Week 1 Discussion ECN 211 Summer

Our first week of study of macroeconomics has generated a thoughtful and spirited discussion that has generated a list of economic questions/challenges facing the US today. At the left you will see a poll based upon the challenges presented by students in ECN 211 Principles of Macroeconomics online at Mesa CC. Please take a moment and vote for the one issue that you feel is the most pressing. Then, take a moment and post a comment/reply to this posting explaining your reasoning.

Comments and questions

Also, after reading the assigned chapters, I think we have all learned that something is only worth as much as a person is willing to pay for it.

This is a clear conclusion from studying human behavior and an
extension of this point, if person A is willing to pay 5 dollars for an item and person B is willing to pay 2 dollars for an item, who should own the item?



Regarding ethanol - This is a great example of our government
trying to solve one problem, and creating a dozen more.


This is an excellent illustration of the tension between principles 5 and 6. A element in societies that tend to develop and grow is the ability to adjust to mistakes or unintended consequences. Principle 5 that observes that decentralized markets tend to be a good way to resolve questions implies that, when mistakes or errors are made, the
decentralized decision makers in the make can adjust or respond quickly.

We all know that, in spite of the contention of principle 6, that governments are much slower to adjust or react. Recall the governmental action to prohibit alcohol production and consumption in the early 20th century in the US. While it became almost immediately obvious that this action was ineffective and in fact created any number of unintended consequences, it was years before the government adjusted
to correct this mistake.


How likely is it that supply and demand is what is driving up the gas prices?

This is a great question and reveals both an understanding of the economic way of thinking and a sense about how society operates. The answer is clear from both an economic perspective as well as an empirical perspective.

The real question is what are the elements that make up demand and supply and what are the variables that change demand and supply.

I think, that the "political stand point of our government" has almost every effect on the economy. Tax the wealthy, tax the poor. Raise the minimum wage, do not raise the minimum wage. Chapter 6 sums up the answer to your question beautifully. It discusses payroll tax, luxury tax, and whether or not to tax the seller or the buyer. It was
a pretty interesting chapter.

Yes, and it is important to keep in mind an observation about the role of government (which is vital) to the economy. The government can assist in decision making with a clear set of guidelines that protect property, insure compliance with contracts, and allows for an independent and transparent judiciary.


If higher gas prices mean we change the way people think about scare resources, then bring it on.


our price has increased due to the increase in the value of the euro. So, if the euro has increased then that means they are paying more for their gas which, in turn, effects the purchase price for Americans also.


My economic question is do you think the tax rebate checks were a true benefit to our society, or were they merely a ploy to distract us from other issues our nation faces?


I hear a lot of different things coming from China. Is it true that since they have been hording as much of the American dollar that they can, that if they want to dump it all back into the American economy at once, it would completely ruin us?


My question may be a controversial one, but I once heard that the only thing that America produces is weapons and that most everything else is bought from other countries, which pretty much leaves our country dependent on other countries. Is this
true?

I understand utilizing trade with others so you can specialize in a field that yields the highest output for yourself but how does a starting economy grow when it is not good enough at its specialty to really benefit itself or make enough money to purchase its other needs? What do you do if you simply don't have the resources or revenue to grow your economy?


On one hand, Federal oversight may stop the band lending practices from happening in the future, thereby adding stability to the housing community. On the other hand, the government has done few things right when they intervene in the private sector. Either way, some type of policy should be in place if Americans are expected to pay for the lenders mistakes and greed.


How likely is it that supply and demand is what is driving up the gas prices?


I personally believe there is a lot of corruption and wrong doings, not just supply & demand, which is driving the cost of fossil fuels.


I think, that the "political stand point of our government" has almost every effect on the economy. Tax the wealthy, tax the poor. Raise the minimum wage, do not raise the minimum wage. Chapter 6 sums up the answer to your question beautifully. It discusses payroll tax, luxury tax, and whether or not to tax the seller or the buyer. It was a pretty interesting chapter.



If you are interested in my comments or responses to student questions raised during the first week of our summer session class, click on the comments link below.

I look forward to the results of this informal poll.

Role of prices

More on the role of prices:

What Are Just Prices?

Daily Article by Jeffrey A. Tucker
http://www.mises.org/story/2976

We all have strange and contradictory wishes concerning what prices should be. We are outraged at what is happening to the price of gas and food. We don't think they should go up. In real terms, we want them to fall, and they have fallen in the last decade and a half. That's a good thing, right? That's how the world should work.

But housing? Now, that's a different matter. When the prices fall, people freak out. It's like the end of the world. How is it possible that my own home would fall in price?! That's not the way the world should work. Everyone knows that house prices are suppose to go up up up, all the time, without fail, until the end of time.

Same with stocks. We want to open the webpage that lists our portfolios and see the prices higher and higher all the time. When they fall, we flip out and demand justice.

But let's stop and think about how peculiar this is. What kind of theory of the world insists that houses and stocks always go up in price, whereas gas and grain prices always go down? That doesn't really make sense. A price is not set by natural law, nor are price movements intended to follow a preset pattern like the movements of stars. Prices are nothing but exchange ratios — points of agreement between buyer and seller. They reflect many factors, none of them fixed parts of the universe.

Excellent analysis of the role of prices!

Greg