ChAP 1 ECON 4306 Audio recording started: 11:43 AM Tuesday, January 17, 2017 - Economic: the study of the allocation of scarce resources to unlimited human wants - For there to be scarcity, there need to be a final amount of good and unlimited want - Ultimately economy is about stuff. o How do you get the stuff Audio recording started: 11:00 AM Thursday, January 19, 2017 Polyani Reading, The Economic Fallacy - We assumed that because money was used in one economic system, it was automatically used in another econ system o Bring about scarcity - Substantive vision of econ: how we get our stuff o The material substantive vision of econ v. the formal/scarcity vision - Material aspect: real econ - Formal aspect: no money for stuff (rec 18:00) - What drives prices up: shortages o That's what happening in Venezuela Substantive Econ - Scarcity leads to choice and opportunity cost o Opportunity cost offers abundance and not scarcity - Wealthy person makes choices based on abundance, the poor based on scarcity o They're opportunity cost comes from diff sources Economy Market System - Water providing in Barcelona - Farmers mkt, where people bargain for what both parties want Command System - Trade amongst equals - Goods are allocated by some ppl, gov, group of ppl, etc Traditional System - Tells us what we should do, how a good should be provided - Family, churches, etc. Different Economic Institutions Allocation Mechanism - Command, mkt, traditional Forms of Ownership Command ownership Traditional ownership<<Audio 1.mp4>> Audio recording started: 11:02 AM Tuesday, January 24, 2017 - Private property gives people an incentive to create money o Aligns the private interest of the owner with the social interest of society - Private ownership, social ownership, and traditional ownership Types of Incentives Material Incentives - Private property: o Right to deny use (this is related to material incentive) Moral Incentives - Don´t work very well - You see it in communist China - It redistribute goods to another group Income Redistribution - Private property is one way of redistributing income - Government taxation - Japan doesn't have much "classical" income redistribution because there's not a lot of income disparity to begin with - US and UK standout with massive income redistribution Role of Politics and Ideology - They play hand in hand with the economy - Whether private property is good, depends what one wants to accomplish Rules 1. Revolution always makes things worse a. When rules are changed, no one is certain about what to do. So no one does a thing Criteria for evaluating economics Morris Borsteins 9 Criteria - Level of output: o GDP: measures the goods produced within a country in a given year - Growth of real output: creating more real goods and services to grow the GDP o Just because you're growing GDP doesn't mean you're better off - Composition of Output: - Static efficiency: can you produce more - Dynamic efficiency o In order to create new invention, something has to go absolute (being pushed out) - Macroeconomic stability - Economic security o Employment, healthcare, income - Income and wealth distribution - Freedom o Being able to do what you want to do within a reasonable standard Measures of Inequality- Gini coefficient =