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Line 172: − − == Adversity and Suffering == − − Some concepts in economics are surprising, as as some teachings of Christianity are surprising the first time. An example is that difficulties can actually be blessings. Consider how a tree grows. − − A tree starts out as a tiny seed with apparently little chance of survival. It must find nourishment deep in the soil, and it must defy gravity by growing towards the sky for sunlight. Typically no humans help it. The tree has to make it on its own, and deal with tornadoes, hurricanes, and hostile animals. The tree never “owns” anything. − − Tree limbs are very heavy, to the point of crushing houses or killing people when they do fall. The tree has to raise and support its heavy limbs against gravity. The flow of a tree’s nutrients is also against gravity. Trees grow in unexpected places, and sometimes around pre-existing obstacles. Out West roads have even been cut through trees, and they still survive and thrive. − − Yet the difficulties in surviving are what make a tree strong. Each day it grows in two directions: downward further into the soil towards more nutrients, and upwards into the sky towards more sunlight. Its growth is not easy in either direction. The more it has to reach for nourishment, the bigger and stronger it becomes. Trees that are given their nutrients, as in a laboratory, do not grow as large and powerful as trees that must struggle to survive in the wild. − − It is in striving against obstacles that the tree becomes so powerful. Economics predicts that those who suffer from adversity will often become more successful or productive than those who have it easy, just as is true for trees. The adversity is what makes one stronger, more motivated and more efficient. Many of the most successful businessmen in history had very difficult childhoods, and some (like Tom Monahan, founder of Dominos Pizza) even grew up in orphanages. Poverty was the common background of most successful businessmen. In contrast, people who have had it easy rarely invent or succeed with their own businesses. − − The Bible contains a similar message: it is through suffering and difficulties that Christianity became so strong. Many books in the Bible emphasize this, from Daniel to Mark. Learn to use adversity like an exercise bicycle or weights in order to make you stronger and more successful economically. − − There is a Latin phrase: "nitor in adversum." It means "strive in opposition." It's a good motto. Line 211:
Line 195: − + − − 9. "A penny saved is a penny earned!" In fact, once taxation is taken into account, "a penny saved is almost two pennies earned!" Discuss one or both of these quotations. − 10. Do you think a Giffen good really exists? Can you see any possible political bias in the claim that Giffen goods exist? Your views, please.+ − 11. Prove the Law of Demand as simply as you can, perhaps using the assumption that the consumer always tries to maximize marginal utility.+ − 12. Discuss the Irish Potato Famine between 1846 and 1849, and whether you think potatoes were an "inferior good" then.+ − 13. Explain whether goods X or Y are perfect substitutes or complements or something else for the indifference curves below, and why:+
Economics Lecture Four (view source)
Revision as of 00:09, September 22, 2009
, 00:09, September 22, 2009trimmed complete
Over 150 years ago, [[Alexis de Tocqueville]] observed that “despotism may govern without faith, but liberty cannot. ... How is it possible that society should escape destruction if the moral tie is not strengthened in proportion as the political tie is relaxed?” Perhaps charity is the economic manifestation of that “moral tie,” upon which economic liberty and free enterprise rely.
Over 150 years ago, [[Alexis de Tocqueville]] observed that “despotism may govern without faith, but liberty cannot. ... How is it possible that society should escape destruction if the moral tie is not strengthened in proportion as the political tie is relaxed?” Perhaps charity is the economic manifestation of that “moral tie,” upon which economic liberty and free enterprise rely.
==Assignment==
==Assignment==
Write in about 300 of your own words on one or more of the following topics:
Write in about 300 of your own words on one or more of the following topics:
8. Describe someone in history who overcame personal hardship and adversity to become very productive.
8. "A penny saved is a penny earned!" In fact, once taxation is taken into account, "a penny saved is almost two pennies earned!" Discuss one or both of these quotations.
9. Do you think a Giffen good really exists? Can you see any possible political bias in the claim that Giffen goods exist? Your views, please.
10. Prove the Law of Demand as simply as you can, perhaps using the assumption that the consumer always tries to maximize marginal utility.
11. Discuss the Irish Potato Famine between 1846 and 1849, and whether you think potatoes were an "inferior good" then.
== Extra Credit for Anyone ==
== Extra Credit for Anyone ==
12. Explain whether goods X or Y are perfect substitutes or complements or something else for the indifference curves below, and why:
[[File:IndifferenceCurve2.gif|550px]]
[[File:IndifferenceCurve2.gif|550px]]