1. DPQ

2. Doesn’t prepare quickly

3. Delightfully productive quiches

4. Dreaded pop quiz

5. Why is the study of economics important to me?

6. Dr. Sowell on why we need to study econ

7. Dr. Sowell on why econ
Every politician affects economic policies

8. State income tax (top marginal rate)?
California
Florida

9. State income tax (top marginal rate)?
California %
Florida %
"I moved out of (California) in 1996 for that reason.” Tiger Woods, Florida resident*
* Estimated saved taxes, $130 million

10. Dr. Sowell on why econ Every politician affects economic policies
We cannot opt out of economics... we can be informed, uninformed or misinformed. It’s your choice…

11. Dr. Sowell on why econ Every politician affects economic policies
We cannot opt out of economics... we can be informed, uninformed or misinformed. It’s your choice…
You have chosen to be informed (or your parents chose for you)

12. What is the classic definition of economics from Lionel Robbins?

13. What is the classic definition of economics from Lionel Robbins?
“Economics is the study of the use of scarce resources that have alternative uses”

14. SRTHAU....

15. SRTHAU
Economics is the study of the consequences of the decisions about the use of land, labor, capital and other resources that go into producing goods and services that determine a nation’s standard of living

16. SRTHAU
Economics is the study of the consequences of the decisions about the use of land, labor, capital and other resources that go into producing goods and services that determine a nation’s standard of living
Those decisions and consequences are much more important than the resources a nation possesses

17. Japan and Switzerland vs Venezuela and Kenya

22. What does ‘scarce’ mean?

23. What does ‘scarce’ mean?
Simply: what everyone wants adds up to more than there is

26. What does ‘scarce’ mean?
Simply: what everyone wants adds up to more than there is
“Unmet needs” are a part of human history

27. What does ‘scarce’ mean?
Simply: what everyone wants adds up to more than there is
“Unmet needs” are a part of human history
What was the only time in human history when there were not unmet needs?

29. Importance/implications of scarcity

30. Importance/implications of scarcity
Trade offs are necessary in any economic system, from laissez-faire to communism

31. Importance/implications of scarcity
Trade offs are necessary in any economic system, from laissez-faire to communism
Each economic system has a different way of making these trade-offs: free market lets individuals make them, socialist system forces them on individuals

32. Importance/implications of scarcity
Without scarcity, there is no need to economize

33. Importance/implications of scarcity
Without scarcity, there is no need to economize
“nothing has been more pervasive in the history of the human race than scarcity and all the requirements for economizing that go with it..”

34. Importance/implications of scarcity
Without scarcity, there is no need to economize
“nothing has been more pervasive in the history of the human race than scarcity and all the requirements for economizing that go with it..”
There is simply not enough to go around to satisfy all of our desires to the fullest

35. Importance/implications of scarcity
Without scarcity, there is no need to economize
“nothing has been more pervasive in the history of the human race than scarcity and all the requirements for economizing that go with it..”
There is simply not enough to go around to satisfy all of our desires to the fullest
There are painful trade-offs

37. $375,000??????
How can that be?

38. Importance of alternate uses

39. Importance of alternate uses
If each resource (material, labor, capital) had only one use, economics would be simple

40. Importance of alternate uses
If each resource (material, labor, capital) had only one use, economics would be simple
What are some of the alternate uses for petroleum, iron ore, land, corn, water

41. Importance of alternate uses
Different economic systems have different ways of making decisions about the allocation of scarce resources

42. Importance of alternate uses
Different economic systems have different ways of making decisions about the allocation of scarce resources
Soviet Union vs U.S. and Japan… less efficiency turning inputs into outputs means lower standard of living

45. Page 2, graf 2
If you understand this paragraph, you will know more about economics than 90% of Americans… and most politicians (including these two)

46. Three ginormous econ theories

47. Three ginormous econ theories
Economic decisions affect the standard of living of society as a whole

48. Three ginormous econ theories
Economic decisions affect the standard of living of society as a whole
Look at economic policies in terms of incentives they create… not the goals they pursue

49. Three ginormous econ theories
Economic decisions affect the standard of living of society as a whole
Look at economic policies in terms of incentives they create… not the goals they pursue
Consequences matter more than intentions

50. Patient Protection and Affordable Care Act

51. Patient Protection and Affordable Care Act… ObamaCare

52. Patient Protection and Affordable Care Act… ObamaCare
Will provide free or deeply discounted health insurance to 30 million uninsured Americans

53. Patient Protection and Affordable Care Act… ObamaCare
Will provide free or deeply discounted health insurance to 30 million uninsured Americans
Will reduce the deficit by having the federal government spend less on health insurance

54. Patient Protection and Affordable Care Act… ObamaCare
Will provide free or deeply discounted health insurance to 30 million uninsured Americans
Will reduce the deficit by having the federal government spend less on health insurance
People who like their current insurance plans and doctors can keep them

55. Patient Protection and Affordable Care Act… ObamaCare
Will provide free or deeply discounted health insurance to 30 million uninsured Americans
Will reduce the deficit by having the federal government spend less on health insurance
People who like their current insurance plans and doctors can keep them
Premiums for the average family would be $2,500 less/year than they were paying

56. The facts after just three months
More than 5 million people have had their policies cancelled
Most of the new plans offered through the feds strictly limit which doctors you can see
New policies through the feds are at least twice as expensive as before ACA
The deficit is projected to rise $6.5 trillion because of increased health care spending due to ACA

57. Moral of the story....
Obama administration may have had good intentions – taking care of the uninsured – but the incentives they created have helped so far have worsened the health care coverage for many more people than it has helped

58. Consequences matter more than intentions
“Nothing is easier than to have good intentions, but, without an understanding of how an economy works, good intentions can lead to disastrous consequences for a whole nation.” Dr. Thomas Sowell

59. More importance of econ
It is the volume of goods and services available that determines whether a country is prosperous or not

60. More importance of econ
It is the volume of goods and services available that determines whether a country is prosperous or not
It is not ________ that determines prosperity

61. More importance of econ
It is the volume of goods and services available that determines whether a country is prosperous or not
It is not MONEY that determines prosperity

62. More importance of econ
It is the volume of goods and services available that determines whether a country is prosperous or not
It is not MONEY that determines prosperity
It’s efficiency in turning SRTHAU into goods and services… otherwise we could make everyone rich by printing $1 million for everyone

63. Last, final, concluding, ultimate ending point for today about importance of econ

64. “Life does not ask what we want. It presents us with options
“Life does not ask what we want. It presents us with options. Economics is one of the ways of trying to make the most of those options”

67. Assignment for 1/21/14
Read and study chapter 2 of Basic Economics: “The Role of Prices”

68. Assignment for 1/21/14
Read and study chapter 2 of Basic Economics: “The Role of Prices”
Be prepared to discuss, especially the contrast between free market approach and Marxist/Soviet-style approach

69. Assignment for 1/21/14
Read and study chapter 2 of Basic Economics: “The Role of Prices”
Be prepared to discuss, especially the contrast between free market approach and Marxist/Soviet-style approach
It’s a challenging chapter. But understanding the role of prices is foundational to understanding economics!!!!

70. One more assignment for 1/21/14
Find one price of something that you track or like and write 75 words on what that price communicates. MLA style!