Upload
cesar-monterroso
View
214
Download
0
Embed Size (px)
Citation preview
8/11/2019 Cartoon Macro Excerpt
1/15
The
cartoon introduction to economics
volume two: macroeconomics
By Grady Klein and Y oram Bauman , P h .D.
the Worlds first and only Stand-up Economist
8/11/2019 Cartoon Macro Excerpt
2/15
contents
Introduction, page 3
Trade and Technology, page 89
The Role of Government, page 73
Unemployment, page 17
The Classical View of Trade, page 99
Money, page 31
Complications, page 111
Gross Domestic Product (GDP), page 59
Foreign Currencies, page 139
Inflation, page 45
Foreign Aid, page 125
Chapter 1
Chapter 7
Chapter 3
Chapter 9
Chapter 2
Chapter 8
Chapter 4
Chapter 10
Chapter 5
Chapter 11
The End of the Business Cycle? page 153
The End of Poverty? page 167
The End of Youth? page 193
The End, page 207
page 219
The End of Planet Earth? page 179
Chapter 12
Chapter 13
Chapter 15
Chapter 14
Chapter 16
Glossary
Chapter 6
PART ONE:a single
macroeconomy
PART Three:global macroeconomics
PART TWO:international trade
8/11/2019 Cartoon Macro Excerpt
3/15
chapter 8 The classical view of trade
The economy is like
a well-oiled machine...
...and trade gives ita turbo boost!
8/11/2019 Cartoon Macro Excerpt
4/15
100
Trade is prettyawesome... ...Just like
technologicalprogress!
If a foreign country can supply uswith a commodity cheaper than we
ourselves can make it ...
The way that classical economists like Adam Smith look atinternational trade is simple and powerful ...
...and comes directly from the view that the macroeconomyis like a well-organized family .
Although trade creates losers as well as winners ,classical economists focus on the gains to society as a whole .
... better buy it [from] them with some part of the produce ofour own industry, employed in a
way in which we havesome advantage.
It is the maxim ofevery prudent master
of a family... ...never to attempt to
make at home what it willcost him more tomake than to buy .
8/11/2019 Cartoon Macro Excerpt
5/15
101
Congratulations,you win the
Nobel prize!
classical economists also emphasize that trade betweentwo countries can benefit both countries.
In 1817DAViD RiCARDOs theory of COMPARATIVE ADVANTAGE showed thatthese MUTUAL BENEFiTS are possible when countries are DiFFERENT ...
...but modern economists believe that MUTUAL BENEFITSare possible even when countries are SiMiLAR .
Paul Krugman won the 2008 Nobel Prize for his work in this area.
Just like tradebetween two
people...
...can benefitboth people!
PORTUGAL has agood climate forgrowing grapes.
swedes makevolvo s .
germans makebmw s .
we can bothgain from
trade!
england has agood climate for
growing wheat.
Lets trade bottles of wine for bags of flour!
And if we ever starttrading with other planets ,
I can explain that too!
8/11/2019 Cartoon Macro Excerpt
6/15
102
...but you can also easily see the benefits of trading with other countries ...
the benefits of trade are most obvious when you thinkabout families trading with OTHER FAMiLiES ...
Without you,mrs. taylor,my life would bethreadbare!
look, here comesMonsieur Chapeau!
Oh, bless your soul,Mr. Shoemaker.
without the french,I dont know howwed get AHEAD.
8/11/2019 Cartoon Macro Excerpt
7/15
103
...or evenwith aliens.
Take me to yourleading economist.
8/11/2019 Cartoon Macro Excerpt
8/15
104
im better off,and so is my new
friend zantrok! Zeekrox floudz,hoogha hoo
ghow zgr steve!
...then this alien encounter would be
pretty awesome for both sides .
...and if both sides engagepeacefully in free trade ...
If we encounter beings fromanother planet ...
You might not think that Adam Smith would have much to say about aliens ...
...but in fact classical economics teaches usan important lesson about interstellar trade:
life on otherplanets?
im still getting usedto the idea of life insouth america.
or if they encounter us!
... And NOBULLYiNG!
Want thiscandy bar? Then you have to
TRADE ME for it...
8/11/2019 Cartoon Macro Excerpt
9/15
105
We earthlings would benefit regardless of whetherthe aliens were LESS ADVANCED than us...
Plus there would be added benefits fromsharing new varieties of food and arts.
...OR MORE ADVANCED.
Cancer? Heck, wecured that eons ago.
need a hand with that?
can you believe thatthe price of admission is
just one avocado?
Whatsan avocado?
Life was much harderbefore we humans
discovered the planetGxhsnael!
Life was much harderbefore the Gxhsnaeliansdiscovered planet earth!
8/11/2019 Cartoon Macro Excerpt
10/15
106
of course, there would be a downside:interstellar trade would createLOSERS as well as WiNNERS.
but Classical economists respond toconcerns about OUTSOURCiNG ...
...by pointing out that FAMiLieS engage in OUTSOURCiNG too.
whether youre a family, a country, or a planet,outsourcing allows you to focus on what youre good at.
nothing ismade on planetEarth anymore.
its no wonderyou lost your job.
My jobgot outsourced
to Xanrak 7!
Thats why there areso many families named
Shoemaker and Taylorand baker ...
well, You dont bakeyour own BREAD,
do you?! ...and so fewfamilies namedEverything.
well makejetpacks...
...and well allgain from trade!
...well makepharmaceuticals...
We do?how?
8/11/2019 Cartoon Macro Excerpt
11/15
107
the idea that OUTSOURCiNG iS GOOD FOR SOCiETY
may seem shocking...
This also explains why classical economistsbelieve that the best thing about trade
isnt EXPORTiNG ......but IMPORTiNG.
As always, this classical view parallels the perspective ofa WELL-ORGANiZED FAMILY.
...but remember that classical economistsview the economy as a finely tuned
job-creating machine.How can it begood when i
lose my job? No big deal, theeconomy will create
a new job for you!
...but Whats reallygreat is all the COOLSTUFF we can BUY.
Everybody alwaystalks about how trade
CREATES JOBS ...
so The only reason toget a job working forSOMEBODY ELSE ...
Theres always workto do here at home .
...is to get moneyso you can BUY
STUFF!
8/11/2019 Cartoon Macro Excerpt
12/15
108
...like currency manipulation ...
The classical view of these activities is that youSHOULDNT WORRY ABOUT THEM.
...and dumping .
theyre exporting ray gunsto us at prices below their
cost of production.
...theyre trying tosteal the market!
Thats dumping , andthats not fair ...
Currencymanipulationand dumping are good for us.
Classical economists also take an unexpected positionon issues of unfair competition ...
Theyre keeping their
currency artificially cheapto promote their exports!
E x c h a n g e $ 1 f o r . . .
.6 6 .7 8
8 6 1 5 0
p o u n d s E u r o s Y e n
g l a k o n s
8/11/2019 Cartoon Macro Excerpt
13/15
109
And once again there is a parallel with families.
as with outsourcing, this classical view is driven bya confident attitude about job creation ...
...and by a focus on imports , not exports.
Currency manipulationand dumping mean thatwe pay less for the
stuff we want!
would you complain ifmr. shoemaker was
selling you boots at pricesthat were too low?
well, no.
duh.
then Dont worry,be happy!
We earthlings might have to stopmaking ray guns, but the economy
will create jobs elsewhere.
its creativedestruction!
o n s a l e ! 1 4 9 ,9 9 9 g l a k o n s
( o n l y $ 9 9 9 .9 9 !! )
8/11/2019 Cartoon Macro Excerpt
14/15
110
As well see in the next chapter, this classical perspectivecan be a little simplistic .
nonetheless, classical economics contributes valuable ideas todiscussions of free trade, whether its with a neighboring planet ...
...or with a neighboring household or country .
Why fight alienswhen we can trade
with them?
commerce...ought naturallyto be, among nations,
as among individuals...
On the one hand ,theres the classical
view of trade.On the other hand ,
there are somecomplications .
What aboutthe 3rd, 4th,
and 5th hands?
...a bond of union and friendship ...
8/11/2019 Cartoon Macro Excerpt
15/15