1. Understanding Economics Introduction: Theories and Fallacies

2. Malthusian Theories grow arithmetically geometric Malthus theorized certain resources grow arithmetically and some resources progress in a geometric way… FOOD AND PEOPLE: Food can only grow in a linear pattern due to land size and the sophistication in food production and distribution; population grows exponentially (ex. population momentum)

4. Malthusian Ideas Advancing Economic Thinking: POSITIVE VS PREVENTIVE “CHECKS”: Famine, disease, starvation, war etc. vs. rising incomes, later marriage, higher C.O.L, abstinence etc…. URBANIZATION IS NOT POSITIVE FOR GROWTH: The utility (value, worth) of a child born in an urban setting is less than that in a farm family…

5. Other Theorists: (Pg. 48-66) Adam Smith (1700s), David Ricardo (1700-1800s), Karl Marx (1800s), John Maynard Keynes (1800- 1900s), John Kenneth Galbraith (1900-2000s), and Milton Friedman (1900-2000s) For each: Focus on an explanation, in your own words, of how their thinking impacted economic thought. Provide a present day example of the validity of fallacy of their theories….

6. Adam Smith (1700s) Key concepts: - Laissez-faire - Laissez-faire; leave economic systems alone and they will eventually correct themselves… - Self-interest - Self-interest; production for profit supersedes meeting demand… - Division of Labour - Division of Labour will increase efficiency and growth increases greater profits for investors…

7. Adam Smith (1700s) Key concepts: - Much like compound interest, he believed in the law of accumulation whereby extra inputs in capital also helped speed up effectiveness and efficiency… order to attract good labour and increase efficiency wages must rise it does mean wages may hold steady as well - In order to attract good labour and increase efficiency wages must rise. However, because of labour competition (due to rise in population) it does mean wages may hold steady as well (see: labour theory of value and contradictions)…

8. David Ricardo (1700-1800s) Key concepts: subsistence level (i.e. just what they needed to get by given the size of their family) - Wages would naturally keep workers at the subsistence level (i.e. just what they needed to get by given the size of their family). Wages, if increased, did not guarantee a higher quality of life because they would be spread out over larger families (if they could afford it). - He articulated absolute advantage and outlined comparative advantage…

9. Karl Marx (1800s) Key concepts: - Economic history and the demise of capitalism: “…whenever the conditions become unbearable, the oppressed rise up in an open rebellion against their oppressors…” - Revolutionary Socialism - Revolutionary Socialism: a system whereby there is common ownership; needs are met and abilities are valued…

10. Karl Marx (1800s) Key concepts: - Labour Theory of Value - Labour Theory of Value: Margins created by the capitalist in a free market essentially “rob” the worker of their value. By performing a task more efficiently than the last worker, the new worker is actually devaluing themselves as they make more money for the owner while they look for yet further efficiency… more efficient - Think of a sweatshop and how they treat their more efficient labour force?

11. John Maynard Keynes (1800-1900s) Key concepts: government or leadership - The government or leadership in a county plays a vital role. His examples include creating postwar prosperity following WWII but helping, not hindering, the economies of defeated nations. by raising or lowering interest rates - The government or leadership can spur (or stop) spending by raising or lowering interest rates. This can directly influence unemployment rates by creating growth and stimulating the economy…

12. John Kenneth Galbraith (1900-2000s) Key concepts: needs not answer to consumer wants or shareholders - The needs of the public should trump private wealth accumulation. He used the example of the wealth created during the Cold War (1940s-1990s), but also high unemployment rates and a lack of goods developed for public use (or goods serving the common good). He argued economic leaders need to manage the economy, not answer to consumer wants or shareholders…

13. Milton Friedman (1900-2000s) Key concepts: - Laissez-faire capitalism - Laissez-faire capitalism; relax wage laws and taxation of those accumulating great wealth (Why? The work ethic involved in accumulating wealth is as important as the needs of individual workers and must be protected as an economic resource…) heavy privatization to fix economic markets and little-to-no government interference - Believes in heavy privatization to fix economic markets and little-to-no government interference…

14. Milton Friedman (1900-2000s) Key concepts: - Government should increase the money supply each year to produce growth (equal to how much the economy should grow by each year over the long- term). As well, controlling the money supply would curb inflation (too much money allowed in increases the inflation rate and too little causes deflation and market stagnation)…

15. Follow-up Work: Theories and Fallacies: 1. Choose one theorist (and their policies) you agree with and explain, with detail, how it is exemplified in 2015. 2. Discount, in detail, one theorist (and their policies). hard work, wealth accumulationlabour theory of value 3. Do the concepts of hard work, wealth accumulation and the labour theory of value collide with one another? Think, and explain.

16. Follow-up Work: Theories and Fallacies: the government takes even a dollar from Bill Gates, a billionaire, and gives it to a poor person, it is like forcing Gates to work for the poor person 4. According to philosopher Robert Nozick, when the government takes even a dollar from Bill Gates, a billionaire, and gives it to a poor person, it is like forcing Gates to work for the poor person. Is Nozick right to think that redistributive taxation is like forced labour? Should there be no redistributive taxation whatsoever?

17. Follow-up Work: Theories and Fallacies: stealing 5. Is offering subsidized public education stealing from the smartest and most creative (and potentially the wealthiest) people in our society? are we being counter productive and holding back society from progress By using money derived from collecting taxes to create equal access to services, are we being counter productive and holding back society from progress?