In this posting, I will write "Economic Glossary"column in English. This is translation of the original Korean posting written by
. Checkout blog post on Steem https://steemit.com/kr/@gotoperson/balloon-effect
I expect support and attention from steemians using English :)
The topic of today is a "Balloon Effect".
Meaning and Reason of a Balloon Effect
If you grasp one side of a balloon, the other side bulges out. Likewise, when you solve a problem in one part, the problem in another part recurs. This is called a Balloon Effect.
A Balloon Effect is a phenomenon in which a method used to solve a problem doesn't work and then the problem is transferred to another area or becomes larger or creates a new problem.
But if the original problem is solved and its Balloon Effect will not happen.
This Balloon Effect is often caused by running a short-sighted solution. It means that the original problem should be considered from various angles and we should not overlook it.
This Balloon Effect term is mainly discussed in economic and social issues which are not fragmentary issues but intertwined with complex relationships.
Let's look at an example to see what is a Balloon Effect in economy.
Let's assume that there is a rigorous change to the 1st bank loan to reduce the size of household loans.
But will the size of household loans be reduced by making the 1st bank be more conservative in lending?
Of course, the size of the household loans through the 1st bank may decrease.
But in this case, it is overlooked that the borrowers will move to other banks where they can get more loans.
Borrowers will turn their attention to loan products of the 2nd or the 3rd bank paying even greater interest. Because the method taken to solve one problem produces the other, the damage is eventually borne by the borrowers.
This is what a Balloon Effect is. The latter problem is often more complicated than the original problem.
Thus, it is very important to avoid Balloon Effects in solving any problems. These Balloon Effects happen everywhere, at a job, at home, at school, even in you pesonal matters and you must block it in advance.
To prevent a Balloon Effect in advance, it can be one way to create various predictable scenarios and discuss those possible consequences. Also, "reducing the size of the whole problem" can sometimes be a fundamental way to solve a problem.
This can be a strategy to block the original problem not to be transferred to another problem as well.
In order to alleviate the above-mentioned household loan problem, it is a way to identify the borrowers' use of loans and to implement the policy or the system that can reduce the amount of the loan.
It is the most ideal life not to have problems but nobody can be free from them.
Remember, to solve a problem wisely, it is important to know its scope and impact as well as the problem itself.
