Day 106-Adam Smith
Today in WHAP we talked about Adam Smith.
So to recap about him, he was the one who wrote the wealth of nations, a book which concerns how a nation becomes wealthy, not necessarily the individuals.
So in a logical train of thought, individuals generally don't care whether their king is wealthy when they are poor. Instead, they themselves want to be wealthy. This inspired the idea that the wealth of a nation should be measured by citizen's wealth, so you can tell that with wealthy civilians there is a wealthy nation. All this is caused by the government removing taxes from markets.
There are then 5 assumptions made in order for this to work. The first is pursuing economic self-interest is primary motivation in human behavior. That's pretty true, most people do work to make money, then get promoted, and make more money. The second is the presence of a free open market, which is not manipulated at all. Eh..... The third is that there is intense competition in the free and open market. Not always the case, as often times people aren't super cutthroat about selling their goods. The fourth is the Laissez-faire, which means no government interference. This kinda ties into number two, adn really depends on the government. Then 5, free trade among theindividuals and nations. This doesn't normally happen.
Other than the problems among those assumptions, more assumptions are made. Another one made is that you automatically have an easy entrance and exit to the market. This isn't necessarily the case, as like in the backpack example, you need to do a whole bunch in order to get those bags on sale.
You're also assuming that there is real price competition. For example, a supreme shirt in cost of materials may be worth the same as a plain white undershirt, but that supreme shirt is selling for $150+, simply because of its design and the fact that it says supreme. Thus, since profiling because of brands skews the price, there isn't that real price competition.
With that, the bell rang and we were dismissed. Take solace in the fact that we only have two days left until Spring Break! Until Tomorrow!
So to recap about him, he was the one who wrote the wealth of nations, a book which concerns how a nation becomes wealthy, not necessarily the individuals.
So in a logical train of thought, individuals generally don't care whether their king is wealthy when they are poor. Instead, they themselves want to be wealthy. This inspired the idea that the wealth of a nation should be measured by citizen's wealth, so you can tell that with wealthy civilians there is a wealthy nation. All this is caused by the government removing taxes from markets.
There are then 5 assumptions made in order for this to work. The first is pursuing economic self-interest is primary motivation in human behavior. That's pretty true, most people do work to make money, then get promoted, and make more money. The second is the presence of a free open market, which is not manipulated at all. Eh..... The third is that there is intense competition in the free and open market. Not always the case, as often times people aren't super cutthroat about selling their goods. The fourth is the Laissez-faire, which means no government interference. This kinda ties into number two, adn really depends on the government. Then 5, free trade among theindividuals and nations. This doesn't normally happen.
Other than the problems among those assumptions, more assumptions are made. Another one made is that you automatically have an easy entrance and exit to the market. This isn't necessarily the case, as like in the backpack example, you need to do a whole bunch in order to get those bags on sale.
You're also assuming that there is real price competition. For example, a supreme shirt in cost of materials may be worth the same as a plain white undershirt, but that supreme shirt is selling for $150+, simply because of its design and the fact that it says supreme. Thus, since profiling because of brands skews the price, there isn't that real price competition.
With that, the bell rang and we were dismissed. Take solace in the fact that we only have two days left until Spring Break! Until Tomorrow!
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