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Week 1 Lecture Notes

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ECON 2720
B Ferguson

Lecture 1 December 7, 2013 2:37 PM First Financial Crisis - There is evidence of the first financial crisis took place in Rome in 33 A.D. - The leader put all of the money from the kingdoms reserves into the Roman banking system to be lent out to people at a zero percent interest rate - This action calmed down the crisis and avoided a complete banking collapse - Rome inherited its banking system from Athens which they came up with around 400 BC - Banks were modern and similar to today but they didn't have cheques, mostly due to the lack of paper - Businesses were also very similar today, and relied on banks the same way we do - Business corporation have existed since the medieval period, and there is evidence to suggest corporations even existed during Roman times - Technological advancements have improved the efficiency of banking but most of the structures of banking have been around for centuries Three… - Creative Destruction (Joseph Schumpeter) - Apple comes into the smart phone market and because consumers like their product better Blackberry is pretty much eliminated from the market - His story of creative destruction puts the focus on entrepreneurs - William Beaumont - He suggested that entrepreneurship is a scarce resource, and cannot be reproduced be being taught in lectures - We can teach people how to be good managers but not entrepreneurs - He also argued that entrepreneurs will go wherever there is the highest rate of returns - Two types of entrepreneurship: productive and unproductive - Productive entrepreneurship refers to people who invent good products and sell them at a good price which people are willing to pay for - Unproductive entrepreneurship refers to people who try and change the rules by influencing government and changing the game to favour them - If patents are used properly they give incentive for research and innovation, but they can be used to create monopolies and become unproductive - Ronald Coase - He looks at the nature of The Firm - He looks at why corporations are effective in some situations compared to many small firms doing the same thing as one large corporation - Henry Ford integrated the company so mostly everything was done in house - That was been reversed now where there are different parts manufacturers Lecture 2 January 8, 2014 10:29 AM Ancient Trading - In some area of the world or times there is no evidence of active trading so we have to rely on archaeological artifacts for signs for business - Many small countries didn't have the resources to be self-sufficient so they needed to trade - Egypt came the closest to be self-sufficient but they couldn't grow grapes for wine so even they needed trade for the - In order for trading to occur their needed to be a middle man who knew the process of trading - Marxist theory often refers to the middle man as parasites, but if buyers and sellers had to trade themselves it gave them less time to produce - Many city states only had the resources to produce one or two different things so they relied on trade for all the other goods they needed - Eastern European countries required tin for production but the only places that had tin were England and Afghanistan, so traders were needed to bring tin in from these place - It was brought to Cyprus where it could be converted into bronze - There were actually very little iron in the earth and it needed to be produced from iron ore - Iron only existed in Greenland and from meteors that came into earth - Iron ore needed to be smelted exactly right otherwise it would be soft or brittle, which was useless
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