Today we talked more about the Bus Driver example under the rule of law. We shouldn't wait for anyone because it would be special privilege, but we have a knowledge problem. Social costs are impotent.
We then talked about feedback loops. If FedEx fails, we would use UPS. However, FedEx cares when it loses a package and it is their interest to hire trustworthy people.
We looked at trade and specialization. The point of economic activity is because things are scarce and we want things. The challenge is to figuring out what gets produced, how we do it, and how to distribute it. The factors of production are land (place to do stuff), labor (people), and capital (stuff needed to produce stuff - physical and human ability to increase ability (i.e. education))
Production process: Inputs --> black box --> stuff. Black box is where cool things happen (production).
We do this by being self-sufficient, specialization and exchange (PSST - patterns of sustainable specialization and trade), and discovery.
Economics is a matching problem as self-sufficiency causes less economic activity. We need to match technology, skills, and consumer presences.
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