Rousseau, Locke, Smith & Pinker: Key Economic and Social Concepts

natural inequality (rousseau)

differences we born with (age, strength)

moral inequality (rousseau)

differences society has made (status, wealth, power)

human in the state of nature (rousseau)

solitary, peaceful, guided by empathy. does not compare or compete.

golden age (rousseau)

small communities before big property. cooperation to live together, but not a fight for status and power yet.

metallurgy and agriculture (rousseau)

tech+farming -> surplus -> private property -> comparisons/status

corruption/inequality (sandel)

putting price on a good can change its meaning. when we can sell everything, only rich have better access to basic civic goods (schools, justice, etc)

market economy (sandel)

system where prices/production are set by supply and demand (advances health and prosperity)

market society (sandel)

commodification of everything. market thinking influences all aspects of life (education, health, social)

conscious capitalism (mackey)

firm needs purpose beyond profit to create value for all stakeholders

customers, workers, suppliers, community, environment, shareholders

stakeholders

public debates (sandel)

need debate on values to decide where market principles should apply. need moral/relig influence in debates. market thinking can corrupt social practices/goods (health, education)

labor theory of property (locke)

we own labor, and mixing it with natural resources turns property private. should leave enough and as good for others

natural rights (locke)

life, liberty, property are rights humans born with that gov should protect

private property (locke)

mixing labor with resources makes them your resources

common good (locke)

overall well being of community

invisible hand (smith)

ppl driven by own desires for profit make decisions about what to produce/how much to produce/how to produce. leads to unintended collective societal benefits bc of more efficient distribution of resources. shows how market naturally guides economic activity to prosperity and gov intervention is not needed.

theory of growth (smith)

division of labor, free trade, and owning capital needed for efficiency

increase in total production/income over time

problem of spoilage (locke)

morally bad to hoard extra resources or let them spoil and go to waste. BUT money can store value by investing and does not spoil, so goes against locke's point.

money (locke)

allows for accumulation of wealth far beyond what one can directly use.

rational individualism (pinker)

ppl use reason, exchange, and rules to solve problems and reduce violence

feudalism

pre-market system of lords and serfs, inherited status, power based on land

market size (smith)

small market means less specializations

socialism

collective/public ownership of major means of productions

free market

minimal gov interference. outcomes guided by competition and prices.

protectionism

policies (tarrifs) that shield domestic production and can trigger retaliation

trade liberalization

reducing barriers to trade (can create winners and losers)

Cold War / "The Wall"

political division (capitalist vs communist) that restricted trade/flow

nexus of 6 phenomena (friedman)

tech, finance, trade, supply chains, information flow, geopolitics

lexus and the olive tree (friedman)

tension between modernization/wealth (lexus) and identity/communtiy (tree)

winners and losers

globalization raises global GDP but not evenly, which produces ____

cobalt mining

global supply-chain ethics vs efficienecy

positives of globalization

scale, lower prices, innovation

negatives of globalization

dislocation, inequalities

tech/housing bubbles

asset prices run ahead of fundamentals and then crash (dot-com, 2008 housing)

K-Shaped Economy

one group recovers fast while others fall behind. creates inequality.

draining the pool

groups block public goods if they benefit other people. everyone loses.

brilliance bias

An implicit bias that men are considered more knowledgable, objective, and innately talented

college admissions scandal

wealth gaming merit

credentialism

reliance on degrees/titles to judge worth

GNP (Gross National Product)

total value of goods/services produced by a nation's residents (includes income from abroad)

relative income

your income compared to others

equality of outcome vs oppurtunity

same results for all vs same starting chances/rules for all

five discoveries/paths to prosperity (mcghee)

policy/collective step that broaden shared prosperity

natural price (smith)

long term price that includes production costs, etc

market price (smith)

price based on availability and other factors

effectual demand (smith)

level of demand that shows real intention to buy from people who can afford

steve pinker main points

Wealth has causes, poverty is the default, wealth is created (through knowledge and innovation), no finite amount of wealth is in the world.

The Great Escape (pinker)

19th century surge in GDP and general living standards as a result of industrialization and intellectual revolutions

The Great Convergence (pinker)

Developing countries have grown at an exponential rate, closing the gap between them and fully established or developed nations.

Lump Fallacy (pinker)

mistaken idea that wealth is static and can only be redistributed, not created.

Flat World Platform (friedman)

technology foundation enabled individuals and entities to connect more easily and removes global barriers

Dell Theory of Conflict Prevention (friedman)

Countries involved in the same supply chain will not engage in with each other.

General Purpose Technology

Technology or innovations that affect almost every sector (business, medicine, etc.) Ex: AI

Creative Destruction

Inconsistent industry changes thanks to innovation that affect jobs. Can cause short term negative effects and speculation but long term it creates jobs and new industries.

Wilkinson points

Countries with greater wealth inequality have more obesity, teenage births, imprisonment, mental illness,etc. Inequality leads to anxiety and stress.

Stiglitz points

Inequality in the US is a result of unfair politics that favor deregulation and the rich. Inequality leads to decreased opportunity, misallocation of talent, decreased social mobility. Solutions are to eliminate tax loophole, salary cap.

Rent-Seeking (stiglitz)

activities undertaken by individuals or firms to influence public policy in a way that will increase their incomes. (ex: lobbying to get more subsidies or taxpayer $)

Collier points

Purpose of business is to maximize shareholder value, less community initatives. CEOS are becoming more short-term.

Michael Porter Ted Talk

NGOs, GOV, and social orgs can't make large differences bc they lack scalability. Businesses must prioritize dual action (social problems and value).

B-Lab

a non-profit organization that assesses a corporation's social and environmental performance standards

Vertical Integration

Practice where a single entity controls the entire process of a product, from the raw materials to distribution