ECON 101 Lecture Notes - Lecture 9: Gini Coefficient, Business Cycle, International Trade
30 Apr 2018
School
Department
Course
Professor
Economics 101
Lori Leachman
Part 9 • Lecture
• Marxism:
o Theory of labor
o What really matters for output is capital, labor is rather trivial
o Got right: capital is important - growth and output
▪ Concentration of capital can lead to income inequality
o Got right: internationalization - increasing globalization (but thought it would be dangerous)
o Got right: larger swings in business cycle - boom and bust - lead to crises
• Income inequality
o Measured with the Gini Index on a scale of 0 - 1 where 0 means wealth is evenly distributed and
1 means all wealth is owned by one person
o Major forces in changing income distribution
▪ Role of technology; automation
▪ Lack of unionization
▪ International trade - globalization
▪ Public policy
o Why does it matter
▪ Tears in social fabric, creating frictions among classes
▪ Lower growth rates due to higher inequality; higher economic volatility
▪ Inadequate demand
o Solutions
▪ Free education
▪ Raise minimum wage; guaranteed minimum income
▪ Tax changes that favor poor and not the rich
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