Economics Course Journal Personal Review
The author is enticing his readers into getting the urge to go deeper in the book when he says that person who considers economics boring does not really understand what it is. The introduction is all-round and makes a reader want to venture more into the book. Heilbroner: The Theory of Comparative Advantage Comparative advantage elaborates the concept of a particular person or group of individuals being able to conduct an economic activity more efficiently than any other. Heilbroner used the scenario of justifying why countries trade to outline the meaning of comparative advantage. From my point of view, Robert is well on the right track when he explains the relationship between a worker and his landlord such that the former is no longer a slave to his reproductive urge.
I find this relevant to the subtopic of why countries trade putting into consideration comparative advantage because it is an idea that helps the capitalist to gain the maximum profits out of that one thing that they have more than enough command on hence making trade favorable. This explains why a nation trades by concentrating more on commodities that it can gain the most out of due to the command that the country has over that commodity in a particular, compared to other states. Heilbroner: A Framework to think about Pollution Externalities, Taxes, and Trade It is justifiable from the author’s point of view that many workers concentrate on their job and forget about everything else as long as they feel comfortable.
The pollution externalities that are present in the industries pose a danger that needs to be addressed before the situation gets out of hand. Considering the state of pollution from a business perspective, a firm’s life is in jeopardy when pollution externalities cannot be controlled to levels that are containable. A high ability to be able to buy commodities means that there is a reasonable amount of money at the disposal of people and that makes the prices of goods and services rise. Trading activities go hand in hand with taxes. It is critical that we establish what the author was trying to put across when explains trade using examples of textile companies. A framework for pollution externalities, tax, and trade is necessary.
This is an interconnected cycle that starts with the factors and practices that contribute to the destruction of a business surrounding. Social evolution plays a big role in the growth of a firm according to the author. This is a process that sees a person adapt to the habits of thinking in stressful situations that relate to the life issues they are going through at any point in time. Heilbroner describes this kind of adaptation as what entails the growth of an institution. Hence, it is true when he says that once the habits of an individual change then the prosperity or failure of a firm shall largely depend on what type of habits of thought this person adapts. This explains why there are institutions that fail whereas others prosper.
This means that the number of people that are filling up the universe earth is growing relatively fast. On the other hand, food production rates are arithmetic to imply that they increased with a constant number during every period of analysis. Consequently, controlling the population of the world is near impossible. This is because the population has a tendency to overpower all the possible efforts in place to sustain life. Heilbroner stipulates that mankind has found himself in such a situation because of the urge of people to reproduce. They both agreed that population is dangerous especially when it cannot be properly managed considering the idea that it grows at an exponential rate. Economically, Ricardo’s contribution through his theory is that he explains that the origin of rent is down to the scarcity of land.
This is true because the population that is exhibited on earth is large and not everyone can afford to buy a piece of land and even if they would space is not much for everyone to own theirs. This leads to the leasing of space for developmental activities. Another reason Ricardo gives for the existence of rent is the differences in the fertility of the soil. Malthus argues that the reason why gluts come into existence is the reduced amount of profits, which is as a result of less demand in the market. The less demand comes about because of the disproportionate amount of income that moves around people. The author explains that this theory outlined that if income moves from landlords to capitalists then a crisis will develop.
The reason behind such a scenario is that according to Malthus when the capitalists save demand goes down and when the landlords spend demand raises. Heilbroner further points out how more economists went underworld by stipulating the situation of Edgeworth. This implied that an economy could work well even with a situation where there is sustainable unemployment without necessarily having to worry about fixing the imbalances first. Keynes arguments were realistic because he said that whenever there is a depression people will in most cases lose their jobs. This means that the amount of income in the public shall be less because their sources of money shall have been cut short. Savings become the option of such people since they still have bills to take care of, in as much as they are not on jobs.
The impact of this is that interests will not go down because of the reduced levels of savings thus making it difficult for incentives to be availed. He considered as just an option to get the economy back to where it was originally before it crumbled so that other better ways of sustenance can be put to task. This means that once the economy has boomed it is critical to work on the important aspects that may cause another depression and prevent them from occurring. That way there may not be the need for government intervention again and Keynes had this thought because he knew the economy will not have to be turning back to the government for help every time.
Heilbroner: The Contradictions of Joseph Schumpeter Robert Heilbroner discusses the controversy that hit Joseph because of his nature of differing with several of his counterparts during their years as economists. Schumpeter did not agree with a good number of people, John Keynes being one of them, because of how they explained their theories. On this particular argument, I tend to side with Keynes more than I do with Schumpeter because once people begin losing jobs and savings decrease thus making interest rates high, very little effort can be done by the capitalists because an economy is very big to be held by a few individuals. Heilbroner explains an in-depth childhood of Schumpeter and it is clear that the attitude and behavior he developed in his adulthood may have as well been natured by the environment that he grew up in when he was young.
Schooling in Theresianum where the sons who belonged to the aristocracy were taken meant that he adapted the culture of people who lived in that surrounding area. The author makes us understand that Joseph sometimes irritated his colleagues at school occasionally. When Heilbroner says that Joseph was contradictory I personally find that believable based on the records of this economist even from way back in school. The author reminds us that a lot of those items that are not tradable are also not tangible. Such details make it more difficult to arrive at a potentially correct figure when calculating the GDP thus the period of time that it consumes is justifiable. Tangibility, tradability, and inflation are critical values in ascertaining the GDP and should, therefore, be handled with a lot of keenness.
Prices also create a havoc when handling inflation. Prices measures are affected by the demand and supply in the market, which in turn affects the final process of arriving at the GDP. The author examines the challenge that has come with the technological advancements. He argues that there products that were physically bought at some point in time that are currently rendered online and he gives an example of newspapers. The music industry has also evolved and, measuring the income from that sector is also tricky. These are some of the reasons GDP computation gets very hectic to the statisticians since incomes from other sectors of the economy become tough to be accounted for in the long run. Hence, it is justifiable to say that there are problems when it comes to working out the GDP.
Today’s world involves a lot of goods and services in the market, which, bear a price tag. These figures that represent the cost of items are often used by economists in analyzing situations and even providing solutions to problems related to price. In the early days, commodities that were involved in trade did not have prices but that did not stop them from transacting. This according to the author is clear evidence that we do not need the economical explanation systems to show how the revolution has occurred since the days Before Christ up to the twenty-first century. The traditional order that was in place in the early days was key to the success of the then economy. The worldly philosophers: The lives, times and ideas of the great economic thinkers.
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