12/12

Interest isn't the price of money, interest is the price of paying for something today that you don't have the money for today.

Economic profits are different than accounting profits. A profit or loss (a PRICE) tells us about where resources are going.

Losses are a VIRTUE of the system. Losses tells you that you are failing at what you're doing, you're inefficient at doing what you're doing.

If you don't have prices you get massive resource misallocation because you don't know how to be efficient, there are no cues to what the right way to allocate costs is.

12/9

You WANT people to make money doing things. This is a motivation to do things we as a society and as a civilization like.

How can it be right for a person to be clothed, but not for the person who makes clothes to be paid.

You can be angry about the market not working properly - companies collaborating to gouge, for example - but getting angry about profit motive? Not the answer

The cause of poverty is an inability to produce something of value for others. (There can be a lot of reasons for this, and you can argue that a market makes this harder for an individual)

Homework for 12/2

This article was an easy way to get into the discussion of why market controls can be seriously broken. Any time artificial controls are put in place, it's a lot of fun to read the way that people circumvent them. The human race might be great at coming up with new inventions to fix serious problems, but we're just as good at finding out how to get to our favorite golf course. It's all about marginal value.

1 Is golf the kind of sport that would naturally develop approaches to breaking rules more than any others? (think: how much richer is the average golfer than most of us? Does that change anything?)
2 What happens to people who aren't breaking the rules when market controls are put in place
3 If this many people want to pay this much to golf, why aren't there more golf courses?

This article perfectly illustrates the point that if you want to take something away the right thing to do is not to eliminate a market. Prices might not be a perfectly fair way to distribute a product, but they just might be the fairest there is. The second you remove markets and eliminate a price system, you make it easier for those who already have an unfair advantage to scam the system even more.

EWOT 12/2

I recently bought a piece of audio equipment marked down to $150 from $650. It was only marked down due to a small dent. I was amazed that the marginal value of the equipment had moved so sharply because of a non-functional flaw in the product. For whatever reason, this culture and this economy deems the appearance or the concept of a "mint condition" so important. I ended up just wondering if the seller had seriously overadjusted the price to entice buyers, or if people really are that afraid of a dent and the price had to be that incredibly low to attract a reasonable amount of buyers.

12/2

Minimum wage is just another form of price control, and if we move from equilibrium vie price control other things have to move, e.g. worker treatment, benefits.

When we have price control our equilbrium that should be $800, and is controlled to $400 *becomes $1200* This sucks.

Scarcity and rarity: the same thing? Nope. Scarcity is about enough to go around, rarity is absolute

11/30

Rent (what we pay to have something temporarily) is not the same as Rent (What you get that you haven't earner)
A binding ceiling is one which is below the equilibrium, only at this point does it have a real effect on the market
Rent control actually hurts the buyers more than the sellers (the price is lower, so fewer people will be willing to rent, fewer places for people to live)

11/28

Where supply and demand meet on a chart isn't everything, and modifications can be made
Chicago school - all about efficiency of markets, but to a fault
Direct financial support in terms of foreign aid isn't where it's at

11/21

Money lowers the cost of transaction. Bartering puts you in shitty suit/toaster world.

Equilibrium is all about what happens AT A PRICE

At too low a price, buyers will actually bid up the price. At too high a price, sellers have to lower to compete with each other for the limited market.

11/16

Judging based on merit instead production is actually a hard argument to make and it's kind of depressing

Competition will always exist, so how do we handle that in a reasonable way? (As I see it how can we turn human greed into a constructive force) The answer is prices.

11/09

Elasticity: %change in demand/%change in whatever you're producing
Elasticity is how much a change in price effects our change in demand
As you move down a demand curve the demand becomes less elastic...BUT DON'T MEMORIZE THISt

TIME
BUDGET
SUBSTITUTES
influence elasticity

11/07

You can combine demand curves

GDP's pretty ridiculous when you think about it

When you combine two curves they move out

POW reading

This was a very interesting read about the nature of currency and exchange in an environment devoid of classical economic regulations. It interested me that in some ways, the cigarette currency is a much better example of a backed currency than a gold standard. However useful you might consider gold to be, cigarettes were obviously more useful, especially in this camp environment. 

1) What is the difference between the BMk and cigarette as a form of currency

2) How does consuming a product affect the worth of another product in a bartering market

3) How does the constant influx of free products effect the market. Does it at all?

I think the importance of reading this is in understanding the point of currency and seeing how easy it is for a currency, even one backed by hard goods, to fail. I think that this also provides an example of a localized economy. There was a limited amount of incoming goods, a limited amount of labor and a limited amount of buyers/sellers. 

EWOT 11/04

It strikes me that the internet markets of craigslist and ebay are an interesting market effect of the information age, and a creative interpretation of the middle man. In this day and age where it is possible for anyone with basic network connection to be in contact with anyone else in the same boat, we have opened up global markets not on a corporate scale, but on an individual scale (granted, craigslist's intent is to strengthen local communities, not act as a global market, but it still performs this roll across the whole world) These services have eliminated the more literal middleman. Their job is to bring these people together, and they do it mostly for free (entirely so in the case of craigslist). It's just interesting to see the middleman bringing people together without collecting a profit via markup.

11/04

1) Households and factors are inverse to each other in supply an demand
2) Prices, kind of a big deal
3) These concepts we've been learning about for trade don't just apply to a hard goods market, they apply to all market type scenarios.

11/2

Chinese should EAT. OUR. MONEY.
Balance of international trade is always maintained
Rizzo hates black people and the Chinese..or was that "over-regulation of trade"

EWOT for 10/28

I was recently looking for handlebar tape for my bicycle and found it for 5 cents with free shipping from mainland china. I bought it just to see what it was all about, but the whole idea of a product from china being sold to me the consumer for 5 cents seems crazy. For there to be any profit that 5 cents has to cover production, development and shipping and then have some left over. Seems unlikely. So, if that's not the case, either this tape has to cost almost nothing to produce, weigh just about 0 ounces, and take up about no space. And even then, the profit is just hovering around 3 cents. So, maybe there's something else wrong, maybe it'a s stolen product, or maybe it just won't ever ship. I figured 5 cents was worth it just to find out.

Krugman (Homework for 10/28)

I think that these krugman articles formed a solid foundation for the concept that free trade is the best possible ensure a solid market economy and better the most people. They also cement the idea that it really is just that simple.

1) To what extent is it difficult to accept Ricardo's proposition because it is just so simple?
2) Is it really the betterment of another society that makes free trade the ethically correct choice? Is it still exploitation if they are bettering themselves but in poor conditions?
3) Could a non-free trade environment ever be more beneficial overall than the opposite?

I think the importance of these pieces lie in what is essentially a structured retelling of what Rizzo has been saying in class. What Rizzo has told us in stories about trade, Krugman provides in more of a structured, argument-type manner.

Property Rights

I thought it was very interesting that this reading was much more about the philosophy of what property rights are, where they stem from and what they entail. The ideas surrounding who gets property and what "owning" something means are a nice side-step from what we've been looking at so far in Econ

1) How useful is property if you aren't allowed to transfer ownership?
2) Is does the right to future property fit into this picture?
3) If the government is a collection of people acting together, and the government owns something, what is the role of any individual citizen in that ownership? Do they have any property rights at all?

It's pretty clear that we read this to understand the sheer strength and significance of personal property rights to a secure market economy

10/21

Everyone benefits from trade!

Value is what we give to something, not inherent. 

Technologies have cool ways of shifting and pivoting PPT curves

10/19

It's still hard to make full, accurate judgements on what the best action is in any given situation.

Trade & Specialization:
3 factors of production
1) Land
-ANYTHING physically here irrespective of human action.
2) Labor
-Hunks of flesh. Stock of human beings available. No learned skills/talents included.
3) Capital
-Something that must first be produced before another thing can be produced. (ore is land, iron is capital)
--Two kinds, physical and human.