Download MAMMON.ECONOMICS.NOTES.2010

NAME __________________________
______/_______/20_____
HONORS ECONOMICS
MAMMON & MORALITY
ECONOMICS’ TWO GREAT INSIGHTS:
VIRTUE ? HAPPINESS
♡
“THERE IS NO SUCH THING AS A FREE LUNCH”
Ex. Education: Free for Children, Expensive for Taxpayers
Grade Inflation
Environment & the Economy
THE ECONOMIC PROBLEM = ______________ _____________
& ______________ ________________.
NECESSITY OF CHOICES & TRADEOFFS
a.k.a. “The Microeconomic Principle” or “The Conservative Principle”
WHOLE ? SUM OF PARTS
>⋃<⨂
“SMART FOR ONE, DUMB FOR ALL” & “DUMB FOR ONE, SMART FOR ALL”
Ex. Peacock & Plumage
Elk & Antlers
Standing at the Stadium
“Tragedy of the Commons”
LoJack v. The Club
__________________& PUBLIC GOODS ; PERVASIVE MARKET & GOVERNMENT
_____________
a.k.a. “The Macroeconomic Principle” or “The Conservative Principle”
PHILOSOPHY & ECONOMICS:
PLATO & ARISTOTLE:
 VIRTUE = ______________ & HAPPINESS = ____________
 ONLY DOING _____________ CAN MAKE YOU T
TRULY HAPPY
 WEALTH = REWARD FOR GOOD BEHAVIOR
 PUBLIC GOOD = ___________
GOOD
 HUMANS = _________
___________ ( ZOON
POLITIKON )
 GOOD ______________  GOOD CITIZENS
( _____ ____________ )
ENLIGHTENMENT:
“In Italy, for 30 years under the Borgias,
they had warfare, murder and bloodshed,
but
they
produced
Michelangelo,
Leonardo da Vinci, and the Renaissance.
In Switzerland they have brotherly love.
They had 500 years of democracy and
peace, and what did that produce? The
cuckoo clock!”
~ Harry Lime in The Third Man
 MACHIAVELLI: “THE END JUSTIFIES THE MEANS”
 VIRTUE (___________) ? HAPPINESS
(____________)
 MANDEVILLE: “THE FABLE OF THE ________”
 _________ ________ PUBLIC VIRTUE
(GREED IS GOOD)
 __________ ______________ THEORIES:
 INTERESTS OF ___________ ? INTERESTS OF RULED
CAPITALISM: ADAM SMITH’S GREAT IDEA:
In 1776, ADAM SMITH wrote THE WEALTH OF NATIONS = attacked
_______________ & established the intellectual basis for modern _________________.
“The greatest improvement in the productive
powers of labour, and the greater part of the skill,
dexterity, and judgment with which it is any where
directed, or applied, seem to have been the effects
of the division of labour.”
 DIVISION OF LABOR – ____________________ &
dividing production into individual tasks would
increase productivity
 THE “INVISIBLE HAND” – Individuals
pursuing their rational _______--_____________
& guided by the _________ ___________’s
“Invisible Hand” served the public interest
The real price of everything, what everything
really costs to the man who wants to acquire it, is
the toil and trouble of acquiring it. What
everything is really worth to the man who has
acquired it, and who wants to dispose of it or
exchange it for something else, is the toil and
trouble which it can save to himself, and which it
can impose upon other people.
It is not from the benevolence of the butcher, the
brewer, or the baker, that we expect our dinner, but
from their regard to their own interest . . . they
intend only their own gain, and they are in this, as
in many other cases, led by an invisible hand to
promote an end which was no part of their
intention. Nor is it always the worse for the society
that it was no part of it. By pursuing their own
interest they frequently promote that of the society
more effectually than when they really intend to
promote it.
 FREE LABOR* – “_________ __________ ____
_________” – The value of a good or service =
labor required to produce it
Smith identified the core elements of modern capitalism:
1) Free Labor,
2) __________________ mode of production, &
3) Market system of exchange among individuals who
______________ _______________ their own self-interest
VIRTUE AS VICE:
CLASSICAL ECONOMICS = “NO SUCH THING AS A ________ ______________”
GOVERNMENT INTERVENTION DISTORTS MARKETS
SUPPORTED ____________-______________ POLICIES
MALTHUS = FEEDING THE POOR  ____________ _____________
 FAMINE & ENVIRONMENTAL DEGRADATION
_____________ WANTS / LIMITED ______________
The power of population is indefinitely greater than the power in the earth to
produce subsistence for man . . . the superior power of population cannot be checked
without producing misery or vice. ~ Thomas Malthus
RICARDO = PROTECTIONISM  ___________________ 
HIGHER
PRICES FOR ___________________
NATIONS SHOULD PRODUCE ACCORDING TO THEIR
____________________ ___________________
MORAL ECONOMY & THE SPIRIT OF CAPITALISM:
MOST RELIGIONS PREACH COMMUNISM – MORAL ECONOMY – IN THEORY IF
NOT IN PRACTICE
– RESTRICTIONS ON ___________ -- See The Merchant of Venice
– YEAR OF ____________________
– ZAKAT / NOBLESSE OBLIGE -- Purpose of $$$ = Give it Away
– _________ PRICE
– INDIFFERENCE TO MATERIAL WEALTH
– MERCHANTS = LOW SOCIAL STATUS
Something funny happened on the way to the rapture . . .
_________________ – PURITANS & PILGRIMS – (WEBER THESIS)
WEALTH REVEALED DIVINE _________________________
– LITERATE POPULATION  ______________ ______ ___________
Bible churches required literacy among the laity
– WORK IS TO PRAY; PRAY IS TO WORK  CAPITALIST _____________
__________ (WORK AS VOCATION)
“Laborare est Orare”
– INVEST RATHER THAN SPEND WEALTH  __________ _____________
Make money, but not spend  Savings & Investment
– RATIONAL ___________________ : IDLE HANDS  DEVIL’S WORK 
TIME IS MONEY
Protestants = Invention of the mechanical clock
Clock Towers replace Bell Towers and Minarets*
LAISSEZ-FAIRE & SOCIAL DARWINISM:
LAISSEZ-FAIRE ? __________ ____________________
 SURVIVAL OF THE FITTEST
 MARKET = ____________ _________________
 COMPETITION = NATURAL
LAISSEZ-FAIRE = ___________________ REFORMERS = ________________
LAISSEZ-FAIRE LINKED TO _________________ ________________.
• ENGLISH __________________ (NOBLES) KEPT OUT IMPORTED GRAIN 
HIGH FOOD COSTS FOR URBAN WORKERS  HIGH LABOR COSTS FOR
CAPITALISTS
(CAPITAL & ___________ vs. LAND)
= SOCIAL DEMOCRACY
• AMERICAN “_____________ _____________” CREATED MONOPOLIES
OVER STEEL, OIL & TRANSPORTATION  LOW AGRICULTURAL PRICES
& INDUSTRIAL WAGES
(LABOR & LAND vs. ___________)
= POPULAR DEMOCRACY
• GERMAN TRADE UNIONS  HIGHER WAGES & WELFARE  LOWER
RETURN ON INVESTMENT & LOWER LAND RENTS
(_____________ & CAPITAL vs. LABOR)
= FASCISM
MARX STRIKES BACK:
MARX: CLASSICAL ECONOMICS = “______
_________”
MARX: HISTORY = _______ ____________OVER THE
________ _____ _______________
 DIVISION OF LABOR  ________________________



WORK = NO LONGER MEANINGFUL
COGS IN A MACHINE WITH NO PURPOSE
“INVISIBLE HAND”  _________________________


CONFLICT, NOT HARMONY
CAPITAL EXTRACTS LABOR’S “__________
__________”
 ____________ VALUE vs. ________ VALUE
 FETISHISM
 FREE LABOR  _________ _________________


LIVE TO WORK, NOT WORK TO LIVE
CAPITALISM = INHUMANE
“The development of civilization and
industry in general has always shown
itself so active in the destruction of forests
that everything that has been done for
their conservation and production is
completely insignificant in comparison.”
“The more the division of labor and the
application of machinery extend, the more
does competition extend among the
workers, the more do their wages shrink
together.”
“Capitalist production, therefore, develops
technology, and the combining together of
various processes into a social whole, only
by sapping the original sources of all
wealth - the soil and the labourer.”
“Sell a man a fish, he eats for a day, teach a
man how to fish, you ruin a wonderful
business opportunity.”
“Anyone who knows anything of history
knows that great social changes are
impossible without feminine upheaval.
Social progress can be measured exactly by
the social position of the fair sex, the ugly
ones included.”
KEYNESIAN REVOLUTIONS:
VICTORIANS: ECONOMIC DOWNTURNS = “COLD ___________” THAT “PURGED
THE ROTTENESS” OUT OF THE SYSTEM AFTER THE “___________ _____________”
& GREED OF THE BOOM YEARS
NO PAIN, NO GAIN
BINGE & PURGE
_______________ REJECTED VICTORIAN MORALITY: _______________ DID NOT
IMPLY A _______ OR A SINNER
“BALANCE SHEET” THINKING  REDUCING SPENDING WHEN INCOMES
SHRINK  _______________ _____ ____________
YOU CAN’T SAVE YOUR WAY INTO ECONOMIC RECOVERY
“The decadent international but individualistic
capitalism in the hands of which we found
ourselves after the war is not a success. It is not
intelligent. It is not beautiful. It is not just. It is not
virtuous. And it doesn't deliver the goods.”
“Capitalism is the astounding belief that the most
wickedest of men will do the most wickedest of
things for the greatest good of everyone.”
“Education: the inculcation of the incomprehensible
into the indifferent by the incompetent.”
GOVERNMENTS SHOULD ___________ _________ – NOT LESS – WHEN
INCOMES & REVENUES DECREASE -- “SPENDER & LENDER OF LAST RESORT”
MARX WAS RIGHT:
CRITICS: MARX = _________________________
•
•
•
PREDICTED “_________________” SOCIALIST REVOLUTION
FAILURE OF “MARXIST-LENINIST” REGIMES IN RUSSIA
& EASTERN EUROPE
_____________________ OF STATIST ___________-_______________
ECONOMIES IN INDIA & LATIN AMERICA
PUBLIC SECTOR SPENDING = __________________ IN ALL DEVELOPED COUNTRIES
IN THE 20TH CENTURY  30% TO 60% OF GDP
MARX: CAPITALISM  HIGHER _______________
___________________ OF RISK & REWARD
•
•
•
•
&
_______________

SOCIALIZED EDUCATION (PUBLIC EDUCATION)
SOCIALIZED ____________ _________________
SOCIALIZED _________________ (SOCIAL SECURITY & 401(k))
SOCIALIZED BANKING (FEDERAL RESERVE & FDIC)
MARX CORRECTLY IDENTIFIED THE IMPACT OF __________________,
MATERIALISM (“___________” COMMODITIES), & GROWTH OF _______________
______________/ BUREAUCRACY
ECONOMIC TYPOLOGIES:
POLITICO-ECONOMIC SYSTEMS: