Nature of Competition: The Asset is It All Through

 

We have a life. First, we have to subsist and reproduce. Second on, we have a dream for the future. We have to prepare for subsistence, fertility and the dream. Where there is an end there must be a means.

             We in economics call such a means “the asset.”

 

The asset for the short run. We consume what we produce in the current period. Macroeconomists envision, rightly or wrongly, such a production function: Y= f(L, K, N), where L for Labor force, K for physical Kapital and N for land with Natural resources.

             In our terms herein, L is the human asset, while K and N collectively represent the physical asset. The human asset is us, which is unquestionable. The physical asset is what we own, or have the property right to. Later we come back to how we utilize our assets of the two kinds. In the meantime, there are largely two ways: self-renting home and lending to the firm away. In case of Robinson Crusoe, there is no such thing as lending, of course.

The asset for the long run. We have a life cycle until the timing of crossing the River. First, we shall be prepared for the declining cycle. Second, we have a dream for better-being. Largely for these two reasons, one push the other pull, we invest in assets so much more for the so many more years to come.

             In a word, the asset for the future is ultimately for the sake of (enhanced) utilities in the future.

             In light that we have to take care of the present and the future with and only with 24 hours of the day after day after day, the present and the future is in trade-off. Per annum, we produce some things (c for individual consumption) for this year and other things (i for individual investment) for later years. Needless to say, our investment is possible owing to our saving (s). Ergo, i≡ s.

             According to Paul Samuelson among other disciples, what is household-wise true is not necessarily economy-wide true. The “macro-economy” does surely invest while the gross national saving (S) is sleeping deep down under the Saltwater. The gross domestic investment (I) never competes with the gross domestic consumption (C) but it is at the mercy of the macroeconomist. Some of us may call such mercy “exogeneity.” Lo and behold, the Keynesian Cross, more in real gold than nominal golden.

 

The value of time. Probably hard-wired in our brain in the hunter-gather age, we prefer the present consumption to the future by the “time value of money” as called in the discipline of finance. Such a preference is of course on the basis of ceteris paribus. According to what have been said by sages, oracles and savants, at any rate, the economy-wide value of time seems to be 2% PA, ceteris paribus.                 Then and now, where there is no today there is no tomorrow.

 

“It’s the economy, stupid.” On one hand, our time (T) is limited. On the other hand, our want for utilities (M∙U) is unlimited, now or later. Yin and yang combined, that’s none other than the concept of economy (U∙M∙T^-1). All that matter is the most utilities per hora, per hebdomas, per mensis or per annum.

             We have eventually come to the name of economy (经济, jīngjì in pinyin) to which the time dimension (T) holds the key. It’s never and nowhere is the space dimension (L¹, L² or L³). Ergo, “It’s the economy (T^-1), Your Excellency.” The winner is never the marathoner (L¹) but it is the fastest (L∙T^-1). In and Out Dream, please do not count our time in millimeters or in miles.

             Back to the top, the asset is “It All Through” (一以贯之, yīyǐguànzhī).