Post Lesson 26/Pre Lesson 27

All,

I hope today was a good way to wrap up this section while having some Friday fun. To prep for the GR I'd really encourage focusing on the objectives but also re-reading my blog re-caps. The major theme encapsulated in one line to me is: prices~wages~interest rates and differences in prices-->trade.

Beyond that some good things to think about:

1. wages tell us something about productivity. if someone is more productive they should rightfully be paid more because they (as a productive worker) are a scarce resource which others would love to have.
• as a sub point...the more expensive a person is to do a given job, the greater returns to automating that process if possible
• since the above point is true, trying to legislate higher wages may eventually lead to fewer jobs via automation which suddenly becomes feasible with higher wages
2. statistics can be deceiving...as unemployment stats sometimes are
3. screwing with wages is like screwing with prices....what are the effects?
4. trade is useful because it allows all of us to lower our costs. this is true whether trade is between individual persons or between entire countries
• limiting trade only forces costs to be higher than they could otherwise be
• there may be instances where trade restrictions are important but what happens with those kinds of arguments (ie claiming it as a national security requirement)?
• just because you can pay someone less does that mean you will employ them? no! it would be "cheaper" for an engineering firm to hire the average worker at mcdonalds but this lower cost would result in a drastically lower benefit as well. sometimes the cost is not all that matters. (see the low-wage myth in sowell)
5. we all have a comparative advantage because our costs are ALWAYS relative.
6. Investments come in all sorts of shapes and sizes so to speak. All of them have a purpose, even speculation, in allocating the use of money today and money tomorrow. Interest rates are the prices that allocate the use of this scarce resource.

There is so much more that could be added but hopefully this gives all of you a start on studying. I hope you can relax a bit this weekend and I hope to see at least some of you around the tailgate on Saturday!