9/30

Economics begin when we stop producing for ourselves

Competition - If you don't have competition, nothing gets better, no pressures
Imitation, Learning - When you see something else making a product, you can make it yourself and make it better
Division of Labor - Know more and more about less and less.

Need these:
Government to protect with police and courts.
National defense
Public goods

And these:
Right to property (contracts are binding, you can't have personal property taken from you)
Division of labor
Exchange is PEACEFUL
NO special privileges!

EWOT

http://news.blogs.cnn.com/2011/09/26/jesus-or-jail-alabama-town-offers-options-for-serving-time/

The long story short here is that in one county in Alabama Judges will offer a new punishment for misdemeanor crimes. Criminals may choose to spend time in jail, pay a fine or attend church every Sunday for a year. While there are obvious constitutional issues under the first and 14th amendments, it's also funny on closer inspection. Since church time is a lot easier to handle than jail time or a fine, people may find crimes more worthwhile to commit. Either way, those who commit crimes will almost certainly take the church time, causing the quality of churches to drop, as criminals from around the county begin to attend. In short, forcing criminals to go to church is a crapshoot when it comes to reforming criminals, but it's 100% likely to fill your churches with criminals.

9/26

Population Theories
Classical - More wealth -> larger family
Need children for labor and support if you're poor (and most of world is poor)

Modren
There's actually a set amount of children they want
 - More wealth -> higher quality kids

The industrial revolution could have come about for a number of reasons. Some of it has to do with luck, some of it has to do with tradition, some of it has to do with location, some of it has to do with the enlightenment. In the end, a lot of it just seems like luck anyway.

Social Science Reading

This article seemed fairly focused on the concept that the social sciences are confronted with serious hurdles in being able to produce any important information. I feel like this refutes numerous real-world social experimental results that have borne out fairly well over the course of decades. However, it does make good points about causal densities.

Is it necessary to have fully controlled experiments to determine any useful information? What is the extent to which statistical information is good enough?

What is another reason there may have been fewer re-arrests after the first in the case of the domestic abuse experiments?

Are the social sciences essentially futile?

I feel like it was important to read this because it gives us a perspective on how fickle our economical axioms are. The article's point is that the social sciences produce often unreliable results. This is how two economists with views totally opposite of each other can both win the nobel prize one after the other.

9/21

• If anything violates the trends that we've been talking about, it's probably for some particular reason that has a story behind it.

•  Bureaucrats, bombs, and bailouts. Couldn't spend that much money years ago because we didn't have it.

•   Cell phones are changing the world.

Class 8

• The current world is significantly better than the past in measureable ways
• Health is clearly better than it was in the past (if not as good for women)
• He's not making it up. Seriously Facts. World is better. 

Heilbroner Reading

As much as it was a good read, the Heilbroner chapter seems to gloss over a lot of important aspects of historical nuance. It isn't to say that it's wrong in how it interprets economic trends, however, its stark categorization of eras into how strictly they are command economies, or how how opposed to the free market they are ignores the detailed realities of the free market and the aspects in which it effects human economics without the intent of humans.

At the onset of the reading Heilbroner posits that if our "Railroad men became bookkeepers" or vice versa, that there could be catastrophic problems, and the market manages these through forces mediated by supply and demand. But how disastrous would it really be if a large number of bookkeepers decided to change jobs? Are there other forces that would compensate?

What role does the concept of money itself play in the economic development of the industrial revolution? How does the ide of a transferrable token of wealth encourage the capitalistic motion of the revolution?

Does the article describe any ways in which the modern era is actually worse than the past?

This paper provided a very large scale review of the methods in which a capitalist free market allowed for a relatively short term transition from a poor agrarian society to what we see today. It pounded home the point with a multitude of evidence and references to make the argument clear.

Class 7

Today's class was all about how we got to where we are today.

It took a lot of time and work and for a long LONG part of human history there was no expectation that your children would do any better than yourself.

At this point we are doing so well that even the best-off people of, say, 1800 would be worse off than any one of us today.

Class 6

Growth is very rapid today compared to the rest of history. The speed at which wealth and technology increase is faster than it has ever been, and by a large margin. 

This most recent growth looks exponential, and as far as Rizzo's concerned we can sustain it for a long long time.

It's not really possible for the rich to get richer by exploiting the poor in a growth scenario like this. 

EWOT 2

I'd bought tickets to a concert that cost $25 and I planned to go on Thursday night. But I started receiving emails from my boss asking for a large series of changes to their website over the course of the next day. By the time it was Thursday night when I was supposed to be going to the concert, I still hadn't finished the work and I decided I had to give my tickets to a friend because I had to keep working. I only make $75 a week for this job, and the $25 I lost wasn't worth the time I was working for the company developing their website. I still decided to do the work even though the time I was working didn't make up for the money I lost because keeping a good relation with my employers provided a different kind of benefit that outweighed the loss of $25.

Beautifully displayed statistical data

http://www.gapminder.org/world/

Motivation isn't always as simple as money

http://www.ted.com/talks/dan_pink_on_motivation.html

Class 5

Impersonal - Any individual in the system doesn't have to treat other parts of the system as real human individuals
Self-interested -  Every person involved in the process is primarily acting to forward their own goals and interests
Cognitive problems - No individual is capable of doing every part of a process
No direction - There is no centralized direction in the system, it is a decentralized process.

EWOT

I went to a restaurant that seemed to be trying to put on a fairly classy appearance. The inside of the restaurant was very nice, the doors looked good. But above all of this are two cheesy looking neon signs that instantly ruined my perception of what the restaurant was supposed to be. It seems like sort of a bad idea to me, but if appearance of the restaurant wasn't effective to get the right clientele, or it wasn't able to get enough, a shift of marketing style makes sense. "Hey, look over here, there's food!" will catch anyones attention. And from there the customer can make a decision. But without seeing the business first, there aren't going to be customers in the first place. So even if the signs ruin a certain amount of the appearance and make 10% of potential customers reject them, this doesn't matter if they attract 100% more customers.

I, Pencil

I feel that I, Pencil does a great job explaining the interconnectedness of markets and the necessity of certain freedoms for the market to be most effective. But the aspect of I, Pencil that was most interesting to me wasn't that every aspect of the product counts on innumerable other products and labors, but that all of those works depend on a series of technological developments that can be traced back to a point when man had nothing but himself and his environment without tools or skills. You can't cut down a tree without a saw, you can't make a saw without metal, you can't make metal tools without knowledge of smelting, you can't smelt without knowledge of fire and a hundred subsidiary steps along the line. Man's accumulation of knowledge is for me the most amazing lesson from I, Pencil. 

Questions:

I, Pencil accuses a centralized post system of being an attack on free people. Saying that people assume because they lack individual knowledge of the entire task, they see it as the domain of a higher power such as a government. But how is this any different from an individual looking at a corporation and saying the same thing? What if the individual sees 2 companies, or 10? Is there a point at which a number of post carriers is great enough that individuals begin to believe they could undertake the task, or part of the task, themselves? Or is the accusation that if the market is open that people will naturally fall into the places needed to create a service that is in demand?

Is it fair to say that oil costs less to ship from the persian gulf to the US than it costs to send a letter? Is this really true, and if so, is it due to poor cost management of the postal service, or an inherent difference between shipping oil in a tanker at low speeds versus moving a letter across a country rapidly?

Can we really leave everything to the “Invisible Hand” of the markets? Over time, the market has proven itself unreliable at dealing with the human rights and environmental issues, as well as being at risk to monopolies which create unfree situations. 

Conclusion:

I, Pencil illustrates the interconnectedness of a globalized economy. At this point in human development our products all depend on a vast network of people and an enormous history of technological development. We have to realize that in this setup small choices can have far-reaching effects. 

Day 3

Why study economics, what is it?

Man acts with purpose. We don't do things randomly.

There is scarcity in the world. That is, there is a finite amount of stuff for an infinite amount of desires. So how de we handle that?

Second Class

Rizzo told a story about a room full of pistachios to explain opportunity cost. The idea of opportunity cost is that any time you are doing one thing, you cannot do another. So even though in a room with 1 pistachio and 1000000 pistachio shells might sound like an OK way to get a free pistachio, the time and effort put into getting that last nut could be used elsewhere. You lost the opportunity to do something else with that time that could be more beneficial to you. This is the same reasoning behind why we will never run out of oil. Eventually it will become too difficult to get out of the ground profitably when you could be doing something else to get energy more easily.

First Day of Class

Rizzo threw money to the class to illustrate how incentives motivate people. More incentive leads to more action. A penny, for example, is not enough to incentive a person to action.

Side-note: http://www.youtube.com/watch?v=77C47XYm_3c