ECO1104 Sep.12 , 2013
YUJIE YI #7038840
What is bad economic reasoning is often good politics.
Correct economic thinking:
- The ‘transitional jobs fund’ of Human Resources Development Canada in
the late 1990s provided subsidies for construction of golf courses
The Chrétien government asserted that these subsidies ‘created jobs’ and
thus ‘worked well for Canadians’
- Creating jobs, conferring benefits … however, this is the “manna from
heaven” or “free lunch” fallacy
- The construction of the golf course has an opportunity cost – land,
labour, capital must be reallocated from other potential uses, which might
be more productive elsewhere.
THE MARKET ECONOMY
Types of economies: Robinson Crusoe, tribal (couldn't be expelled from the
land either), feudalistic, command, free-market (Singapore, Hong Kong),
social democratic (mixed)( the US, Canada, the UK, Italy…G7, G20, G8)
Principle #6 Markets are USUALLY a good way to organize economic activity
(Financial meltdown on Wall Street and the horrific damage that it did to the
broader economy) ------- Not always
As rule-of-thumb, the more “right wing” one is, the more one agrees with
that statement, and the more left-wing one is, the more one disagrees with
it. (never & always)
Any economy has to address THREE COORDINATION TASKS
- WHAT goods and services should be produced, and in what quantities?
1/3 - HOW should they be produced? In other words, what is the technology?
Technology of production: HOW TO allocate those scarce resources …
- FOR WHOM are the goods and services produced?
How does the market economy go about addressing these tasks?
Resources allocated to their HIGHEST AND BEST USE.
- WHAT goods and services will be produced?
Those that are PROFITABLE. Production of unprofitable G&S is