# The Economics Book  ## Metadata - Author: [[DK Publishing]] - Full Title: The Economics Book - Category: #books ## Highlights - reliance on statistics, graphs, and formulas. ([Location 161](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=161)) - rational or irrational behavior ([Location 180](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=180)) - Lionel Robbins. In 1932, he described it in his Essay on the Nature and Significance of Economic Science as “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” ([Location 182](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=182)) - economies ([Location 185](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=185)) - Note: Is this a valid word? - beginning of the so-called market economy. ([Location 191](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=191)) - Note: Was this really the beginning? - Plato and Aristotle thought of economics as a matter of moral philosophy: ([Location 249](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=249)) - mercantilists advocated the taxing of imports. ([Location 264](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=264)) - Economists attempted to measure economic activity and described the working of the system, rather than looking only at moral implications. ([Location 271](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=271)) - physiocrats analyzed the flow of money around the economy and effectively produced the first macroeconomic (whole-economy) model. ([Location 273](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=273)) - John Locke (1632–1704), however, spoke out for individual rights, saying that as God gave us dominion over our own bodies, we also have dominion over the things we make. The German philosopher Immanuel Kant (1724–1804) later argued that private property is a legitimate expression of the self. ([Location 307](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=307)) - governments of every country in the world reserve the right to override private ownership when this is deemed necessary, ([Location 317](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=317)) - a staunchly capitalist nation, ([Location 318](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=318)) - Note: Not as staunchly capital list as we clean. - prices ([Location 330](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=330)) - Note: Price not value. - Market economists consider the marketplace to be the only way to establish price, as nothing—not even gold—has an intrinsic value. ([Location 336](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=336)) - “just price,” ([Location 342](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=342)) - decent profit, ([Location 343](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=343)) - excessive profiteering, ([Location 343](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=343)) - Money is transferable and deferrable—the ([Location 386](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=386)) - Note: So are other goods. - value, ([Location 388](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=388)) - Note: Price - Commodity money has intrinsic ([Location 392](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=392)) - Note: No no a thousand times no. See this quote earlier in the book: "Market economists consider the marketplace to be the only way to establish price, as nothing—not even gold—has an intrinsic value." - Since 1971, the value of a dollar has no longer been convertible to gold and is set entirely by the US Treasury, ([Location 396](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=396)) - Note: The price for money, like all commodities, is determined in the market through exchange. - three economic concepts ([Location 440](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=440)) - first is “economies of scale.” ([Location 441](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=441)) - The second is “diversification of risk.” ([Location 443](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=443)) - The third concept is “asset transformation.” ([Location 445](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=445)) - “borrowing short, and lending long.” ([Location 447](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=447)) - Note: When did this practice become popular? - As a result banks need to be regulated, ([Location 481](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=481)) - Note: Oh, need to be regulated? - Leverage, or borrowed money, lay at the heart of the crisis. ([Location 489](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=489)) - Note: No mention of monetary expansion. - the quantity theory of money has led to the notion that money is neutral in its effect on the economy. ([Location 557](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=557)) - Thomas Mun, insisted that what matters is not the fact that payments are made abroad, but how trade and payments finally balance out. ([Location 618](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=618)) - left free, Smith insisted, the market would always grow to enrich all countries eventually. ([Location 624](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=624)) - we take it for granted that the economy can be measured, and its expansions and contractions accurately quantified. ([Location 653](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=653)) - William Petty. ([Location 654](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=654)) - Statistics are now at the heart of economics. ([Location 668](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=668)) - joint-stock companies ([Location 698](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=698)) - World Bank reported that growth in the agricultural sector contributes more to poverty reduction than growth in any other sector. ([Location 728](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=728)) - François Quesnay (1694–1774) ([Location 738](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=738)) - physiocrats tried to think ([Location 745](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=745)) - Mercantilists thought the state should behave like a merchant, ([Location 753](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=753)) - The physiocrats took the opposite view: they argued that the economy was naturally self-regulating ([Location 755](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=755)) - Pierre de Boisguilbert. ([Location 759](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=759)) - making consumption the driving force in the economy. ([Location 760](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=760)) - Note: More accurately, consumption provides the driving purpose for an economy. Production provides the driving force for an economy. - rich (who hoard it). ([Location 762](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=762)) - Note: Hoarding by the rich represents a false, but popular, premise. - Léon Walras, becoming one of the foundations of economic theorizing. ([Location 793](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=793)) - Quesnay’s approach to quantifying economic laws makes his Economic Table possibly the first empirical macroeconomic model. ([Location 793](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=793)) - $2 million of corn, ([Location 797](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=797)) - Note: No such thing as $2 million of corn. Can you have bushels of corn, tons of corn, ears of corn, but money does not represent a measure of corn. - Keynes showed how government spending could stimulate further spending in a “multiplier effect.” ([Location 813](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=813)) - public ([Location 850](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=850)) - demand for these goods, ([Location 853](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=853)) - Note: Demand means that someone will pay for it. - non-excludability, ([Location 861](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=861)) - non-rivalry, ([Location 862](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=862)) - John Locke and David Hume ([Location 895](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=895)) - approach the subject initially as one of moral philosophy. ([Location 895](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=895)) - “classical” economics. ([Location 901](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=901)) - division of labor and its contribution to growth, ([Location 903](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=903)) - what factors were involved in giving value to goods. ([Location 903](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=903)) - David Ricardo ([Location 909](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=909)) - A staunch advocate of free trade, ([Location 909](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=909)) - Jean-Baptiste Say, who first described the relationship between supply and demand in a market economy. ([Location 915](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=915)) - John Stuart Mill ([Location 936](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=936)) - the idea of Homo Economicus is referred to as rational choice theory. ([Location 939](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=939)) - conflicting long- and short-term goals. ([Location 949](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=949)) - Note: Time preference. - The idea of “spontaneous order” was not new. It was proposed in 1714 by the Dutch writer Bernard Mandeville in his poem The Fable of the Bees ([Location 991](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=991)) - Smith believed that governments should not interfere with commerce, ([Location 995](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=995)) - In Smith’s view government did have an important role, supplying defense, justice, and certain “public goods” that private markets were unlikely to provide, such as roads. ([Location 999](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=999)) - Karl Marx would predict that the market leads to revolution. ([Location 1003](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1003)) - demand for a product exceeds its supply, ([Location 1006](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1006)) - Note: There's something wrong with this phrasing. - The Use of Knowledge in Society, the Austrian economist Friedrich Hayek ([Location 1008](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1008)) - A central planner, Hayek said, could not hope to gather up so much dispersed information. ([Location 1010](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1010)) - "Consumption is the sole end and purpose of all production." Adam ([Location 1024](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1024)) - monopolies occurring under the mercantilist system, ([Location 1026](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1026)) - the rate of interest. ([Location 1041](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1041)) - Note: A rather indefinite reference. - The highly unequal outcomes of today’s market system are a long way from what Smith envisioned. ([Location 1047](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1047)) - Note: But, is it. - the division of ([Location 1050](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1050)) - the accumulation of capital, ([Location 1055](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1055)) - (there is more growth with paper money than with gold), ([Location 1056](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1056)) - Note: Oh? - caused by growing inequality during booms. ([Location 1510](https://readwise.io/to_kindle?action=open&asin=B00Q9N8P9A&location=1510))