The Nature of Economics Reasoning and Its Impact on Other Spheres

The nature of economics reasoning can be varied nationally and institutionally. This happens because of the social, common practices, laws, policies, political situations as well as geologically. In order to lay out the better policies or to develop the economic system, the nature of economic reasoning, the making decision by comparing the costs and benefits, is needed to be understand well.

What is Economic?

According to the archeological and written records of humans’ history, obtaining the materials means to satisfy the wants is a continuing problem to the humans. Though both foods and shelters are the basic requirements of a human life, as the civilizations rise more and more advancing, not just the needs but the others goods become partial needs and partial wants to fulfill the desire of humans. And studying the way how that humans deal with these issues and challenges become known as “Economics”. In another words, according to the Economists, “Economics” is the study of how the limited resources are allocated and how the choices to make maximum outputs with minimum inputs or resources to fulfill the needs and wants of humans.

Due to this concept, minimizing inputs and maximizing output, people do the economic reasoning in everyday life. Using this economic reasoning, decisions are made by comparing marginal costs, the additional cost over and above cost already incurred and marginal benefits, the additional benefit above and beyond what has already accrued. Therefore, for generally and rationally, if the marginal cost is below the marginal benefit, then the decisions are made while if the marginal cost are beyond the marginal benefit, then the decisions are not made.

Opportunity Cost

Equation of marginal cost and benefit is only true for small cases but if for the co-operations, enterprises and firms, this equation cannot be true. In another word, if the decisions are made for short term, like buying clothes or daily uses, then this equation is perfect but if for the long term or strategic planning, choosing career life, investing getting married or not, then this equation should not be applied easily due to the opportunity cost. For example, Bill Gates left the collage and started the Microsoft. And here, opportunity cost, that should already be less than the benefits of what have chosen, become one of the basic facts of the nature of economic reasoning.

Taking Risk

Another facts of the nature of economic reasoning is known as Taking Risk. Though, taking risk is a bit seen similar to the opportunity cost, this concept is more practical than the opportunity cost. Due to this concept, the governments of each nation choose different module of economic designs such as free market economy, social market economy, command economy, mixed economy, etc.

The Choices of Economic Designs

And again, the choices of economic designs, commanding heights, are also based on how that nation was formed up and constructed, both by informally and formally, as well as the experiences of that nation. In another words, Commanding Heights or Choosing the economic design can be varied on the populations density, social designs, and background. (A History of the U S Economy, 2010)

For example, why United States of America chose the free market economy while Myanmar chose socialist economy design? And this answer relied on the history of both nations’ backgrounds. The constitution and the nation building process of United States of America was led by landowners and those with huge businesses backgrounds. And, on the other hands, the independence of United States was happened mostly due to the economic pressure from British Government. As most of the statesmen of United States are from wealthy and landowners, the design of economic chose was free economy markets until nowadays thought it faced great depression for several time.

Unlike that nation, Myanmar was a different story. Before 1885, the economic design of Myanmar was a bit tend to be known as traditional but later 1885, due to the colonization system, the design was change and again, after the 1962, the economic design was changed to socialist economy. This is because during those days, the country was facing arm conflicts with Burma Communist Party, Ku Ming Tang from China and Ethnic Armed Groups. And due to the lack of peace and many conflicts, the Government decided to take control the market and started the socialist economy. And later in 1988, the economic design was changed again to market economy due to the changing of global trend and public demands.

Conclusion

As both types of economy level, Macroeconomic and Microeconomic level, are controlled by three forces of economic forces (the invisible hand), social and cultural forces and political and legal forces, while the macroeconomic level, the branch of economics that studies the behavior and performance of an economy as a whole, focusing on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product and inflation, was managed by governments and the microeconomic, individuals, households and firms' behavior in decision making and allocation of resources that applies to markets of goods and services and deals with individual and economic issues, Economic Reasoning, the making decision by comparing the costs and benefits, can be varied daily and several times.

According the historical facts, the thinking designs of economic reasoning can be changed gradually due to the globalization trends, war, rises of new technologies and social behaviors. For the conclusion, the nature of economic reasoning. depends on the economic institutions, that can be varied according to the nations, such as law, policies, social, common practices, religious ideology and background of that nation can be varied from time to time.