Reading Analysis of 'The Sumptuary Manifesto'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
One of the first things we learned in this class was that values are subjective. As simple as this idea is, it always pops into my head whenever I read anything pertaining to economics. There's certainly a lot of frivolity present in today's market, but it's only there because people are consuming it. There's a supply of it because there's a demand for it. Do people really need flashy, expensive cars? No, however, if they're willing and able to pay for them, then a quantity demanded exists. It's interesting to suggest that people should limit their consumption to only the necessary things they need for survival. It's Communist-esque in the sense that goods are rationed by capping expenditures, but unlike it because the people would still have excess income that they weren't allowed to spend. This is similar to self-sufficiency being the road to poverty, and the importance of fair trade. People would just be sitting on their money without the ability to enter it into the market, making everyone poorer. Prohibiting exchanges impoverishes us.

Discussion Questions
What are some possible repercussions of enforcing the rule against frivolous spending? Who would benefit/suffer the most from a policy like this? Are there any positive unintended outcomes that could come about from the implementation of such a strategy?

Annotation
Market supply molds to fit the market demand. If consumers want trivial tangible items, then they'll be created. It doesn't necessarily mean that people are "wasting" their money. Restricting the purchases of such goods won't promote any sort of economic equality because other ways to distinguish one's self will emerge. Free trade makes all of us richer on net, so prohibiting certain exchanges will make us poorer because entire sectors of the market would disappear. Freedom of purchase coupled with competition allow our economy to thrive.

Reading Analysis of 'The Use of Knowledge in Society'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
Hayek mentions in this piece that the knowledge problem applies not only to the to the producers of a good, but to the consumers of it, too. In terms of allocation, a consumer may believe that he or she values a particular good more than the other demanders of the same product. This person doesn't know, however, if the next consumer would put the product to better use. In other words, a consumer may believe that their use for a good is superior, but actually has no idea if his/her form of consumption is "better" or more efficient. The information problem extends well into the demand market as well as the supply market. I also find it interesting that society tends to regard people who have an advantage of information that allows them to acquire a good as dishonest. They simply have a comparative advantage in obtaining a certain good over other demanders in that market. Hayek suggests that the other demanders feel contempt for such a person with a knowledge advantage, but I believe it's more jealousy than it is anything else.

Discussion Questions
Why do you think governments still appoint several central planners even though it has been proven to be inefficient time and time again? Do they have another option besides central planning? Why or why not?

Is there a way to economically plan without centrally planning? At what point does the former cross into the realm of the latter?

Annotation
The point of this article was to further discuss the extent of the information problem in markets, and to reenforce the idea that central planning is virtually worthless. There is no possible way that one person has the capacity to make decisions for the whole because there is no feasible way for them to acquire all the knowledge they would need to make choices on that level.

Reading Analysis of 'The Problem with Price Gouging Laws'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
It was interesting to read that, after all we've learned about the ineffectiveness of price-controlling czars, Tennessee's state government prosecuted gas stations for price gauging. The rise in gas prices was simply a result of the scarcity of oil during that particular time. The businesses selling gas were responding to the increased effort it took them to obtain gasoline by raising the prices. Is it possible that some sellers were dishonest in how big of an increase in cost of opportunities they faced? Yes, but for the most part, these distributors were likely responding to the fact that an increase in scarcity of a good insinuates an increase in price of that particular good in the market. Prosecuting firms for abiding by market "rules" is a bit ridiculous. A similar situation occurred in North Carolina during a storm. Men were arrested for selling ice at a higher price than it was marked at even though no one complained about paying the higher price. Ice was more valuable to the people so they were willing to fork over a little more cash to ensure their stock in the event of scarcity.

Discussion Questions
We learned that both participants of a market, buyers and sellers, work to achieve an equilibrium price for a good. How do natural disasters like the ones described above mess with the equilibrium price of something? How do buyers and sellers react to return to the "right price" of a good? Can they do it on their own or is outside intervention required? What is/are the consequence(s) of outside control?

Why do events such as natural disasters receive special treatment in the light of prices and allocation of goods that are different than the usual workings of the market? Is this "good" or "bad"? Explain.

Annotation
This reading describes the issues that arise because of price gauging laws. The people policing price increases during events of scarcity would need to know an astronomical amount of information in order for these laws to be even marginally effective. There is absolutely no way for them to obtain that level of knowledge, and therein lies the problem with such laws. I'm not suggesting that there should be a total market free for all during natural disasters because people don't always abide by the Silver Rule when it comes to transactions. Suing distributors for a natural economic response during scarcity, however, isn't conducive to the functionality of the market at all.

"Reading Analysis" of WWII Propaganda Posters

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
The WWII propaganda posters' messages don't correctly coincide with the laws of supply and demand. All of the posters urge the people of America to consume less of specific materials (i.e. rubber, certain metals, etc.) in order to ensure that there are ample amounts of these goods to input into aircrafts, weapons, tanks, and other war necessities. This advice is juxtaposed with supply and demand laws because demand is the driving force behind supply. In fact, it would make more sense for Americans to consume the same amount, if not more, of the raw materials needed for the war effort during times of conflict. For example, if United States citizens demanded more rubber erasers, suppliers of such products would have to create more erasers. Thus, more rubber would have to cultivated in order to meet the demands of the people. By the laws of supply and demand, there would have been more rubber circulating in the American market in that instance than if the United States people took the advice of the posters. Not only that, but the existence of more rubber in the market would have lowered its price. Overall, this would have improved the war effort.

Discussion Questions
Presumably, Americans followed the advice of the posters and consumed less than they normally would due to the war. What affect would this have on the prices of specific goods they were told to reduce usage of? How would listening to the propaganda messages skew the price system as a whole? Explain.

Annotation
Pointing out the flaws in the suggestions of the propaganda posters enforces our understanding of how supply and demand work. Demand is the driving force behind supply. Producers make more of something when the demand for it is higher. This, it turn, makes a product less expensive because price decreases when there is more of something in a particular market.

Reading Analysis of 'The Theory of the Leisure Class'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
Any time there exists a hierarchy of people in a specific location, the economic market in that locale will be affected. Because only the top-tier people were permitted to consume lavish items, the inferior classes couldn't have a demand for such products. The fact that the lower class's quantity demanded for luxurious items was impressed upon them by the structure of the caste system was particularly interesting. Coupled with the fact that they couldn't afford these opulent goods, the order arrangement of people impressed upon them that they didn't want these luxuries either. It was against the system, and almost sinful, to consume goods reserved for the higher class if you belonged to an inferior one. This reduced the quantity demanded of these lavish products down to nothing. The caste system skews the market, and futzes with the idea that prices are indicators. They hold little valid information once what one can purchase or consume is restricted.

Discussion Questions
Only the inferior classes can do manufacturing or manual work. How does securing the upper class's leisure affect the natural job churn cycle of the market? How would technological innovations affect the lower tier jobs?

Although it's not really conveyed in this piece, India's caste system wasn't designed to hurt the poorer people. In fact, the upper classes have an obligation to take care of and look out for those in the lower classes. America doesn't have an official caste system, but we do have levels of income that determine how much luxury we consume. Do you think Americans look out for people of lower income levels. Why or why not? Is it simply a result of capitalism? Explain.

Annotation
This piece illustrates the detrimental effects of protectionism on the poor. It tends to hurt them much more than it helps them. Within the leisure class example, the poorer people were locked into manual labor-type jobs. Technically speaking, they have a relatively high job security because they will always have to serve the upper classes, but they aren't permitted to act on their own self-interest at all. This has a large impact on the market because it exacerbates the information problem since prices are no longer an accurate indicator.

Reading Analysis of 'The Economic Organization of POW Camps'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.

Easily the most fascinating aspect of this article is the idea that free trade is so persistent a force that it can occur in un-free societies. The atmosphere of a POW camp certainly doesn't seem conducive to the development of a method of exchange. However, the fact that markets regulate themselves definitely rings true. Non-money prices did exist, and cigarettes prevailed as the main form of currency. Because of this, cigarettes had value to everyone, including the non-smokers. Arranging a trade proved to be difficult, and before a better way to do so was established, people would wander around calling out their offers and desires. This is almost identical to what happened to us in recitation during the buyers and sellers game. The residents of the POW camp recognized this hinderance to trade, and each bungalow posted a board that listed specific desires and prices of its residents. This organized the transactions quite nicely, although transactions costs were encountered. There were often people from many nationalities in these camps so language barriers were frequent, and it was sometimes difficult to overcome the information problem. People who were in the know, however, made the smartest transactions. For example, when it was discovered that a driver of a ration truck was willing to sell bread for one chocolate bar, bread and chocolate became complementary goods. 

Discussion Questions

The economic markets within the camps became more and more fixed when they had very little contact with outside markets. What does this say about our global trade market? Do prices fluctuate too much? What would happen if countries took a more isolationist approach? Would this be less efficient? Explain.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Interference is a transaction cost. Violence, for example, hinders transactions. Prisoners of war are a product of violence. How do you explain the existence of a market amongst them then? Did they find a way to overcome this transaction cost?

Annotation

This article was used to convey the persistence of markets. They are born out of a human desire for trade and transaction, and the most successful ones aren't controlled by a single person. Markets are prone to constant fluctuation in both money and non-money prices. Free trade is also essential to market stabilization. The wider the trading sphere, the more variables a market has. The main point is that market prices establish such a feeling of normalcy that they were born and sustained in a society where the people had almost all of their rights revoked.

Reading Analysis of 3 Paul Krugman Pieces

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
Paul Krugman asserts that free trade is hotly debated as contentious topics surrounding religion. It's interesting that something as concrete as the belief in the benefits of trade and specialization could spark backlash comparable to declarations about evolution. This situation returns to the idea that it's more permissible to question social scientists as opposed to doubting "hard" scientists' findings. Perhaps it is due to the amount of incorrect economic information the public is forced to guzzle from frequent newscasts. In "Ricardo's Difficult Idea", Kruger writes, "Modern intellectuals are supposed to be daring innovators, not respecters of tradition." The daring quality of these thinkers often skews the economic reality.

One such incorrect depiction is that the strides made in first world countries hinder third world nations. In his second article concerning improvements on third world countries, Kruger states that "jobs with bad wages are better than no jobs at all". Not surprisingly, many people had a problem with his point of view, regardless of the amount of fact it contained. In the same article, Kruger informs the reader that aid from developed nations has done almost nothing for improvement in living standards in third world countries. This is a surprising realization for many. Most people cater to the belief that charity really does stop the hemorrhage when in actuality it simply slaps a band-aid on the entire situation. Wage and job improvements in the developing nations are positive unintended consequences of first-world enhancements.

Not everything in the first-world is perfect, as demonstrated by the final article entitled "A Raspberry for Free Trade". There are clearly double-standards about certain American policies. Kruger writes, "When the U.S. consumer is offered cheaper shirts from abroad, the United States loses the same number of shirt-making jobs regardless of whether the shirts were produced by workers making 30 cents an hour or $30 an hour." It really doesn't matter how underpaid, fairly paid, or overpaid the worker was when the American consumer is incentivized to buy the cheapest shirt he or she can find. I'm not saying that wage doesn't matter, but job loss is inevitable in almost all employment sectors.


Discussions Questions
Why are comparative advantage, and even trade in general regarded as controversial topics seemingly on the level of religious debates? Are there differences between the discussions on trade and the disputes on creationism vs. evolution?

Why is it that people believe so strongly in the zero-sum theorem? Is it truly that difficult to believe that the first world can become richer without further impoverishing the third world, but in fact raising the standards of living for the citizens of the latter? Explain.

How did globalization attain such a negative connotation?

Annotation
The purpose of the series of three Krugman articles was to further enforce ideas about the pros of free trade and globalization in the marketplace. He wrote about real-world examples concerning specialization and exchange, and established that standards of living improve on a global scale as international production increases. If production is increasing, then technology innovation is also increasing. This means that the number of jobs in a job sector with a fair amount of technological advancement is decreasing. The job churn, however, ensures that new jobs will always be created as old ones are eradicated.

Reading Analysis of 'Individualism and Altruism'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
The concepts of individualism and altruism are interesting to me because they both address the existence of some sort of sense of duty that human beings possess. It is true that humans are relational by nature, and there is no possible way for us to survive an isolated lifestyle. We need human interaction. Though this may be true, where does this urge to help others stem from? An individualist would argue that we assist others to ensure help or have a better chance of being helped in the future. Perhaps by spotting my friend five dollars when he doesn't have enough to pay for his dinner I effectively secure a future loan when I'm also lacking in funds. The altruist would assert that I should willingly hand over my money because the happiness of my friend should be above my own--I should act selflessly. In his notes, Rizzo states that altruism isn't a livable lifestyle. I would safely agree because it goes against human tendencies. I believe the sense of duty we feel to help others is due to a karma-centric thought process--if we do good to others, good will come back to us. We don't self-sacrifice without the thought of a future gain in the back of our minds. This doesn't make us selfish, it just makes us human.


Discussion Questions
Why do you think 'individualism' has such a negative connotation in today's society? If your actions truly make a difference in helping someone else, why should it matter if it was done in your own self-interest? Does this really make us selfish?

Similarly, we have been taught to be wary of altruistic acts wherein the benefactor receives no personal gain from an exchange. Why do ulterior motives seem to travel with altruistic actions? Do people who exhibit altruism have a hidden agenda with bad intentions?

Annotation
Altruism cannot function in a market economy. This is because no person can possibly know the values of others. Producing for the sake of the people instead of for profit ensures failure. The goal of attaining profit motivates the producer much more than the thought of the joy his or her product will bring to consumers. Individualism isn't synonymous with selfishness, but rather the driving force behind production.

Reading Analysis of 'The Case for Contamination'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
To me, the most interesting part of this piece was that people who believe isolation preserves diversity exist. Globalization is part of the benefit of today's myriad of technological advances. Worldwide communication allows us to share ideas and culture like never before. When various backgrounds come into contact with one another, one isn't negated by the other. As with the trade of tangible goods, cultural exchange also isn't a zero-sum situation. Instead, two cultures coming together promotes the development of a whole new lifestyle. This occurs if and only if the exchange is fair. Instances of colonization and take over don't foster cultural growth. They inhibit progress just as unfair trading in the market hinders innovation. If some force was to prohibit the trade of cultural traditions and values, our world would become stagnant, monotonous, and boring. The nay-sayers addressed in the article argued that the Western influence was overpowering, and would overtake all other cultures in its path. Canada, America, England, Japan, and all other developed countries fall under the Western culture umbrella, and yet are all vastly different. Even regions within the aforementioned nations are widely dissimilar. The idea that less contact fosters culture is just extraordinarily invalid.

Discussion Questions
Can you foresee any unintended consequences that could arise if government or some other force mandated isolationism to preserve culture?

How are the people who would advocate for the type of situation posed above similar to the Mercantilist fallacies we previously studied?

Annotation
If the laws of a fair market are correctly followed, trade within any market isn't zero-sum. One side does not effectively become poorer than the other within the concept of exchange. Collaboration makes both sides wealthier. The riches aren't always monetary, but intangible wealth is just as valuable. Innovation is fostered by globalization, not hindered by it.

Reading Analysis of 'What is Seen and What is Not Seen'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
Bastiat has an interesting opinion surrounding the controversy of whether or not to subsidize the fine arts. Personally, I have no strong attachment to theatre, etc. I wouldn't notice very much if museums of plays and paintings suddenly disappeared because my values don't include the arts. Other people, however, might argue that the arts are inherently valuable, and necessary to the refinement of the people. Values are subjective. I do agree with Bastiat's point about allowing the masses to control what thrives as opposed to the government assigning values to us in the form of subsidies. Having a government that is supposedly controlled by the people, but allocating taxpayers' money towards something that the citizens wouldn't necessarily sustain seems a bit counterintuitive. While it's important to preserve some things, the government shouldn't choose what non-essential items our tax dollars support.


Discussion Questions
Bastiat writes, "Our adversaries believe that an activity that is neither subsidized nor regulated is abolished. We believe the contrary. Their faith is in the legislator, not in mankind. Ours is in mankind, not in the legislator." What about in worser economic times? People cut back on non-essential items in order to preserve their savings. Items such as play tickets fall under this category of non-necessities. Do we continue to let the arts fend for themselves then?

Annotation
This piece addresses the point that values are subjective, as well as reiterating that there's no such thing as a free lunch. Although not everyone values fine arts, the decision to subsidize them affects every tax-paying person. Money that could have been used to increase education standards or improve roadways is reallocated to sustaining theatre and other fine art forms. Similar to the Broken Window Fallacy, the portions of the pie that suffer because the money is used for something else are unseen. We don't see what could have been. The resources have to come from somewhere.

Reading Analysis of 'Economics of Happiness' from the Aspen Ideas Festival

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive?
Two of the most interesting and intuitive points in the video were made by Robert H. Frank. Firstly, he suggested that money can buy happiness, but we just don't purchase all of the right things. Perhaps this is due to financial planning or the desire to save our earnings. Money-wise people don't spend frivolously, but their happiness might know no bounds if they did. The second assertion Frank makes that caught my attention was that economists of the future will regard Charles Darwin, not Adam Smith, as the father of economics. Because economics is a social science, this actually makes perfect sense. While Adam Smith will always be credited for turning social behaviors into economic theories, Charles Darwin was the original studier of human tendencies. After all, economics is a social science.

Discussion Questions
Justin Wolfers says that money can't buy love. For many people, however, love or being loved may equate to happiness. What do you think about this? Will wealth and happiness ever correlate for these people?

If studies and graphs show that people become happier as their wealth increases exponentially, is the opposite also true? Does poverty cause depression? Does one have to have a personal experience with wealth in order to make poverty so unbearable? Explain.

Annotation
This video further elaborates upon the Easterlin Paradox. Both featured economists essentially convey the difficulty with quantifying happiness. Surveys upon surveys had to be conducted to obtain the data expressed in the graphs and charts in the movie. As Wolfers explains, the questions that were asked of people changed over time. This directly affected the accuracy of the responses. Issues highlighted here further emphasize the problems that arise in social sciences because people and their habits are riddled with variables.

Reading Analysis of 'What Social Science Does--and Doesn't--Know'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
Social sciences, especially economics, seem to get a lot of flack about inconsistencies between predictions and results. Hard sciences, as they are referred to in the article, are regarded for having definitive, concrete outcomes. Although qualitative data can be extremely helpful for predicting social trends, economists are consistently chastised for incorrectly forecasting an event. Physicists, chemists, and biologists can't even say that the results of their experiments are surely indicative of future occurrences, and yet people generally don't argue with 'hard' science. It's true that social sciences are much harder to study because the variables are endless, but the themes are still warranted. As Rizzo explained, economists might not know the outcome of all situations presented to them, but they do understand how things are supposed to work. One would be hard-pressed to find a hard scientist who knew how an experiment should turn out.


Discussion Questions
Hard scientists are often perceived as having more reputable experiments and procedures than social scientists. Which group of scientists has a higher margin of error? Could they possibly be about the same? Why?


Why do people feel they can argue more with data presented by social scientists? Do chemists or biologists really have true controls in their experiments?


Annotation
This article makes an argument for the validity of economists assertions. Although controls are difficult to establish, the outcome of social science studies are still important for future understanding of economic policy. No 'hard' science can be correct 100% of the time, and neither can a social science. The bottom line is that all science has flaws and misrepresented results, but both make valid points.

Reading Analysis of 'The Economic Revolution'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
It's very interesting to think about globalization's role in the economic revolution. A merchant's frustration about different towns using different units of measure and currency is documented in the piece. Why on earth would anyone aim to expand their business when everything requires immense amounts of conversion? If anything, a businessman would be dis-incentivized to grow wealthier because the cost of adjusting prices and weights for various locations outweighs the benefit of becoming richer. The industrial revolution made connections between people all over the world much more attainable. This insinuated more and more trade between nations. It's very intuitive to correlate the time of the economic and industrial revolutions. Quite frankly, without a widespread circulation of money, economics barely exists. There was no reason for economists in the times where religion and monarchy ruled all. Church leaders and kings weren't wealthy because of a desire to attain wealth, but rather because they took money from poorer people. Once the playing field was leveled a bit, the desire to be rich flourished, and the economic theories we know today were born.

Discussion Questions
Heilbroner writes about man's innate desire to become richer, which is juxtaposed with Rizzo's earlier statement in the course that the natural state of man is poverty. Which idea is correct? Explain the discrepancy.

Many Americans have fears about China "overtaking" the US. China is somewhat of a 'command society', meaning it will be economically stable. Are these people's concerns justifiable or just rubbish?

Annotation
This reading helped to further understanding on the topic of industrialization and the impact it had on the study of economics. Without globalization, economics would be pretty irrelevant. This is because economics is a social science. The interaction between people is crucial. 'The Economic Revolution' also hammers home points that came up in class about the massive increase in global wealth in the last few centuries. The reasons for this up curve lie in the industrial revolution's ability to streamline trade and global exchange of goods.

Reading Analysis of 'I, Pencil'

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain why.
It's almost ridiculous how many people and resources are involved in the creation of something so utterly small. Manufacturing in America seems so streamlined that you almost feel duped when reading about how much it takes to develop a pencil. When you walk into Wegmans in search of a yellow, Number 2 writing utensil you tend to only think about the fact that there is obviously a pencil factory somewhere out there in the world. After all, the product is right there in your hands. It hardly strikes you that there are other factories, worksites, and manufacturing plants--about a half dozen, even--that had a hand in creating something so little. The process seems to lack economical logic, and definitely appears to be counterintuitive. By having such a long process involving so many steps, one would think that the monetary cost would be overwhelming, yet Staples is currently advertising a Back to School Sale where a 6-pack of pencils costs $1. It's quite the phenomenon.


Discussion Questions
Leonard E. Read acknowledges that a pencil seems like a simple product, although "not a single person on the face of this earth knows how to make [a pencil]." What would be the economic impacts of a society where manufacturing processes with numerous steps could be boiled down into one factory? Would this be 'better' or 'worse'? Why?


The author also asserts that humankind is slowly losing its freedom of creation. Where else do you see this occurring in our economic culture? Could there be any economic benefit to streamlining more processes or is the cost of autonomy not worth it?


Annotation
'I, Pencil' is of timeless importance because it describes the manufacturing steps that we tend to overlook or forget about. This affirms the idea that anything out of the ordinary is newsworthy. We may not understand all of the phases a pencil must go through to be a finished product, but a panic would ensue if there were suddenly no more pencils in the world. Today's society is addicted to normalcy. Read's article also illustrates the fact that people know very little about how the products they buy are created, and thus do not understand what they're really paying for. Because of the multitude of people and steps required to make a pencil materialize, Read asserts that the benefit of a free society where the government doesn't run everything is worth the monetary costs. We're paying for creative freedom.