ECO 108 Lecture Notes - Lecture 5: Invisible Hand, Headache, Price System
Document Summary
How to tie individual behavior to social outcomes- adam smith"s invisible hand. Fundamental economic problem is not enough stuff: overcome scarcity, want people to be happy. Knowledge problem: created/ generated, transmitted, acted upon. Tacit: particular to time and space and to u, little adjustments u make while riding a bike to stay afloat. All this is important because you want to give knowledge to people that may serve you. You want the transmission of info to be personal to make you act on it. The words i have a headache gets transmitted to a coffee farm in costa. Are you better off today than 10 years ago: to ask this question, it"s absolutely insane, no one was better off in thomas jefferson"s time. We now live in inequality: usa produces over 50 times the poorest countries and 15 times typical poor country. Today"s world is characterized by sustained growth: we have seen sustained growth.
