NEO WORLD BIZ ECON SHOW 1: SPOTTING BS - WILLIAM EASTMAN

SEGMENT ONE
Politicians and Talking Heads - BS or Real Stuff?
We can use the pandemic as a great teacher of economics. Around the world and within every country different approaches have been used to deal with the virus. This gives us an unique opportunity to examine the impact of government intervention on business.

Topic 1: What Happened?

• governments seek power and use fear and dependence to gain it
• government policy is double-entry bookkeeping: for every addition to government power has a corresponding reduction in individual freedom
• government views people in two groups - independent and dependent; take from the independent to give to dependent until there are more more horses in the wagon than pulling it
• in business there is no Pause in costs, just revenue

SEGMENT TWO
When Economics Became a Science
Economics were not created or discovered. Adam Smith was the first to analyze it in a systematic way and called it capitalism. Other than a few local examples, most countries were involved in some form of mercantilism where exporting was good and importing bad because of the transfer of wealth.

Topic Two: Development of Economic Models

• Adam Smith was a philosopher first and an economist second
• First work was on the morality of markets
• social order is based on freedom - how do 'good' societies act vs bad
• three basic economic models: market, command, and mixed

SEGMENT THREE
Belief in the Invisible Hand
Exactly what is the invisible hand? It is the unseen forces that move market based economies. Through individual self-interest and freedom of production and consumption, the best interest of the great society is fulfilled because bad actors are nullified.

Topic 3: Market Based Economies

• behavior based, not intentions
• voluntary transactions require accurately and timely information - price: the interaction between supply and demand
• governments role: system structured to penalize lying, use of force, and failure to honor contracts
• intervention beyond here (mixed economy) leads to short-term inefficiencies and long-term destruction

SEGMENT FOUR
Belief in the Sword Hand or the Velvet Fist

Topic 4: Command & Mixed Economies

• central government makes all economic decisions; usually supply based and price is cost plus
• good at removing inequities by leveling down (except for government)
• creative destruction or even continuous improvements impossible; monopolies cannot heal themselves
• Mixed Economies represent less hubris of the elite, but its still there

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