Economics in great measure tries to uncover the processes that influence how people's lives come to what they are and identify ways to influence those processes so as to improve the prospects of those who are highly constrained in what they can be and do.
Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world.
Accumulation of manufacture capital, human capital , and the production diffusion and the use of new scientific and technological ideas each contributing positively to the contribution of the others lead to economic growth.
THE LESSON:- The art of economics consists of looking not merely at the immediate but at the longer effects of any act or policy, it consists of tracing the consequences of that policy not merely for one group of people but for all groups.
1. THE BLESSING OF DESTRUCTION( War)
- Mere inflammation, i.e,the mere insurance of more money, with the consequence of higher wages and price may look like creation of more demand but in terms of the actual production and exchange of real things it's not.
- The belief that a genuine prosperity can be brought about by a replacement demand for things destroyed or not made during the war is nonetheless a palpable fallacy.
- Demand and supply are merely two sides of the same coin; same thing looked at from different perspectives .
- Whenever business is increased in one direction, it must be correspondingly reduced in another.
- Effective economic demand requires not merely need but corresponding purchasing power.
2. PUBLIC WORKS MEAN TAXES:-
- There is no more persistent and influential faith in the world today that the faith in government spending.
- Everything we get, outside the free gifts of nature , must in some way be paid for.
- Every shilling of government spending must be raised through a shilling of taxation.
- When providing employment becomes the end, need becomes a surbodinate consideration.
3. TAXES DISCOURAGES PRODUCTION:-
- The great burden of income taxes is imposed on a minor percentage of a nation's income.
- The larger the percentage of the national income taken by taxes, the greater the deterent to private production and employment.
- When the total tax burden grows beyond a bearable size, the problem of deriving taxes that will not discourage and disrupt production becomes insoluble.
4. CREDIT DIVERTS PRODUCTION:-
- private loans will utilize existing resources and capital far better than government loans.
- The government can give no financial help to business that it does not first or finally take from.
5. THE CURSE OF MACHINERY:-
- Among the most viable of all economic delusions is the belief that machines on net balance create unemployment.
- Those who cannot remember the past are codemned to repeat it.
- On net balance, machines, technological improvements, economies, and efficiency do not throw men out of work.
- There is also an absolute sense in which machines may be said to have enormously increased the number of jobs
- The real result of machine is to increase production, to raise the stars and of living and to increase economic welfare.
- There is no limit to the amount of work to be done as long as any human need or wish that work could fill , remains unsatisfied. (Spread - the work schemes)
6. THE FETISH OF FULL EMPLOYMENT:-
- The economic goal of any nation , as of any individual is to get the greatest result with the least effort.
- Our mere objective is to maximize production.
- The fears of unemployment arise because people look at only one side of the process.
- When we can find no better argument for the retention of any group of officeholders than that if retaining their purchasing power, it is a sign that the time has come to get rid of them.
- Production is the end, employment merely the means . We cannot continuously have the fullest production without full employment.
- Everywhere the means is erected into the end, and the end itself is forgotten.
- The progress of civilization has meant the reduction of employment, not it's increase.
- The problem of distribution on which all the stress is being put today, is after all more easily solved the more there is to distribute.
- We can clarify our thinking if we put our chief emphasis where it belongs- on policies that will maximize production.
7. WHO'S 'PROTECTED' BY TARIFFS?
- In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who selk it cheapest .
- It is the maxim of every prudent master of a family , never to make at home what it will cost him more to make than to buy.
- The lobbyist for tarrif protection are continually putting forward arguments that are not factually correct.
- In order that one industry might grow or come into existence, a hundred other industries would have to shrink.
- Whether the net effect of the tarrif is to lower money wages or to raise money prices will depend on the monetary policies that are followed
- It is not merely that all visible gains are offset by less obvious but not less real losses.
- Clarity and cander of thinking compels us to see and acknowledge that some industries are right when they say that removal of the tarrif on their product would throw them out if business and throw their workers out of jobs.
8. THE DRIVE FOR EXPORTS:-
- Exceeding only by the pathological dread of imports that affects all nations is a pathological yearning for exports.
- An export subsidy is a clear case of giving the foreigner for nothing by selling him goods for less than it costs us to make them.
- It is not wise to bestow charity on foreign people's under the impression that one is making a hardheaded business transaction purely for one's own selfish purposes.
9. 'PARITY' PRICES:-
- The argument for 'parity' can be roughly be put as follows; Agriculture is the most basic and important of all industries. It must be preserved at all costs, morover, the prosperity of everyone else depends on the prosperity of the farmer.
- The joint system means merely that famer A and industrialist B both profit at the expence of forgotten man C.
- The idea that an expanding economy implies that all industries must be simultaneously expanding is a profound error. In order that a new industry may grow fast enough, it is necessary that some old industries should be allowed to shrink or die.
10. HOW THE PRICE SYSTEM WORKS:-
- It is precisely from the persistent and lazy habit of thinking only of some particular industry or process in isolation that the major fallacies of economics form.
- The world is not ruled by the engineers, thinking only of production but by businessmen, thinking only of profit .
- Prices are fixed through the relationship of supply and demand and in turn affect supply and demand.
- Demand is determined by how intensely people want a commodity and what they are willing to offer in exchange of it. This every departure from the desired sped itself sets in motion the forces that tend to correct the deperture.
- It has been calculated that the total labour and capital dumped into prospecting for gold and oil has exceeded the total value for gold or oil extracted.
- The artificial shortage built up this year by witholding part of a crop from the market mean artificial surplus the next year .
- In nearly every effort to stabilize the price of a commodity, the interest of the producers have been put first.
11. GOVERNMENT PRICE FIXING:-
- The consequence of fixing a maximum price of a particular commodity would be to bring about the shortage of that commodity.
- Rationing merely limits the demand without also stimulating the supply as a higher price would have done.
- The real cause for price fluctuation is either a scarcity of goods or a surplus of money.
- Not only must there be at least as much loss as gain from this political manipulation of prices , there must be a great deal more loss than gain, because price fixing discourages and disrupts employment and production.
Insightful piece, any other recommendations on economics?
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