1. Development of the Global Economy

2. The Importance of Productivity in an Age of Dilemmas Lecture #1

3. All Economic Activity is Ultimately Devoted to Two Things --

5. Of course, we must also be concerned with... --- The distribution of income and wealth, and...

6. Of course, we must also be concerned with... --- The distribution of income and wealth, and... --- Equal opportunities for future generations, and...

7. Of course, we must also be concerned with... --- The distribution of income and wealth, and... --- Equal opportunities for future generations, and... --- The judicious control of market externalities

8. Government Can Sometimes be Useful in Helping Us Accomplish These Goals

9. That is,

10. Government Can Sometimes be Useful in Helping Us Accomplish These Goals Helping to Control Externalities, Provide a System of Justice and Enforcement of Contracts, Supply Goods and Services that the Private Market Fails to Provide, Ensure a Reasonable Distribution of Income and Wealth, and Moderate the Business Cycle

12. U = utility C = consumption L = leisure Both C and L ultimately depend on y = output per population

13. We Must Increase y= Steadily Over the Long Run

14. How Can We Increase (r1) (r2) and (r3) ?

15. Suppose we just want to increase (r1) which is

16. Child Labor – Not Really Elderly Workers – Limited at Best

17. Foreign Workers – Maybe, but Problems, Problems Robot Workers – Not for Many Years

18. < 1 No Matter What, (r1) has an Upper Limit

19. Okay …..suppose we try instead to increase (r2) which is

20. No Sleeping ---- No Eating ---

21. Just Work, Work, Work ---

22. < 24 Hours/Day No Matter What, (r2) has an Upper Limit

23. In Fact…the Trend is for Less Hours Not More Hours of Work !

26. How Can We Increase y? The Only Reliable, Long Run Way is to Increase (r3) = Average Labor Productivity

28. How Do We Get High Growth in Labor Productivity?

29. Short Run – Moderate the Business Cycle, Get the Economy Growing Again

30. How Do We Get High Growth in Labor Productivity? Short Run – Moderate the Business Cycle, Get the Economy Growing Again Long Run – Encourage Saving and Investment

31. How Do We Get High Growth in Labor Productivity? Short Run – Moderate the Business Cycle, Get the Economy Growing Again Long Run – Encourage Saving and Investment Dilemma -- Are These Two Goals Compatible?

32. Besides More and Better Labor and Capital, We can also Increase Output per Person with More Land and Raw Materials

33. Terracing Can Give Us More Land – But Ultimately Limited

34. Parts of the Zuider Zee in the Netherlands as Reclaimed Land from the Ocean – Really Difficult and Costly Noordoostpolder, Netherlands

35. Hong Kong Airport – Land Reclaimed from the Ocean

36. Not Land, but Space, Coupled with Physical Capital

37. Recycling Can Help Us Reduce Some Resource Problems

38. Renewable Energy Can Help a Little in Our Search for Energy

39. Naturally invention and innovation are important, but these are all just another way of saying that we need greater investment in research, development, motivation, education, marketing, production flows...investments will be best when government does not create large distortions, but encourages free trade, competition, and business becomes focused on providing a better product rather than getting a better deal from the government.

40. Ultimately, all our efforts will require saving as a temporary sacrifice -- in order to grow the economy. This is what we must prepare for and why the challenges we face are so daunting to a world that wants results NOW.

41. Basic Questions to be Discussed in Afternoon 1. What Caused the 2008-2009 Global Recession? 2. Are We Expanding Now or Are We Entering a New Global Recession? 3.Is Government the Cause of or Solution to Our Economic Troubles? 4.Do We Need Less Government (Austerity) or More Government (Stimulus)? 5.Why is Income Inequality Worsening throughout the World? 6.What is Globalization and is it a Bad Thing for the Average Person?

42. Thank You for Listening