Class 3 9/7/2011

In today’s class, Professor Rizzo talked about how man acts with purpose. Humans not being able to have everything that they want cause this action. Part of the reason that we can’t have everything that we want is because we live in a world of scarcity. There aren’t enough resources to go around to everyone who needs them. One excellent example of scarcity is oil. This is because there is such an abundance of it in the ground that it won’t run out for over 1,000 years but still we want more of it than what is available. Rather than focusing on how to get more oil than we need, I think that we should focus more on producing better forms of energy that we can make an easy transition to so that we have something to use after all of the oil does eventually run out, and so we can pardon the ozone from absorbing mass amounts of pollution.

Economists are considered a recent occupation. In ancient Greece and before that, no one looked like an economist. It wasn’t until the 18^th century when Adam Smith came around that he was the first documented person to look like an economist.

It wasn’t until recently that man has made big strides in straying from what is our natural state. This natural state is poverty. For most of humanity we could only hunt and gather. This was a very basic way of living that consisted of no luxuries.

Economics would not do well in either heaven or hell. In hell there is no growth so the goal of economics would be wiped out. In heaven everything is perfect, so there is no need for economist to make things better, because they can’t get better. Professor Rizzo gave us an official definition for economics. He defined it as “The study of the consequence of the choices made as part of the extended order of human cooperation.” He felt that this was a much better definition than those of other economists so I will stick by this one as well. Most people believe that economics is the study of prudence but it is not. Economics is the study of temperance, but we need prudence and temperance for economics to work properly.  EWOT drills down to actual problem rather than “we have a health care problem.” Today, 311,000,000 people could afford 1970’s life care with 1970’s prices. With today’s prices, the number is realistically a lot lower since the cost of life care is much higher than it was in previous years.

Though there are times when the country goes into a recession, over a long period of time we constantly move in a forward direction.  Today only 2% of people work in agriculture. This number is a lot lower than in previous years. A big reason for this is that the cost to produce food is much lower than in the past. New technology has lessened the amount of people needed to work.

There are two divisions in economics. One is microeconomics. The other is macroeconomics. Micro is the study of price theory. An example of this would be global unemployment. Macroeconomics deals with disequilibrium theory.  An example of this would be a supply and demand trend. Through macroeconomics is where we realize that every decision has a consequence.  Though inequalities happen, no one has an intention of causing them when a decision that they make causes inequalities.  One example of how microeconomics plays a role in everyday life is the law against selling one’s kidneys. Without being able to sell them, one doesn’t have an incentive to giving their kidneys away.  Because of this, there are fewer kidneys on the market so less people will get the replacement kidney that they need to stay alive. This lost hope of survival will drive them to have bad eating habits and will impose greater health risks than they already had.

There was a lot covered in this class on different topics that are important to economics.