Today in class, Rizzo started off by taking about Dave Humes. Humes was an economist who argued that mercantilist's ideas were harmful. They forgot the role that prices play on the economy. If a country has a lot of gold then the prices of products will be high. If a country has a low amount of gold, then prices for products will be low. Both competition and division of labor are very important for a country's growth.
Adam Smith who lived from 1723-1790 wrote the wealth of nations in 1776. This was his most famous book he ever wrote. He preached that the government doesn't need to control and regulate most economic affairs. Laissez faire is when people can associate with anyone else as long as they don't hurt anyone in the process. The government does need to supply a dew things for a country to be successful. These are
1. Police and courts
2. National defense for protection from bandits.
3. Public Works (things the government can do productively that private companies wont do on their own. Ex. build roads and bridges)
Things that we need as citizens are
1. Rights to property
2. Division of labor exists
3. Exchange has to be peaceful and mutually agreed upon
4. No special privilege
If all of these happen, it assembles capitalism and we get a source of wealth --> ability to produce and exchange.
The Tampa Bay Rays make us wealthy because they make us happy and we produce and exchange because of this.
People may choose farming as a profession because they enjoy feeding people, but it doesn't motivate people all the time to do work. People have moral obligations to do more than self interests. Need self interests to keep society up right. We don't want everybody poor because this wouldn't benefit us.
People adjust to changes in society to what they want to see. Smith said that people should be able to buy what they want when they want with who they want.
Spontaneous order is what smith was articulating when he argued that our national propensity to make our lives better, to ease the burden of "trucking, bartering and exchanging" ends up producing an orderly outcome. No one designed the "economic system" yet here it is and it's very successful. The result of human action but not of human design. The deeper point is that it is really hard to do better by explicit design.
First moral philosopher in Scottish tradition was Fergusson(1767). Lots of institutions we see today couldn't be designed explicitly.
Smith's ideas were that people have a tendency to ease burdens of doing things. By saying please, it is easier to get something. Certain laws of human behavior we can articulate. Biggest one is that we want to make our lives better. Smith thought the future prosperity of England would be destroyed by prejudices of the public. He was scared of two business men getting drunk in a pub together because it meant that they were plotting to screw us. Future wealth threatened by prejudices of public and government allowing special privileges.
Corn prices tripled in the 19th century. Enterprising merchants brought wheat from abroad. These merchants were Jews. Land lords made the corn laws because of this. They had sliding duties on the importation of grain. By 1813, there were a series of crop failures. Wheat prices rose to double the weekly salary. The anti corn law league was established. It took 2 years to repel corn laws. By 1860 50% of the world's goods were produced in England. By 1870 there was the fastest economic growth ever. This was in part due to mass global trade.
Marx saw capitalism as a mass production system. This took care of people who weren't elite. Capitalism delivers too many goods at the risk of the planet. The more capitalist a country is, the less capital it has.
Measure of inequality- health outcomes, access to political power, religious freedoms are most important.
Things can't be necessities today that weren't in the past. Easier to not die from food today compared to 1790.
25% of income in US is property income.
Proof of Progress is that we are freeing the masses and allowing normal people do what only the rich were allowed to do in the past.
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