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Macroeconomics: Unit 3, Determinants of Economic Growth 0 Views
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Transcript
- 00:03
macro economics Allah shmoop determinants of economic growth All right
- 00:09
different businesses demand different skill sets in order to be
- 00:12
successful at a complex semiconductor architecture company All that matters
- 00:16
is that the circuit thingy there works The electrons flow
- 00:21
is they're supposed to flow in The engineer's well made
Full Transcript
- 00:23
it all work And nobody cares that the engineers are
- 00:25
rude arrogant and you know unpaved Well the measure here
- 00:30
at this company is solely about whether the product works
- 00:34
or not Same deal If you looked at the economics
- 00:36
of ah well ah heart surgery practice With a dozen
- 00:40
cutters and three dozen nurses and five support people nobody
- 00:44
cares what their personalities were like They just wanna live
- 00:48
to see another sunrise And you know another Kardashian episode
- 00:52
The opposite side of the world is the rial tour
- 00:55
industry or real estate sales industry Pretty dumb people Pretty
- 01:01
dumb Well pretty anyway some are sharks Some are just
- 01:06
in the right place at the right time and a
- 01:07
hot real estate market and they make bank But being
- 01:11
neurosurgeon smart is not a useful skill Bathing matters in
- 01:16
the real estate industry Lack of arrogance matters Aesthetics matter
- 01:22
being nice and able to take abuse from idiot customers
- 01:27
who are always angry is arguably the most important skill
- 01:31
So the factors of production of a successful real estate
- 01:34
sales company are vastly different from will Also that of
- 01:38
a semiconductor architecture company right Well at a much simpler
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level US Start up Berry Picking business would require a
- 01:45
lot of land and a lot of labor Human labor
- 01:48
for now you know until the robot overlords takeover the
- 01:51
picking But if we're picking Berries in the woods while
- 01:54
we don't need a lot of capital we just need
- 01:56
some bug spray and a few buckets to put the
- 01:58
Berries in And maybe a few signs toe advert you
- 02:01
guys But well that's about it Now if we start
- 02:04
to get a lot of business and want to start
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selling our Berries in supermarkets will have to invest some
- 02:09
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
- 02:20
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
- 02:34
on the Berries In the process humans are responsible for
- 02:37
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
- 02:43
know especially if they're unionized And human Capital also includes
- 02:47
the motivation required to start in complete The task is
- 02:51
opposed to just binge watching Brillo pad Bill cartoons online
- 02:56
Well in short what people bring into the workplace actually
- 02:59
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
- 03:37
squashed unsellable Berries well then she's less valuable than Jerry
- 03:42
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
- 03:50
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
- 03:56
show up well then suddenly Sherry becomes more valuable once
- 04:00
again because you know a bird in the hand's worth
- 04:03
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
- 04:20
people of lesser talent The left over generally feels that
- 04:25
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
- 04:37
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
- 05:09
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
- 05:24
of 2022 where children being exploited for cheap labor rise
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up and raise the berry bushes to the ground Yeah
- 05:33
the berry picking corporation probably wants to avoid that situation
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right Well specifically social capital means interpersonal trust relationships that
- 05:43
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
- 05:53
social capital because it's the guidelines of social capital that
- 05:57
makes sure people pay for the goods and services they
- 06:00
purchase and that you know keep businesses from selling poison
- 06:04
Berries too unsuspecting naive buyers Well except maybe in fairy
- 06:08
tales where poison fruit is well a huge stable On
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the other hand physical capital brings far less confusion And
- 06:16
sherry and Jerry since physical capital ain't human way We
- 06:20
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
- 06:26
the computers The tools the buildings the robots and the
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technology we used to manufacture the goods and provide the
- 06:32
services for Berries are physical Capital is pretty simple It's
- 06:36
just buckets and a sink toe wash them in before
- 06:38
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
- 06:50
physically reach them Well that's a lot of money we're
- 06:52
losing And remember we can't yell pick more Berries and
- 06:56
just have it magically happen right So then we have
- 06:59
a choice We can increase human capital try and throw
- 07:03
more workers at the problem which is to say literally
- 07:06
throw people at hard to reach Berries and hope they
- 07:09
land safely Or we can increase physical capital by investing
- 07:14
in new technology like in this case hiring more people
- 07:18
won't make the barriers easier to re age So we
- 07:20
need physical capital well weakened by special remote controlled hummingbird
- 07:25
robots that can reach the hard to reach Berries and
- 07:28
pick up With the introduction of this new physical capital
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our workers are now able to increase their productivity In
- 07:34
short increasing physical capital can increase individual productivity but everything
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has its limits Right Physical capital can depreciate Do the
- 07:44
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
- 07:55
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
- 08:07
about their very picking robot there Those hummingbirds well their
- 08:11
innovations that improve the very picking process if they're in
- 08:14
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
- 08:23
picker costs all in 45 grand a year toe higher
- 08:27
pay their pension and medical benefits and bonus time and
- 08:31
deal with them being sick and whatever else and that
- 08:34
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
- 08:41
to buy and five grand a year to run and
- 08:43
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
- 08:52
no longer needed All right Another alert Politics alert Yep
- 08:57
What do we do with those laborers when the robots
- 09:00
come along and replace them Well lots of journalists and
- 09:04
politicians suggest that we should heavily tax robot picked Berries
- 09:09
and or their equivalents Business owners then suggest that we
- 09:13
should offer consumers a choice Consumers can pay $5 a
- 09:17
crate for human picked Berries or reflecting the cheaper cost
- 09:22
of the robot picking of the Berries Consumers could pay
- 09:25
$4 a crate for those robot picked Berries and that
- 09:29
way that consumer decides if they choose to donate a
- 09:33
dollar a crate so that human pickers remain employed or
- 09:37
not Right Leave it to the consumers The voters well
- 09:40
more or less Our American farm subsidies have made this
- 09:43
choice as taxpayer Dollars are donated to farms in the
- 09:46
form of our government guaranteeing purchase of wheat and corn
- 09:50
and whatever else we produced when American Farm simply can't
- 09:53
compete with low human rights and pollution interested farms overseas
- 09:58
or at least over borders there Yeah So how does
- 10:02
human Capital then stay relevant in the face of all
- 10:04
this new technology competing against it Well education plays a
- 10:09
huge part right Not to say that we all have
- 10:11
to race out during tons of degrees although that's kind
- 10:14
of cool can But people who have the skills and
- 10:16
knowledge required by the economy contribute to the economy Yeah
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there are a few arguments on this one and not
- 10:22
every economist degrees Some say that education is simply proof
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that one has ability and nothing more Yeah we know
- 10:29
a lot of really educated people Others say that it's
- 10:33
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
- 10:41
hop on a political soapbox here We're on an economic
- 10:44
one already and it's a pretty good one so we're
- 10:46
not moving from it In the business world employers who
- 10:48
invest in training their employees tend to have more productive
- 10:52
ones But at what cost And since economics is ultimately
- 10:56
about incentives If investing in training means improved productivity well
- 11:00
then the improvement is an incentive for the company to
- 11:02
keep investing in its workers if the investment pays off
- 11:06
For example if we learn that training our berry picking
- 11:09
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
- 11:15
benefit our bottom line in the end if it's not
- 11:17
that expensive to train them and they really become a
- 11:20
10% more productive for taking a day off and learning
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how to pick Berries carefully right Okay So quick Recap
- 11:28
Human and physical labor are two factors that make the
- 11:31
production of all goods and services possible right Human physical
- 11:35
capital without humans to bring in the knowledge skills and
- 11:38
motivation the machines whatever sit unused or run below capacity
- 11:42
the end result would be lower or no production lower
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quality of goods and a lot of going out of
- 11:47
business sign In addition a human of physical capital and
- 11:50
economy needs our Andy or research and development and technology
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Generally speaking to grow well RND helps companies come up
- 11:58
with new technologies and processes and applications which ultimately make
- 12:02
production easier faster cheaper Remember that technology is not just
- 12:07
the computers or the tools It's the knowledge of how
- 12:10
to use them well And on top of that education
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in the sense of at least training for practical things
- 12:16
on the job also make our workforce more efficient which
- 12:20
can all also lead to economic growth Or at least
- 12:23
we can hope that it does So yeah those are
- 12:25
determinants Let's hope economically at least we're growing for a 00:12:29.496 --> [endTime] while
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