As part of our Business Statistics syllabus at Diploma level, Ms Fiona, the lecturer was teaching us how to draw the Lorenz Curve and how we should describe the curve.
"The Lorenz Curve shows the degree of inequality that exists in the distributions of two variables. It is often used to illustrate the extent that income or wealth is distributed unequally in a situation. Likewise, this question shows the degree of inequality in the distribution of income and the population. After you draw, use the 80-20 rule to explain it....” the lecturer explained.
I gave her a blank look. Obviously, I do not take to learning like a duck to water.
“What’s the 80-20 rule, Miss?” I asked.
“80-20 rule as in the Pareto rule. Does anyone of you know what is the Pareto rule?” she asked the class.
Silence.
I leaned back triumphantly and smiled. Ahh! brethren! I wasn't the only one who did not kow what the 80-20 rule was!!!. “Pareto rule? Is it related to the Pareto Chart that is used for quality control??” I asked the lecturer again.
"What is Pareto Chart?" Chin Chin cuts in.
"Ah, it's something out of Production Management. Don't worry, you will learn it when you take Production Management." I replied.
"We use the Pareto rule to describe the Pareto Chart also. The Pareto rule states that 80% of the effects come from 20% of the causes. In economics, we always say that 20% of the world's population own 80% of all the available wealth and 80% of the population own 20% of all the available wealth,” the lecturer answered.
“True, ah?? Does it apply to countries as well??” I asked.
“Generally, yes. Pareto rule was developed by an Italian economist called Pareto, who observed that 80% of income in Italy went to 20% of the population,”
Without missing a beat, I said, "Yeeh, that is not fair. Eh Miss, does this rule apply to our country, or not??" I waited eagerly for her answer. I loved where the conversation was leading to....
"Nothing is fair in this world. Never has been and never will be...," the lecturer chided, "now can we continue??"
I groan inwardly. That was not what I wanted to hear!! "Oh okay, okay. How do we describe the Lorenz Curve using the 80-20 rule??" I replied.
The lecturer had that familiar twinkle in her eye upon hearing that. She continued with lessons. She sure loves statistics..
"You see ah, for this question, you draw the line from here to here, then you explain it like this: The Lorenz Curve shows that 20% of the total income is earned by 63% of the population while 80% of the income is earned by 27% of the population.........."
"Why must it be 80% or 20%? can't it be a 70-30 or 60-40?" I asked inquisitively.
"It can be anything actually but not 50-50. However, we usually use 80-20 because that is the rule of thumb in business." After her explanation, Ms Fiona gave us a question to test our understanding.
Then she made her rounds to make sure everyone understood what she was teaching. She always does that during tutorial sessions.
After I finished calculating the cumulative numbers and percentage cumulative, I leaned over to Li Sia and said, "Ms Fiona sure knows everything."
"Of course she knows, just like most of our lecturers." she answered while pulling out a piece a graph paper from her file to draw the curve.
Chin Chin, who was sitting in front of me, turned around and said, "Aiyah you. 老师就是老师. 如果老师不知道, then who knows?"
"Yeah, I guess you are right. Likewise, I wouldn't call Mr. Kho the walking Oxford dictionary for nothing, right," I replied, letting out a sigh. "Now I know how come I can never become a teacher."
"Why?" Li Sia asked. Eyebrows raised.
"There's a lot of things I don't know. You see, like Ms Fiona, she knows a whole lot of stuff from finance to accounting, from statistics and math to econs. As for me, I have forgotten what I have learned during Financial Accounting 2!!" I replied.
"You still remember what we learned in Production Management like the Pareto Chart leh.", answered Li Sia, probably in an attempt to make me feel better.
"Probably the Pareto Chart only. I've kinda forgotten the rest anyway." I retorted.
"So what do you want to become in future?" she asked.
A pause. I racked my brain for an answer.
"Remember last time during MTP, Ms Noresa used to tell us, if you can't find a job related to your major or your qualification, you can always go back to teaching."
"Ah hah..", Li Sia mumbled. She was busy sketching her curve. I was only beginning to plot the dots. There was a noisy bunch at the back, joking in Chinese. Chin Chin was busy, hunched over her desk.
"Well, I can't follow her advice so I think I'd go to Europe and become a cow," I said, comprehension dawning.
Chin Chin overheard what I said. "Become a cow?" she asked with her face scrunched up, as if cows were inferior creatures. She gave me an incredulous look.
"Ya, why not?" I replied promptly, "The average European cow gets a subsidy of $2 a day. That's the World Bank measure of poverty; which more than what half of the people in the developing world is living on. Therefore, in some cases, it is actually better to be a cow in Europe than a poor person in a developing country or a farmer in sub-Saharan Africa. Do you know Joseph Stiglitz?"
Li Sia and Chin Chin shook their heads with blank stare at me.
"Well, he's an economist. He won a Nobel prize winner for Economics. He is also the author of several books, all which I never had the opportunity to lay my hands on. One of his works is entitled Making Globalization Work. I never read it but from what I gather from reviews, he criticized the hypocrisy with which developed countries had extremely high subsidies on farming and refusing to remove subsidies for agricultural products and farming. Do you know as a result of the high subsidies given to the farmers in developed countries such as US, the bulk of developing population whose populace depends on agriculture for subsistence, are unable to export their agriculture to developed nations because the subsidies keep prices in developed countries unfairly lower. The subsidies enable high-cost farmers and food companies to sell their products at below the cost of production and unfairly beat off the products of farmers in developing countries that don’t have the same kind of money to subsidize their products. So actually it's quite sad to think that those in the developed world are oblivious to the plight of the poor in the developing world. They have pushed for policies that promote trade liberalization mostly in the service sectors, where they have an advantage, and kept up tariffs to block out agricultural imports from the poor countries, when they know that agriculture is the sole livelihood for much of the developing world inhabitants. The losses to farmers in the Third World due to such selfish policies cost three times more than aid given to those countries by the developed world. It makes more sense, then, to pursue a fairer trade regime. As long as discrimination toward the poor doesn't end, we will continue to see an increase in the vicious circle of poverty which will cause environmental degradation. That is why we see inequality in the distribution of wealth. Remember just now, Ms Fiona was telling us that 20% of the world's population own 80% of all the available wealth? I think that is how it comes about. Probably the only way out of this is for the First World countries to share some of their wealth with the developing world, or at the very least, trade fairly with them," I postulated.
The conversation ended. Li Sia's work was 80% done. Mine was only 20% done!!!
Why the big difference when we started at the same time???
I knew I had to get back to work. I had to catch up with her. Thank God I finished in time when the lecturer reached our desks.
"Finish?" she asked Li Sia and I.
We showed her our neatly sketched Lorenz Curve and the explanation we did using the 80-20 rule. "Good, you understand the concept, right? You two do your work very fast, huh?"
I felt a grin spreading itself over my face.
"That's because we spent 20% of our time talking while the rest spent 80% of their time talking. Therefore, when we are 80% done, they are 20% done!", I answered vainly, hiding the truth that Li Sia finished way ahead of me. "Miss, I know how to apply the Pareto rule, huh??"
The clock struck 10:30a.m. The bunch of boys sitting behind rushed out of class. A student went towards her with the assignment question with the assignment question paper in hand. It was obvious he was going to ask her questions about the assignment. Knowing how vain I could get at times, she smirked.
***************************************
and to the G-D somebody from the primate category, thank you for what happened yesterday that made me sense your disdain and the disgust and disappointment. I am raging at the whole injustice of your lack of acceptance and unreasonable expectations that that burning anger's just faded down to a vaguely throbbing ache in my chest. (And it doesn't help much when your parents start interrogating you as if you were a criminal when in the first place, you do not know why you were treated like that behind your back....)
Well, the sad truth is staring at me in the face but I wouldn't wallow in my troubles. After all I don't intend to work for the G-D somebody from the primate category when I graduate.
If I can't find a job then, I would just go to Europe and become a cow as in lembu. After all, I'm a wood ox, or in my case, a wood cow. :)
