Philosophy of Economics

1. Philosophy of Economics History’s Most Influential Economists

2. Economic Schools • Austrian School • Biological economics • Chicago School • Constitutional economics • Ecological economics • Evolutionary economics • Freiburg School • Freiwirtschaft • Georgism • Institutional economics • Keynesian economics • Marxian (Marxist) • Neo-Ricardianism • New classical macroeconomics • New Keynesian economics • Post-Keynesian economics • Public Choice school • School of Lausanne • Stockholm school Crash Course Economic Schools

3. Influential Economists • Adam Smith (1723–1790): Free Market • Frederic Bastiat (1801-1850): Demand-Side • Karl Marx (1818–1883): Labor Theory of Value • John Keynes (1883–1946): Aggregate Demand • Ludwig von Mises (1881-1973): Non-Intervention • F.A. Hayek (1899-1992): Pure Theory of Capital • Milton Friedman (1912–2006): Monetarism • Arthur Laffer (1940- ): Supply-Side

4. Influential Economists Adam Smith (1723-1790) • An Inquiry into the Nature and Causes of the Wealth of Nations • Division of labor • Productivity • Free markets • Theory of absolute advantage • “Invisible Hand”

5. Bell Ringer EP-01 • What is the definition of an ‘economic school’?“经济学校” 的定义是什么?'경제 학교'의 정의는 무엇입니까? • Which ‘most influential economist’ did Mr. Miller actually meet?米勒先生见过哪位经济学家？어느 경제학자가 밀러 씨를 만났습니까? • What ‘greatest work’ of economic literature is Adam Smith best known for?亚当·斯密最出名的是什么书？Adam Smith가 가장 잘 아는 책은 무엇입니까?

6. Influential Economists Theory of absolute advantage: The ability of an individual, firm, or country to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources

7. Influential Economists “Invisible Hand” • The assumption that an economy can work well in a free market scenario where everyone will work for his or her own interests • The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically

8. Influential Economists Frederic Bastiat (1801-1850) • Opportunity Cost • Unrestricted free market • Consumer Demand or Demand-Side theory • Macro impact of economic decisions • 2nd and 3rd order effects of economic decisions

9. Bell Ringer EP-02 • What is the theory of ‘absolute advantage’?什么是“绝对优势”理论？'절대 우위'에 대한 이론은 무엇입니까? • What does the ‘invisible hand’ mean in economics?“看不见的手”在经济学中意味着什么？경제에서 '보이지 않는 손'이란 무엇을 의미합니까? • Give one example each of a 2nd order and a 3rd order effect in macro economic decision making.在宏观经济决策中给出一个二阶和三阶效应的例子。거시 경제 의사 결정에서 2 차 및 3 차 효과 각각에 대해 한 가지 예를 든다.

10. Influential Economists Opportunity Cost • The idea that any choice results in sacrificing one option in favor of another • The value of the option NOT chosen is the opportunity cost • Used in computing cost vs. benefit analysis

11. Influential Economists Demand-Side Theory • Consumer spending leads to economic expansion • Full employment increases the amount of disposable income • Personal investment increases wealth, which in turn promotes consumer spending

12. Bell Ringer EP-03 • Choosing to only make tables when I have an absolute advantage in tables AND scarves is an example of which macro- / micro- principle?选择仅在我在表和围巾中具有绝对优势时才制作表格是宏观或微观原则的一个例子吗？테이블과 스카프 모두에 절대적인 이점이있는 경우에만 테이블을 선택하는 것은 매크로 또는 마이크로 원칙의 예입니다. • What do I call the cost of making a choice between economic options?我怎么称之为在经济选择之间做出选择的成本？경제 옵션 중 하나를 선택하는 비용은 무엇이라고합니까? • What three factors must occur to make Demand-Side theory work?使需求方理论发挥作用必须出现三个因素？수요 측면 이론을 실현하기 위해서는 세 가지 요소가 필요합니다.

13. Influential Economists Karl Marx (1818–1883) • German philosopher, economist, historian, sociologist, political theorist, journalist and socialist revolutionary • With Friedrich Engels, author of The Communist Manifesto • Labor Theory of Value

14. Influential Economists Communist Manifesto • The history of existing society is the history of class struggles • End Goal: A stateless and classless society • Traditional socialism’s failure to recognize the revolutionary role of the working class

15. Bell Ringer EP-04 • Who did Karl Marx team with to produce his written works?谁与卡尔·马克思团队一起制作他的作品？칼 마르크스는 누구와 서면 작품을 제작 했습니까? • What does Marx say is the ultimate goal of the Communist revolution?马克思所说的是共产主义革命的最终目标？마르크스는 공산 혁명의 궁극적 목표는 무엇이라고 말합니까? • The Communist Manifesto advocates getting rid of what specific things in order to promote a classless society?共产党宣言主张摆脱具体的东西？공산당 선언은 어떤 특정한 사물을 제거하는 것을지지합니까?

16. Influential Economists Labor Theory of Value • The price of a good or service should be (morally) equal to the total amount of labor value (wages) required to produce it • Dissociates price & value • Workers control the means of production

17. Influential Economists John Keynes (1883–1946) • Father of modern macro economics • Aggregate Demand • Advocates government using monetary policy to mitigate the effects of recession/depression • “Deficits during recessions are a good thing”

18. Influential Economists Aggregate Demand • Total demand for all goods and services at any given price level in a given period • Does not address quality or standard of living • People saving money hurts the economy by reducing demand

19. Influential Economists Government Intervention • Low wages = high employment • Gov’t spending during recessions: GOOD • Corporate Bailouts • Gov’t guaranteed loans • Infrastructure spending • Gov’t spending during surges/booms: BAD • Deficits are okay: not debt • Control of interest rates

20. Bell Ringer EP-05 • What is the difference between Demand and Aggregate Demand?需求和总需求之间有什么区别？수요와 총수요의 차이점은 무엇입니까? • How does control of interest rates impact the national economy?利率控制如何影响国民经济？금리 통제가 국가 경제에 미치는 영향은 무엇입니까? • Why is government borrowing a bad thing during a boom economy?为什么政府在繁荣的经济中借钱呢？왜 정부는 호황기에 나쁜 것을 빌리 는가?

21. Influential Economists Ludwig von Mises (1881-1973) • Co-founder of the Austrian School • Laissez-Faire Economics • Business cycles are caused by uncontrolled expansion of bank credit • Socialism must fail economically

22. Influential Economists The Austrian School • Social phenomena result from the actions and motivations of individuals • Economic Principles: • Subjective Theory of Value • Marginalism in Price Theory • The Economic Calculation Problem

23. Influential Economists Laissez-Faire Economics

24. Bell Ringer EP-06 • What is “Subjective Theory of Value”?什么是“主观价值论”？"주관적인 가치 이론"이란 무엇입니까? • What is “Marginalism in Price Theory”?什么是“价格理论中的边缘主义”？"가격 이론에서의 마진주의"란 무엇입니까? • What is Laissez-Faire Economics?什么是Laissez-Faire Economics？Laissez-Faire 경제 란 무엇입니까?

25. Influential Economists F.A. Hayek (1899-1992) • Austrian Theory of the Business Cycle • Pure Theory of Capital • "A claim for equality of material position can be met only by a government with totalitarian powers."

26. Influential Economists • Austrian Theory of the Business Cycle • The business cycle results from the central bank's inflationary credit expansion and its transmission over time, leading to a capital misallocation caused by the artificially low interest rates.

27. Bell Ringer EP-07 • What is “Subjective Theory of Value”?什么是“主观价值论”？"주관적인 가치 이론"이란 무엇입니까? • What is “Marginalism in Price Theory”?什么是“价格理论中的边缘主义”？"가격 이론에서의 마진주의"란 무엇입니까? • What is Laissez-Faire Economics?什么是Laissez-Faire Economics？Laissez-Faire 경제 란 무엇입니까?

28. Influential Economists • Pure Theory of Capital • A monopolistic governmental agency like a central bank can neither possess the relevant information which should govern supply of money, nor have the ability to use it correctly. Fundamental disagreement with Keynes on the role of the central bank

29. Influential Economists Milton Friedman (1912-2006) • Chicago School Founder • Opposed Keynes • 1976 Nobel Prize • Consumption Analysis • Monetary History • Stabilization Policy • No ‘Social Responsibility’ • Monetarism

30. Influential Economists "There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

31. Influential Economists • Monetarism • More money in circulation is inherently inflationary • Authorities should focus on price stability • Gold standard overly restricts the money supply • There is a minimum level of unemployment below which inflation is created

32. Influential Economists Arthur Laffer (1940 - ) • Reagan's Economic Policy Advisory Board • “Father of Supply-Side Economics” • The Laffer Curve • One of four economists advising Donald Trump's 2016 campaign

33. Influential Economists Supply-Side Economics • Recommends lower taxes and deregulation to increase the supply of capital, jobs, labor, and entrepreneurship • Nicknamed “Reaganomics”

34. Influential Economists Laffer Curve • A relationship between economic activity and the rate of taxation that suggests the existence of an optimum tax rate that maximizes tax revenue. • The more an activity is taxed, the less of it is generated. The less an activity is taxed, the more of it is generated.

35. Trash Ball • Class is divided into teams (2 or 3 teams depending on class size • Each team is asked a question. If they answer correctly, they receive 1 point and earn a shot at the basket. • If they answer incorrectly, the next team can steal the question for points. • A correct answer earns a shot at the basket. If made from the center aisle, it is worth 1, 2, or 3 points based on the distance. • If the shot is made from the TV set, it is worth 5 points and another turn. • Only one person on each team can answer the question, and each team member must have had one chance before anyone can get a second chance. • Winner gets 2 bonus points. Ties get 1 bonus point each. Losers get NOTHING.