The institution I am affiliated with has chosen the theme for this year, "Be Healthy in Mind, Body and Spirit". This theme reminds and wants to encourage all of us to be holistically healthy, which means that it is not being healthy only in one aspect but in all aspects of one's being.
When one is healthy in all these three, it may be compared to a market that is in equilibrium and which has achieved allocative efficiency, thus society's welfare is maximized.
At equilibrium, demand and supply are equal, therefore the input factors of production are used to their maximum capacity and strategically allocated towards producing goods that are more needed, wanted or demanded, so much so that if the two market forces meet, (allocative) efficiency is achieved.
Society's welfare is maximized at this point because the marginal costs (MC) and marginal benefits (MB) are equal, which means that neither the consumer nor the producer is better off or worse off as evidenced by the same area occupied by consumer and producer surplus.
Consumer surplus is the extra happiness or benefit received by the consumer for paying a price to buy that good that is lower than what he is willing to pay for, while producer surplus is also the extra happiness derived by the producer for selling his goods at a price higher that what he is willing to sell them for. So, basically, being healthy in body, mind and spirit is having a good balance of everything in your life. But what happens when there is an imbalance?
There is what we call a disequilibrium. The market is in disequilibrium when there are price distortions like a price ceiling or price floor, when taxes are imposed or subsidies are given, or when the government meddles in the affairs of the market.
A person may experience a disequilibrium when there is an imbalance among the body, mind and spirit. When one is constrained or restrained physically, the body is not able to move or do whatever it want to do. When one is manipulated or when another person decides for one, the mind loses its freedom to think rationally. When a religion forces or teaches one to hate another, the spirit weakens.
There is disequilibrium due to market failures, like externalities. There is a disparity between the social benefits or costs and the private benefits or costs, where an action of an economic agent affects other parties that are not included in the transactions. In the same way that a person who performs an action without thinking of the effect of other persons then there is an imbalance. A smoker who does not think about other people who inhales the smoke he exhales will lead to the detriment of not only the smoker but also of the people who inhaled his cigarette smoke.
Another market failure is information asymmetry. In this market failure, there is an imbalance of information, as such, one party having more information than the other, and uses this to his advantage. The person can have more information about the other person and uses these to the other’s disadvantage. The spirit therefore suffers as the morality of using what one knows about the other to destroy the other’s reputation, such as rumor mongering or twisting truths.
Monopoly power is another market failure. Here, a single firm that dominates a certain market can take advantage of this, pushing the prices higher than what the market really dictates or making it difficult for other competitors to enter the market. The human person, gifted with great intellect, the likes Hitler, Stalin, Marcos, uses this intelligence not to uphold the dignity of other people but rather trample their rights upon. This not only is a sign of weak or unhealthy mind but a mind full of evil that only triumphs in the downfall of others.
Economics, with all its theories and concepts, can also explain what a healthy person is. One that has a balance of body, mind and spirit. When all these three are balanced or in equilibrium, we are assured that we not only get the best in life today, but the best in life for the rest of our life.
To Brent International School Baguio sdministrators, faculty, staff, parents, alumni and students, Happy 110th Foundation day! Congratulations!