Why Economic Growth is More Important than Gender Equality

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Figure 1: Taking care of moral issues enhances the economy

I think most of would agree that issues such as gender equality, education and malnutrition are important matters. Not only morally, in the sense that anyone of us should have the right to be treated equally, to receive education or to have proper feeding, but also because of their economic consequences. Studies have shown that gender inequality, lack of education and malnutrition affect the economy of a country negatively (see Figure 1). But fewer studies, at least none I could find, look at the relation the other way: what are the effects of economic development on gender inequality, education and malnutrition? Or more broadly: what are the effects of economic development on moral issues, instead of the other way around?

Let’s take gender equality, for example. I think it is reasonable to assume that when a country develops economically, the role of women in society will improve – in the sense that they are treated more equally to men. For suppose people have more disposable income, as a result of economic development. Then this money might allow families a sense of freedom that partially breaks down the traditional role division between the working man and housewife. The money might for example allow women to pursue their interests, whether this be education, painting or something else, thereby enabling them to develop in a manner similar to men.

Furthermore, economic development might reduce the number of children per family, thereby putting less pressure on either the man or woman to stay at home to care for the children. This enables both parties to participate more equally in, for example, the workplace.

Economic development might also increase the level of education in a society. In case there is a system of private schooling in place, this is obvious. For if people have more income to spend, they can spend more on the education of their children, thereby increasing the level of education received in society. Also, more income means more taxes. In case a country has public schooling, more taxes allows for a more elaborate educational system, thereby enhancing education. Also, when families have more income, their children might not have to do labour to increase the family’s income. This provides them with the time required for education.

Malnutrition; another problem. It is obvious how malnutrition might be bad for a country’s economy. But it is just as obvious how economic development might reduce malnutrition. After all: if people have more income to spend, they can spend more money on food, thereby decreasing the level of malnutrition. Furthermore, if an economy develops, the supply of food might increase, since there might be more economic demand for food. The food might also be cheaper due to increased mass production, hence increasing the availability of food for the common people.

I am sure there are many other moral issues I didn’t deal with in this article (think about poverty, or child labour), but that affect both the economic development of a country and are affected by it. But what each of these matters appear to have in common is that they can be improved by improving the economic development of a society. Hence, in case you want to improve the well-being of a society, as many charities might want to do, you might be better of developing a society economically than to try and solve each moral issue one by one (see Figure 2). Because why choose the hard way when there might be a much simpler solution?

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Figure 2: Economic development might (partially) solve moral issues

What do you think?

Why Voting on Trump Now is Especially Bad

Today another terrorist attack hit a major city in Europe. After Paris, today Brussels was hit. Naturally people are scared, and want to feel safe. Hence it seems attractive to support a political party which implements policies that at first sight seem to increase one’s safety. Think about people such as Geert Wilders in the Netherlands, or Donald Trump in the USA.

Geert Wilders for example wants to close its country’s borders, and stop emigration from Muslim countries. Wilders’ policies are part of a much broader agenda; an agenda that is characterized by a core of anti-Islam. He condemns pretty much anything that has to do with the Islamic ideology. Donald Trump might be even worse: he wants to ban any Muslim from emigrating to the USA.

Although such measures might appear to improve the safety of the average citizen, one can legitimately doubt whether such policies will make our lives safer, instead of less safe.

For suppose more people vote on Wilders or Trump. Then Wilders/Trump will implement more anti-Muslim policies, which not only creates a more apparent difference between Muslims and not-Muslims, but might also make Muslims feel more oppressed in their own country, which in turn could cause resistance. They might start thinking: ‘If you guys won’t accept us and our ideas, then we might have to force you to respect us another way’. Or: ‘Given that you don’t respect us, we see little reason to respect you’. This feeling might not directly cause terrorism, but it could lead to an increased sense of suppression within the country’s Muslim community, which might stimulate the occurrence of a breeding ground for (violent) resistance.

But even without political anti-Muslim measures being implemented, increased support for anti-Muslim politicians might in itself make Muslims feel like they are not accepted, not even in their own country, thereby creating resistance. After all: how would you feel to live in a country (such as the Netherlands) in which 1 in every 3 people on the street votes for a party whose main message it is to suppress your kind of people. I can imagine that you won’t feel much compassion for your fellow citizens.

Especially in this time, when the tensions between Muslims and not-Muslims seems relatively large, voting for people who increase this tension even further might be particularly problematic.

What do you think?

Why Do So Many People Want To Be in a Relationship?

Why Do People Want To Be in a Relationship?

Why Do People Want To Be in Relationships?

Sharing your life with someone else. Always being together: if not in person, then at least in mind. Sharing in the other person’s pain (but also in their happiness of course). Always having an obligation to someone. Not being fully free.

These are merely some of the consequences of being in a relationship. I wonder: what draws so many people into a relationship? Why do so many people appear to have the urge to always have that other special person in their lives?

Is it is to share your feelings and ideas with someone who truly cares about you? Who doesn’t judge you, who wishes the best for you and tries to help you? That might be true, but it seems like you don’t have to be in a relationship to have such experiences. You might just as well talk to friends – who by definition care about you, want the best for you and try to help you – and achieve pretty much the same results.

Is it for sex then? To have sexual intercourse with someone regularly without having to go through the seduction process over and over again? Maybe, but again: you don’t need to be in a relationship for that. You can have sex with pretty much anyone who wants to have sex with you; also with the same person, so that you don’t have to go through the seduction process over and over again. ‘But’, someone might object, ‘sex with someone you’re not in a relationship with is less intimate in some way, than sex with your girlfriend/boyfriend.’ But is it really? Because why would the fact that you are in relationship with someone, which appears to be nothing but a social construct, add to the intimacy of sex? It might be that being in love with each other does, but then again: you don’t need to be in a relationship to have that experience.

So why then, if not for companionship or sex?

Maybe it is to boost our own perception of ourselves. Maybe it is the idea that we mean so much to someone that that person is willing to give up a large part of their lives, time and bodies for us. And the prettier, smarter, kinder that other person is, the more special it is that that person chooses you. And it might just be that feeling of possession that we, insecure humans, crave for, and why we value being in a relationship with someone.

Or maybe it is because it is just the normal thing to do, according to the unwritten rules of society. But one could question whether this is ever a good reason to do anything.

The best reason I can think of is when you plan on having, or actually have, children with someone. For in case you have children with someone, it might only be fair towards that person to devote all your resources to him/her and your children – if only because it might be best for your children, which from an evolutionary perspective seems an important consideration in one’s actions. However, I doubt many teenagers, or people in their twenties, consciously decide to get into a relationship with someone for this reason.

None of this is of course a problem; not if both parties agree to the relationship. But it might shed light on the not-so-conscious reasons that drive people into a relationship.

How Hedge Funds (Ab)use Human Psychology to Increase Profits

I am a professional trader. That means that I buy and sell stocks for a living. And since I am a so-called ‘day trader’, the buying and selling have to happen within one day. This means that I am extremely short term focused: I try to anticipate where a stock will be at within five minutes or an hour from now, instead of five years.

As a trader, you obviously want to buy a stock as cheaply as possible, and to sell it for as much as possible. But if you think that studying financial documents and finding out what companies appear undervalued will help you in trading, you are only very partially right. Much more important, I dare to say, is understanding and using human psychology. And when you zoom in from years to days to minutes to seconds, the more important human psychology becomes.

Let me give you an example of how big hedge funds (which I certainly do not belong to) seem to use human psychology to increase their profits. I say ‘seem’, because I cannot prove this. If only because I don’t know who is buying or selling at any moment in time (but I can see what hedge funds own what stocks, and when they bought/sold). But given my everyday experience with movements in price, and applying common sense, I am reasonably certain.

Suppose there is a stock trading a little above $3. Last time it went to $3, it recovered to $10 within three years, and to $55 within six. Last year the stock was priced at $10, and ten years ago it was priced at $55. Therefore it looks cheap (irrespective of the fundamentals of the company). Hedge funds assume that many people are willing to buy at this price. Assume that many people do. Now hedge funds, with practically unlimited financial resources, come in. They create a level of resistance in the price. They do so by offering a practically infinite amount of stocks at best offer (being the lowest price at which people are willing to sell the stock: $3,21 in Table 1). By doing this, they create an upper limit in the price, since before the price can increase, all the stocks at best offer have to be bought, which is practically impossible given that the hedge funds have so much selling power compared to the rest.

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Table 1: order book of stock

 

Now, since the price cannot go up, it will go down at a certain point. Be it because of algorithms trying to maintain certain correlations with indices, or because the hedge funds actively sell stocks at successive levels of best bid (the highest price at which people are willing to buy the stock: 3,19, 3,18 etc. in Table 1). Through doing this, the price will decrease to let’s say $3: a ‘psychological level’ in the stock. Many of the people who bought the stock thought it would never go under $3. Now people get anxious. Then the hedge funds give the final blow, and push through the $3. Now people start to panic – “maybe the stock will go to $2!”. They start selling the stock ‘at market’, meaning regardless of the price.

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Figure 1: Arcelor Mittal stock

 

Now the hedge funds can buy the stock for less than $3 from the people who are selling at market, either to go ‘long’ (to have stocks), or to cover their shorts. See Figure 1 for a graphical display of this chain of events. Combine this with the fact that high frequency traders (acting on behalf of hedge funds) can change the order book in less than the blink of an eye (thereby changing the quantities on bid and offer), they can very quickly change the price of a stock. The price of a stock is after all nothing more than the price paid for the stock in the last transaction: so if you very quickly pull away successive levels of best bid, the next person selling at market will do so at a (much) lower price, meaning that the hedge funds buy at a lower price than the general public.

Now the hedge funds have bought their stocks, they pull back, and let the market do the rest.