Hey Guys,
Here is where you will post your summer assignment discussion responses. Occasionally I will post questions to get you thinking. Please reply to this post in the comments section.
-Halsey
P.S. Don't forget to leave your full name in your comment so I can give you credit!
Subscribe to:
Post Comments (Atom)
48 comments:
I found it quite interesting how this book discussed the upsides and downsides of the economies of Communism and Capitalism. Many believe that both systems of government are conflicts between man and man, and that man in turn exploits man. This is visible in both, but more in Communist governments where entire citizens of countries are exploited for the personal benefit of the state (i.e. Sweat Shops). For Communism to work whole communities must become altruistic, or self-less; Capitalism requires people to be selfish. I dislike Communism. However, I recognize it as a great and noble ideology, if used correctly, could recreate a wonderful egalitarian society. I despise Capitalism because of the disparity between the rich and the poor. I find it disturbing that Bill Gates can have $50 Billion, Alex Rodriguez can be paid $250 million (basically for hitting a baseball for ten years), and Michael Jordan can be paid $30 million in one year all while one in five Children in the U.S. are suffering from poverty.
I also find it fascinating that Michael Jordan signed a One-year $30 Million contract. Then again, it’s all about Incentives. As Charles Wheelan said, “Families in the South Side of Chicago are not poor because Bill Gates lives in a big house. They are poor despite the fact that Bill Gates lives in a big house.” One of my idols, Kobe Bryant will sign a contract with the Lakers worth $135 million over the course of 5 years. I’m not in full favor of this or any other dealings involving huge sums of money in corporate transactions during these tough economic times, but what can I do? All I know is…if I’m offered $135 million, I’m taking it.
From reading a couple of chapters from this book, I was quite fascinated. It gave me a good outlook on how the world worked, how we communicated with other countries and how money was dealt with. The book from what i understand tries to get us to better thinking, especially now when the economy is not doing so well.
I agree with Satbirbassi, if I was offered that amount of money it would be hard to refuse. :D but while reading I was shocked to know the differences on plane tickets. And the fact that if you wanted to acquire a seat for you child's car-seat, it would cost you the same as a seating price.
Keeping with the idea of self-interest, Satbir poses and interesting question. He is talking about the capitalism; essentially talking about Adam Smith's idea of the invisible hand. Wheelan talks about Smith's concept of free market capitalism and how "self-interest" brings us to do what is better for society. In his book he states "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." Each wants to better his own status and in turn we are better off because we have our dinner! What do you think? Do you agree with Smith? Are people or firms making decisions to better themselves, that make the world a better place?
After reading the book, I found that the chapter I believed most interesting was chapter 11, titled, "Trade & Globalization: The good news about Asian sweatshops." The "invention" Charles Wheelan discusses in the beginning of the chapter, is later described as trade. It makes complete sense that our entire economy is built upon the concept of trade. The idea that different regions of the world produce what is easier and more efficient for them to produce, and then trade with other regions that specialize in products that they themselves do not specialize in, is in my opinion 100% logical and was made very clear to me because of this chapter.
In response to Ali Halsey, I do believe that the world is a better place because people are driven by "profit motive." The standard of living is higher because we focus on what we can do best, and then utilize trade for everything else, in hopes of improving our own economic standard. Something I found really interesting was Wheelan's example of Nike and how they make shoes in Vietnam. Obviously Nike does this because they can pay workers in Vietnam much less then workers here in the U.S. However, while Nike does this out of self interest, they are improving the lives of workers in Vietnam and even perhaps their economic standard as well. For example, the family of a 15-year-old Thai laborer, paid $2 a day for a 9 hour shift making clothes for export to American in a Bangkok factory, described the job as "good-pay" and that she "hopes she can keep that job." In Vietnam, Nike "does not used forced labor in its Vietnamese factories." Like Wheelan said, they work because it is more of an opportunity then anyone else can offer to them. This proves the idea that while we work to achieve our own personal desires, we improve the standard of others, especially through globalization.
Excellent points Shelbie. Great insights into gains from Trade. That is a huge part of our first unit and our last unit of the course. People trade to make themselves better off. We'll get into the concept of comparative advantage in the first few weeks of school. Fantastic response, I'm very impressed with all responses so far.
What I found most interesting was Chapter 10 titled "The Federal Reserve: Why that dollar in your pocket is more than just a piece of paper". What interested me so much was the fact that Alan Greenspan has such a massive impact on the country and the world, simply because he controls the "credit tap" of the U.S. The book's description of his job painted such a great picture of how much stresss he must be put under making decisions about the interest rate. On a less serious note, WIlliam McChesney Martin's comment about the government taking away the punchbowl was great. The book seemed to be full of these little injections of dry humor that made it an easy read.
In response to Shelbie Strykers, I could not agree more. Different regions of the world should produce what they are best at producing, since it only helps everyone else in the end. And yes the book did help to make this very clear. Even though sweatshops are a horrible concept, they still help the economy and i believe more people need to realize this.
In this book I have found one basic idea that hit me pretty strong in the first half of the book. It seemed like no matter what the topic it keeps coming up. This idea is one of the basic laws of science and that is for every action there is an equal and opposite reaction. It seems like no matter what suggestion there is to improve the economy there will be some type of negative reaction occuring from it. I could give examples from the book but why restate the obvious, it was probably one of the first things you picked up on.
Another thing that sparked my interest was that it seems as though alot of the action that needs to be taken place in our economy (as stated by the author) isnt happening because of one thing......human nature. To make this more clear when the author talks about the people who have the ability to do and invent great things and how they are spending there time creating margarita maker backpacks it is because of human nature. They can make those now and make quick money rather than spending years on cures for diseases or something that society really needs to make an improvement. (and yes I understand the people who make those margarita backpacks are not in the field to be curing diseases but you get my point) A person wants to do whatever they can to improve what they consider the "quality" of their life, and unfortunately not to many people feel proud to improve everybodies life around them. So back to the point human nature is going to make you think about number 1 first not your economy.
So saying all of that im going to go ahead and comment on Mrs. Halseys blog about Adam Smiths invisible hand idea. I want to agree that people and firms are making decisions that better themselves, and maybe on occasion it betters the world in some way but I believe that in the longrun the decisions fill there pockets rather than improving the world
A chapter in the book that really caught my attention as Chapter 6: Productivity and Human Capital. In the book human capital is described as “the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience etc.” The discussion of human capital really hit me personally. I know and seen people who can’t read or write and haven’t been able to get a good job or high education. In the chapter Wheelan discusses about how human capital can be invested in, such as receiving a college education or learning a new trade. But another issue that goes hand in hand with human capital is poverty. In the book it is stated that “11 percent of Americans” are poor.” Why? It became clear to me that those people have trouble finding good jobs because they lack skills and opportunities. Opportunities to me are endless and they should be given to people who have had “road blocks” in there life. Some reasons people can’t improve their lives are because of drugs, illiteracy, and illnesses. All of these can be solved through treatment and/or education, but not all Americans can afford it. So it because this big cycle: we try to decrease the poverty rate by expanding human capital, but the poor can’t afford to expand their human capital. I believe that there will always be low-wage jobs for people to fill them, but that number should be less and less every year. America is often called the “Land of Opportunity” and I think it is time that we should live up to that. At the end of the day, if all you had left was your human capital, your skills, would you be able to survive on that alone?
Chapter 9 really jumped out to me most because I felt it pertained to our current economic situation more so than some of the other chapters. What I liked most about it was Wheelan's explanation of recessions, the facts and figures of the history of this nation, and the way he talked about the inner workings of GDP. He talked about the mistakes made in dealing with economic recessions and depressions of our past. Using GDP as a mechanism of measuring the economy is efficient in many ways, but has it's pit-falls as well. Some of the down falls of using GDP are things like only knowing economic activity that is paid for in some certain way. An example of this would be a stay at home mom, that doesn't work for a living, but cleans the house and takes care of the children. Her output cannot be measured monetarily. On the other hand, GDP does a more than efficient job of displaying the overall growth or decline of the nation's economy. I feel I have a much better understanding of the current situation our nation is in.
In response to satbirbassi's comment: The two forms of government in his post are communism and capitalism. Karl Marx and Engles wrote Manifesto of the Communist Party which is the science behind communism, and what they state in their writings is this. "Everyone would be guided by the dictum From each according to his ability; to each according to his needs." The state, or organized government, would no longer be needed and would "wither away." First of all, a major consequence of this implication is that the individual nature of the human being is literally taken away. The individual no longer controls his "abilities" nor his "needs", but as property of the state, submits his individuality or freedom for that of the determination of the state.
Communism in my opinion is ultimately a reach to attain a perfect society where all are mandated to be equal. Utopian societies that try to provide equal wealth for all have been tried before. The problem is that no such thing exists except to the creator's own perspective.
Capitalism is not perfect. And neither is any other form of government in my own opinion. What capitalism seems to capture though is an essence of personal accomplishment and always being the dictator of your own future. And no matter how much one tries to refute it, there will always be a disparity of fortunes among classes in any society. There will always be poverty within the societies of any government. I think that within the confines of the capitalistic mindset, a person can much more easily attain 'middle class' designation.
With capitalism, each person is provided the opportunity to attain wealth in almost any manner they see fit. Communist countries have even higher disparities between the rich and the poor, and in order to try and attain wealth one must pierce both a corporate veil and a government veil. And even if you do pierce that veil, you can be shot down by the government for any reason they see fit.
Poverty in America is no cakewalk, and I won't attempt to lessen the brevity of each person's plight who has been in that situation. But in comparison to poverty in other communist countries and 3rd world countries that employ aspects of communism, it is a beautiful experience filled with opportunities that those others would literally kill to have. Opportunity.
I am extremely impressed with each and every post. They are all extremely well written and are quite thought provoking. I am glad you have all taken away something from the text. I look forward to discussing it in further detail in class.
Okay, I was surprised how the chapter I thought would be the worst is the one I'm going to blog about: Chapter 3-Government and the Economy Part I. I always thought that economics was strictly business and numbers but after reading this chapter I see how it links to loads of other things including human behavior. Take for example the issue of externalities. If our economic system is all about human capital and how much "utility" you can get for your buck then these externalities are always going to present. An externality is the gap between the private cost and the social cost. Personal example: My families front lawn looks really uncared for. I happen to have a neighbor who has the greenest grass, and you always see him outside watering his mini garden. Should my mom have to pay for a gardener to make my neighbor happy? or should my neighbor have to suffer because we don't want to pay that extra money, which makes me happy because that saved money might be spent on me? I think Wheelan offers a better example; smokers pay money to feed their habit but is it enough to compensate the people around them who suffer from second-hand smoke? So what do we do? Ban cigarettes or maybe raise the private cost...... To try and solve this problem the government puts regulations on things.
The government does alot to help the market economy, in fact if it weren't for the government regulating and providing adequate infrastructure then our market economy would fail.
I'm not trying to praise the government though. So lets talk about redistribution and the super rich vs. the poverty-stricken. We can't all be happy and get what we want. Government could take some money from the wealthy and use it to help the poor but as Wheelan states, "...government policies that ostensibly serve the poor can have inadvertent consequences that make them less effective or even counterproductive." I'm no expert on gov policies or economics so someone tell me what government policies that have helped the poor have been counterproductive?
I don't know, I think economics has been man-made to be more complicated than it should be.
One valuable lesson that I learned from the book was the one that talked about the different choices people had and their consequences. The example the author used was that he was not going to give any money to society because he drove a SUV that endangers the life of people who drove a Honda and would be demolished if they both crash. His main point was that people only care about things that they have to pay for. For instance he issues the example of asthmatic children not being on the tally sheet, so he and his wife did not considered what would the consequences would be if they bought their Ford Explorer. This would affect them because they would be inhaling worse air than before. I like this book because it is actually interesting and gives real life examples and not boring ones that keep talking about the same thing repeatedly.
What I found to be most interesting and controversial was the discussion of Communism and Capitalism. Most people believe that communism is all together bad but it does have its advantages over capitalism. The point I found interesting was that when the government controls the prices(i.e. communism) the only differing factor for companies is the quality of the product and of the services provided. This is a downside for capitalism because all people are concerned with is the price of the product. What communism allows is competion not with prices but rather quality of the service.
I also fully agree with Shelbie's statement about producing what you specialize in. Why go out of your way to produce something that could possibly be traded for at a lower price. Also if labor in another country is cheaper why not move your factories to these places. The countries in question allow low wages because its the only work available and in some cases the wages are more than the average in a specific country
In regards to Marissa's comment about policies to help the impoverish. When he states that sometimes they can be counterproductive, could he be referring to the disincentive to find work once on unemployment or welfare? He further discusses that idea later on in the book.
I found Chapter 10 fascinating. I had always wondered how the government could release more money into the bank system without causing inflation. The answer was bonds! By using something already there, and giving it in a very roundabout way, there is no massive devaluation of the dollar. Which makes me wonder- was our recent stimulus bill released in bonds, making it safer in the long term, or simply given in cash to banks, at the risk of serious inflation (and corporate misuse)? Wheelan's clear metaphors and dry humor make it very easy to understand previously unintelligible subjects, and *gasp* even made it an enjoyable read.
In response to Ali Halsey on 7/9: I totally agree that our self interest can have a positive impact on the global economy. If every country manufactured every single product they needed at home, and traded with no one, the US might be able to continue to grow, but countless developing countries would collapse because they simply don't have the resources to create all their necessities. On the other hand, American companies who open sweatshops in third world countries experience a much larger profit margin as well as creating a source of economic growth in the host country.
I thought one of the saddest examples in the book was when Wheelan described Americans picketing a sweatshop because of poor working conditions and child labor. The protesters were eventually successful and the factory shut down. The sad part was that most of the children they had been trying to protect couldn't find another job and ended up as prostitutes or drug runners.
I find it too ironic that the one time we weren't looking out for our own self interest, we actually had a worse impact than when we were.
this book is freakin ingenious!this guy talks in circles nd it makes sense!... but one thing i was a bit puzzled by was that in chapter 2 it talked about the black rhino being hunted for its horn because of its value and the species has been greatly decreased... and to prevent more poaching the officals decided to cut off the rhinos horns and put them into their habitats..well the fact is one theyre gonna be hunted anyway for the stumps ..but the funny part is that what happens to the tusks that are taken from them for protection? they dont just put them in a closet. they sell them! so either way the horns are still being sold and the animals are still being hunted...this method seems very ineffective the only logical solution is to protect the rhinos in a secure enviorment
Commenting on Satbir's blog:
I think that capitalism, yes, requires competition and with is a little selfishness but I also think that if the government and the corporations didn't work together then the market economy would fail. And even excluding government involvement: competition enables businesses to enhance their products which makes the public happier.
I completely understand what you're saying about the rich and the poor (I talked about that a little too). I forget what chapter it was either 5th or 6th, he talks about how compared to France the United States has a much larger gap between rich and poor however we are wealthier as a nation soooooo, if we can magically solve all problems and make the poor better off without negatively effecting the economy we would probably all feel better about Bill Gates and his $50 billion, yeah?
I agree with Cody's statement about the basic law of science: "for every action there is an equal and opposite reaction" For example in Ch. 11 there is a lot of information about trade and how it's better for poor countires because they are doing something they are could at or else they wouldn't be doing it( theres exceptions). but becacause workers in vietnam call do the same work and for less pay, that causes a negative reaction to our American workers: we pay less for our products but we lose our jobs to people in vietnam.
As I've been reading this book I totally agree with Cody's observation, it seems that for everey postive idea to boost the economy there is some negativity to encounter. It is like a scientific reaction.
Commenting on Marissa’s comment on my blog:
I think you’re missing the point. You obviously have no idea what you’re saying; let me quote you “if we can magically solve all problems and make the poor better off without negatively effecting the economy we would probably all feel better about Bill Gates and his $50 billion, yeah?” First off, No. Truth of the matter is, we still wouldn’t feel better. It all comes down to the pie. If you get a share of the pie, and Bill Gates gets a share, which will most certainly be a whole pie, if not many pies, then would you really be happy or satisfied with that? Secondly, there is no way to rise from the deep trenches of poverty without depraving the economy. And even if we were able to “magically” erase poverty, and give away $100,000 a year to every individual (i.e., Mohair Farmers) it would take him/her 500,000 years to reach Bill Gates’ income. That is a disparity, to say the least. Don’t get me wrong, I would jump on the 100k anytime, but I would still be outraged by Billy’s payroll. You feelin’ my drift?
Woo finally got this to work! Anyway...
While reading this book I did find many interesting points. But equally as important are his definitions of certain vocabulary/economist jargon(which made me just want to pull out a highlighter and go at it!).
Nonetheless, as Satbir did point out already (so excuse me if i repeat somethings he has already said), Wheelan did discuss the positives and negatives of Communism and Capitalism. Both forms of government have been criticized and picked at, and naturally I prefer Capitalism over the other but that doesn't mean I don't recognize the other as a wonderful idea. I say idea because only in THEORY does communism work, sure it's great to have no classes in society and everybody walking around with the same amount of money in their pockets but in reality it just doesn't work because of GREED! (and of course if i did live in a communist ran gov't i wouldn't have the motive to work over summer for that wonderful new iphone...)
And in response to Mrs. Halsey's question about bettering ourselves rather than the world. Personally I feel people and firms are bettering themselves more over the world, and don't take me wrong there are a few organizations/ people who do try to make the world a better place(obviously not the stupid environmentalist who want to save little fish rather than produce food and jobs). And please don't take me as Mr. Killjoy but honestly (and this is for everyone) when you eat dinner every night do you think about the millions of starving men, women and children who live in poverty; when you go to the doctor when you're hurt/sick do you think of the thousands who are uninsured and can't afford medical care, I know I don't and I know my parents, family members, friends are not doing anything about it. (even though the new Presidential Administration is trying to make National Health care happen). My point is this world is hard to live in and unfortunately Social Darwinism is real, the smart/clever and witty will succeed and the others will fail. I know I keep going on and on so I will leave at that.
-Thank you
P.S. To Mrs. Halsey just incase my name made any confusing this is Joseph Soleno
I found the book very fascinating, i especially enjoyed chapters 4,6 and 11. But after reading a few post,i feel obligated to speak of the book as a whole rather than just a few chapters.
Well, after reading this book, it seemed like Wheelan was arguing that the free market system is far more superior than government regulated ones. In the chapter "the power of markets" Wheelan explains how individuals work for their own self-interest,for example he tells us the soviet socialist failed because government bureaucrats directed the economy, which brings us to Mrs. Hasley question.
Working for ones self-interest IS Capitalism, its the pursuit for ones happiness. For example if Nike did some research and found a way to produce a $100 shoe for $15 and sell it for $30. It is persevering its own self-interest, and now Puma comes along with a way to produce the $100 shoe for $10 and sell it for $20. This "work for ones self-interest" creates competition lowering prices for their products. Thus the work for self-interest is work for public-interest.
I thought this book was very interesting. I enjoyed reading every chapter. the chapter that really interested me the most was chapter 10. Charles Wheelan brings up interesting points and everything just makes sense. I really enjoyed reading this chapter because it juts connect with the economy now. something that I found really interesting was that when there is a fall in the discount rates, Banks can barrow from the Fed more cheaply and that way it can lend to their customers more cheaply as well. This chapter gave me an understanding of how significant money really is. Money is just paper and it won't be worth anything if you would find yourself in a desert with nothing to purchase, but of course it would be worth something if you were to be rescued because money's value depends on its purchasing power or else its worth nothing. Because of inflation the prices go up, and a dollar in your pocket is worth less than what it use to.
After reading this book, I realized that economics is all around us, even though we may not know it. I never really knew much about economics until I read this book. I mean that the language and syntax that Charles Wheelan uses is very understandable. It just makes it that much more interesting.
I found chapter 6 and 7 very interesting. Chapter 6 began with the story on Bill Gates and gradually moved on to talk about human productivity. Its amazing to know that today in 2009 we make alot more than what we did a century ago with working less. Not all 24 hours of the day are used as much as they used to. But still we manage to find ways to produce so much more than before: i.e. Robotic factory lines. Of course it is bad for the workers out of a job, but it continues to create a more developed economy. In chapter 7, I figured out how some investments can pay off. Like the example of the $250,000 house just like the $500,000...I would buy that house in a heartbeat!Then again that's just a risk I am gonna have to take.
In response to Alexis Eduardo's comment, I fully agree with you. People only care about the items they purchase. Charles said that he bought an explorer because he was expecting he first child with his wife. Knowing that this SUV can potientally harm a Honda Civic. He didnt care about those Hondas. He only cared about getting another vehicle when his SUV rolled over. Then maybe that would open his eyes a bit further. This topic brings us all back to self interest.
After reading this book, I found Chapter 4: Government and the Economy II the most interesting. I liked the fact that it discussed the governments power, and how it can be used in both good and bad ways. It gave good examples regarding necessary and unnecessary government regulation (ex: The DMV vs. The U.S. Post Office), and also explained the reasons for certain government decisions. Another interesting point made was the last topic in the chapter that states, "Government is an intrusive tool that can be used for good or ill." It was interesting to me that Wheelan didn't state whether Government is right or wrong, he gave both sides to the topic, and made it very clear and easy to understand. This Chapter definitley gave me a better insight about the Government and it's control over economy.
I have agreed and disagreed with some points in this book, but I guess thats why we have discussions. Overall I found the book very informative, more on things happening in the than on Economics. For Example I had no idea that the Black Rhinos were going extinct because of poaching or that traveling during the weekends if mess less expensive than traveling during the week.
In Response to Satbir Bassi
Theres nothing you can do about A-Rods recently signed contract which is now higher than 250 million, because Baseball is under the control of the US government and that means that they are never going to set a salary cap on any baseball team or any limit on how much a baseball player is payed because it is America's Past time. But in the end the money that the yankees are paying to A-Rod is nothing in comparison to the revenue they are making off of his jersey and all the 2,000$ seats right behind home plate in the new Yankee Stadium.
Chris Garcia
The book, Naked Economics, provided a great insight on the world of economics. While reading this book, I found chapter 3 really interesting, Government and the Economy. I had a blast reading the humor Wheelan has put into this chapter, where he states that he sold his Civic because he was afraid of getting compressed over by a bigger vehicle. This chapter taught me that the government is the ultimately a source of market failure(e.g. minimum wage, tax burdens, etc). Also governments are not always fair and efficient. The example was India’s government, that is burdened with cases and would take them 324 years to clear all existing cases. Another interesting fact was that in a competitive economy like ours, capitalism, monopolies could be established. For example Viagra has a patent, so no other company could copy the inexpensive drug and sell it in the market. Government is really a very broad topic, which could be elaborated upon in many different paths.
In response to Jason Regier:
I don’t really agree with the point your making here, that communism has it advantages over capitalism. The government controlling prices isn’t a good thing because there would be no competition that would result in a standstill in the economy resulting in no economic growth. Communism eventually leads to decentralization of power and could possibly result in tyranny. I have not known of any communist government that has successfully eliminated the gap between the rich and the poor. Certain variations of Communism have emerged, but pure Communism is a near fictional concept.
In response to Brittany Fitzgerald, I completely agree that Chapter 10 helped give a better understanding on "releasing new money." I also had always wondered how that system worked, and Wheelan did a good job in explaining. Like Brittany stated, he did a great job in presenting this information in a humorous and enjoyable way.
I found chapter 9, “Keeping Score, is my economy bigger then your economy?” most interesting. I was most fascinated by the GDP, Gross Domestic Product, a tool used to measure a modern economy. The GDP represents the value of all the goods and services produced in an economy. If the president were to wake up from a comma, hypothetically speaking of course, The GDP would be the first numbers he would look at.
Commenting on Satbir's comment on Marissa's comment on Satbir's comment. it think both of you have valid insights on the gap between rich and poor. Marissa makes a good point about how capitalism thrives off of people being selfish, to an extent, and how the government has to step in to regulate the selfishness. Satbir provides a good example of someone thriving off of his want to make money. However Satbir, you seem to be in a "bashing" mood. Your making it sound like Bill gates just has 50 billion dollars, like he didn’t work a single day in his life for it. You even quoted Charles Wheelan, which contradicts your point you made to Marissa. Charles said, “Families in the South Side of Chicago are not poor because Bill Gates lives in a big house. They are poor despite the fact that Bill Gates lives in a big house.” People are not poor because of Bill Gates. Capitalism thrives off of product and demand. He saw a profitable product, realized the demand for the product and went for it. A lot of the time, to make money, you either have to have money to start and/or take risks to actually make a profit.
I agree with the comment made by Josh S. about capitalism and how it helps an economy to grow stronger than communism. Capitalism allows competition to rise, which allows buyers to buy cheaper goods rather than goods that are the same price everywhere in the country like communism.
From reading the first few chapters, my knowledge on competition and why people do things was DEF expanded on. The basic concept of why any one does anything, which is to maximize his/her utility, was very interesting and for the most part is the building blocks of how any economy works. How ever i also found it entertaining that maximizing your own utility does not always have to be in the form of a dollar sign. Im being careless about my grammar on this blog because it is a waste of my time/utility to go back and change it expecially when the time it will take to me to correct it is greater than the initial time it took me to write this little... thing. Blog.
Any way... Go econ?
O, and a very interesting book.
Inginfur was my Word Verification thing. That is also interesting...
Commentng on Matthew's comment on Satbir's comment on Marissa's comment on Satbir's comment.
Im not really doing that... talk about a waste of utility.
Ill just comment on Satbir's first blog since it is the only one i have made it through.
First off Satbir, you need to email Bill Gates and have him pay for making your name correctly spelled by accordance to spell check. As much as i love red lines under things i KNOW is spelled correctly... i really don't. Other than that, rich people are rich because they can things that other people cannot or they can do it better than other people.
I am aware that some people have better opportunities than others simply by how much money their parents had or who their parents knew but other than that capitalism ensures that money is free game.
In a communistic society when you are born your occupation is chosen for you as well as your wage. No matter how hard you work you earn the same as the guy next to you who is being half as productive as you. The problem with communism is incentives.
if we are choosing which economy/society is our favorite i would have to go with a Utopian society. Unicorns would kill on the black market.
The moral of that story... there are no perfect economies that makes every one happy, just ones that make the people who matter happy.
O, and 1 in 5 children are poor because they suck at sports.
although this really simple and kind of boring i found the coca-cola incident funny yet thoughtful towards people on the other side of the berlin wall. like the book said it wasnt a smart economic investment in the short run, it was a maojor increase in the long run. they thought quickly and made a bold decision to give free cokes to the people through little holes in the wall.
I found it quite interesting that the author pretty much calls our government a monopoly. In chapter 4, Wheelan explains how government charges prices not relevant to the quality of the item. He also describes how partner firms are influenced immensely by the government, therefore proving our government's power. This is all due to the idea of taxation. Charging more for a cheap item raises the tax on that item. Ultimately the incentives suffer social losses. This causes more people to buy less, therefore meaning less tax revenue for the government. The government, according to Wheelan, is a monopoly, evident because of the growing prices all due to the need of economic progress for the government.
wow in response to cory i found blog to be rather entertaining and also slighly insightful because he is right on the waste of time (no offense towards the creator of this assignment) but i do not prefere blogs. but back to the subject he explained that maximizing your utility isnt always in money for example the chicken crossing the road in the book to maximize his utility, i thought that was rather funny. a little humor was found in that book i would say, although it was boring.
After reading for hours upon hours, I was most fascinated with Chapter 6, "Productivity and Human Capital". In the chapter Bill Gates, Tiger Woods, and Steve Jobs were just a few of the successful people mentioned when talking about human capital. If it just so happened that these three lost all their assets, more than likely they'd still be well off because of their human capital, the skills and traits they possess. Whereas, if you took everything away from an "average joe" he would probably become part of the 11% who is under the poverty line due to the loss of his job and competition to find a new one.
Another interesting section I came across was, time is money. Is that new shirt you'd like to buy worth all the hours you put in at work? The example about the purchasing of stockings was quite interesting to me. For a pair of stockings in 1900 you would work 1 hour and 41 minutes, whereas today stockings cost only 18 minutes of working time. Interesting, interesting. This book was so full of knowledge that I would finish reading a chapter and wonder.."what possibly could they have more to talk about!?". But surprisingly they kept on going and I kept on learning.
In response to Satbir Bassi:
Man exploiting man seemed like a very big part of this book. If a man would be in a better position if he exploited his fellow partner then heck why not!? As Satbir mentioned with the celebrities and their rediculous paychecks, I totally agree that their income is absurd especially considering that worldwide children are in extreme poverty. It's quite unfortunate.
It makes sense that Charles Wheelan talks about the price system and all that stuff. It was confusing. There were a lot of terms being used that i did not really understand. But i agree that without a government, a free economy would not exist. And like in world war 2, they substituted goat hair for wool. Which i think was necessasary to do. Although i did not read much, the way economics was broken down was pretty good.... And i do think that sometimes how somebody does something for themselves, that sometimes it is good for everybody else.
Speaking about selfish humans…I find the prisoners dilemma quit interesting ‘prisoner A figures that if he keeps his mouth shut, then he can get the light sentence by ratting him out but his partner would almost certainly thing the same thing…’ The example opened up great insights on how real-world situations in which unfettered self-interest like that can lead to very poor outcomes. We do always exploit each other when it comes to being better off.
I have to honestly admit before I started reading the book a had little to no knowledge or interest at all on economics but after gaining much helpful knowledge I find it amazing how being exposed to all those big ideas can help me start to realize that it pops up everywhere and is happening all around you.
Economics is life.
Another problem is the sweatshop controversy big companies taking advantage of underprivileged foreign workers and exploiting them. These people are getting paid above nothing to do some of world’s hardest work. The U.S. should treat everyone around the world equal that’s what our country is based upon. But as long as U.S. companies or U.S. itself is benefiting off of the labor workers nothing will be done about it and they’ll still be taken advantage of. It is human nature can’t be helped, we humans just can’t let go of something that is benefiting us just for the good of “other” people they don’t care if doesn’t hurt them why let go of something and let it have its undesirable effect on us when we could push it on others that can’t do anything.
From reading this book it has taught me so many things I've never knew about like the communism and capitalism, trades, marketing, and so much more. But what I thought was really interesting was chapter 9 and how it really connected with today's economic crisis. I enjoyed a couple of other chapters as well such as chapter 11 about trades I thought that was intresting. Just overall I think that this book was really good it taught me so many things I didn't know before and now I have a better understanding of the significance of money, trades, and other things.
I agree to Shelbie's statement about how our entire economy is built upon the concept of trade. I also totally agree with Bianca about the human capital and how she can relate to it cause I've known some people just like that because due to not being able to read and write it makes them more of a victim of not being able to get a good job or a higher education. Just overall I enjoyed reading everyone's comments and blogs they were very interesting.
Bao Vang
In reading this book I found a vast amount of information regarding contemporary economics, history of economics, global economics, and our domestic economics. I was more fascinated with how our government controls the economy. Government and congressional policies used in controlling the economy are called fiscal policies. I was amazed at how merely changing the tax rates or government expenditures can decide whether or not our economy will reside in a state of recession or a state of inflation. However, there is another set of tools that are used in controlling the economy. These tools are not used by the government or congress but rather the Federal Reserve. Its interesting how the Federal Reserve is its own entity in our economy. I did not know that it was the Federal Reserves responsibility to print money, buy and sell bonds, and control interest rates. If there's one thing I can take from this book it’s the fact that I know what our country uses in combating inflation or recession.
Bao Vang
In response to DallasP
I would agree with the statement that government maybe inefficiently taxing and under allocating their spending. It may be a little controversial in saying that our government is a monopoly. It is true that with the law of supply and demand, an increase in prices will lower output which is translated into less purchases. Economic progress is key because it allows for more jobs and more money into circulation. This is good for times of recession. As I mentioned earlier this is merely part of the governments job with fiscal policy. So as to say that our government, while only doing their job, is this monopoly trying to take everyone's money is a little controversial.
There is something in Wheelan's dialogue that I find quite interesting. He stated that the American car companies had two choices when it came to competing with Japanese car companies in the 1980s: build more practical vehicles, or get congress to "enact tariffs and quotas that would keep Japanese cars out of the market." What I find interesting about this, is that there are more cars in the United States from over seas now than every before and the quality of cars produced by American car companies like Ford and GM Motors have remained at a less than acceptable quality and price. It seems as if they didn't make any choice. They kept doing what they had done . . . making poor quality vehicles and attempt to sell them at an expensive price. If you are going to have a high priced product, the quality has to go with it! Instead, they were going about it the cheapest way possible which resulted in poor quality.
Had they invested in making a vehicle that was good quality, fuel-efficient, attractive, and cheaper, they would not be in such a "great" situation as they are right now or were a couple of months ago. Yes, they may have initially spent more money in developing a proper program, but in the long run, they would be in much better shape right now in the year 2009. If they would have made a pickup that was as reliable and tough as the pickup they made during the early 1940s and 50s, Toyota's Tundra and Tacoma wouldn't stand a chance!
In response to Michael Galindo's statement about how our economy has developed into something that produces a whole lot more now compared to a century ago, I agree with him totally! We have really come a long way. But it is also apparent that our economy is not functioning the way it should. If you look back about 60 years ago during the heat of WWII and look at what we did to win the war, it puts our current day economy to shame. During WWII, we built almost everything on our own without much assistance from any other countries. Plus, the items we built lasted forever. The exact opposite is apparent today. Everything we buy is made in other countries. Roosevelt and Truman would spit on us if they realized how dependent our economy is on other countries. What I am trying to say it that our economy does produce a lot more than it did one century ago, but not 60 years ago. We won the war because we could produce guns, tanks, and airplanes faster than Germany. We could build hundreds of Sherman tanks in a short amount of time. The Germans couldn't do that. Even though their tanks had bigger cannons and thicker armor than our little Sherman, they could not produce as fast as us. If you put our current day country into a World War like WWII and place us against China, how do you think we would do? We could be doing a lot better than we are right now, we've just lost sight of how things were during WWII.
Daniel Carrion
Period 3
Dang it! I was hoping to be the only person to write on Human Capital- but Cailin beat me to it...ah well. Yeah, the chapter I found most interesting was the one about human capital. The idea that every person has an economical value was really interesting to me. And the thing I find most fascinating about it is that anyone can change theirs! It goes along the lines of the 'big American dream' and how in this country at least- you can do virtually anything. Any person can descide that they don't want to be a farmer (not that there's anything wrong with that) and go become a lawyer. People can increase their human capital by becoming something scarce (also goes with the chapter about scarcity and how valuable it becomes). It should encourage people to go out and obtain certain skills that are needed. burger flipper vs. computer genius....its almost like you need to make yourself something special.
I'd like to comment on really just about everyone who wrote about the sweatshops in Asia. I was orignally against the whole concept but its just perspective. To us, it seems like we're just ripping them off, but we don't know their background. they might not have other options because of the lack of available education to increase their human capital and for them- that wage is normal.
Post a Comment