Day 6

Agenda:• Get spiral• Finish Production notes• Cafeteria (take spiral): we need to get there

by 11:05!!

9/17/13

In your spiral, evaluate the meaning and relevance of the quote. Is Mr. Friedman right? Explain.

“There's no such thing as a free lunch.” ― Milton Friedman

Musical Chairs Debrief

• What did you notice about the behavior of the participants in the first game?

• In the second?• What factors influenced participation and

“enthusiasm” (willingness to produce?)

Today’s Objectives:1. Discuss and evaluate “3” different types of economies. 2. Analyze economic influences in current events.

Please title the next section in your spiral as follows:Types of Economics & Related Theorists

• Traditional- “3 economic questions” are answered generationally. - Continuity and stability are most valued. - Typically focused around hunting, fishing, agriculture- Resources allocated by inheritance- Many of these are in process of switching to the 2 other types or to a “mixed” economy- 400 million people are indigenous in the world

• Examples:- places with “emerging” markets, 3rd World

- Africa (Pygmies of the Congo)

• Re-create this t-chart in your notes, and talk with your neighbor to brainstorm the potential contents of the respective lists

• Benefits:- unity, social bond, reduced hostilities- low crime rates- low unemployment- honors customs and religion

- no surplus or waste of goods• Drawbacks: - resistant to change = lower productivity, efficiency - lower standard of living - lack of freedom to choose your job

BENEFITS DRAWBACKS

• Market (Well, now “Mixed”)- Individuals and businesses own productive resources and answer “economic questions.”- Prices determine allocation.

- Prices determined by market forces.- Regulated by the players, supply and demand- Little or no gov’t regulation, no such thing as truly “free” market anymore

• Examples:- Brazil, Nicaragua, India, UK, Peru, USA, New Zealand, Canada

BENEFITS DRAWBACKS

• Benefits: - Most efficient way to allocate resources

- Highest standard of living- freedom to choose, and many options- goods and services are produced that people really want (demand)- equal opportunity for success- self-interest fosters competition, competition = growth and progress- freedom to live as you wish- fosters democracy- no viable alternative- happiness

• Drawbacks:- Class division, inequality- Waste- anti-social- dangerous- anti-democratic (corporations can purchase votes)- pollution, moral hazard- “dictatorship” by CEOs- propaganda (advertising or brainwashing?)

Free Market Theorists

• Milton Friedman: free economy necessary for a free political system

“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”

• Adam Smith: greatest societal good comes from fostering the greatest individual good

“What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

• Laissez Faire and invisible hand

• Command- Authority figures or entities (lords, gov agencies, central planners) decide how to answer “3 Economic Questions” and how they will be allocated. - key feature of communist societies- gov’t central planners create and implement the economic plan based upon “needs” of society- Central ownership finance, utilities, and automotive industries- government ownership of some key businesses, such as prisons, water systems, telecommunications systems, health-care systems.

• Examples:- China (key industries owned and operated by the government rather than private industry, government allows prices of goods and services to fluctuate based on the market, rather than monopoly to set prices )- Cuba- North Korea- Russia- Iran

• Benefits: - override individual self-interest

- subjugate individual freedom to promote greater agreed-upon goal for the society at large- Conform to the planner's vision (Stalinist Russia, Maoist China and Castro's Cuba)- Basic needs met- Internal innovation, lack of outside innovation

• Drawbacks:- Must eventually limit individual liberties- Lack of outside innovation- Fewer consumer options- Fewer choices in all areas (work, school, military, personal)

Karl Marx: Author of The Communist Manifesto• capitalist mode of production = estrangement

from self, work, other workers• labor theory of value: value of a commodity

determined by amount of labor that went into producing it (and not by fluctuating relationship of supply and demand).

• Societies advance through class struggleProletariat vs. BourgeoisieInternal conflict leads to self-destruction

7 Goals of Any Economy(Discuss and Rank)

EfficiencyEconomic freedomSecurityPredictabilityEquityGrowthInnovation

Then, determine which of the 3 types of economies best meets your established priority list.

Tragedy of the Commons• http://archive.org/details/ChalkTalkTragedyOfTheCommonsPart1• http://archive.org/details/ChalkTalkTragedyOfTheCommonsPart2• http://www.youtube.com/watch?v=B0vmP7HoFI4 (John Stossel, 11 min)• http://www.youtube.com/watch?v=fdgafsxTdp0 (Bangalore)• http://www.youtube.com/watch?v=MLirNeu-A8I (by learn liberty)