1. Economics Economic Systems and Decision Making Notes

2. Congress has two barber shops. Senate: Barber shop is gov. owned. It cost taxpayers $300,000/year over last 15 years. House of Representatives: Barber shop was privatized in 1994. It gets no gov. money, pays rent, and is cheaper. Senate barber shop charges $20 for a shave, the House barbershop only $10!

3. Manual vs. Skilled Labor Manual labor: Requires little training. Examples are maids, waiters, etc. Skilled labor: Requires a lot of training. Examples are doctors, pro athletes, etc. Human Capital: education, training, health, etc. Acquiring it is an investment in the future. – For example, it takes a long time to be a doctor, but not a lot to be a dog walker. Doctors get paid better.

4. Labor, Kapital, Consumption Labor: Work done by humans. Kapital: Things used for production. Capital makes labor more productive -- less work needed to get more output. Consumption: The fun part.

5. Labor, Kapital, Consumption An athlete/doctor delays consumption (movies, etc.) for practice and education. Through their hard work they accumulate human capital. Their capital makes them more productive, and they get higher wages. An investor saves money to buy a machine. The machine makes workers more productive. The investor and the workers share the gains.

6. Capitalism is not a philosophy but a way solving a coordination problem. You can grow food by harvesting your back yard or by going to work every day and then exchanging some of your pay for food at a supermarket. “Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.” Adam Smith

7. "We are perishing for want of wonder, not for want of wonders." G. K. Chesterton Cedar is logged in Oregon and shipped to a mill in California. The lead is made from graphite mined in Sri Lanka, mixed with clay from Mississippi refined with ammonium hydroxide and wetting agents. The lead is baked for several hours at 1,850 degrees Fahrenheit, then treated with wax from Mexico, paraffin, and hydrogenated natural fats. The metal ring is brass made of zinc from Peru and copper from Chile. The outer ring is made of nickel from Australia. The eraser is made by reacting oil from the Dutch East Indies with sulfur chloride using vulcanizing and accelerating agents. Millions are employed mining and drilling for gas and oil, making steel, saws, axes, cars, railroads, phones, using turbines to produce electricity, etc. All that to produce a pencil.

9. Theory Of Value Karl Marx (1818-1883) thought only labor adds value. That is, the value of a diamond is determined only by the amount of labor needed in production. Carl Menger (1840-1921) noted the value of a diamond found by accident was the same than when mined.

10. Communism also underestimated the coordination problem. Keeping the lights on requires millions of people. You just don’t see them.

11. Communism From Outer Space

12. Claim to be communist Communist countries are liberalizing: 1.China 2.Vietnam 3.Cambodia 4.Laos This countries are growing by reversing past mistakes.

13. Communism vs. Capitalism Economic migration tends to flow towards freer countries: North Korea South Korea East Berlin West Berlin CubaU.S.

14. “Do not hesitate with the use of a firearm, including when the border breakouts involve women and children…” Stasi order from 1973

15. Enabling everyday progress: Egg Check out this ExxonMobil advertisement to witness the interconnectedness and complexity of that which you may think is simple: https://www.youtube.com/watch?v=WrH19H-J4pU Did you ever think about the beauty of capitalism? It is so transparent that you don’t even realize how much energy, time, and resources go into things you do everyday.