Assignment 3/4

2. Assignment 3/4 • Chapter 10: “Controlled Labor Markets” • Write a 350-word essay: President Obama is proposing to raise the federal minimum wage from $7.25/hour to $10.10/hour. Based on your reading of Dr. Sowell, what will happen if it’s enacted? Be specific and use his thinking… not your opinions! • AND

3. The need for attribution! Sez who?

8. Two tough questions we must ask

9. 1. Is capitalism Christian?

10. Is capitalism Christian? • Remember consequences, not intent: rent control was supposed to help the poor

11. Is capitalism Christian? • Remember consequences, not intent: rent control was supposed to help the poor • The first thing communists and fascists do is eliminate or marginalize religion: Stalin, Lenin, Castro, Mao, Hitler

12. Is capitalism Christian? • Remember consequences, not intent: rent control was supposed to help the poor • The first thing communists and fascists do is eliminate or marginalize religion: Stalin, Lenin, Castro, Mao, Hitler • In socialism, the state becomes the religion

13. Is capitalism Christian? • Remember consequences, not intent: rent control was supposed to help the poor • The first thing communists and fascists do is eliminate or marginalize religion: Stalin, Lenin, Castro, Mao, Hitler • In socialism, the state becomes the religion • Nowhere in the Bible do I see where it is the duty of the state to care for the poor… it is the individual and especially the church

14. Is capitalism Christian? • Christians are the most generous people in the world… and most are capitalists

15. Is capitalism Christian? • Christians are the most generous people in the world… and most are capitalists • Christ’s teachings about caring for the poor are all about a changed heart… not about your money being taken by the state and given to others

16. Is capitalism Christian? • Christians are the most generous people in the world… and most are capitalists • Christ’s teaching about caring for the poor are all about a changed heart… not about your money being taken by the state and given to others • The Bible gives us no explicit economic system, but it seems clear to me capitalism is much more in line with Christianity than socialism or socialism-lite

17. Is capitalism Christian? • In no other economic system have so many people been lifted out of poverty into prosperity than capitalism

18. Karl Marx “Religion is the sigh of the oppressed creature, the heart of a heartless world, just as it is the spirit of a spiritless situation. It is the opium of the people. The abolition of religion as the illusory happiness of the people is required for their real happiness.”

21. 2. If I become rich, do I make others poor?

22. Zero-sum thinking • Refers to the idea that there is a winner and loser in all transactions, kind of like a tennis or boxing match

24. Zero-sum thinking • Refers to the idea that there is a winner and loser in all transactions, kind of like a tennis or boxing match • So if Bill Gates is rich, he must have taken that wealth from others

25. Zero-sum thinking • Refers to the idea that there is a winner and loser in all transactions, kind of like a tennis or boxing match • So if Bill Gates is rich, he must have taken that wealth from others • The economic pie is only so big, so government has to make sure we all get the same size slice… “fairness” and “social justice”

26. Zero-sum thinking • Does not recognize how much wealth Bill has created for others… e.g., the increased productivity from using Microsoft Office

28. Zero-sum thinking • Does not recognize how much wealth Bill has created for others… e.g., the increased productivity from using Microsoft Office • Free-market thinkers want the pie to grow bigger… rising tide floating all boats

29. Zero-sum thinking • Seen today in discussions of how rich are getting a larger share of the economy, and how CEO pay is now 354 times that of the average worker, versus 50 times in the 1960s

30. Zero-sum thinking • Seen today in discussions of how rich are getting a larger share of the economy, and how CEO pay is now 354 times that of the average worker, versus 50 times in the 1960s • Ignores the fact that the average worker is living much better than ever

31. Zero-sum thinking • Seen today in discussions of how rich are getting a larger share of the economy, and how CEO pay is now 354 times that of the average worker, versus 50 times in the 1960s • Ignores the fact that the average worker is living much better than ever • Used to argue against free markets and international trade, and for minimum wages, price controls, “paycheck fairness” act

32. Zero-sum thinking • Liberal economists in general want to make the pie more equal through government interventions and redistribution of wealth

33. Zero-sum thinking • Liberal economists in general want to make the pie more equal through government interventions and redistribution of wealth • Free-market economists in general want the pie to keep growing through the free marketand supply and demand

34. Zero-sum thinking • Liberal economists want equality of outcomes… i.e., everyone makes about the same through government redistribution

35. Zero-sum thinking • Liberal economists want equality of outcomes… i.e., everyone makes about the same through government redistribution • Free-market economists want equality of opportunity… everyone has an equal chance to succeed

36. National output

37. Fallacy of composition

38. Fallacy of composition • The mistaken assumption that what applies to a part applies to the whole

40. Fallacy of composition • The mistaken assumption that what applies to a part applies to the whole • In economics, we’re looking at the economy in total… not any given individual, company or industry

41. Fallacy of composition • The mistaken assumption that what applies to a part applies to the whole • In economics, we’re looking at the economy in total… not any given individual, company or industry • We know that the economy is dynamic… some companies and industries must pass (typesetters, milkmen) so others can rise (app developers, organic bakers)

42. Fallacy of composition • Most common when government intervenes to “save jobs” such as the taxpayer bail out of GM and Chrysler

43. Fallacy of composition • Most common when government intervenes to “save jobs” such as the taxpayer bail out of GM and Chrysler • Said to “save” 1 million jobs… at a cost of $80 billion of taxpayer money, and locked in GM and Chrysler’s pension obligations and high fixed costs

44. Fallacy of composition • Most common when government intervenes to “save jobs” such as the taxpayer bail out of GM and Chrysler • Said to “save” 1 million jobs… at a cost of $80 billion of taxpayer money, and locked in GM and Chrysler’s pension obligations and high fixed costs • More important: what has been the cost to the rest of the economy in lost jobs and opportunities?

45. “Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, darn* lies and statistics.’" *Teacher’s edit

46. Measuring National Output

47. Measuring National Output • More common measure is GDP: gross domestic product

48. Gross Domestic Product • The sum total of all goods and services produced within a nation’s borders including by foreign nationals during a year

49. Gross Domestic Product • The sum total of all goods and services produced within a nation’s borders including by foreign nationals during a year • GDP is the preferred measurement of contemporary economists, used by the U.S. since 1992

50. The two main components of GDP