EWOT Goggles - 10/30

This week for me was characterized by the number of naps I took in the middle of the day. I took at least one every day and one day I actually took 3. The naps seemed to help my focus, at least compared to what it was before the naps. So what if we instituted a policy that required people to take a certain amount of time out of their days to nap or do whatever? It could be similar to the siestas they take in Mexico. Would our productivity increase or stay the same? We would have less time to do our jobs but so would everyone, so we would all be on the same playing field. We would be more rested and thus our focus and concentration would improve. Would this translate to more economic output or would it just throw us and the rest of the world off? I say we try it out for a day or a week or something and see what happens. My prediction: we see happier, more well-rested workers and our output and therefore our GDP increases.

Reading Analysis - 10/30

A.) A common theme that appears in all 3 videos is that the everyday people working at lower wages at infrastructure jobs are undervalued and at the mercy of more powerful institutions (media, government, etc.). From these 3 videos, the one thing that stuck out to me was Mike Rowe's discussion of following your passion vs. reality. If everyone followed their dreams, how many jobs would exist today that have to do with castrating sheep and mining and farming maggots? Not very many. It was even evident in the video that those people who Rowe talked to working these lower-end jobs actually seemed happy (ex: whistling roadclearers). And then he asked them if this was their ideal dream job and they would just laugh. So the point is that these jobs that are frowned-upon/looked down upon by most are all the more necessary than high tech jobs and stockbrokers and the such. But their reputation suffers because they aren't viewed as the most ideal. But talking to the people who actually do the jobs, it's evident that they skillfully adjust to the point where they even begin to enjoy what they're doing. These "infrastructure" jobs are necessary for everyone's prosperity and something needs to be done about their recent decline. To start, it's definitely helpful that guys like Mike Rowe are bringing to light the situation and trying to educate the public about the goods in manual labor.

B.) What efforts are the government taking to protect these infrastructure jobs from near extinction? Why don't they pursue this issue more fervently?
       Can we really afford to keep telling our kids to "follow their dreams" if all that's doing is moving the workforce away from skilled manual labor?
       If the trend continues, what will happen to the balance of labor jobs and "glamour" jobs? How much longer until we can't actually sustain this imbalance any more?

C.) These 3 media outlets were assigned to bring to light the issue with the decline of infrastructure jobs and how without them, the mass production and distribution of new technologies is virtually impossible. These people unfairly get a bad wrap and while it is true that trade is always good and the recent improvement in living standards is absolutely a good thing, we need these jobs nonetheless to sustain today's lifestyle and provide more opportunities to progress.

Class Lecture #24 - 10/28

1.) Empirical evidence that trade does not cause job loss..... Does the trade deficit cause maunfacturing job loss? NO! Because in the agricultural sector the share of jobs has also gone down while there has actually been a trade surplus. So both sectors have seen a decrease in the share of jobs even though one experienced a trade deficit and the other experienced a surplus.

2.) Why doesn't trade cause job loss? Because when you trade, 2 things happen:
- Imports are paid for with exports
- You get RICHER.... so more jobs
So when you add it up... net zero jobs + more jobs = MORE JOBS!

3.) Cheap foreign labor in China...Better than US?
(Wages/Marginal Product of Labor) for China vs. (Wages/Marginal Product of Labor) for U.S.
$8 per hr/4 shirt per hr = $2/shirt (China)
$20 per hr/20 shirts per hr = $1/shirt (US)

So the U.S. an absolute advantage in making shirts. But what about comparative advantage?
China: $8/unit U.S.: $0.50/unit
U.S. has an absolute AND comparative advantage in making shirts.

Class Lecture #23 - 10/26

1.) Some people who argue that trade is bad because it misplaces a lot of jobs are WRONG. It is true that technological advances today only benefit a certain group of people who have a unique set of skills (as opposed to at the beginning of the century when technology benefited everyone). But, those jobs, in most cases, would not be in existence if not for trade (ex: Rizzo's job and international students). Also, while those outsourced may be down at first, in the end, trade always ends up benefitting the whole society. And finally, it's just a known fact that trade DOES NOT cause job loss.

2.) From the powerpoint, the trade deficit has gone steadily down since around 1976. This is because the trade balance is negative because we are importing more than we are exporting (US and China). Today, we have spent $10 trillion more on goods from China than they have spent on our goods. While all this is happening, we have actually seen a steady increase in employment. This is because trade DOES NOT change the number of jobs. It changes the type of jobs.....

3.) U.S. Manufacturing employment has increased and decreased independently of the trade deficit. The share of manufacturing employment as compared to total employment has seen a steady decrease long before the trade deficit became persistent. And even though the share of manuf. employment has gone down, the manuf. out put has seen a steady increase = a lot more stuff with a lot fewer people (newer technology more efficient and cheaper).

Class Lecture #22 - 10/24

1.) Comparative Advantage..... Who's more efficient at making each item?
      absolute advantage = how much an individual can produce without taking into account economic context.
      efficient - whomever sacrifices less when they produce something; fewer tradeoffs
       - Rochester grads.... 10 bottles of wine/yr and 5 cameras/yr
       - Cornell grads...... 3 bottles of wine/yr and 4 cameras/yr
   
                           Rochester                      Cornell
camera cost        5 cams cost 10 w           4 cams cost 3 wines
                           1 cam cost 2 w              C = 3/4 wine
                           C = 2 wines
wine cost           10 w cost 5 cam             3 wines cost 4 cam
                           C = 1/2 cam                 C = 4/3 cam

    - UR more efficient at making wine... have a comparative advantage in making wine over Cornell
    - Cornell more efficient at making cameras.... comparative advantage in making cameras over UR
    - UR has an absolute advantage in making both
    - NOBODY CAN HAVE A COMPARATIVE ADVANTAGE IN EVERYTHING!!!

2.) This is what happens when UR and CU grads TRADE:
                    UR                       CU
Initial        10 wine                 0 wine
                  0 cams                  4 cams
   Then UR give CU 3 wines and CU give UR 3 cams (Price of Exchange = 1 wine per camera)
Final          7 W                       3 W
                  3 C                        1 C

Both parties experience economic growth because they're production plot lies on the outside of the curve. Going back to (1), for the two schools to be able to trade, 3/4 wine < P cam < 2 wines  AND  1/2 cam < P wine < 4/3 cam. Since the price of exchange is 1 wine per camera, this falls within the ranges of both, so both experience economic growth.

3.) The main point of today's lecture was that self-sufficiency is the road to poverty. People should be social and trade rather than take everything into their own hands.
    - Trade = a non-technical form of production that is much more efficient than self-sufficient production. Trade creates substantially more economic growth than self-sufficiency and so it is the more desirable route for most people. For this reason, countries that impose tariffs and exchange constraints on their citizens are costing the economy a lot.

EWOT Goggles - 10/23

My friend Cy McGeady lives in one of the rooms across from mine some ways down the hall. But lately, he's been spending an awful lot of time in my room, so much so that he's starting to call it "his" room, much to my displeasure. When does it get to the point when he can say (and I can say) that it's his room with confidence? It would have to be when the trade-offs we both make are desirable and mutually acceptable. By "living" in our room, Cy gives up the chance to sleep in his own bed and to have a space to call his own, but he does get to spend more time in a room with a lot cooler things and people. By Cy living in our room, I'm giving up some space and some quiet in order to spend more time with a friend and to have more insane chill sessions. I'm not sure I'm at the point where I can call my trade-off favorable but I'm pretty sure Cy is. And when I am, I guess we can start calling it his room.

Reading Analysis - 10/23

A.) I read the Property Rights notes and I thought it was interesting reading about the manipulation of fairness and Thomas Schelling's experiment during the 1970s. The first question, would it be fair to give a larger child tax credit to poorer families than richer families, seems very fair: poorer families with children get a a tax break when compared to richer families. Now this leads into the second question, which is: should rich couples without children pay a larger surcharge than poor couples without children. Again, this seems to make sense, but it is actually the same thing as saying that poor with children receive a smaller bonus than rich with children. This is because rich without children suffer more and therefore the rich with children receive a bigger bonus. Poor without children don't suffer as much and so poor with children receive a smaller bonus. The thing is, both questions/schemes are EXACTLY THE SAME. So how can one be fair and the other one not be fair? Obviously this unsettles people and causes them to question their own views on fairness.

B.) What sorts of conditions must be in place in a society for self-ownership to be absent?
      For justice formulation, fairness = voluntary exchange + proportional requital. For proportional requital, Locke explains that this means every man gets his "just due." What exactly constitutes a just due? Is it different or the same for everyone?
      From the collective farm example, how many people would you expect to go home and leave the crops to rot? So then how many would you expect to stay the extra week and earn the $1 million for the "country," essentially?

C.) This reading was assigned because it introduces us to property rights and moral justice. Private ownership is the premise of our capitalist market and so it is important for us to get a feel for what's out there and what every person is entitled to as far as justice goes. It also builds off of the institutions notion..... institutions matter!

Class Lecture #21 - 10/21

1.) Trade creates nothing new, yet it benefits BOTH parties.....
                Time to do Yardwork                                         
                     Mike:               Rich:
weeding       80 min.             120 min.
mowing       40 min.              120 min.
                    120 min.             240 min.

...Rich offers to weed 3/4 of Mike's driveway if Mike mowes Rich's yard.
                Time to Do Yardwork
                     Mike:                Rich:
weeding       20 min.              210 min.
mowing       80 min.               0 min.  
                     100 min.           210 min.

Both parties benefit. Trade is for this reason, very efficient.

2.) Production Possibilities Frontier
        - given resources, education, technology
        - Properties of PPF's:
             (1) all points on or in the curve are achievable
             (2) "absolute advantage" = individual's ability to produce something
             (3) all points outside of curve NOT achievable
             (4) points on the PPF are productively efficient (right combination/point on the curve is economically efficient)
             (5) Slope.... more coonskin hats, less jibbits... tradeoffs
             (6) Change in slope = "Law of Diminishing Returns" or increasing opportunity costs
             (7) Economic Growth.....

3.) Economic Growth happens when successful production lies on a point outside of curve. Growth happens because of:
        - increase in/better resources
        - better technology
        - TRADE

Class Lecture #20 - 10/19

1.) Ex: Why do we have so much confidence that our packages will be delivered without any kinks by FedEx?...... Feedback Loops. FedEx punishes employees who do a bad job and rewards employees who do a good job (both incentives to do a good job). Also, competition (between institutions) plays a role because if another company delivers a package more effectively, FedEx will lose customers.

2.) Trade and Exchange
      - What gets produced? How do you produce it? How do you get it to the consumer?
                         black
      - inputs --> box  ---> "stuff"
           2 ways: self-sufficient OR specialization and exchange (!!!)
      - Factors of Production include:
           (1) Land - pre-existing stuff
           (2) Labor - # of people and their innate abilities
           (3) Capital - physical and human
                  --> physical = produced for the purpose of producing something else
                  --> human = improve our economic stock of skills by augmenting our abilities
      - Economic Activity --> PSST (Patterns of Sustainable Specialization and Trade)
            1. self-sufficiency    2. specialization and exchange     3. discovery (takes more time)

3.) Wealth = whatever we value
     Economic Growth occurs when same inputs --> more stuff
     Exchange can only happen when values DIFFER (ex: Kirby Puckett vs. Buddy Brancalana)

Class Lecture #19 - 10/17

1.) Because of the fact that people don't like markets being driven by self-interest, another option some people prefer is the Golden Rule, or, treating people the way you'd want to be treated.
     - people can "control their own destiny" 
     - can work on smaller scales(ex: tribes and families)
     - BUT, impossible to know what other people want, so system doesn't work..... price system solves this problem
     - self interest = pursue the things that interest you (Mother Teresa)
  
2.) The Silver Rule is basically the same as the golden rule except in less active terms. It means not doing to someone what you think is unfair.

3.) Charitability only acceptable if done with your own money
     Running a business like a family or vice versa NOT GOOD
     Can't have too much profit

EWOT Goggles - 10/16

This week, my roomate and I bought a used futon on craigslist for $50, a good deal I think. But before that, we were looking at used futons that were being sold for nothing. That's right, they were completely free. So I thought what the point of just giving something away that you spent good money on for free was. If it were me, I'd want to try and earn back what I thought it was worth at that time. Maybe these people thought their futons were so shitty that they would just try and get rid of them by any means necessary. But even so, I'd still want to try and make back some money. Maybe it has to do with the value of happiness: if the person received >$100 of happiness for a futon they bought for $100, maybe they were just so overjoyed with what they got out of it that they were content giving it away for nothing. I don't know. But I do know that I get the message that the futon is a piece of shit if it's being given away for free. So I really don't understand why these people don't charge anything for the futons.

Reading Analysis - 10/16

A.) So I read the article "The Case for Contamination" by Kwame Appiah, and among other things, I thought it was interesting that Appiah used people's responses to popular Western television shows in his argument aganist cultural imperialism. The point he was trying to make was that the audience of the shows (Israeli Arabs, Dutch, Moroccan Jews, etc.) did not all have the same response to the shows and therefore were affected differently by them. "Media-cultural imperialists" say that the center of the ruling sector (ie the West) essentially controls the peripheral sectors through various means, including advertising. If this is true, then all of these groups after watching American TV shows should take away the exact same message, or, the message that the West intended to provide. But as proven by Appiah, each group takes something different away. For example, Zulu college students talked about how they began to understand relationships between a man and a woman as well as a person and his father after watching the soap opera "Days of Our Lives." Why would "multinational capitalism" try to instill this message in their "subjects" if it's more concerned with spreading the word of capitalism and advanced technology and the such? So, different cultures' responses to these TV shows proves that these cultures are not controlled by a centralized superpower and have the ability to make decisions for themselves.

B.) Can we really say that homogeneity as a result of globalization is really homogeneity at all if everyone has such a wide array of "things" to choose from and therefore has such different lives anyway?
      If we asked the members of numerous exotic cultures whether or not they would embrace change, what do you think a majority of them would say?
      Does the increased price of cultural artifacts and items provide incentives for these cultures to change to a more Western way of life?

C.) This article was assigned because it shows how there are some groups of people who are potentially slowing down modernization in places where it is most likely inevitable and necessary. It also ties back to the Inustrial Revolution because it talks about how newer generations now have the ability to pursue their own interests as opposed to just following in their parents' footsteps. This was one of the main reasons the IR got started when and where it did. Basically, the articl is saying that change is good.

Class Lecture #18 - 10/14

1.) Markets are often "wrong"...... [1] lack of markets leads to externalitites
        - Market power
        - Information problems (cancer/individual health/insurance companies example)

2.) Markets are often "wrong"...... [2] Institutions matter
        - institution - any arrangement for people to live side by side
        - Rule of Law --> apply equally to everyone, not arbitrary, general law
        - get institutions right means you boost economic growth substantially

3.) Inflation..... when you have too much money going after the same amount of products, prices rise
        - since 1940, average prices have gone up by 16x

Class Lecture #17 - 10/12

1.) Unintended consequences tend to arise because of a complex system that attempts to be governed by a simple set of rules. (ex: American Disabilities Act, Endangered Species Act, etc.)

2.) Trade is NOT zero-sum..... pie fallacy --> if someone gains someone else has to lose. In reality this is what exploitation is. Consequences of zero-sum trade would include slowed economic growth, rich oppressors, poor oppressed, an invoked notion of power.

3.) Wealth is stock
     Income is flow

EWOT Goggles - 10/7

Incentives, incentives, incentives. People's behaviors will change when you change benefits and costs. So, what were the incentives to study for this week's Economics exam? Obviously to get a good grade. But were the incentives for each individual person different? I guess there's no way of knowing but when I took a look around the room, certainly not everyone seemed entirely focused on the exam. So, if people pay $54,000 a year to go to this school, how can it be that people don't take the exam seriously? Everyone's incentives are different; everyone places different values on things. Some people put high importance on Econ 108 while others put little importance on it. These same people probably put more importance on other things and other classes. You make a trade-off when you take the exam: you take time to study, you will probably do well. If you don't take the time, you will probably not do well. So, people's values are revealed by the trade-offs they make.

Reading Analysis - "What is Seen and What is not Seen"

A.) Here is a classic example of the Broken Window fallacy at play. M. de Lamartine, a Frenchman who is a strong advocate for theater and arts subsidies, gets absolutely blasted by Bastiat who argues that public spending does not just make everyone richer; the money has to come from somewhere. Subsidizing the arts industry means that in effect your desubsidizing other, more important industries (examples given were carpentry, blacksmiths, etc.). So, arguing that this stimulus creates lots of jobs is incorrect because you're using money from taxpayers who are losing these 60,000 francs which are going to the prospective painters, actors, etc. I think it's interesting how you can apply this fact to the economy today when you hear about the economic stimulus. It just makes me think a little bit about where that money is really coming from.

B.) During this time, which industries do you think required the most subsidies and why?
      Where did these subsidies come from? Were the more successful businesses the ones that ran off of pure profit?
      Did taxes go up when subsidies were required to stimulate new/struggling industries?

C.) The reason for reading this article would have to be its application of the Broken Window fallacy to the arts industry in France and how even back then there were economists who understood that this stimulus money had to come from somewhere.

Class Lecture #16 - 10/7

1.) The term "selfish" is very subjective. Every one means something a little different when they say someone's selfish. Context (margin) must be understood to understand the meaning.

2.) marginal cost - costs we incur from making a decision
     sunk cost - costs/resources not recoverable when decisions made (bad economic decisions when you take into account sunk costs)

3.) Humans act with purpose; they respond to incentives. They tend to do things that ease life. A person's behavior changes when benefits and costs change.

Class Lecture #15 - 10/5

1.) Broken Window fallacy.....three problems with the "it's stimulating statement"
         1. didn't choose the roof to begin with
         2. lose value of the resources that go into making the roof
         3. if roofer was unemployed, then we take away the opportunity for him to take another job

2.) Jobs are not a benefit, they're a cost. You have to give up a lot of your time to do something that's not always the most appealing.

3.) Marginal cost.... water/diamond paradox. Diamonds have a much higher marginal value than does water because they're much more scarce. Marginal cost - the change in cost by taking an action

Class Lecture #14 - 10/3

1.) Every economic decision made involves some sort of trade-off; nothing is free. For something to be free, when you produce and consume something you cannot use up any resources at all. Costs are anything that consume resources and so they are directly related to trade-offs. Taxes are NOT costs because they don't consume resources; they're just an exchange.

2.) Opportunity costs..... net value of next best opportunity. Opportunity costs are essentially the basis for everything in this course. Bruce Springstein tickets vs. Barry Manilow tickets. What is the opportunity cost if Barry Manilow tics are $40 but your willingness to pay is $50 and the Springstein tics were free? Opportunity cost = $10 because it's the net value of the next best opportunity.

3.) Broken Window fallacy
        - no new jobs created
        - $ spent on new roof is not $ spent on other things
        - NO NET CHANGE
       

EWOT Goggles #4 - 10/2

This weekend, my roomate, my friend and I went to Walmart to buy a rug and a futon for our room. Unforunately, we were only able to buy the rug because the futon was too expensive. When we got back to the room, we put the rug down and the room looked a whole lot better than it did before. This got me thinking about how our room is compared to other rooms. While our room is certainly nice, there are some other pretty kick-ass rooms on our hall. But what makes a room nice? Is it the way it looks and the way everything is set up? Or is it the stuff in the room? Or, is it a little bit of both? Are more expensive rooms automatically better than rooms set up more cheaply? Or can rooms that have less expensive stuff look nicer than rooms with more expensive stuff? I guess my question is, is there a correlation between the aesthetics of the room and the price value of the room in terms of everything that's in it?

Reading Analysis 10/2 - Happiness vs. Income Video

A.) I thought it was interesting to hear Robert Frank cite Darwin in his argument that realtive income, not absolute income, is what really matters for a person's happiness. Basically, Professor Frank said that the Darwinian instincts in us make it so that we're always comparing ourselves to others; if we're trailing behind them then we can't be happy. This, he says, holds true across all communities and social classes. The poorest person in a very rich neighborhood will probably be unhappy even though it's possible that he is a lot richer than most people in the country. Position in our social groups is everything and he ties this back to our desire to outcompete the others in the group, or to atleast hold par against them. He said that no matter what advances or progress our particular group makes (see antler example), it's all relative to each other. So bigger antlers for everyone is actually harmful because while all the deer grow them, they're keeping the playing field level and at the same time they're making it harder for themselves to run through more densel-wooded areas. This ties back to what Darwin said about self-treated individuals: that their advancements can actually harm the group and we saw that that was the case in the above example.

B.) When we looked at the graph for the U.S. that measured happiness in relation to income, it was surprisingly flat and Justin Wolfers said this was the case because economic growth was different for everyone in the U.S. If this is the case, why don't people in other countries experience this as well?

      If everything is looked at in relative terms, is their any importance at all for the absolute value of something?

      What could be some reasons for the negative slope in the graph of happiness/income for Belgium?

C.) I think Professor Rizzo had us watch this video to expose us to the opinions on this topic that economists hold and to demonstrate that not all economists think alike. This video should help us understand the topic better and it should get us thinking about how other aspects of life correlate with personal income.
     

Class Lecture #13 - 9/30

1.) Adam Smith wrote in his book Wealth of Nations that the key to a successful economy was for government to not get involved. Smith theorized that the economy was at its best when:
      - everyone had rights to property
      - a division of labor exists
      - exchange is peaceful and mutual
      - there were NO special privileges

2.) Smith argued that the source of wealth for everyone is the ability to produce and exchange commerce. This view is very different from the views of the mercantilists who said that the more gold and silver a person had, the richer they were.

3.) Capitalism emerged as a self-organizing system under spontaneous order. The capitalist way of life really took off during the late 1800s when the Industrial Revoluion was in full swing and when free trade and exchange was the norm.