Schools of Economics

There are two major schools in economic thought: Keynsian and Friedmanistic economics. The difference between the two is how they view government's role in the economy. Keynes, who beilieved that controlling demand was more important than supply, thought that the government should have an active hand in the economy. He thought that the best way to solve an economic problem is to have the government enforce rules and regulations and generally tke charge of the scene. Friedman, on the other hand, thought that managing supplies was more important than demand. He thought that the government should never intervene in the economy. According to Friedman, an economy has natural fluctuations and will eventually right itself after a hard spot. Also, he thought that these fluctuations weed out the weaklings and keep the economy healthy by only allowing the strongest competetors to survive.

One example of a demand side economy is communism. In communism the government decides what to produce and how much of it. In this way, the government controlls demand by producing only certain things. An example of a supply-side economy is the United States. Here there are few controls and the 'invisible hand' of the market guides production.

In my opinion, supply side economies are better. This leaves control in the hands of the masses and allows for the needs of the people to be metdirectly. It also is better for providing competition, which keeps prices low and quality high.

Genomics

When economists use the word 'genomics' they are reffering to an emerging system in the world of economics centered around genetics. They think that genomics will be the new economic system to replace the present one. Formerly, the world was dominated by agrarianism. A few hundred years ago the world saw a shift from farming to industrialism. We are presntly in the age of industrialism. If the new school of economists are right, we are at the end of the age. Soon manufactoring will no longer be the driving force in economics. The new force will be genetic manipulation. We are already seeing the beginning of this: crops are genetically modified to have pesticides, gene therapy has been invented (though is nto yet practical) and scientists are considering genetically modifying animals to produce more food.

Success in this form of economics is the knowledge of genetics. If a particular country is lacking in its knowledge of the genomes of humans and other organic beings, or even knowledge in general, they will fall behind other countries who are more skilled in these areas. For this reason, education will become even moreimportant. If people in a particular country are not educated well enough (especially in genetics), they will not be able to compete with people from other countries. Also, countries who are already behind in education and technology (another important factor) will likely fall even more behind. Education and technology will become a moreimportant part of politics as timegoes on.

Market Value

There are several components of product value. The first and probably the most obvious factor of product value is the utility. The main goal, in theory, of buying is to obtain something to do what you need done. For instance, if you are just starting off in life you will probably need a washing machine. This need creates the reason that you should buy the washing machine, and the product is therefore valuable to you. Needs are not the only thing that creates value, though. Desire also does this in a similar manner. One other thing that determines value for a product is a trend. If something is trendy, and if you desire to be trendy, then you may buy that product. In theory, though, utility should outweigh trends. Trends should not be a very big part of a product's value to a consumer.

Market value is different than product value. Where product value is the value of something for one person, market value is the value of a product for an entire group of people as a whole. This is where trends really come into play. When people buy things based on market value, potentially useless things can be sold. If this is the case, it is likely that that product which was sold was 'cool' or 'trendy'. In other words, other people have it and in order for someone to be considered 'cool' that person must own whatever the product is. An example of this is the .dot com bubble in the 1990s. The internet was a new technology during this period. A multitude of online companies (such as Amazon and ebay) were formed. The share prices for these companies skyrocketed quickly, even though they may have actually been worth exactly nothing. Really the only thing to look at when thinking about a product's market value is how the group as a whole views it. The actual amount that it cost to make or the product's utility matter very little.

Whenever a person makes a financial transaction of any kind, it is important to do research. If that person did not do any research they may not get what they bargained for. Consider the stock market. As for the product value of a stock, its only use is to make money. Stocks generally tend to be rather volatile. This means that they do not usually stay at a constant price; they are always rising and falling. If you were to invest in the stock market, you must do research. This research can be anything from looking at the stock's history (possibly from a graph or a table) to making educated predictions about what will happen with that stock's price (by watching the news for stories concerning the stock). A similar idea must be taken when buying other things, for instance home appliances, but one can also research smaller ticket items if one wants a good deal. In general, if a buyer does not do research he will likely lose money due to the volatility of prices.

When the Future Catches You: Chapter Three

Summary

In the past, the major way to make money is by selling commodities such as gold or food. This has been the case from the time agrarianism began and on through the time of industrialism. Nowadays, according to Juan Enriquez, this is no longer the case. The new way to make lots of money is to be in the idea business. As an example of this, take software companies such as Microsoft. They do not sell a tangible product, but have made billions of dollars over the past decade or two. The key to success, in the idea business, is growth of the company and spreading of the product. When products are easier to improve, their company grows faster. Also, the people are happier when they get better products, which makes the products spread faster (through advertising via word of mouth). There are two ways to make good products (ideas): educate your nation’s people or bring in educated people from other nations. Nations who do not have educated people tend to fall behind economically quite quickly.

Political Application

No less than one third of this chapter is spent comparing several countries to each other. Taiwan is compared with Mexico. Before technology became a major factor in economics, Mexico had a superior economy. This was reversed after Taiwan began to manufacture computer parts and Mexico didn’t. Comparatively, other nations (such as the U.S.) who produced many more computer parts were much bigger than Taiwan economically. Studies by the author show that countries that have high technology capability are more likely to be successful than those who don’t. This idea is highly relevant to politics today. A major topic of discussion is what a presidential candidate intends to do with education in this country. If they succeed in bettering the school system, we will be able to compete in more areas of economics with other countries. For instance, science is a big industry. If this nation was on the cutting edge of technology, we would be able to make and sell advancements in technology.

My Position

Personally, I do not like this new form of economics. This new form is one that puts less emphasis on physical work and more on mental work. In the past, if someone wanted to be prosperous, they advanced themselves by the sweat of their brows. In the future, according to this system, the only thing that you will need to make a good living is the capacity to think abstractly. We are already seeing the foreshocks of this system. Anyone who does manual labor, for instance a construction worker, is looked down upon. In the future, these people will probably make less and less and no one will want to do these jobs. This has serious repercussions. Without people doing the physical work, academics would not be able to do their work. As for my part in this new system, I guess I would have to fit into the academic crowd, because that is what I am good at. I am able to do physical work, but I prefer not to.

Economics

The economy of the future, if it goes the way When the Future catches You says it will, we should focus on things that have little immediate physical application. In other words, we should make innovations in all things theoretical, and let the practical applications come later. Genetic engineering, advanced forms of medicine and data storage devices, among other things, will probably be important in the future. Essentially, if a country wants to be prosperous, it should educate their people in science and math. The first country to make technological advances will be able to make lots of money from those advances.