The Mike Rowe video looked at the problems in society with castrating lambs. Peta and the Humane society say this should be done by rubber bands (don't ask) but farmers still use knives/teeth. The farmers know what is better through experience. The rubber band lamb sat down and won't walk for a few days but the knifed lamb was off frolicking in the field. Rowe says society has a "War on Work." We have sacrificed infrastructure and trade schools. He says innovation without imitation is pointless.
The Roquefort video looked at a cheese shop that sells Roquefort French cheese. In recent years tariffs have caused this price to increase. The government imposed tariffs in response to France not buying American beef. The cheese shop owner realized that soon enough people will not have the choice in consuming. She has waged a protest on the tariffs through a publicity stunt "Long Life Roquefort." She says that soon Americans won't even have the option of buying cheese. Our choices will be made for us. This was a very interesting look at how tariffs and trade restrictions affect businesses and society.
The NPR articles and audios of the Jobs of Yesteryear: Obsolete Occupations looked how advancements in technology had replaced a lot of jobs like the iceman, switch board operators, and the telegraph operator. The audio clips gave a nice insight into how the jobs were replaced and obsolete. But some people like iceman said that they were happy with the replacements. "Thank God for refrigerators."
I still have questions. 1. What does Rowe mean by innovation without imitation is pointless? Shouldn't people try to improve and advance technologies and not just imitate or does he mean something different? 2. The government knows the effects of harsh trade restrictions and tariffs on the consumers and producers but still does it. Why do they continue to harm society just so they can play a political game? 3. The people who lost their jobs seemed happy - they seemed to show that although technology is a job killer it is a good thing. What happened to all these obsolete workers? Did technology simply make more jobs?
These videos gave different looks at economics in society. The Rowe video looked at society problems, the Roquefort video looked at political problems, and NPR looked at technological problems.
Saturday, October 29, 2011
Cheating is Wrong. Collaboration is Economics.
Comparative advantage seems like a very hazy subject. Who is really going to mow people's lawns or trade wine and cameras? It didn't seem that this had real world applications. But it does!
A bunch of my friends were sitting around today watching College Football. Someone started ranting about how they had to do their bio homework and math webwork over the weekend. They had already finished the bio but not the math. Another person, who was in the same classes, said they had done the math but not the bio.
They're eyes lit up. They realized that the should help each other finish the work. While a third person said they should just give each other the work that was done and copy it - these two unknowingly economists knew that cheating was wrong, but collaboration wasn't.
Person 1 said the math took them 20 minutes and the bio would probably take them an hour. Person 2 said the bio took them 30 minutes and the math would take 45 minutes. Person 1 has the comparative advantage in bio as their bio work takes 1/3 math (while Person 2's bio is 3/2 math). Person 2 has the comparative advantage in math as their math takes 2/3 bio (person 1's math takes 3 bios).
So the two people decide to collaborate and help each other finish the work. Now Person 1 did their bio in 30 minutes and Person 2 did their math at 20 minutes by the help of their friends. The world just gained 55 minutes back through this collaboration. Time for more football!!!!!
A bunch of my friends were sitting around today watching College Football. Someone started ranting about how they had to do their bio homework and math webwork over the weekend. They had already finished the bio but not the math. Another person, who was in the same classes, said they had done the math but not the bio.
They're eyes lit up. They realized that the should help each other finish the work. While a third person said they should just give each other the work that was done and copy it - these two unknowingly economists knew that cheating was wrong, but collaboration wasn't.
Person 1 said the math took them 20 minutes and the bio would probably take them an hour. Person 2 said the bio took them 30 minutes and the math would take 45 minutes. Person 1 has the comparative advantage in bio as their bio work takes 1/3 math (while Person 2's bio is 3/2 math). Person 2 has the comparative advantage in math as their math takes 2/3 bio (person 1's math takes 3 bios).
So the two people decide to collaborate and help each other finish the work. Now Person 1 did their bio in 30 minutes and Person 2 did their math at 20 minutes by the help of their friends. The world just gained 55 minutes back through this collaboration. Time for more football!!!!!
Class 24 - Trade Defecits are our Friends
Today we talked about what determines is jobs are shipped overseas. The answer is absolute and comparative advantage.
For example. If China produces at $2/unit and USA produces at $1.5/unit then USA has an absolute advantage. This shows wages/MPL (marginal produce of labor)-(how much stuff you get if you work another hour). But we need to find comparative advantage.
So does trade surpluses = jobs? Agriculture shows no. A trade deficit doesn't create or hurt jobs.
Trade deficit = amount export less than import
It doesn't hurt jobs because people pay for imports with exports. Specialization = wealth increase (use fewer resources). And with more money - people consume more and create more jobs. Employment increases on net.
We then discussed what the US Current Account Balance (what Americans sell compared to buy) and
the US Capital Account Balance (American assets - treasuries/bonds) were.
For example. If China produces at $2/unit and USA produces at $1.5/unit then USA has an absolute advantage. This shows wages/MPL (marginal produce of labor)-(how much stuff you get if you work another hour). But we need to find comparative advantage.
So does trade surpluses = jobs? Agriculture shows no. A trade deficit doesn't create or hurt jobs.
Trade deficit = amount export less than import
It doesn't hurt jobs because people pay for imports with exports. Specialization = wealth increase (use fewer resources). And with more money - people consume more and create more jobs. Employment increases on net.
We then discussed what the US Current Account Balance (what Americans sell compared to buy) and
the US Capital Account Balance (American assets - treasuries/bonds) were.
Class 23 - The Robots are Coming - they Have our Jobs.
Today we defended trade and showed how trade does not cost jobs - it just changes the jobs.
The sources of job loss from trade are outsourcing/technology replacing people.
Technology is the real job killer.
Foreign competition also causes manufacturing job loss.
Let's run a trade deficit. If we buy more from China than we sell - we get a service surplus and a goods deficit. The deficits don't hurt jobs - they just change what kinds of jobs we have/need.
Some say Americans don't make things anymore - NOT TRUE. Manufacturing output increasing steadily since the 1940s.
The sources of job loss from trade are outsourcing/technology replacing people.
Technology is the real job killer.
Foreign competition also causes manufacturing job loss.
Let's run a trade deficit. If we buy more from China than we sell - we get a service surplus and a goods deficit. The deficits don't hurt jobs - they just change what kinds of jobs we have/need.
Some say Americans don't make things anymore - NOT TRUE. Manufacturing output increasing steadily since the 1940s.
Class 22 - Wine and Cameras. Sounds Like a Good Class.
Today we talked more about PPF-production possibility frontier.
We looked at comparative advantage. Absolute advantage is just the ability to produce something. Comparative advantage is how much more efficient you are at producing something than someone else.
Efficiency = less tradeoffs
Comparative advantage shows that self-sufficiency is the road to poverty.
For example: There are only cameras and wine produced by Rochester and Cornell.
Rochester can make 5 cameras and 10 bottles of wine. Cornell with the same resources only makes 4 cameras and 3 bottles of wine. Rochester has the absolute advantage compared to Cornell.
So who has a lower opportunity cost? Who does it cost less for? Who has to make less tradeoffs?
So for Rochester, 1 camera = 2 wine and 1 wine = 1/2 a camera. For Cornell, 1 camera = 3/4 wine and wine = 4/3 camera.
Rochester has a comparative advantage in making wine compared to Cornell. But Cornell has a comparative advantage in making cameras compared to Rochester.
Rochester has a lower opportunity cost so it has a comparative advantage over Cornell.
Nobody can have a comparative advantage in everything!
Now let's say that Rochester had 10 wines and 0 cameras and Cornell has 0 wines and 4 cameras. Rochester gives 3 wines and Cornell gives 3 cameras. The price of exchange was 1wine/camera. Now Rochester has 7 wines and 3 cameras while Cornell has 3 wines and 1 camera. Both schools now operate outside the PPF (look at notes) so trade is sustainable and profitable.
Restricting trade is costly.
The world is richer.
We looked at comparative advantage. Absolute advantage is just the ability to produce something. Comparative advantage is how much more efficient you are at producing something than someone else.
Efficiency = less tradeoffs
Comparative advantage shows that self-sufficiency is the road to poverty.
For example: There are only cameras and wine produced by Rochester and Cornell.
Rochester can make 5 cameras and 10 bottles of wine. Cornell with the same resources only makes 4 cameras and 3 bottles of wine. Rochester has the absolute advantage compared to Cornell.
So who has a lower opportunity cost? Who does it cost less for? Who has to make less tradeoffs?
So for Rochester, 1 camera = 2 wine and 1 wine = 1/2 a camera. For Cornell, 1 camera = 3/4 wine and wine = 4/3 camera.
Rochester has a comparative advantage in making wine compared to Cornell. But Cornell has a comparative advantage in making cameras compared to Rochester.
Rochester has a lower opportunity cost so it has a comparative advantage over Cornell.
Nobody can have a comparative advantage in everything!
Now let's say that Rochester had 10 wines and 0 cameras and Cornell has 0 wines and 4 cameras. Rochester gives 3 wines and Cornell gives 3 cameras. The price of exchange was 1wine/camera. Now Rochester has 7 wines and 3 cameras while Cornell has 3 wines and 1 camera. Both schools now operate outside the PPF (look at notes) so trade is sustainable and profitable.
Restricting trade is costly.
The world is richer.
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