"blow off rule of law" -->extra kids in class
-able to predict with certainty
-some rules not economic
--> class enrollment piece of legislation that
Bus example: not clear whether he should stop
imagine world where have to get to airport
-call brother, ask stranger, taxi; which most confid way to get there?
ex: send legal document, used FedEx
-why Rizzo not worried about his important stuff?
==>imagine how many things that could go wrong! (throw out, open..) Why content?
CONFIDENCE!
-Compare other ways of doing business (Imagine giving package to total stranger on street)
-Compare time to get there, the cost, reputatio
Feedback Loops: exist to ensure performance
-Consequence for failure
FedEx hires honest people, fires people who lose packages, rude
Why Bother Keeping Reputation Intact?
Customers damage competition
-> Rizzo more confident in Fed Ex
Feedback works well when people feel guilty about doing a bad job
*Areas most satisfied/that work => more feedback loops
Trade and Exchange (Must understand what property is and ethics of a just exchange)
1) What should get produced?
2) How Do We Decide to Produce?
3) Allocation System; how get from producers to consumers?
Inputs => "Black Box" => Stuff
Factors of Production
1) Land
2) Labor
3) Capital
-->basic resources available to society
Land: Nat. resources, preexisting phys. objects (minerals, trees)
-Something doesn't become a resource UNTIL we give it value
Labor: # of bodies, phys/mental ability born with
Capital: something that must be produced in order to produce something else
2 types here
-physical: used for something else (crow bar used to change tire)
-human: all augmentation people 2 Ways to Exchange in Production Process
Self Sufficient <------ -------> Specialization & Exchange
1) Specialization 2) Exchange 3) Discovery
What does it meant to have economic activity?
PSST = Patterns of sustainable specialization & trade
-Getting other people to voluntarily do things for you
Work By Yourself --> reduce economic activity, less GDP
Dynamic Discovery; techonology growth, new patterns of PSST
Possible for Undiscovery
-Dark Ages "undiscovered" urban living
-Econ. slumps traced to undiscovery
Rapid change of technology -> possible reason behind Great Depression
Prices awesome, adjust BUT in real world sometime people don't care?
Just remember, TRADE IS GOOD!
Why Do People Produce? -> Acquire wealth
What is Wealth? -> sometimes material stuff
ex: What Buddha's wealth was: wanted nothing! Yay, wealthy!
Nat. incr. production of thing but incr. production of wealth growth happens when inputs and stuff move apart
Voluntary Exchange:NOT exchange of equal value; People trade/cooperate to gain what each values
ex: exchange of baseball cards, money value not sole reason
