ECON 155 Study Guide - Spring 2018, Comprehensive Midterm Notes - City, Capitalism, Production Function
ECON 155
MIDTERM EXAM
STUDY GUIDE
Fall 2018
Dead Cities January 6, 8
Dead Cities – Mike Davis
• Human beings are 2.4 million years old
• Cities first appear on the human landscape in the 8th etu BCE .416% of the Eath’s eistee
• Humans have lived in migratory, wandering cities—settling near water holes, eating fruit, exhausting their supply
and discarding the seeds and moving on—99% of the Eath’s eistee
• Until the 19th century, most human communities remained semi-nomadic
• Cities are a developmental anomaly
o Cities demand an unsustainable amount of energy
o Urban dwellers must colonize and extract amounts of energy from the countryside (ie: water, food) –
everything not produced in the city
o Requires unprecedented increases in efficiency and technological innovation
• The production function is simple – MPL = change in quantity over change in labor or y = axbeta
o We measure mpc in terms of worker productivity
o Want to produce more things with less capital and labor
• Mike Dais’s pole = ou pole
o How much is enough? Cities demand an unlimited supply of goods
• Production model suggests diminishing returns from every input (whether of labor or capital)
o To maintain a steady rate of productivity increases, we need technologically generated efficiencies to be
greater than the marginal decline of capital/labor
o However, synthetic raw materials produced in the production function are not limitless
o The energy required to produce goods limitless? No physics model that says we can do this forever
• Cities illustrate the problem with the production function
o Huge aouts of eeg apital, lao is euied to aitai ities, the the eet to the atual state
(ie: roads have pot holes, weeds start to grow)
o Cities are unsustainable because they require extra urban land and capital
o Cities are not homogenous, undifferentiated things – resources are allocated within cities to maximize
efficiency (ie: blighted housing is the most efficient in that neighborhood)
▪ You can disaggregate nearly anything or person within the city among similar lines (ie: crime and
police protection, drug/alcohol abuse and treatment facility, fire and fire protection, utilities, pot
holes and street maintenance, pollution and clean air, disease and health)
o The market allocates people and things to their optimal location because there is an upper limit of resource
exploitation and availability
▪ It is the est of all possile olds ie: ee though thee is oe goup that is i teile health
▪ Market distributes goods in the best fashion
▪ Even when the supply of energy is in jeopardy, the market still distributes these limitless goods
• In the production function, there is no variable that measures sustainability, individual, not the aggregate health
effects, hunger, and climate change
o Problem: not that it is overly mathematical, but it is insufficiently rigorous. There is a serious flaw to the
model
o Model needs to be supplemented so that it can accurately characterize the real world
o This is not a moral argument – we are questioning why resources are allocated in this manner
o This is an economic argument – it is up to policymakers
o Dead ities ae a ealit ad e eed to odel the oe igoous
• Syllabus
o Participation (10%) – 10 times (email reader what you participated in)
o Sign up for a presentation group
find more resources at oneclass.com
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Aistotle & Affluee January 8, 8
Aristotle: Politics
• Cobb-Douglass helps us to understand the distribution of goods and people
o We a use the futio to gasp dead ities illustatig that ities ae ot e podutie
o The short term is insufficient; we need to be thinking about the long run
• Politics
o Roles are differentiated (ie: mother/father, parents/children)
o Childe do’t guide ad diet paets; paets guide ad diet hilde
o Greek term for head of household
• I a piate etepise, e ae’t lookig fo idetial idiiduals
o No private firm is governed democratically
o Iestos do’t hold a ote aog eploees i ode to deteie ho thei apital should e iested
▪ Similarly parents role despotically – hilde do’t deide he to sleep
o A private enterprise is despotic by nature
▪ In Greek, slave and employee is used in the same context
▪ If ou ok i soeoe else’s hoe, the ou ae a slae
o Obviously, like slaves, employees enjoy more or less freedom
o Employees take their marching orders from the owners of the enterprise – it is not democratic, egalitarian,
just or good, it is economic
• Catego eo: a piate etepise is ot the sae as a epuli ie: ou at sa that ou’e u a usiess, so you
can run the country – they are opposite skills)
• Humans are unnatural
o By nature, the human world is not a natural world
o All animals naturally maximize utility; only the human animal engages in politics and aggregate themselves
unnaturally
o As Homer notes, you have no family, no law, and no home, or you operate above the law
• Relationships of domination and subordination are normal and natural (ie: parents dominate their kids)
o What is uatual fo huas is to iuie ad disuss ie: What do ou thik aout this?
o The household, the private economy, is governed by necessity and the relationships are natural – this
relationship is different from res republica (politics)
• Political leaders rule over free and equal persons
o The problem that arises is the problem of freedom and necessity, and the survival of the enterprise
o Deisios opelled eessit ae’t fee; if the ae’t fee, the the ae ot oal
o Aristotle draws a fundamental distinction; wants us to imagine a city that is free
o Only action that is free is moral, not actions that are compelled
• Aristotle fails because when individuals commands the supply of goods, then they can command their actions
o We want biological animal life = pleasure, efficiency by optimizing the C-D function
o The piate etepise opeates off of desie, ut it does’t auatel haateize the it
o Republican values are premised over what is desired rather than what is economic, but compared to today,
we have failed (ie: health companies focus more on money than on providing health)
o Over time, Greek citizens came to value private enterprise over public institutions and failed to understand
what is good
Original Affluence
• Sahlins challenged the dominant paradigm: Paleolithic life was solitary, nasty, brutish, and short
o Capitalism was an unmitigated improvement over pre-capitalistic society (ie : thank god for cities; Paleolithic
to Neolithic)
o Paleolithic societies labored between 2-4 hours a day, lived longer than most members of developed
soieties, ad did’t satte to look fo food
o Attiuted oigial affluee to a ze etalit
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
In the production function, there is no variable that measures sustainability, individual, not the aggregate health effects, hunger, and climate change: problem: not that it is overly mathematical, but it is insufficiently rigorous. I(cid:374) a p(cid:396)i(cid:448)ate e(cid:374)te(cid:396)p(cid:396)ise, (cid:449)e a(cid:396)e(cid:374)"t looki(cid:374)g fo(cid:396) ide(cid:374)ti(cid:272)al i(cid:374)di(cid:448)iduals: no private firm is governed democratically. I(cid:374)(cid:448)esto(cid:396)s do(cid:374)"t hold a (cid:448)ote a(cid:373)o(cid:374)g e(cid:373)plo(cid:455)ees i(cid:374) o(cid:396)de(cid:396) to dete(cid:396)(cid:373)i(cid:374)e ho(cid:449) thei(cid:396) (cid:272)apital should (cid:271)e i(cid:374)(cid:448)ested: similarly parents role despotically (cid:272)hild(cid:396)e(cid:374) do(cid:374)"t de(cid:272)ide (cid:449)he(cid:374) to sleep, a private enterprise is despotic by nature. In greek, slave and employee is used in the same context. If your community is migratory, possessions pose an encumbrance: c-d function suggests that i will maximize my leisure-labor trade off. Cities that have lied for good reason/good of the people, they will lie for any reason: phillip dies u(cid:374)de(cid:396) suspi(cid:272)ious (cid:272)i(cid:396)(cid:272)u(cid:373)sta(cid:374)(cid:272)es. Ale(cid:454)a(cid:374)de(cid:396)"s (cid:271)o(cid:455)hood tuto(cid:396) (cid:449)as a(cid:396)istotle: first principle: economics is not politics.
