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| | == Gresham's Law == | | == Gresham's Law == |
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| − | In Economics we often learn powerful concepts that seem surprising at first, or which we would not think of otherwise. Opportunity cost is one. The Coase theorem is another. The law of Miminishing Marginal Utility is a third. Returns to scale is a fourth. The list seems never-ending, and perhaps a student in this course will discovery a new Economics insight that will be taught to future students. | + | In Economics we often learn powerful concepts that seem surprising at first, or which we would not think of otherwise. Opportunity cost is one. The Coase theorem is another. The Law of Diminishing Marginal Utility is a third. Returns to scale is a fourth. The list seems never-ending, and perhaps a student in this course will discovery a new Economics insight that will be taught to future students. Appreciating any one of these key concepts can yield enormous benefits to you the rest of your life, both with business and beyond. |
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| | Here is another surprising discovery in Economics: "bad money drives out good." If there are two types of money in an economy, then people will prefer using the weaker type when they buy goods and will want to save or hoard the better type. Before long the weaker, or "bad", form of money dominates the marketplace as everyone tries to get rid of it. The better form of money is saved up and rarely makes it to the market. | | Here is another surprising discovery in Economics: "bad money drives out good." If there are two types of money in an economy, then people will prefer using the weaker type when they buy goods and will want to save or hoard the better type. Before long the weaker, or "bad", form of money dominates the marketplace as everyone tries to get rid of it. The better form of money is saved up and rarely makes it to the market. |
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| | ===Applied beyond Economics=== | | ===Applied beyond Economics=== |
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| − | Recall back to the beginning of this course when I mentioned that | + | Recall back to the beginning of this course when I mentioned that our learning would extend beyond money. Gresham's Law is an example of that. It has significance far beyond money and economics. Let's pause for a moment and consider the implications. |
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| | + | What happens when something "bad", such as a serious crime, happens in a neighborhood? It tends to decrease the value of the homes and drive out the "good", as people move away. Similarly, what happens when some arrives in a group and starts to use lots of profanity. It tends to lower the quality of the conversation. Before long, other people are using profanity in the group and some people leave it altogether. The "bad" drives out the "good". |
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| | + | In public schools, as students wear unattractive clothing like Goth it tends to cause other people to dress worse; as students start to goof off and stop working it becomes contagious and others start to imitate them. Again, the "bad" drives out the "good". |
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| | + | Even on a personal level, <> |
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| | + | Once we realize this, it becomes possible to anticipate and correct it. The "bad" can be prohibited, excluded, or stopped immediately as it occurs. Better yet, if there is effort can the "good" drive out the "bad"? |
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| | + | == Is the Converse of Gresham's Law True? == |
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| | + | The converse of Gresham's Law would be this: the "good" drives out the "bad". Is it true? |
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| | + | Personal level: Newton and the Bible |
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| | <discuss [[Gresham's Law]], and ask if good discussion can drive out bad? E.g., start discussing the Bible and watch atheists disappear.> | | <discuss [[Gresham's Law]], and ask if good discussion can drive out bad? E.g., start discussing the Bible and watch atheists disappear.> |