Wednesday, 23 November 2016

Environmental Economics


Motivated by this windy picture of me spending some quality time in the nature and my Monday's decision to finally stop buying plastic bags for my groceries, I want to talk about the environment. I have to state, that my first impression of the people talking about the environment are the extreme-activists of Greenpeace and the so called "viherpiipertäjät" always whining about pollution and discriminating the daily choices of other not-so-green-people.

Just recently I started to think that yes, our collective behavior indeed has consequences and it is going to have negative consequences in the long-run if nothing is going to change. Look, I'm not saying that I'm going to save the planet with my choices, and I'm not forcing you all to change your habits. I just started to think about my daily carbon footprint. Whether you want to decrease yours or not, it's just up to you.

The basic theme and question of this text is that if free-market capitalism with its multinational corporations and industries is designed to create welfare, why it is still considered to harm the environment? Is there anything that could be done to make things good for the environment as well?

One explanation can be found from the tragedy of the commons. According to the theory, basically everything that's free, for example water, air or public fish population, is over-consumed. In a shared-resource system where individual users acting independently according to their own self-interest behave against the common good of all users by depleting that resource through their collective action. If the water you use for drinking and showering isn't billed according to the amount of liters used per month, you tend to keep the shower on while you soap yourself.

That offers us one explanation on the growing problem of over-fishing and the decreasing fish population. If fishing in the oceans is considered as free for all, the self-interest drives individuals to consume more the ocean's resources in order to gain profit by selling fish as much as possible, for instance. If it is not considered as free, regulation and monitoring are difficult and costly to maintain and could allow illegal and undocumented fishing.

Also the pollution of the water systems by different factories, for instance has been a problem partly due because of the tragedy of the commons. But could this be avoided?
Let us consider an example. In a place far far away, there's a fishermen's village near to a beautiful lake. Near to a lake is also a large coal plant. The fishermen need the lake in order to get fish, and the plant needs the lake for sewage purposes.

What do you think will happen if the lake is considered as a shared resource? A conflict of course: The plant will keep on using the lake for sewage and pollutes the lake, thus decreasing the fish population. The fishermen would be probably angry and would sabotage the plant or cause some other major damages.

But what if the lake was owned by either of the parties? If the village would own the lake, the plant would be required to provide monetary compensation on the amount of lost catch due to the pollution for the fishermen. Vice versa, if the plant owns the lake, the fishermen would have the incentive to invest to a refinery to be build for the plant, on the amount of gained catch from more clean water.

So should this suggest that everything needs to be owned by someone? It is a radical conclusion, but yes. That's why for example I'm not against communism, IF the ownership and capital are free to move inside the economy. That was not what was going on in the Soviet Union unfortunately. Everything could be privately owned or governmentally owned to offer a solution for the tragedy of the commons. That's why for example the chairman of Nestlé, Peter Brabeck suggested the privatization of water in 2013. That perfectly shows the difference between the economic theory and real life. Some things such as nature and environment are hard and almost impossible to express in monetary terms.

That is actually what is happening at the moment. Oil refineries have been polluting the ecosystem around them because of different kinds of errors and faults, without providing any major compensation. But the production of oil is not going to stop, since the humanity is already extremely dependent on oil. OPEC has continued the production of oil lately without introducing any new cuts to be seen soon.

Some day oil is going to run out. Only what is going to left from John D. Rockefeller's heritage is destroyed ecosystems and questions to be raised in 50 years on why the hell were people sailing around the Baltic Ocean in a can consuming ridiculous amounts of fossil fuels, just to buy cheap liquor. So could there be any alternative for the production itself?
Nuclear power is a hot topic in every part of the world. It is proven to create less emissions than traditional coal plants and to be proven to be more efficiency. Many countries like France have been investing heavily in nuclear power, providing over half of the produced energy in the country from nuclear power. The only downsides however are the existence of extremely toxic nuclear waste, and the anxiety of the people towards Chernobyl-like reactor meltdowns.

Another, more popular alternative are investments on renewable energy. Germany has been a pioneer in green energy in such a way that it has already managed to produce a day-worth of nation-wide energy from renewable energy sources. Especially the investments on biomass and wind power have been popular. Similarly in Finland, Neste Oil and ST1 are constantly developing more environmentally friendly bio-diesel fuels out of ethanol produced from waste, for instance.

In the near of the becoming energy-crisis, everything I just wrote about ownership and type of energy production will become important. The alternatives for production and the solutions to reduce pollution rising from the negative externalities of production and consumption are going to be more rigorously under research and fiercely under lobbying from the oil companies in the following years. During these times, we all can think about the effects of our own individual daily choices for the economy, for the environment and for ourselves. The next time you're going to drink a cup of coffee from a take-away cup, spend a brief moment to explain to yourself, how that coffee and the cup got there.

Test: SW

Tuesday, 15 November 2016

My Story And Interest On The Dilemmas Of Wealth And Prosperity




While money can't buy happiness, it certainly lets you choose your own form of misery. - Groucho Marx
On this blog I'm going to take an intermission of my usual nonsense, and introduce some facts on why I decided to do all this. Why I became passionately interested in economics, why I decided to apply for business school and finally, why I decided to start writing this humble, but yet so unexpectedly popular blog of mine.

Ever since I was a child, I already noticed that it is the money that unfortunately makes the world go around most of the time. Because of money, my parents were going to work every single day and because of money I was prefered to get a decent education. I reckoned that money is an important matter in the everyday-life, and I consider that our family didn't have much of it. Even when I got the money, I spent days and days of thinking were should I invest my money or should I just save it for the rainy day.

But my story with economics starts from the year 2010, when I decided to apply for the International Diploma Programme of my hometown. I'm still not sure why I did it nor any of my friends are. For those of you who don't know what the so called IB-Programme was, it was basically going through the 3 years of high school in the English language. The biggest differences were that only 6 subjects were studied and the programme consisted of compulsory extra-curriculum activities. The 6 subjects were studied intesively and the students were encouraged to critical thinking.



Of those 6 subjects I decided to choose Economics as one of my subjects. The thing that struck me in the subject was this: it was easy to understand. All the theories and fundamental laws made complete sense in my head. Everything in the world seemed to follow the law of supply and demand and all the people seemed to live to maximize their utility. Although my physics-studies with quantum-mechanics and astrophysics widened my perception of the microworld, economics offered me a chance to understand the macroworld around me better. I magically started to understand how the world works and what exactly is in the news. So for 3 years I studied the basics of microeconomics, macroeconomics, international economics and development economics.

Not to mention how much I enjoyed, and still enjoy applying the Game Theory and the theory of marginal utility, for instance, in a silly way while going through everyday activities. (Battle of the Sexes is one of my favorites)

From that point on it was clear to me as the skies above to apply for business school to continue my studies. I didn't possess much interest in marketing, management or accounting, but nevertheless I was prepared to go through all of them to get the acceptance for the Bachelor's and for the Masters Programmes in Economics.

I got accepted with the first trial and my studies began in a town near to my hometown in 2014. And boy, was I alone. I'm ashamed to admit but the people seemed to fit in all the stereotypes I've heard that the students in business schools are like. It felt so hard for me to adapt and find friends from my new community. During the first year the general atmosphere felt so bad, that I really started to wonder would this really really be my thing. But my passion towards economics was so intense, that I was willing to deal with all the things just for the sake of myself. I was not willing to give up.

I got accepted to the major of economics for my Bachelor's and Master's Programme. However, a reformed degree structure was introduced during 2014 and people were recommended to change to study all the subjects in Economics and Business Administration for 3 years, before specializing for one major for the Master's Programme. And so did I as well.


It was awful. Courses and topics in marketing, management and accounting were pain for me. I felt like I couldn't be any less interested in SWOT or the BCG-matrice. That also lowered my motivation towards my passion, but I still decided not to give up. I would make it for the 3 years and then start deepening my understanding from the field of economics and finance.

During the second year things were different. I started dating, started to find connections and friends from the business school and found all the courses more interesting. Especially the course in Monetary Economics woke the fire inside my towards the school. I again remembered why I was there and the other subjects besides economics seemed to be a bonus, still widening my perspective on the general characteristics of the business environment. Also when I had spent more time in the business school, the people seemed to be all right after all.

During spring of 2016 my world crashed heavily. I got a call that my dad would have approximately one week to live. He was diagnosed with cancer a couple of months before and things were getting worse. I had to live with the fact that I'm going to lose him soon.

My dad used to drive the truck, the bus and the taxi. He was a car-mechanic and his dream was his own shop in my hometown. As you might guess, he didn't even exactly know what I was studying and what my passion was. He just saw that my passion is money-related stuff and I'm hopefully going to make much money out of it. He supported me 100 % although he didn't know anything about the Heckscher-Ohlin-model of international trade or monetarism.

Unfortunately, the cancer was stronger than my dad and I lost him in April 2016.

After that week I spent a lot of time of thinking about life and what were the significant things for me in my life. I decided that the best way to continue is to continue my studies and chase my goals passionately as my dad would have wanted and hoped.

It was exactly then when I wrote my first blog. I felt like I wanted and needed to share my thoughts in my own personal way. I wanted to show what I was interested about and what I had to say..

But I was so uncertain. I thought that people would lynch me on the basis of "Why are you trying to be so smart in the social media?". "Do you really think that someone would care?".


To my great surprise, people cared. Friends and people in the business school were almost daily commenting on my writings and were sincerely asking about the next one and giving ideas. I was astonished. It really felt like the cliche of just being yourself and neglecting what other people think would give you the most happiness and freedom.

The second shock came about a month ago when I was not accepted for the Master's Programme in Economics. I thought that the game would be finally over. I despised and hated the whole application system and judged it as totally unfair for the students. Students were allocated to the majors according to their Grade Point Average. Even though there were 12 positions for economics, and I was one of the 8 who applied for the subject as their first alternative, I didn't get in. I was so angry.

I was desperate at looking all the options I would still have left to keep clinging on the weak branch. My friends seemed to be more shocked than me, which I appreciated a lot. They told me to complain about the matter but I thought it wouldn't help anything. Nevertheless, I decided to relieve my anxiety in a form of complaint for the school.

But for my great surprise my complaint went through. The board considered my complaint as adequate. According to the board, my decision to change my degree structure in 2014 was based more on the suggestion to change than my own personal consideration. And it was true, I didn't considered fully the consequences of the change would affect my later studies. By taking notion of all the circumstances, I was awarded the position in the Master's Programme in Economics.

I was back on track to pursue a career with my passion: economics and finance.

There's also one motive behind this story that I want you all to remember. If I've learned something from these past 6 years, is that if you have a passion, don't give up. Although everything would feel awful and the people and the system would tell you that it is not possible, still don't give up. The goals we set for ourselves and our passions keep us in motion and make us achieve things thought to be unreachable. Whether it's economics, engineering, interior design or cultural anthropology.

And the people around you are the right people if they believe in you more than you believe in yourself.

Text: SW

Wednesday, 2 November 2016

The Winds of the Winner


Only one presidential candidate in the history of the United States of America has been more unpopular than Hillary Clinton. That candidate is Donald Trump.

In less than a week the next leader of the Western superpower is chosen by the American people. The whole world gathers around their receptors to see the one of the biggest political spectacles. In the world. It's the fight between the Democratic party's long-term politician Hillary Clinton and the Republican party's estate millionaire Donald Trump.

The election is not just going to be extremely interesting, but also insanely tight. Latest polls show the percentages of 46,5 % for Clinton and 45,6 % for Trump. If the election is going to be one of the most interesting ones in the history of the United States, it is going to be also one of the closest ones yet.

Especially the European media has implied Trump as a complete buffoon and unsuitable leader for any nation. The nomination of Donald Trump as the president of the United States is seen as disgraceful, scary and also very unexpected. If we consider the political scandals on which Trump has rode his way through his campaign with unexpected success, how on earth the race is still not going to be an easy win for Hillary Clinton?

One of the biggest reasons is the absence of voters. So many voters still think that neither of the candidates is worth their vote and that's why choose not to vote. That makes the statistics and the percentages biased. But let's take a closer look for our candidates to see what makes them so popular and yet, unpopular.


Hillary Clinton has made a long and a successful career in politics. Starting by as the first lady of the president Bill Clinton in the 1990's, Clinton has managed to advance all the way up to the Secretary of State and now possibly for the first female president of the United States. She has been a keen supporter of gender-equality, family values, human rights, middle-class incomes and education-reforms. She has emphasized the establishment of universal preschool and making college more affordable, for instance.

Still, she has managed to smutch her kind and friendly reputation with the e-mail-scandal, which was about using personal e-mail for State affairs during her years as the Secretary of State, causing a major nationwide information security risk. The FBI is still investigating her actions closely during the campaign and to see what major laws she has maybe violated.

Causing a major nationwide information security risk, breaking several laws of the United States and still running for president? That is the questions what the voters for Trump have been thinking


Wall Street favors Clinton's candidacy and especially Goldman Sachs has been a very keen supporter of Clinton's campaign, probably because of her support towards free-trade agreements and financial liberalism. That has also raised conspiracy theories about Bernie Sanders' retreat from his campaign, although the odds may have been ever in his favor. There exist theories that Hillary is not playing it square. Also the general motivation towards the Democratic party has declined during the Obama administration, after several unsuccessful attempts to create a new health-care system and an employment program.


Donald Trump offers, let us say, an alternative for the people who are absolutely not willing to vote for Clinton. Donald Trump is a successful businessman, TV-producer and an estate millionaire. He has no experience from the field of politics and he has soiled in several scandals during his campaign.Whether it has been about building a "Great Wall" for the border of Mexico or the sexual harassment of young women, Trump has managed to stay in the headlines.

Trump appeals to the anxiety of the Americans towards immigration. He has suggested a temporarily ban of all Muslims entering the United States and to exile all illegal Mexican immigrants to reduce crime-rates and the risk of terrorism. Trump's platform includes renegotiation of U.S.–China trade deals, opposition to particular trade agreements such as NAFTA which Clinton has been supporting, reform of veterans' care, and tax cuts.

Trump has also criticized heavily Clinton's policy on Syria. According to him Hillary Clinton wouldn't ease the situation in Syria but just making it worse by denying not to negotiate with Russia and keep on bombing Syria. As a businessman, Trump has been verified to have good and warm connections to Russia.


This might sound very wonderful but there exists a major problem: How? Trump has plenty of ideas but he has no concrete evidence on how to achieve them. With no relevant experience in political decision making, the nomination of Trump would be a game of chance. Populists like Nigel Farage with "Brexit" and Timo Soini with "Jytky" have left the voters not getting exactly what they were promised. I guarantee that this is eventually going to be the case with Donald Trump. I believe that he can't and doesn't know how to implement half of the things he has promised for the American people. Still the rise of anti-immigration atmosphere and nationalism haven't been ever found peaceful during the course of history.

The nomination of Donald Trump as the president of the United States has been considered as a joke from the start. The nomination caused a petition in the United Kingdom to "Block Donald J. Trump from UK entry". The nomination has been described as a threat for world peace to let a temperament person like Donald Trump to a position of such authority and embracing nationalism by "Making America Great Again", not to mention to let him so close to the nuclear launch codes.

Nevertheless, on 8th of November the whole world takes their breath and takes their popcorn out to see where the world is heading next. The game is getting dirtier and dirtier and anything could happen. I personally do care on the matter of which one is chosen, but I think that neither of them would be suitable for the president of the United States. As an ending statement, I suggest you all to watch the video below showing the best bits of the final debate to get a clue from what probably is going to happen and most of all, what is not.


Test: SW
Picture's and other media don't belong to me.