Macroeconomics: Unit 3, Determinants of Economic Growth

CoursesMacroeconomics
LanguageEnglish Language

Transcript

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it all work And nobody cares that the engineers are

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rude arrogant and you know unpaved Well the measure here

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at this company is solely about whether the product works

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or not Same deal If you looked at the economics

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of ah well ah heart surgery practice With a dozen

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cutters and three dozen nurses and five support people nobody

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cares what their personalities were like They just wanna live

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to see another sunrise And you know another Kardashian episode

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The opposite side of the world is the rial tour

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industry or real estate sales industry Pretty dumb people Pretty

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dumb Well pretty anyway some are sharks Some are just

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in the right place at the right time and a

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hot real estate market and they make bank But being

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neurosurgeon smart is not a useful skill Bathing matters in

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the real estate industry Lack of arrogance matters Aesthetics matter

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being nice and able to take abuse from idiot customers

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who are always angry is arguably the most important skill

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So the factors of production of a successful real estate

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sales company are vastly different from will Also that of

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a semiconductor architecture company right Well at a much simpler

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level US Start up Berry Picking business would require a

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lot of land and a lot of labor Human labor

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for now you know until the robot overlords takeover the

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picking But if we're picking Berries in the woods while

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we don't need a lot of capital we just need

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some bug spray and a few buckets to put the

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Berries in And maybe a few signs toe advert you

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guys But well that's about it Now if we start

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to get a lot of business and want to start

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selling our Berries in supermarkets will have to invest some

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more capital probably a factory or two to sort of

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package The Berries will need trucks to deliver them to

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Stores will have to hire a creative team to come

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up with a mascot to make kids think varies are

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somehow cool and so on and so forth Well the

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core asset Well the ability to attract and retain human

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pickers Willing tto work for minimum wage or less and

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not steal eat or uh you know take a dump

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on the Berries In the process humans are responsible for

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all the necessary knowledge skills and technical expertise to pick

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Berries The Berries aren't gonna pick and sell themselves you

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know especially if they're unionized And human Capital also includes

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the motivation required to start in complete The task is

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opposed to just binge watching Brillo pad Bill cartoons online

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Well in short what people bring into the workplace actually

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brings in that economic value or their economic that So

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if we hire Sherry here to pick Berries and she

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picks 13 pales a day while she's bringing value to

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us through her work we pay her 12 bucks an

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hour She produces Berries that sell for 30 bucks an

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hour essentially after costs of packing shipping ensuring an allocations

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for spoilage of some $10 an hour to give us

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hopefully something like eight bucks an hour in pretax contribution

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of profits for her labour All right well that's spoilage

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and or damage thing is a big deal in this

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industry as well If half of Sherry's 13 pales contains

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squashed unsellable Berries well then she's less valuable than Jerry

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who picks the berry who picks eight pails of perfect

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Berries because well Sherry's not producing as much and it

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takes time to sort out the good Berries from the

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bad right But if Jerry is unreliable and doesn't always

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show up well then suddenly Sherry becomes more valuable once

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again because you know a bird in the hand's worth

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two in the Bush assuming it's a very bush measuring

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the value of human capital is more than a little

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tricky here since not everyone has the same skills the

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same knowledge or the same Dr Politics alert Well the

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world is highly divided on this issue How to treat

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people of lesser talent The left over generally feels that

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all workers should be paid the same Whether they're awesome

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or mediocre at picking the right leans toward workers on

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Lee being paid piecemeal for their productivity So if someone

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generates $1,000,000 in profits for the company in a year

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well maybe they make 20% of that number or 200

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grand A big payday for a berry picker But you

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can imagine how well that it's it with union picking

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Berry groups tohave rock stars at picking who are making

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that kind of money when the average Joe Picker makes

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only 1/5 of that number Yeah if we want to

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get crazy and really specific and who we totally d'oh

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we should note that human capital includes social capital We

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aren't talking about popularity contest here but rather an agreed

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upon system of behavior by members of a social group

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rules laws guidelines expectations Well without those Super Structure's chaos

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rules And we fall into the great berry picking rebellion

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of 2022 where children being exploited for cheap labor rise

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up and raise the berry bushes to the ground Yeah

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the berry picking corporation probably wants to avoid that situation

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right Well specifically social capital means interpersonal trust relationships that

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work and responsibilities that are respected Teamwork makes the dream

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work right Well Businesses can't operate without some form of

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social capital because it's the guidelines of social capital that

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makes sure people pay for the goods and services they

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purchase and that you know keep businesses from selling poison

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Berries too unsuspecting naive buyers Well except maybe in fairy

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tales where poison fruit is well a huge stable On

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the other hand physical capital brings far less confusion And

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sherry and Jerry since physical capital ain't human way We

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don't have to worry about six days or personal drama

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or spitting on the Berries Thes human made goods are

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the computers The tools the buildings the robots and the

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technology we used to manufacture the goods and provide the

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services for Berries are physical Capital is pretty simple It's

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just buckets and a sink toe wash them in before

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they hit the sale table The more complex the product

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or service while the more physical capital will probably need

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All right So now let's say that we noticed that

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about 50% of Barry's remain unpick because the workers can't

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physically reach them Well that's a lot of money we're

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losing And remember we can't yell pick more Berries and

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just have it magically happen right So then we have

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a choice We can increase human capital try and throw

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more workers at the problem which is to say literally

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throw people at hard to reach Berries and hope they

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land safely Or we can increase physical capital by investing

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in new technology like in this case hiring more people

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won't make the barriers easier to re age So we

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need physical capital well weakened by special remote controlled hummingbird

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robots that can reach the hard to reach Berries and

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pick up With the introduction of this new physical capital

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our workers are now able to increase their productivity In

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short increasing physical capital can increase individual productivity but everything

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has its limits Right Physical capital can depreciate Do the

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wear and tear upgrades air probably required in technology gets

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outdated quickly Right Humans are just a susceptible to depreciation

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which curves because of technological advances Or they have a

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lack of training And there's getting injured Or you know

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they have a mental decline and just can't function Yeah

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well technology is constantly developing and can improve efficiency to

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replace two Appreciate it Old tech and humans right Think

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about their very picking robot there Those hummingbirds well their

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innovations that improve the very picking process if they're in

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demand while they can add to a nation's economic growth

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If we have like millions of them around picking Berries

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all they want Well what happens if the best human

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picker costs all in 45 grand a year toe higher

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pay their pension and medical benefits and bonus time and

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deal with them being sick and whatever else and that

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human picker produces 10,000 bushels of varies in a year

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But then a robot comes in which costs 200 grand

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to buy and five grand a year to run and

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maintain ensure Well then it produces 25,000 bushels a year

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Well the human labour than likely just fades away is

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no longer needed All right Another alert Politics alert Yep

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What do we do with those laborers when the robots

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come along and replace them Well lots of journalists and

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politicians suggest that we should heavily tax robot picked Berries

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and or their equivalents Business owners then suggest that we

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should offer consumers a choice Consumers can pay $5 a

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crate for human picked Berries or reflecting the cheaper cost

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of the robot picking of the Berries Consumers could pay

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$4 a crate for those robot picked Berries and that

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way that consumer decides if they choose to donate a

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dollar a crate so that human pickers remain employed or

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not Right Leave it to the consumers The voters well

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more or less Our American farm subsidies have made this

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choice as taxpayer Dollars are donated to farms in the

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form of our government guaranteeing purchase of wheat and corn

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and whatever else we produced when American Farm simply can't

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compete with low human rights and pollution interested farms overseas

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or at least over borders there Yeah So how does

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human Capital then stay relevant in the face of all

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this new technology competing against it Well education plays a

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huge part right Not to say that we all have

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to race out during tons of degrees although that's kind

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of cool can But people who have the skills and

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knowledge required by the economy contribute to the economy Yeah

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there are a few arguments on this one and not

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every economist degrees Some say that education is simply proof

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that one has ability and nothing more Yeah we know

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a lot of really educated people Others say that it's

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reason for the government to invest in education way Need

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more English majors Yeah not but we aren't going to

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hop on a political soapbox here We're on an economic

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one already and it's a pretty good one so we're

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not moving from it In the business world employers who

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invest in training their employees tend to have more productive

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ones But at what cost And since economics is ultimately

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about incentives If investing in training means improved productivity well

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then the improvement is an incentive for the company to

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keep investing in its workers if the investment pays off

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For example if we learn that training our berry picking

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employees can result in Mohr and better Berries picked well

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then we'll spend the time and money required because it'll

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benefit our bottom line in the end if it's not

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that expensive to train them and they really become a

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10% more productive for taking a day off and learning

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how to pick Berries carefully right Okay So quick Recap

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Human and physical labor are two factors that make the

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production of all goods and services possible right Human physical

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capital without humans to bring in the knowledge skills and

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motivation the machines whatever sit unused or run below capacity

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the end result would be lower or no production lower

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quality of goods and a lot of going out of

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business sign In addition a human of physical capital and

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economy needs our Andy or research and development and technology

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Generally speaking to grow well RND helps companies come up

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with new technologies and processes and applications which ultimately make

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production easier faster cheaper Remember that technology is not just

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the computers or the tools It's the knowledge of how

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to use them well And on top of that education

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in the sense of at least training for practical things

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on the job also make our workforce more efficient which

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can all also lead to economic growth Or at least

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we can hope that it does So yeah those are

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determinants Let's hope economically at least we're growing for a 00:12:29.496 --> [endTime] while