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The Almighty Buck

Pinball Wizard's Journal: Macroeconomics 4

Journal by Pinball Wizard
Finally my critiques of capitalism will have some theory to go behind it. This is my first business or economics class ever. It's just that when I was in high school this stuff never interested me. However, having been stupid with money and having felt the consenquences, and also having been involved with growing a business has changed my outlook considerably. In fact I'm taking econ 105 now to keep my options open in case I want to minor in business.

So anyway, allow me to very briefly touch on some of the Macroeconomic wisdom my school has imparted upon me.

The basic goals of economics are as follows:

Economic growth

Full employment

Economic efficiency

Price-level stability

Economic freedom

Equitable distribution of income

Economic security

Balance of trade

To achieve these lofty economic goals, the prevaling wisdom is that you reach a point of economic nirvana called market equilibrium in which the circle of businesses, households, resource markets and product markets are each serving each other perfectly and thus fulfilled.

Unfortunately for us, as I discovered when I asked a few questions about our economy, we are far from attaining this state. In particular, having a monopoly of any type severely disturbs this equilibrium. Many of our most basic services like gas, electricity, and water come from a single source. 95% of media comes from 7 companies and a single company produces 90%+ of desktop software. These, among many other examples, have a deleterious effect on the economy.

At any rate, we're just getting started and both the professor and the book we use have a very traditional capitalistic approach to the subject. So I may be adjusting my view of capitalism in the near future. I will say however, it appears that capitalism needs a lot of government regulation to function correctly. I think perhaps the point I made previously about businesses cannibalizing each other(with a coincident harmful economic effect) until a monopoly emerges may not be so far the truth.

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Macroeconomics

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  • Economic growth
    Market domination. Growth is an illusion.

    Full employment
    Selective employment. Move dead wood out cheaper in.

    Economic efficiency
    Volatility = tactical advantage.

    Price-level stability
    See last.

    Economic freedom
    For market leaders only!

    Equitable distribution of income
    Hahahahaha, One for you and ten for me!!!

    Economic security
    Keep away from my pie!!!

    Balance of trade
    Export (profits) high and import (costs) low = well balanced.
  • First off, I hope you are also taking a micro course as well.

    Economics is the study of how markets distribute limited resources (and I should note that any time two or more people engage in trade of anything, you've got a market). Anything else would venture into the realm of applied economics.

    I can't remember whether it was macro or micro, but one of the big things is 'barriers to entry'. If these are too high, you will tend to monopoly.

    Capitalism doesn't require massive influence and control by the government. It requires strong, well defined, well guarded property rights. The basis of the US Constitution is a good example of what is pretty close to the minimum required for a capitalist society. Don't forget that the founding fathers were largely businessmen of different types, and that a government conducive to capitalism would be good for them.

    If you take your study of economics to heart, you will be sorely dissapointed by the actions of modern businesses. The actions of everyone from MicroSoft to GM to the steel mills are all about erecting barriers to entry. Marketing is mostly about the destruction of 'perfect information'. And don't get me started on tariffs...

    • ah, but the founding fathers and early colonialists were highly distrustful of corporations. Sure, they had freedom, but a very limited amount of power. Early corporations had a charter - they were to serve the community, and if they stepped out of bounds they were slapped hard by the feds. It wasn't until Lincoln that these restrictions on corporations was removed - and it was the removal that allowed the first robber barons to thrive.


      Don't ask me to elaborate, its just something I picked up watching PBS one day.

      • I don't disagree at all. Corporations have little->nothing to do with capitalism.

        I think T. Roosevelt and the Sherman Act solved much of those problems of corporations. The Supreme Court declaring them 'people' in the rights having sense screwed the whole thing up again.

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