Statement of Purpose – final

My search for truth had always been synonymous with the study of science. The method, models and rigor of science attracted me from an early age. At five my grandmother was taking me to the planetarium, at 10 I began a subscription to Scientific American (I usually just read the summary paragraphs, the rest was over my head) and as a teenager I became a huge fan of the writings of Carl Sagan and other science popularizers. Sagan was able to explain profound and beautiful things in simple language. At the time, I took this aspect of his writing to be useful because it made it easier for me to understand how the world worked. In the back of my mind stuck his determination to help others to understand.

As a child, I had great contempt for subjects of human nature; English and social sciences. They seemed to me to be deeply narcissistic. Besides, I felt they had nothing to do with a greater pursuit of the truth. I remember arguing vehemently with my 8th grade literature teacher about whether or not “The bumblebee flew anyway” had a subtext. “If the author had some lesson for his readers to learn” I argued, “why didn’t he just write the lesson out in plain English?!” Part of this bias can be explained by my growing up in the middle of the Redwood Forests of Northern California; conservative and largely unpopulated. Most of my experiences, playing in the creek or hunting tweety birds, were governed by the natural world rather than people.

However, when I went to school in Berkeley, I saw my world shift from being governed by nature to a near 100% saturation of human pursuits. Like the set of a play that is brought in to cover the bare rafters and structures that make up the stage, Berkeley covered all I knew about how the world worked with the constructs of modern human civilization. I was struck by the fact that each tree was placed by a human; every rule to follow was a human law rather than natural. I realized that people, especially large groups of them, had a logic of their own, perhaps distinct from nature. I began to ask myself, “What laws govern these people?” There were the obvious answers: government and politics, the police and power. These were brute force kinds of answers. Possibly true, but uninteresting. What struck me were more subtle issues that dealt with the layers of abstraction involved in everyday interactions of people. Buying apples at the store involves a tremendous amount of faith in these unsaid laws of human interaction. Why does money have value and why would the apple vendor take it in exchange for an apple (which by the away arrived to the vendor via a complex scheme of domestic and international trade)?

My years in industry have deepened this mystery. I’ve been involved in both the buying and selling of software. I’ve struggled with creating new products, setting prices, and trying to find buyers. I’ve created ‘value propositions.’ Why do people buy things at the market price or any price for that matter? I’ve taken finance classes where I’ve learned value is the NPV of net future cash flow. What happens in cases where future cash flows are uncertain or unknowable? Even without perfect information, the price is set, people still buy and people still sell. My experience in the real world, while sparking my interest in the theory of price setting, has shown me how important these issues really are.

For such an important and regular activity, determining price and trying to place value on stuff is an extremely hard thing to do. Aesthetically and innately, I’m attracted to the prospect of understanding this problem better, to the science of determining value and to the study of the theater that allows for such transactions to take place.

Yet, what excites me most is the prospect of teaching people the tools of economics so that they can better make decisions. Decisions on small, but important, things like the setting prices and decisions on large things on how to best structure society. If as a teacher of economics, my only accomplishment is to be a counterbalance to the knee jerk reaction toward socialism, to remind people of the dangers of such systems and of the various successes of capitalism, I will have felt accomplished at the end of my career. If I accomplish nothing else but an understanding of why Communism failed and I resist, both internal to myself and as a teacher, the temptation of similar ideologies, then I’ll have been a success. However it is much harder to be for something than it is to be against something; thus, I strive for a deeper understanding of economic life.

Economic life is dominated by two forces; the spirit of the individual and the instinct for community. People are individuals; it is physically impossible to ‘stand in someone else’s shoes.’ It shouldn’t be a surprise to anyone that people think of themselves first and act accordingly. Because physics determines such individuality, this force has been easier to quantify and it is easier to borrow models from the physical sciences to help determine its form. Much of economics up to this point has been just this. Models built on assumptions of rationality or utility maximization are examples. The other force, community, gets less attention. It is hard to quantify the social nature of humanity and it is hard to understand the social institutions that it creates. Because it is hard to understand, some deny its validity or see it as an aberration. Some go as far as to say that people are acting irrationally when they act in ways that are in their community’s best interest rather than their own (e.g. voting, fighting in wars, etc). However, this force has as much to do with economics as does greed or selfishness. As Thurow pointed out in his ‘Future of Capitalism,’ Capitalism depends on a strong foundation of social institutions and as Seabright argues in his ‘The Company of Strangers,’ we seem to be pre-built with the drive to build such institutions.

I want to study the dynamic between these two forces. What policies help these forces to not come in conflict? More specifically, how can markets be used to protect the environment, ensure a more equitable distribution of wealth and foster growth in our country and the less developed countries?

As you can see, I have a strong motivation to continue my studies in economics and to become a teacher of the subject. My background and interests have given me the focus and maturity to succeed in your program.

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