the need for attribution!. affect: a verb effect: a noun
TRANSCRIPT
Affect: a verb Effect: a noun “The lack of attribution affected the teacher and the
subsequent effect on Arnold’s grade was devastating.”
Affect or effect?
Remember consequences, not intent: rent control was supposed to help the poor
Is capitalism Christian?
Remember consequences, not intent: rent control was supposed to help the poor
The first thing communists and fascists do is eliminate or marginalize religion: Stalin, Lenin, Castro, Mao, Hitler
Is capitalism Christian?
Remember consequences, not intent: rent control was supposed to help the poor
The first thing communists and fascists do is eliminate or marginalize religion: Stalin, Lenin, Castro, Mao, Hitler
In socialism, the state becomes the religion
Is capitalism Christian?
Remember consequences, not intent: rent control was supposed to help the poor
The first thing communists and fascists do is eliminate or marginalize religion: Stalin, Lenin, Castro, Mao, Hitler
In socialism, the state becomes the religion Nowhere in the Bible do I see where it is the duty of
the state to care for the poor… it is the individual and the church
Is capitalism Christian?
Christians are the most generous people in the world… and most are capitalists
Is capitalism Christian?
Christians are the most generous people in the world… and most are capitalists
Christ’s teachings about caring for the poor are all about a changed heart… not about your money being taken by the state and given to others
Is capitalism Christian?
Christians are the most generous people in the world… and most are capitalists
Christ’s teaching about caring for the poor are all about a changed heart… not about your money being taken by the state and given to others
The Bible gives us no explicit economic system, but it seems clear to me capitalism is much more in line with Christianity than socialism
Is capitalism Christian?
“Religion is the sigh of the oppressed creature, the heart of a heartless world, just as it is the spirit of a spiritless situation. It is the opium of the people. The abolition of religion as the illusory happiness of the people is required for their real happiness.”
Karl Marx
Refers to the idea that there is a winner and loser in all transactions, kind of like a tennis or boxing match
Zero sum thinking
Refers to the idea that there is a winner and loser in all transactions, kind of like a tennis or boxing match
So if Bill Gates is rich, he must have taken that wealth from others
Zero sum thinking
Refers to the idea that there is a winner and loser in all transactions, kind of like a tennis or boxing match
So if Bill Gates is rich, he must have taken that wealth from others
The economic pie is only so big, so government has to make sure we all get the same size slice… “fairness” and “social justice”
Zero sum thinking
Does not recognize how much wealth Bill has created for others… e.g., the increased productivity from using Microsoft Office
Zero sum thinking
Does not recognize how much wealth Bill has created for others… e.g., the increased productivity from using Microsoft Office
Free-market thinkers want the pie to grow bigger… rising tide floating all boats
Zero sum thinking
Seen today in discussions of how rich are getting a larger share of the economy, and how CEO pay is now 250 times that of the average worker, versus 50 times in the 1960s
Zero sum thinking
Seen today in discussions of how rich are getting a larger share of the economy, and how CEO pay is now 250 times that of the average worker, versus 50 times in the 1960s
Ignores the fact that the average worker is living much better than ever
Zero sum thinking
Seen today in discussions of how rich are getting a larger share of the economy, and how CEO pay is now 250 times that of the average worker, versus 50 times in the 1960s
Ignores the fact that the average worker is living much better than ever
Used to argue against free markets and international trade, and for minimum wage, price controls, “paycheck fairness” act
Zero sum thinking
Liberal economists in general want to make the pie more equal through government interventions and redistribution of wealth
Zero sum thinking
Liberal economists in general want to make the pie more equal through government interventions and redistribution of wealth
Free-market economists in general want the pie to keep growing through the free market and supply and demand
Zero sum thinking
Liberal economists want equality of outcomes… i.e., everyone makes about the same through government redistribution
Zero sum thinking
Liberal economists want equality of outcomes… i.e., everyone makes about the same through government redistribution
Free-market economists want equality of opportunity… everyone has an equal chance to succeed
Zero sum thinking
20,000 pages of regulations and counting It hasn’t gone into effect yet CBO estimates it will add $6.2 trillion to debt
Affordable Care Act (aka Obamacare)
The mistaken assumption that what applies to a part applies to the whole
In economics, we’re looking at the economy in total… not any given individual, company or industry
Fallacy of composition
The mistaken assumption that what applies to a part applies to the whole
In economics, we’re looking at the economy in total… not any given individual, company or industry
We know that the economy is dynamic… some companies and industries must pass (typesetters, milkmen) so others can rise (app developers, organic bakers)
Fallacy of composition
Most common when government intervenes to “save jobs” such as the taxpayer bail out of GM and Chrysler
Fallacy of composition
Most common when government intervenes to “save jobs” such as the taxpayer bail out of GM and Chrysler
Said to “save” 1 million jobs… at a cost of $80 billion of taxpayer money, and locked in GM and Chrysler’s pension obligations and high fixed costs
Fallacy of composition
Most common when government intervenes to “save jobs” such as the taxpayer bail out of GM and Chrysler
Said to “save” 1 million jobs… at a cost of $80 billion of taxpayer money, and locked in GM and Chrysler’s pension obligations and high fixed costs
More important: what has been the cost to the rest of the economy in lost jobs and opportunities?
Fallacy of composition
“Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, darn* lies and statistics.’"*Teacher’s edit
The sum total of all goods and services produced within a nation’s borders including by foreign nationals during a year
Gross Domestic Product
The sum total of all goods and services produced within a nation’s borders including by foreign nationals during a year
GDP is the preferred measurement of contemporary economists, used by the U.S. since 1992
Gross Domestic Product
Private consumption and public sector spending In 2012, U.S. GDP was $15.7 trillion
The two main components of GDP
Private consumption and public sector spending In 2012, U.S. GDP was $15.7 trillion Private consumption was $11.1 trillion
The two main components of GDP
$407 billion on autos $829 billion on food and beverages $366 billion on clothes $440 billion on gasoline and fuel $266 billion on furnishings
Private consumption 2012: $3.7 trillion for goods
$2 trillion on housing and utilities $1.8 trillion on health care $410 billion on recreation services $714 billion on food service and accommodations $829 billion on insurance and financial services
Private consumption 2012: $7.3 trillion for services
Private consumption and public sector spending In 2012, U.S. GDP was $15.7 trillion Private consumption was $11.1 trillion Private investment was $2.1 trillion
The two main components of GDP
$460 billion on structures $555 billion on information processing equipment and
software $198 billion on transportation equipment
Private investment 2012
Private consumption and public sector spending In 2012, U.S. GDP was $15.7 trillion Private consumption was $11.1 trillion Private investment was $2.1 trillion Government spending was $3.1 trillion
The two main components of GDP
$809 billion on national defense $405 billion on nondefense $1.8 trillion on state and local government spending
Government spending 2012
Problem 1: The totals add up to $16.3 trillion, not $15.7 trillion
Problem 2: The federal budget alone was $3.5 trillion in fiscal 2011-2012 (October 2011-September 2012)
Hey, wait a minute!
We need to subtract the trade deficit from GDP: in 2012, the deficit was $560 billion. We balance!
Problem 1
Most of government spending is “transfer” payments for Social Security, welfare, health care. Does not count as part of GDP because it’s taking from one part of the economy and giving to the other… it’s not productive because it doesn’t produce anything
Problem 2
Most of government spending is “transfer” payments for Social Security, welfare, health care. Does not count as part of GDP because it’s taking from one part of the economy and giving to the other… it’s not productive because it doesn’t produce anything
Key corollary: Government does not produce wealth; it consumes it
Problem 2
GDP = C + I + G + (X − M)
C is consumptionI is gross investmentG is government spendingX is exportsM is imports
Common GDP Formula
U.S.................$15.6 trillion PRC (China)......$8.2 trillion Japan...............$6 trillion Germany..........$3.4 trillion France.............$2.6 trillion
Top 5 GDP Nations: 2012 by International Monetary Fund
Liechtenstein Luxembourg Monaco Norway Qatar U.S. #18, China #93
Top 5 GDP Nations, Per Capitasource: United Nations