, which made the British government very headache.
Later, a member of parliament came up with an idea. The problem is not the money, but the mode of payment. In the past, the government paid the shipowner when the prisoner boarded the ship, but now it is paid by Australia. In other words, in Britain, no matter how many prisoners you bring, the government always counts people at the place of arrival and gives money according to the number of living people who land in Australia. If a person dies halfway, he won't get a dime.
This way to completely reverse the situation, the government does not need to send people to supervise, nor does it need to send doctors. On the contrary, the ship owner asked the doctor to take care of the prisoner himself, for fear that once someone died halfway, everything would be in vain. Results The mortality rate of carriers going to Australia decreased obviously, and kept between 1% ~ 1.5%.
There is a more famous example about motivation: "cobra effect".
"Cobra effect" refers to India during the British colonial period, where cobras ran rampant in the capital Delhi, posing a great threat to citizens' safety. In order to protect people's safety, the British colonial government issued an incentive measure: for every cobra killed, people can get a reward of 1 rupee. After the introduction of the system, the British colonial authorities thought that the problem of cobra rampant would be solved soon, but the final result was unexpected: cobra not only did not decrease, but increased. It turns out that Indians raise cobras to get rewards.
Therefore, a well-designed incentive policy is the "killer" for economists to solve problems, and it is effective for anyone at any time.
Because this is the real human nature.
Fourth, everything depends on the price.
In the eyes of economists, price is not only money, but also an incentive signal, which is transmitted in the market. It can be said that the biggest advantage of market economy is that the problem of signal transmission is solved by price, and resources can be rationally allocated.
The reason is simple: if a good thing is temporarily scarce, scarcity means high price, and high price means people are willing to produce it. Various enterprises spontaneously come out and try their best to develop and produce. Enterprises may not be to fill the country's technical gap, nor to serve the people, but simply to make money, because the product price is high. But in the end, the price of this product is getting cheaper and cheaper, everyone can afford it, and the whole society will benefit.
But this is just an ideal state. Many times, the price transmission mechanism will also fail.
In one case, the price signal is chaotic. For example, in the fields of education and medical care, the reason why marketization has not succeeded is because the price signals in these two fields are chaotic. Simply put, the more expensive the school, the better. Sometimes it is simply parents' good face and anxiety. Private hospitals are more expensive than public hospitals, but this does not mean that they are of high level. People would rather trust public hospitals than go to private hospitals for medical treatment. Private hospitals like "P Tian Department" have disturbed the price transmission of the whole medical industry through their strong capital operation ability and false advertisements.
Simply put, it is necessary to have a good legal system and social environment to ensure the effective transmission of price signals.
Another situation is that human intervention leads to the failure of price transmission mechanism. For example, the monopoly formed by administrative QL. This is not within the scope of economic research, so it is not easy to elaborate.
But even so, in the face of strong market rules, this force only plays a short-term adjustment role and cannot change the general trend. For example, house prices. In some cities, restrictions have dropped, just like diapers, only temporarily; In some cities, the price limit is only a short-term regulation, and the soup has already opened. What should fall or fall, what should rise or rise.
What can "everything depends on the price" tell us ordinary people? What it tells us is that you never buy anything expensive. Because price is not only a signal, but also a screening mechanism.
For example, if you want to buy a car instead of walking, then a family car of about 10 million yuan is economical and applicable; If you want more space and more functions, it's about 300 thousand; If you want to go out and have face, it's 500 thousand or even higher As for the interior, wheelbase, appearance and even brand, they are all minor problems. Even if you don't know anything, as long as you know your own needs, you can't buy it with your eyes closed. Because the price has been chosen for you.
Another example: You took a fancy to a dress, and the final transaction price was 200 yuan. It is possible that this dress is only 100 in other places, but you don't know where to sell the 100 dress. If you want to find it, the cost may far exceed the cheap 100 yuan.
In other words, when the transaction is concluded, the money you pay is your current optimal solution.
Therefore, with the signal of price and the screening mechanism, you will never buy expensive ones or buy the wrong ones.
It depends on what you want.
5. The result may be unexpected.
There is a word called "butterfly effect", which means that a butterfly flapping its wings in the Amazon jungle may cause a tornado somewhere in the United States. Of course, no one can finish the experiment. This is just a metaphor.
The theory of "butterfly effect" perfectly fits the viewpoint in economics that the result may be unexpected. That is, when we do anything, the initial conditions are magnified or confused layer by layer, and the final result may be quite different from the original idea, or even completely different.
We ordinary people may regard the world as a simple causal relationship. For example, rich people donate money, which everyone thinks is a good thing. If the rich do public welfare, the life of the poor will be improved. For example, helping poor countries in Africa, where people's lives will be better.
But the truth may be just the opposite.
For example, study whether donations can help the poor improve their lives. Economists have done an experiment. They selected some poor families and gave them money every month in the name of the government. After waiting for a few months, comparing the economic indicators of these lucky families with those of normal families, we found that the employment rate of families receiving money did not increase, but the divorce rate increased greatly, and the quality of life did not improve at all. This is because people often do not cherish hard-won wealth, but are more accustomed to relying on this kind of assistance. We are usually called "lazy people" here.
For another example, the world has helped poor areas in Africa for many years, but Africa has not become rich. On the contrary, many places have gone from bad to worse, and wars have continued and they have become poorer and poorer. This is because the aid from other countries cannot be directly distributed to those in need, and the cost is too high, so the aid can only rely on the local government, and it is inevitable that some people will enrich themselves. Even some African governments will use this aid to expand their power, and their status will be more stable, but the people will be poorer.
China's aid to Africa in recent years has been fruitful because the China government no longer simply sends money to poor black brothers for delivery, but invests in local infrastructure construction, such as building roads and bridges to generate electricity, boosting local industries, creating employment opportunities for the bottom people, and greatly improving efficiency.
"The result may be unexpected" tells us that simple causality is invalid in many cases. Because the world is a complex system, the behavior of complex systems is often unpredictable.
Therefore, it is best not to be easily disturbed by any unprecedented big move you come up with out of thin air, because you have no idea what will lead to in the end! This is also the reason why the bigger the organization is, the more bloated it is and the lower its efficiency is. What the large organization pursues is no longer efficiency, but the safe and stable operation of the system.
Economics is profound, and the concept of "cost" alone has made countless economists disappear for many years, and a large number of related works exist. As ordinary people, we can understand the four foundations and five wisdom of economics, which opens our third eye to see the world.
Only with these four foundations and five bases of wisdom can we be called "modern people".
Believe it or not!