Presentation Transcript

1. HONORS ECONOMICS PREINDUSTRIAL ECONOMIES & THE MONEY ILLUSION
2. THE GREAT DIVERGENCE CALCULUS GUNPOWDER / EYEGLASSES PRINTING PRESS / MECHANICAL CLOCK TRIGONOMETRY / PAPER IRON / STEEL
3. THE WEST & THE REST 25¢ 34¢ 3¢ 17¢ 20¢ 23¢ 23¢ 14¢ 2¢ CHINESE REVOLUTION WWI, WWII, DEPRESSION GANDHI /INDEPENDENCE MING DYNASTY RENAISSANCE / COLUMBUS MUGHAL EMPIRE OPIUM WAR INDUSTRIAL REVOLUTION INDIA  BRITISH COLONY
4. THE ECONOMY HAS LEFT THE BUILDING
5. PRODUCTION POSSIBILITY FRONTIER WASTED POTENTIAL ♂ ♀
6. INDUSTRIOUS vs. INDUSTRIAL REVOLUTION TWO WAYS TO INCREASE PRODUCTION: 1) WORK HARDER (INTENSIVE GROWTH) 2) WORK SMARTER (EXTENSIVE GROWTH) ===== THE REST: (CHINA, INDIA, etc.) NO FRONTIER  NO MORE LAND TO USE  FARM LAND MORE INTENSELY (RICE CULTIVATION) GROWING POPULATION  INCREASED LABOR INPUTS NO CHEAP ENERGY – NO MORE FORESTS THE WEST: (ENGLAND, FRANCE, etc.) DISCOVERY OF AMERICA  PLANTATION AGRICULTURE BUBONIC PLAGUE  INCREASES LAND-LABOR RATIO  CAPITAL INPUTS / INNOVATION CHEAP NEW ENERGY SOURCES (COAL) NEAR WATERWAYS
7. AGRICULTURAL DIVISION OF LABOR NOBILITY CLERGY LONG DISTANCE MERCHANTS P E A S A N T S MONEY EXCHANGES BARTER EXCHANGES YORKTOWN MAHOPAC BREWSTER OSSINING PUTNAM VALLEY FOX LANE HEN HUD CARMEL
8. MONEY CHANGES EVERYTHING MEDIUM OF EXCHANGE: MONEY = LOWEST COMMON DENOMINATOR ALLOWS EFFICIENT TRANSACTIONS AMONG ANONYMOUS INDIVIDUALS WITH DIVERSE PRODUCTS STORE OF VALUE: MONEY = PRESERVES VALUE OVER TIME BORROW FROM THE FUTURE INCOME WORK NOW, SPEND LATER INTERTEMPORAL SUPPLY & DEMAND IMBALANCES “Pecunia non olet” UNIT OF ACCOUNT: MONEY = SCORECARD / PRICING THE PRICELESS
9. BARTER EXCHANGES ANDREW WANTS COWS, SELLS CHICKENS ALEX WANTS CHICKENS, SELLS GRAIN ANTHONY WANTS GRAIN, SELLS COWS 1 CHICKEN = 4 GRAIN 1 COW = 7 GRAIN
10. EXCHANGES WITH MONEY ABIGAIL WANTS COWS, SELLS CHICKENS $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ AMANDA WANTS CHICKENS, SELLS GRAIN ALYSSA WANTS GRAIN, SELLS COWS $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1 CHICKEN = 4 GRAIN 1 COW = 7 GRAIN 1 GRAIN = $1 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
11. SEX FOR IDEAS CONSUMPTION  INVENTION / PRODUCTION (SHOPPING = SOCIALLY BENEFICIAL) READING  WRITING LISTENING  SPEAKING “DRESS-UP”  GROWING UP IMPLICATIONS: INVENTION = SOCIAL; ORIGINAL INVENTORS = RANDOM MUTATIONS≠ IMPORTANT LITERACY, TOOL-MAKING, & INTERACTION = KEY  EXCHANGE =  INNOVATION (CHINA, TANZANIA) EVOLUTION = COOPERATIVE (NON-ZERO), NOT COMPETITIVE WOMEN > MEN Conventional Economics (“No Free Lunch”) sees exchange as ZERO-SUM: You Get something, You Give Something Recently, Some (“Whole > Parts”) see exchange as positive-sum: SEX FOR IDEAS.
12. THE KULA RING
13. KULA RING, PART II PROBLEM: How to trade diverse products among anonymous individuals? How much should you produce? How much should you charge? How much should you pay your employees? How much should you pay for raw materials? How do you communicate this information to others? What job should you choose? What training? ANSWER: MONEY. (Gift-exchange) Necklaces (counter-clockwise) Bracelets (clockwise) No profit. Gift = total value of goods
14. SAY’S LAW SUPPLY WILL CREATE ITS OWN DEMAND HUMAN ACTIVITY IS EITHER WORK or LEISURE Leisure = production for personal consumption Work = for sale to others === Increasing SUPPLY of goods  increase DEMAND for goods === Zero-sum  no free lunch If you consume more, i must consume less  ARTIFICIALLY stimulating demand = bad idea The market is always right Unemployment = vacation
15. PAST, PRESENT & FUTURE PRESENT PAST FUTURE DEBT CREDIT SAVINGS PRODUCERS CONSUMERS RENTS INVESTMENTS ?? +/- ?? SAVINGS EXPORTS IMPORTS
16. HUMAN BODY (AS AN ASSET) = $47 MILLION Bone Marrow: $23.0 Million DNA: $ 9.7 Million Antibodies: $ 7.3 Million Lung: $ 116,400 Kidney: $ 91,400 Heart: $ 57,000 HUMAN BODY (AS A COMMODITY) = $4.50 COMMODITIES & ASSETS BUSHEL OF APPLES GALLON OF GASOLINE OUNCE OF GOLD SHEET OF PAPER HIGH SCHOOL DIPLOMA MEGAWATT OF ELECTRICITY HEALTH INSURANCE METRIC TON OF CO2 VOTE FOR PRESIDENT MILLIGRAM OF PARACETAMOL COMMODITIES – OBJECTIVE, DEFINED CHARACTERISTICS & HOMOGENOUS QUALITY – QUANTITY KEY ASSETS – SUBJECTIVE OR INTANGIBLE DIMENSIONS & HETEROGENOUS QUALITY – QUALITY KEY MARKETS = GOOD AT COMMODITIES / BAD AT ASSETS PREMODERN ECONOMY= BARTER = COMMODITIES  MODERN ECONOMY = EXCHANGE = ASSETS INT’L MERCHANDISE TRADE IN GOODS & SERVICES: $13 - $16 TRILLION US GDP: $14 TRILLION GLOBAL GDP: $60 TRILLION GLOBAL FINANCIAL ASSETS: $140 TRILLION PUBLICLY TRADED STOCKS REAL ESTATE SERVICE SECTOR JOBS HEALTH TECHNOLOGY / PATENT FASHION CURRENCY “BRAND NAME” MERCH’ WORKS OF ART CLEAN ENVIRONMENT RELIGIOUS SALVATION ADVICE
17. “FICTITIOUS” COMMODITIES MONEY IS STERILE : MONEY IS A VEIL BUYING / SELLING MONEY = BUYING / SELLING AN INCH SIN OF USURY: CANNOT LEND MONEY AT INTEREST RELIGIONS FORBADE FINANCIAL INSTITUTIONS (TEMPLARS) FILTHY LUCRE: WALL STREET vs. MAIN STREET TRAGEDY OF THE COMMONS LAND = NATURE; NOT PRODUCED FOR MARKET STRANGE IDEA: MANHATTAN FOR $24 NATIONAL BORDERS INVISIBLE FROM THE “BIRD’S EYE” VIEW EMINENT DOMAIN: GOD  KING  LORD  VASSAL  SERF PEOPLE BELONG TO THE LAND,  LAND BELONGED TO THE PEOPLE TRAGEDY OF THE COMMONS / ENCLOSURE MOVEMENT SELLING ONESELF LABOR = HUMAN ACTIVITY; NOT PRODUCED FOR MARKET CANNOT SELL YOUR TIME WITHOUT RELIABLE CLOCKS(c. 1700) PROSTITUTION & ORGAN SALE  ILLEGAL STADTLUFT MACHT FREI – WORKERS BELONGED TO THE LAND & LORD
18. C  M  C or M  C  M* Since WWII, the US = the world’s BANK: We “BORROW” low (selling public/private debt abroad) & “LEND” high (buying EQUITY/ownership in foreign businesses) & pocketing the difference. WHY? From 1914 to 1945, the world fought an expensive & destructive war  nearly 80% ($26 of $33 Billion) of the world’s GOLD = US: We had all the bracelets & necklaces. US = CMC  MCM Economy Rebuilt Japan Marshall Plan Bretton Woods System Redistribute the World’s Necklaces / Bracelets Foreign Military Bases American Consumerism & Debt  FINANCIALIZATION & DEINDUSTRIALIZATION of US domestic economy Medium of exchange: Money mediates between commodities CMC Money = NEUTRAL: Money is a VEIL, a placeholder for the underlying commodity exchange. Money = LIQUIDITY lubricating economic exchanges  Loose Money & SMALL CHANGE Store of Value / Unit of Account: Money is a HOARD of value, commodities as CAPITAL = medium to transfer money. MCM* Make $$$$ with $$$$. Money ≠ Medium: It can be purchased. Commodities  ASSETS / Fictitious Commodities: Nature = Property Humans = Labor Money = Capital Money = COMMODITY. FINANCIAL Institutions = MONOPOLISTS of money Sound Money GOV’T SPENDING AUSTERITY DEVALUATION DEVALUATION APPRECIATION APPRECIATION GOV’T SPENDING AUSTERITY