9/30/11

• Adam Smith's View of Government's Positive Roles in Laissez Faire
• Police and Courts for domestic defense
• National Defense
• Public Works
• Adam Smith's View on Citizens' Rights
• Rights to Property
• Division of Labor
• Exchange is peaceful and mutual
• No special privilege
• Source of Wealth according to Smith
• Production and Exchange
• Prevent certain elements from marketplace
• any attempt to control prices
• unfair taxes(not fair taxes)
• disability to buy what I want when I want from whom I want
• Spontaneous Order
• Ferguson (1767)
• first recent moral philosopher to discuss order
• people want to make their lives easier to get what they want
• Corn Laws
• started early 19th century
• impose sliding taxes on imported corn (grain)
• passed so elites could continue to rake in the money from their inflated corn
• repealed mid 19th century
• Fastest Economic period of Growth
• late 19th century
• England had a far higher manufacturing rate than any country
• This prompted many countries to lower trade barriers
• More capitalist a country, the less important is capital
• Capitalism provides for more opportunities 

9/28 recitation

• played Ultimatum game
• what is greed?
• higher level of self-interest that occurs when one goes too far
• an excessive desire for more
• why do you expect wegmans not to poison you?
• the Feedback Loop
• the consumers' money gives the business an incentive to make them happy so they will come back to them again

9/26 week reading: the debate

• there were many statistics that showed that the richer countries were the happier
• many facets of everyday life were seen with more satisfaction among the citizens of the richer countries
• however, there were also examples that showed how quality beat quantity
• ex: people would rather be the commoners in the land of the rich than the richest of the poor
• changing the question asked to the people being surveyed kept the results essentially the same
• ex: Japan did this and although its people were becoming happier, the surveys indicated otherwise

9/28/11

• Circular Flow of Economy
• Two groups: People and Businesses
• Factor Market
• People send "stuff" in exchange for money so businesses can make their products
• "stuff"= labor, capital, machinery etc.
• "Goods" Market
• People pay businesses for their products
•  Income = Expenditures
• Increase in Expenditures will have to lead to increase in income
• Consumers can consume
• Consumers can invest
• Government can purchase materials
• Individuals can't be self-sufficient at least not successfully 
• Pysiocrats' Source of Wealth
• Agriculture was source of wealth
• Mercantilists' Sources of Wealth
• Gold in treasury
• more gold produced more means to execute war
• Wealth/Finances of the King
• king's purpose is to produce a positive balance of trade
• Positive Balance of Trade
• Arguments against other sources
• trade is zero-sum(giver is loser and receiver is winner)
• the King should control trade
• Restrict Imports
• Promote Exports
• NO Free Trade
• money is wealth 
• Is Capitalisim compatible with justice?
• 'conforms to some preexisting notion of goodness'
• Hume
• even more prominent than adam smith
• most widely read author among the founding fathers
• rejected that the source of wealth is agriculture
• scared that jealousy would prevent us from trading's benefits
• Hume's Source of Wealth
• Commerce
• Specie-flow mechanism: Law of One Price 
• amount of money relative to amount of goods in circulation 
• Hume's Important Elements
• Competition 
• separates the weaker from the stronger
• "trabant" example a car made only in east germany
• Learning and Innovation 
• learn from failed attempts of other countries
• Division of Labor
• unattainable without  a lot of trade
• Idea: Economies of Scale
• you wouldn't use more resources than a task required
• Prices change when money goes in and out
• England's prices inflate, British buy French goods, French prices go up and English prices go back down

9/26/11

• Direct Causes of IR
• Emergence of a Business Class
• Entrepreneur
• Increase in Technology Improves Worker Productivity
• Wages Rising improves technology or is derived from improved technology 
• IR was one of the first times we started to value peer collaboration
• Institutions
• Adam Smith argued they are the most important factor for growth
• Duty has transformed to people high up on the hierarchical ladder to ourselves
• Mercantilism
• 'progressive corporatism'
• heavy restraints on indivduals imposed by states
• craft guilds
• licensing, government granted monopoly
• restriction on the free movement of people
• Two major groups
• French Physiocrats
• Scottish Moral Philosophers
• Quesnay
• Circular Flow
• stuff going between individuals and firma

EWOT for week 9/19-9/23

Many arguments that we are destroying the earth and its resources are unfounded. Many resources are plentiful and in actuality bodies of water and air are both cleaner. These accomplishments are accompanied with greater income and riches for everyone as a whole in comparison with the past. However, greater incomes does not lead to happiness and many today serve as living proof.

9/23/11

• Is the natural world better or worse?
• Bodies of water and air in America and Europe are cleaner
•  Resources are more plentiful than in the past globally
• Takes less land to produce more crops
• Forests are larger than 60 years ago
• Has becoming richer made us happier?
• Layard did a study:in some places where people have incomes beyond 15Gs, they don't become happier with more dollars
• Happiness has been seen to arise from social and political gains
• No concrete correlation between increased incomes and happiness
• GDP per capita growth
• Highest growth was during 1950-1973 at 2.5% growth
• 2000-2010 has been the Developing World's Best Decade Ever
• Industrial Revolution = Commercial Revolution
• Transition period from no change to accelerated change
• Countries affected differently from each other
• Economic growth=Extensive growth= population becomes richer but individuals not affected
• Classical Theory
• More people leads to faster usage of productivity
• Modern Theory
• Advancements in tech. knowledge, and human capital allows productivity to outrun population
• Child quality vs. child quantity
• net transfer from older to younger generation
• Fertility rates
• rate=2 .1
• Falling across the world
• Poor countries' rate went from 6 to 3
• Europe's rate halved
• Most of the world only meets the replacement rate now
• If it continues, population will be at 9 billion by mid century
• Intellectual Stepping Stones of the IR
• Chinese invented printing press
• Romans invented first steam engine
• 
  

Recitation 9/21/11

• Recap: comparative advantage=competitive advantage=specialization
• Facts help us decide how much of a resource is needed
• People know economics;they just don't know the right stuff
• Ideas are usually held by people who are not affected by what the idea's about because there's no cost to them
• What is done depends on the concepts and view of the people in question
• When we put a price floor, companies need to pay their employees more money
• With minimum wage comes high cost which is not necessarily a good thing
• High cost leads to unemployment
• Feedback Loop- consumers can trust companies because they need to provide the consumer service to ensure the possibility of their coming back
• Minimum Wage causes:
• Unemployment
• Worse Working Conditions
• Less Benefits

9/21/11

• Income
• 1790- 91% spent on necessities
• 1900- 72% on necessities
• Today- 35% on necessities
• We're richer today because we can spend double on whatever income we garner on nice stuff 
•  Major Income Inclinations
• Primarily Risk
• Income Elasticity of Demand
• prime example would be spent amount on luxuries
• "Freed-Up" Wealth gets us..
• Bureaucrats
• Bombs
• Bailouts
• Government's Scope in the Market has grown significantly over the past century
• Commodities
• they themselves don't matter
• the services that the commodity provides matters

Main Points 9/19/11

• Mankind has been constantly improving itself
• Death rates for major diseases falling
• Physical Stature increasing
• Nutrition Rates increasing
• The Flynn Effect, increase in cognitive utilization, is on the rise
• Health care improvement
• These Improvements are significant
• Mankind's population growing
• World becoming richer
• strong correlation between richness and longer length of life
• People living longer
• American Living Standards (Past and Present)
• Workweeks are shorter 
• Vacations are more plentiful
• Commutes are longer
• Retirement did not exist
• Women were only 18% of workforce; now 50%
• Income
• Average Per Capita income 100 years ago $7000
• Average Per Capita income now $45,000
• Effort
• less needed today to buy more
• counter example
• piper-club plane cost $25,000 in our money
• costs $120,000 today
• Time dedicated to work has fallen
• lower than Europe

EWOT week 9/12

• Living standards have never ever been nearly better than how they are now
• Technological advancements are a major key to the doorway of societal betterment
• The rise of the middle class has significantly improved standards of living

Main points 9/16/11

• Generally, everyone on the planet was dirt poor
• Farming rates incredibly high 80% to today's below 2%
• What about the past's incredible achievements, the natural wonders?
• most of the people were serfs, a rank barely above a slave
• they were obligated to construct buildings and give 30% of their wealth to the kings
• serfs' wealth and work went to the building of the monuments 
• No one has seen anything to compare with the work accomplished by 20th century western democracies
• Some of the rich and famous of the past died of causes that could be easily cured today
• Internet gives us access to a plethora of material resources
• Poorer peasants' experience
• Lucky to have pit privies: same streams to drink from that animals bathed and both animals and humans defecated in
• Only had wood
• took miles and hours per day to collect
• Inadequate Housing
• Early Urbanites' experience
• Travel via Horse
• 22 pounds of manure per day
• Trash thrown into streets
• 1/3 of agricultural land to feed horses
• Life Expectancy has risen since the 18th century to now for almost all countries
• 1/3 deaths were due to hunger 
• Much healthier today we are

Industrial Revolution- Recitation

• It takes a great deal of effort to manufacture and supply even the most basic of products
• We're better off today because we don't have to be self-sufficient anymore
• many corporations and companies can supply us with what we need
• 5 Reasons for Industrial Revolution
• Laissez Faire
• Rise of Entrepeneurs
• International Gold Standard
• Mobility of capital and labor
• Ability to take advantage of the world wide division of labor and the competitive advantage that accompanies it
• competitive advantage- what you can specialize in
• free to do more, we are
• Present day America, mercantilism is practiced
• Past Britain, little incentive was there and there was no free trade
• no specializations
• everyone worked on their own
• Why was England able to industrialize
• its liberal environment
• individual rights=extraordinary leap of energy
• individual man was free to create, innovate and enterprise without government interference
• social and economic mobility became easy for the business man as the social and economic barriers were lowered
• Rich got richer, but the poor got much better than before
• Invisible Hand
• Standards of Living
• Increased
• Everyone got richer
• Globalization allows us to extend knowledge across the world
• Without trade and specialization, we lose competition, learning, and innovation

Main Points 9/14/11

• First 1000 years A.D. income stayed stagnant and living standards did not improve
• literacy fell on a wide scale
• deurbanized
• extremely low GDP growth
• Technological advancements alone does not at all guarantee economic growth
• tech for steam engine was available during year 1000 
• Pre- Industrial Revolution there was no middle class
• Growth rate increase since 1800 has been incredible (about 1 %- 3 %)
• World production has grown much faster than world population
• Extensive growth is technological advancements designed to support people not improve living standards
• Through time, monetary inequality has risen
• 1870, USA 9x richer than poorest countries; Today, USA 75x richer than poorest countries
• 80% reduction in poverty in last 40 years
• How different are some of the rich and poor today
• functionality vs causality

Class 5: Economic Advancement from the Stone Age to the Technological Era

• People have looked frustrated to economics for explicit reasons to why things occur the way they do in the economic field; however, there is no explicit intention or reasoning
• Impersonality 
• Prevalent in most if not all commercial activities today
• A main reason why some people are nostalgic for the past
• Self-interest
• Everyday, skills are traded for benefits
• Money or time is invested for personal gain primarily
• Cognitive Issue
• Practicality
• The cost of producing far outweighs the cost of sale
• Who gave the orders?
• Nobody, most commercial activities are made up of many interconnecting threads
• Everyone in the chain of events cooperate for the end results
• Invisible Hand
• possibility for people to cooperate for self-betterment with no one giving orders and without the need for coercion
• Tacit Knowledge
• how things are done in a uniquely known way that could not be done by someone else
• allowing people with the information and incentive to work on it
• Price System
• price is a way of telling how scarce something is
• a method of knowing the terms of exchange
• no one sets the prices
• Are we better off today?
• expecting improvement is astounding
• asking the question is impressive
• differences between 1000 A.D. and 0 A.D. are actually negligible 
•  We live in a world of immense inequality
• USA produces over 50X the poorest countries and 15X typical poor country
• GDP measures money produced inside USA's borders
• Not everything produced is valuable and not everything valuable is produced
• Stone Age
• everyone was stone-cold poor
• for many millenia, no advancements were made
• now, world's richness doubles in 15 years

The Economic Revolution , the Worldly Philosophers, by Heilbroner

Mankind is by nature self-centered. Nevertheless, societal needs ,such as hunger, push us together to accomplish tasks that could not be done by ourselves. This has established societal norms like kinship and collaboration. To ensure the continuation of society, man has made traditions for the next generation to go into careers in which they can utilize their selective skills. Centuries upon centuries, mankind was never in need of economists in spite of various economic scales of wealth. Later on, economists devised the market system in which each person could do that which was to his/her best monetary advantage.  The market system marked the beginning of the modern world's most important revolution. The incentive of financial gain proved to be better than that of authoritarian rule. The very idea of gaining profit to have a surplus is actually modern and had no system or base in history beforehand. For people who had any form of capitalism in mind, society's answer was societal exile. A market system is more than simply exchanging goods. It is a mechanism for sustaining and maintaining a society(Heilbroner 27). There was virtually nothing for any sort of economist to do in the Middle Ages and the short span of time that followed in the pre-Capitalist era. To make your own path or bring about change was inconceivable because it was viewed as unimportant and irrelevant. The foremost causes that brought about the possibility of the modern market system are the following: spark in scientific curiosity, new political leadership,  and emergence from the dark ages. From those stepping stones, man began to delve into the principles of gain and profit. With the help of leaders who were akin to economists such as Adam Smith, great advances in ideologies and foundations were made to construct the modern workplace society in which we all live in today.

EWOT for week 1

The world is run by incentives ,and trade-offs are rampant whether they are visible or not. In almost every aspect of a person's life, economic thinking is evident. Everyone ,regardless of being aware of this or not, makes cost effective decisions based on benefits vs costs. Even in mundane decisions, this line of thought is prevalent. Today, efficiency has never been higher ,yet at times, people disregard or forget important concepts such as every decision has repercussions and good intentions do not equate nor do they justify bad results. Mankind acts purposefully. In every era, especially this one, no one has ever greatly committed himself/herself to a cause or process that he/she does not understand or support.

Main Points Day 4

• Microeconomics is analyzing individual decisions
• Macroeconomics is the study of the unforeseen consequences of those individual decisions 
• The reason to study economics is to know how the economy works and to identify what disrupts it
• Why should anyone study Economics
• Provides a way of awe
• Understanding concepts are important
• Knowing the facts are important
• Trade-offs are rampant in this age
• Today...
• Important concepts are misunderstood
• It's possible to collapse time and space incredibly
• Intentions do NOT equate Results
• 2.3% of Americans earn minimum wage
• Economics is not complex; Economic Systems are
• People can have a Type C or Type M brain
• Type C are scientific and analyze situations firstr
• Type M are emotional or motivation driven

Basic Economics by Sowell: Chapter 1

• Scarcity of resources is an issue at the heart of economics
• Resources with alternative uses are the prime source
• Alternative uses make it harder to properly decide resource utilization
• Allocation of scarce resources is the study of economics

Hazlitt's Economics in One Lesson: Chapter 1

• A presiding economic fallacy today is to overlook the consequences of a decision for all groups involved
• It's all too easy to overlook the important long-term effects of decisions
• In accordance with the arts of economics, it is wise and keen to make decisions with both long-term and immediate effects for all groups effected not just a select few

Key Points day 3

• In this world of scarcity, trade-offs are essential
• To economize is to weigh the benefits and costs of decisions, a rational thought process
• All values and costs are subjective
• Economics is about prudence and temperance as well
• Economics is the study of the emergence of order and wealth creation and the consequences of choices made in order to ascertain the progression of mankind's society
• Microeconomics studies unforeseen consequences of decisions for everyone
• Macroeconomics studies with consequences of decisions in the long-term scale such as if the government banned the sale of kidneys, incentive to sell them would fall rapidly

Key Points (days 1-2)

• Incentive is a fundamental key in economics
• Scarcity of resources is at the economical core
• Allocation of scarce resources, especially the ones with alternative uses, is imperative
• Focusing solely on immediate effects of decisions for select groups is very ill-advised.
• Immediate and Long-Term effects have to be focused on for all the groups that the decision entails

Personal Web Site Completed

That didn't take a substantial amount of time at all. Objective completed. I will now acknowledge said completion in 3 different languages for fun.
                                                                     I did it
                                                                     Lo hice
                                                                     Yah tah