It's Better for the GDP to Have a Cow Instead of a Child

I, Pencil Overview
1) Impersonality
2) Self-Interest
3)Cognitive Issue
4)Who gave the orders?

Invisible Hand possibility for people to cooperate with out prodding; it results in social benefits
Tacit Knowledge = importance of type of knowledge that only an individual knows within a process (and couldn't possibly be known by someone else.
    - allows people with info and incentives to make decisions
    - not possible to have central planner; the world is always changing!

What lets people act in a market economy?
PRICES
Price System: perfect signal of scarcity
- terms of exchange; know exactly how much to give up to get something else


History of Economic Growth
"Are you better off today than 10 years ago?" => preposterous question! Even though we expect the answer to be yes
-We live in a world of staggering inequality
-Today's world is charactered by sustained growth
GDP = add up dollar value of everything produced inside the U.S. 
- national income estimate
-BUT not everything produced is valuable, not everything valuable is produced.