I got my degree in economics several years ago. I thought my Econ 101 course was super interesting, so that's why I decided to make it my major. Once I got hit with a lot of complex math in the more advanced courses, I started to regret it, because I'm not much of a math guy. So I added on a Spanish major, but since I was already halfway done with econ I decided to stay the course. It was not easy for me, but I finished, and I do not regret it a bit. To this day it has still shaped the way I look at the world, and given me more understanding about how markets, people, and the society operate. I commend you for your interest in economics and think that you will find great value in learning, if nothing else, the basics. Enjoy! :)
@@kevinswift8654:"... it has still shaped the way I look at the world..." Does this include ignoring the simplifying assumptions that may produce false and harmful policies? Do you know that Lionel Robbins advised against testing conclusions by "empirical verification"?
Hello khan sir, your videos helped me to pass my economics courses for masters degree. I am a b.ed appearing student and have learned from you how to simplify tough economic concept. Your videos are so informative and easy to understand and explain things without sounding boring . Thank you again for your amazing effort
I am here because in my mid-forties I am beginning to rediscover the need to understand economics and finance better. Part of the urge comes from the need to make investments in stock market and earn better returns. I think by understanding economics better, not only can we understand the economic and political headlines better, but we can also invest our savings in a far more sensible and a profitable way. I am also so happy to see that Khan Academy provides free educational resources for people who wish to understand things on their own. My best wishes for Khan Academy and I will try to financially contribute to your organization also for providing such excellent resources for everyone.
@@sed625 well if they unless becomes genius in this which seems possible but it would take time and they wouldn't be able to fully experience the 8th wonder ....
His explanation of Micro and Macro Economics is easy to understand. I think if every business is based on an invisible hand, easy to control it. But among nations they scheme to get more profits. Under such situations Economics seems to be kind of a landmark to lead to better solutions. Once I heard that Economics is drawing fantasy on the panel. This means that an economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today, I wonder. Nice video!
Adam Smith also recognized that government had an important responsibility; which is, to establish "a fair field with no favors." Smith understood that part of our nature is to secure privileges when possible, to use financial and political power interchangeably to do so. He warned against the creation of a "rentier" elite and of cartels whose power was to claim what others produced without having to exchange anything in return. Smith understood that the rent of land, of nature, is societal and not individual wealth; he shared with the Physiocrats in France the view that rent was the appropriate source of public revenue, that earned income flows and the capital goods we produce should not be burdened by taxation (i.e., by what we call today "dead weight losses").
==========< There is the owner and the employee.>========== Ultimately, the 'Employee' makes the products, takes those products to the market, sells the same products, he made, to himself and finally he pays a fee known as Profit to some 'Owner' for a permission to own the same products he made and sold to himself. The owner gets to collect profit for doing nothing.....and many call that 'earning' instead of 'taking'. The way forward to a better society is to increase and maintain a strong minimum purchasing power of the end-consumer using the magic formula. (Magic Formula: 'Your minimum Purchasing Power' = 'minimum wage' + 'Benefits payments' - 'Cost of dignified living from cradle to grave' - 'Taxes, fees, penalties') Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day. Save the minimum purchasing power of the human citizens instead of saving businesses/firms.
@@reasonerenlightened2456 When you pretend that the owner of a business does nothing while the employee does all the work you gloss over all of the hard work, time, and risk it took to create said business in the first place. The way forward to a better society is to get rid of government creating corporations where failures of a business get's erased by taxpayers.
on the Smith quote ending "by pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it." My version: "By ALIGNING one's own self-determined interest --both one's financial interest and passion for one's craft--WITH a vision for the greater good of BOTH society and ecosystem, one has truly got it ! Here, we can enjoy the innovative pizazz of laissez faire and the (decentralized) cooperative spirit dedicated to holistic ecofriendly lifestyle and celebration of thriving community. Today we see the dire effects of BOTH capitalism--unchecked by concern for the environment and labor health--and communism--also unchecked by this concern. Welcome to Project Integrity International!
Kahn this quote makes me smile. How many economic teachers would ever mention something like this? And yet it's so obvious by many great inventors; Henry Ford, Albert Einstein, etc.
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. - Ford
How can a person have such vast knowledge on various subjects that are theoretically independent of each other. What a genius!!! Please tell us how can we achieve this kind of juxtaposed knowledge base?
I study English philology, but i started a course of Introduction to Economy. So far i have found it very interesting and would love to learn it deeply
Adam Smith additionally recognized that authority had a key component of responsibility; which is, to set up "a impartial field with no favors." Smith understood that component of our nature is to procure privileges when possible, to use financial and political power interchangeably to accomplish so. He warned against the formation of a "rentier" elite and of cartels whose power was to claim what other people generated without having to swap anything in return. Smith understood that the rent of land, of nature, is societal and not individual wealth; he shared with the Physiocrats in French republic the watch that rent was the necessary source of public revenue, that earned earnings flows and the capital goods we build should not be burdened by taxation (i.e., by what we exclaim nowadays "dead weight losses").
oh right... by aiming self-interest the individual helps society maybe even more than if he would try to help society... now i understand why all this shit is going on in this country..... well done Smith, well done
Its an unpleasant truth with a realistic approach. If you tell peolple"never mjnd you family, self interest and ambitions, focus your efforts on altruism, very few people would listen. Instead, everyone is required to provide and take care of themselves, while the economy is shaped to optimize these values of indipendence, self preservation and growth. So everyone takes care of themselves and as a byproduct, everyone benefits.
You make a good point. If someone adopts an overly simplistic interpretation of Smith, it can lead to bad outcomes. However... Read the book before firing off comments. Of course people act based on their values. That’s *part* of economics and “self-interest”. You think we have problems? Consider the places that supposedly operate (or operated) on the basis of the “social good”, including all communist countries and many fascist nations.
Exceptional presentation in that it emphasises the many caveats that must be added when simplifying assumptions are used to generate the output from the mathematical model.
I think this is the first time I've ever found fault with a lesson by Salman Khan. When I first learned economics in school, we were told that the uber-capitalistic statement "regarding the invisible hand" was taken out of context by most people in the west. Adam Smith was a "moral philosopher" who was trying to develop a wealth redistribution model to protect the bottom class of society from being of out ways to protect the people who were being made poorer by the industrial revolution. (cont)
Arrrrh! I really LOVE your videos - but I HATE it when I can not easily find the next 'installment'. Come on YT - give KA the power! Thank you very much for ALL your videos.
Again, "The Invisible Hand" is often taken out of context. Smith studied the welfare of persons and governments, and he is exposing how the flaws of others benefit local capital. It can be argued that those participating in the economy of the time, merchants preferred trade with those that were of similar ethnicity. The name of the book is after all, The Wealth of Nations, not the wealth of merchants. "By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." -- Adam Smith
It means unseen forces. Being led by an invisible hand means exactly what it is stated. It is not intended to be some moral tool that means everything has to have a national agenda.
that's part of a reason why people usually argue about the holly ''free market'' while using Adam Smith's invisible hand. I know many people who don't know a thing about him.Jjust this. Taking it out of context helped some economists to create a new capitalistic religion .
Assumptions are inevitable in economics. Economics is not a science( although high level economics uses pretty much as much math as physicists). It cannot be since it deals with people. Economics has schools of thought precisely because economists disagree with how certain stuff work. Physics cannot have schools of thought. You are either right or you are wrong, it can be easily proven. In economics it is not that simple. The more you thing about it, the more complicated it gets. Believe me.
(Basic) microeconomic theory doesn't make predictions based on observation. It starts with a very simple model of how economic actors behave and then explores the mathematical consequences of these assumptions. It turns out that these assumptions are reasonable enough that the predictions happen to agree with the observation some of the time. (cont)
What Adam Smith especially meant was, that (in modern game theoretic sense) there should be rules of the game such that the overall outcome is optimal. For me the essence of capitalism is *not* self-interest or exploitation, but rather the use of a stochastic growth process to escape eternal poverty and build wealth.
I agree with psychological egoism, I do think we act in our own self-interest but not in an obvious stereotypically selfish way. i.e. I make others happy because their happiness makes *me* happy.
They made it in a number of different ways. Some good, while some bad. Not all rich people are rich because they earned, just like not all rich people are rich, because they exploited.
Smith also opposed special privilege and monopoly, although in his time he could not denounce landed privilege directly. Smith's treatment of "rent" (i.e., the rent of land) comes as close as he could come to arguing the case for the public collection of the rent of land to pay for public goods and services. To correct your assertion, Smith's French contemporaries the Physiocrats were equally as insightful in their writings on political economy. It was Francois Quesnay who came up with the first input-output flow chart.
Edward Dodson , Good to see you here, pointing to a fundamental principle of real-world economics. The workers and entrepreneurs earn their rewards (wages, profits/interest). But does the private "owner" of a piece of nature he did nothing to create earn the rent he extracts?
Economists are like with many things/people, deciding how a society should function, not explaining how things can be predicted. So why do they ever try to predict anything? Why do they say "If we do this, then our economy will collapse/flourish!", when they're really saying "I think that a society should work like this"?
A deficit is simply the result of negative cash flow. For example, if your costs are higher than your revenues, you will generate a loss in your Profit & Loss Statement and a Deficit in your Cash Flow Statement. This does not necessarily constitute a debt. A debt is a legally binding obligation to pay or repay a financial obligation that is based upon a contract.
If you have millions of actors who are basically similar your assumptions can be off for a few of them and the prediction are still likely to hold. But sometimes assumptions fail to hold across the board. E.g it is assumed that consumers have perfect information. But say the seller is engaging in misleading advertising and controls the information flow effectively. If most of the buyers have faulty information the effects won't "average out" or disappear due to large numbers.
Just by the way: The Bavarian constitution contains the highly interesting statement: "The entirety of economic activity shall serve the common wellbeing, in particular a guarantee of dignified existence for all and a gradual enhancement of living standards for all sections of the community." Compare this to the German Basic Law: "Property entails obligations. Its use shall also serve the public good. Expropriation shall only be permissible for the public good" And yet nobody cares...
Would you guys recommend following these lectures for my PrIncipal of Economics course? We're using Sloman's book (9th edition) as a reference and I'm not quite sure whether it'd be fully aligned with the syllabus. Thanks in advance!
We all have rights The problem is when rights impose on each other or those with polical and econmic well being.. It may be said that rights are up side down
But I think LOVE IS ACTUALLY A SCARCE RESOURCE, it's so scarce that such things as manipulation, consumerism, malevolence... would disguise themselves as love.
@KhanAcademy who brings the concept of economics first ? And why ? Why the concept of demand and supply bring in economics ?? Please reply anyone ...🙏🙏
sir, I am connected to khan academy by Google as well as RUclips pls make a video on basic entities of economy I am in class 9 and in this topic in our text book, consumers, types of consumers, importance of consumers, and same as for producers ... and at last direct role of government and indirect role of government thank you may you read my comment...
I should be doing calculus but here I am because the virus might collapse the economy and I have no idea what even this means really 🤷♀️ this right now might be good to get educated on
(cont) He was also worried what Great Britain was doing to places like India and realized that investors could make much more money investing abroad rather than investing locally while making much less. The context of the "invisible hand" has more to do with a person's conscience (guiding him to invest at home, but making less, because it was the right thing to do. At least this is how is was taught to me.
I define "exploitation" as "the usage of a person's work capacity to gain profit while not paying the respective person a) a wage sufficient to realize his human rights in the country he is residing in or b) a wage above a) but not adequate to the amount & importance of the work". And since I have been to China twice, I must admit that the working conditions at the local fabrics are exploitative and therefore unbearable. The same problem exists in South Asia. One cannot deny this.
Khan videos are excellent, Thank You! I'm trying to get a better understanding of what happens to money when spent on goods from a foreign market, and what conditions are needed for that trade to happen. Im reading Hazlett's "Economics in 1 lesson" and realized there is more to exchange of dollars for foreign goods than I thought and can't find a decent lesson on it anywhere... any video or PM me a link to anything would be helpful. thank you.
I recommend you check out the books "Judgment Under Uncertainty " and "Rational Choice in an Uncertain World". They don't have anything to do with Economics, I merely suggest them due to what I believe you might interested in, based on your comment. :)
While I respect a lot of Adam Smith's major points, I would probably lean more to a Keynesian approach especially looking at the nature of today's economy and market as a whole. A little government involvement in "good" economic times can be a good thing. Pure competition will ultimately lead to inefficiencies and economic collapse
I'm half way through Wealth of Nations at the moment, and it's not what I expected. Smith rips into the wealthy again and again, and the way they use government to harm the public good. One example was the injustice of laws preventing workers from associating to raise wages, but no such restriction on owners conspiring to force wages down.
I am curious about why you believe "Pure competition will ultimately lead to inefficiencies and economic collapse". And what does government involvement do to be a good thing at any time?
Why would you lean towards Keynesian approach. It caused the great depression. The US government had to increase spending so it increased taxation and this in turn mean people had less money to spend.
I don't even study economics. I'm studying electrical engineering. I'm here to learn some basic economics that everyone should know.
I got my degree in economics several years ago. I thought my Econ 101 course was super interesting, so that's why I decided to make it my major. Once I got hit with a lot of complex math in the more advanced courses, I started to regret it, because I'm not much of a math guy. So I added on a Spanish major, but since I was already halfway done with econ I decided to stay the course. It was not easy for me, but I finished, and I do not regret it a bit. To this day it has still shaped the way I look at the world, and given me more understanding about how markets, people, and the society operate. I commend you for your interest in economics and think that you will find great value in learning, if nothing else, the basics. Enjoy! :)
@@kevinswift8654:"... it has still shaped the way I look at the world..."
Does this include ignoring the simplifying assumptions that may produce false and harmful policies?
Do you know that Lionel Robbins advised against testing conclusions by "empirical verification"?
@@kevinswift8654 🙏👌
Same
Same.
I have a sudden urge to start taking notes.
I almost did.
I feel you
please post notes
GO GO GO!!
😂😂
Thank you KA. All your free education programs benefits people from the 3rd world.
7 years now do u remember this? Is it worth it?
Anyone remember this?
@@STICKCRICKETSUPERLEAGUESCSL bruh
@@STICKCRICKETSUPERLEAGUESCSL bruh
@@STICKCRICKETSUPERLEAGUESCSL bruh
Hello khan sir, your videos helped me to pass my economics courses for masters degree. I am a b.ed appearing student and have learned from you how to simplify tough economic concept. Your videos are so informative and easy to understand and explain things without sounding boring .
Thank you again for your amazing effort
I am here because in my mid-forties I am beginning to rediscover the need to understand economics and finance better.
Part of the urge comes from the need to make investments in stock market and earn better returns. I think by understanding economics better, not only can we understand the economic and political headlines better, but we can also invest our savings in a far more sensible and a profitable way.
I am also so happy to see that Khan Academy provides free educational resources for people who wish to understand things on their own. My best wishes for Khan Academy and I will try to financially contribute to your organization also for providing such excellent resources for everyone.
aren't you a little late :(
@@ankylosis751 Umm No
@@sed625 well if they unless becomes genius in this which seems possible but it would take time and they wouldn't be able to fully experience the 8th wonder ....
@@ankylosis751I’m 19, I want the same things
@@coco5900 focus on increasing your income strictly
나이가 들어감에 따라서 단순히 자신의 분야만 관심을 가져야하는 것이 아닌 다양한 분야에 관심을 가지고 지켜봐야한다는 사실을 깨닫습니다. 그 중 하나인 경제학의 기본에 대해서 잘 설명해주신 좋은 영상이라고 생각됩니다.
한국 사람이에요?
Of course he or she is
I love your videos. You've saved my life numerous times. Thank you!
His explanation of Micro and Macro Economics is easy to understand. I think if every business is based on an invisible hand, easy to control it. But among nations they scheme to get more profits. Under such situations Economics seems to be kind of a landmark to lead to better solutions. Once I heard that Economics is drawing fantasy on the panel. This means that an economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today, I wonder. Nice video!
Adam Smith also recognized that government had an important responsibility; which is, to establish "a fair field with no favors." Smith understood that part of our nature is to secure privileges when possible, to use financial and political power interchangeably to do so. He warned against the creation of a "rentier" elite and of cartels whose power was to claim what others produced without having to exchange anything in return. Smith understood that the rent of land, of nature, is societal and not individual wealth; he shared with the Physiocrats in France the view that rent was the appropriate source of public revenue, that earned income flows and the capital goods we produce should not be burdened by taxation (i.e., by what we call today "dead weight losses").
Nice!
Sounds like we went exactly the way he warned against. Hooray!
Hello Edward! How's life?
==========< There is the owner and the employee.>==========
Ultimately, the 'Employee' makes the products, takes those products to the market, sells the same products, he made, to himself and finally he pays a fee known as Profit to some 'Owner' for a permission to own the same products he made and sold to himself.
The owner gets to collect profit for doing nothing.....and many call that 'earning' instead of 'taking'.
The way forward to a better society is to increase and maintain a strong minimum purchasing power of the end-consumer using the magic formula.
(Magic Formula: 'Your minimum Purchasing Power' = 'minimum wage' + 'Benefits payments' - 'Cost of dignified living from cradle to grave' - 'Taxes, fees, penalties')
Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day.
Save the minimum purchasing power of the human citizens instead of saving businesses/firms.
@@reasonerenlightened2456 When you pretend that the owner of a business does nothing while the employee does all the work you gloss over all of the hard work, time, and risk it took to create said business in the first place.
The way forward to a better society is to get rid of government creating corporations where failures of a business get's erased by taxpayers.
This is from India 🇮🇳 and a lot of thanks for Sir as this helped me to under the system more better in the depth 😊
on the Smith quote ending "by pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it." My version: "By ALIGNING one's own self-determined interest --both one's financial interest and passion for one's craft--WITH a vision for the greater good of BOTH society and ecosystem, one has truly got it ! Here, we can enjoy the innovative pizazz of laissez faire and the (decentralized) cooperative spirit dedicated to holistic ecofriendly lifestyle and celebration of thriving community. Today we see the dire effects of BOTH capitalism--unchecked by concern for the environment and labor health--and communism--also unchecked by this concern. Welcome to Project Integrity International!
This is great! I'm studying economics and having you explain helps a lot!
Suddenly realized I have no idea how economics work. Sees Khan Academy has a introductory series on it. Let’s go.
Kahn this quote makes me smile. How many economic teachers would ever mention something like this? And yet it's so obvious by many great inventors; Henry Ford, Albert Einstein, etc.
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. - Ford
It's hard to say just how great this enterprise is.... Khan Academy
How can a person have such vast knowledge on various subjects that are theoretically independent of each other. What a genius!!! Please tell us how can we achieve this kind of juxtaposed knowledge base?
Interest I suppose. Also it’s simply the basics and perhaps it also encompasses intermediate levels. It’s still impressive.
I study English philology, but i started a course of Introduction to Economy. So far i have found it very interesting and would love to learn it deeply
Tabanova Aisha
,
Good for you.
But beware of all the simplifying assumption that can lead to conclusions leading to social policies that do harm.
I enjoyed watching this not for the facts, but for the reason he has a voice which gives me goosebumps!.
Thats called ASMR
Adam Smith additionally recognized that authority had a key component of responsibility; which is, to set up "a impartial field with no favors." Smith understood that component of our nature is to procure privileges when possible, to use financial and political power interchangeably to accomplish so. He warned against the formation of a "rentier" elite and of cartels whose power was to claim what other people generated without having to swap anything in return. Smith understood that the rent of land, of nature, is societal and not individual wealth; he shared with the Physiocrats in French republic the watch that rent was the necessary source of public revenue, that earned earnings flows and the capital goods we build should not be burdened by taxation (i.e., by what we exclaim nowadays "dead weight losses").
I have a Macroeconomic Exam on Friday 😵💫 Thank You!
I have become speechless. Unwavering commitment.
oh right... by aiming self-interest the individual helps society maybe even more than if he would try to help society... now i understand why all this shit is going on in this country..... well done Smith, well done
Its an unpleasant truth with a realistic approach. If you tell peolple"never mjnd you family, self interest and ambitions, focus your efforts on altruism, very few people would listen. Instead, everyone is required to provide and take care of themselves, while the economy is shaped to optimize these values of indipendence, self preservation and growth. So everyone takes care of themselves and as a byproduct, everyone benefits.
You make a good point. If someone adopts an overly simplistic interpretation of Smith, it can lead to bad outcomes.
However...
Read the book before firing off comments.
Of course people act based on their values. That’s *part* of economics and “self-interest”.
You think we have problems? Consider the places that supposedly operate (or operated) on the basis of the “social good”, including all communist countries and many fascist nations.
6:00 this could apply also for psychology, learning 2 topics at the same time, hell yea
Self-interest does not mean selfish. Also, acting in self-intetest avoids the pretense of knowing what's good for other people.
Love is scarce my friend ..
Great video..I am grateful for Khan Academy.
Exceptional presentation in that it emphasises the many caveats that must be added when simplifying assumptions are used to generate the output from the mathematical model.
I think this is the first time I've ever found fault with a lesson by Salman Khan. When I first learned economics in school, we were told that the uber-capitalistic statement "regarding the invisible hand" was taken out of context by most people in the west. Adam Smith was a "moral philosopher" who was trying to develop a wealth redistribution model to protect the bottom class of society from being of out ways to protect the people who were being made poorer by the industrial revolution. (cont)
i like your voice man.. its so economical
You made one pretty clear...thank u soo much
Your videos really cover almost every subject I can think of. Great job!
Arrrrh! I really LOVE your videos - but I HATE it when I can not easily find the next 'installment'.
Come on YT - give KA the power!
Thank you very much for ALL your videos.
Please make a video series about International Trade and Economics(Comparative advantage,Hecksher ohlin,trade tariff etc.)
Again, "The Invisible Hand" is often taken out of context. Smith studied the welfare of persons and governments, and he is exposing how the flaws of others benefit local capital. It can be argued that those participating in the economy of the time, merchants preferred trade with those that were of similar ethnicity. The name of the book is after all, The Wealth of Nations, not the wealth of merchants. "By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." -- Adam Smith
that sounds like an important part of the sentence that was left out
It means unseen forces.
Being led by an invisible hand means exactly what it is stated. It is not intended to be some moral tool that means everything has to have a national agenda.
that's part of a reason why people usually argue about the holly ''free market'' while using Adam Smith's invisible hand. I know many people who don't know a thing about him.Jjust this. Taking it out of context helped some economists to create a new capitalistic religion .
因此，由于每个个人都会尽力把他的资本用以支持并管理国内的产业，这些产业的生产于是便能达到最大的价值；每个个人也必然竭力的使社会的年收入尽量扩大。确实，他通常并没有打算要促进公共的利益，也不知道他自己促进了这种利益至何种程度。由于宁愿支持国内的产业而非国外的产业，他只是盘算着他自己的安全；他管理产业的方式在于使其生产的价值能够最大化，他所盘算的也只是他自己的利益。在这些常见的情况下，经过一双看不见的手的引导，他也同时促进了他原先无意达成的目标。并非出自本意并不代表就对社会有害。借由追求他个人的利益，往往也使他更为有效地促进了这个社会的利益，而超出他原先的意料之外。我从来没有听说过有多少好事是由那些佯装增进公共利益而干预贸易的人所达成的。
Did you read "Escape From Freedom" by Erich Fromm?
Joan Wang I agree with you.
yes! getting a head start in AP economics
Assumptions are inevitable in economics. Economics is not a science( although high level economics uses pretty much as much math as physicists). It cannot be since it deals with people. Economics has schools of thought precisely because economists disagree with how certain stuff work. Physics cannot have schools of thought. You are either right or you are wrong, it can be easily proven. In economics it is not that simple. The more you thing about it, the more complicated it gets. Believe me.
(Basic) microeconomic theory doesn't make predictions based on observation. It starts with a very simple model of how economic actors behave and then explores the mathematical consequences of these assumptions.
It turns out that these assumptions are reasonable enough that the predictions happen to agree with the observation some of the time.
(cont)
What Adam Smith especially meant was, that (in modern game theoretic sense) there should be rules of the game such that the overall outcome is optimal. For me the essence of capitalism is *not* self-interest or exploitation, but rather the use of a stochastic growth process to escape eternal poverty and build wealth.
Thank you KA .... it helps a lot.
I agree with psychological egoism, I do think we act in our own self-interest but not in an obvious stereotypically selfish way. i.e. I make others happy because their happiness makes *me* happy.
They made it in a number of different ways. Some good, while some bad. Not all rich people are rich because they earned, just like not all rich people are rich, because they exploited.
But the logic goes that the one wishes to maximize his own profit. I don't think Khan Academy profited him much. It's very much a social contribution.
Smith also opposed special privilege and monopoly, although in his time he could not denounce landed privilege directly. Smith's treatment of "rent" (i.e., the rent of land) comes as close as he could come to arguing the case for the public collection of the rent of land to pay for public goods and services. To correct your assertion, Smith's French contemporaries the Physiocrats were equally as insightful in their writings on political economy. It was Francois Quesnay who came up with the first input-output flow chart.
Edward Dodson
, Good to see you here, pointing to a fundamental principle of real-world economics.
The workers and entrepreneurs earn their rewards (wages, profits/interest).
But does the private "owner" of a piece of nature he did nothing to create earn the rent he extracts?
I wish I have infinite amounts of love
Bruh why am I paying so much money when I can just be here and study and learn on my own time.
Economists are like with many things/people, deciding how a society should function, not explaining how things can be predicted. So why do they ever try to predict anything? Why do they say "If we do this, then our economy will collapse/flourish!", when they're really saying "I think that a society should work like this"?
A deficit is simply the result of negative cash flow. For example, if your costs are higher than your revenues, you will generate a loss in your Profit & Loss Statement and a Deficit in your Cash Flow Statement. This does not necessarily constitute a debt.
A debt is a legally binding obligation to pay or repay a financial obligation that is based upon a contract.
Nicely explained
First lesson and in the first 3 minutes you already understand why all the people who profited of 2008 pretend that they were helping everyone.
The only correction is that the Constitution doesn't establish governance of a democracy but a Republic. Besides this, thanks for the superb lessons!!
If you have millions of actors who are basically similar your assumptions can be off for a few of them and the prediction are still likely to hold. But sometimes assumptions fail to hold across the board.
E.g it is assumed that consumers have perfect information. But say the seller is engaging in misleading advertising and controls the information flow effectively. If most of the buyers have faulty information the effects won't "average out" or disappear due to large numbers.
it works better than the current system
Great intro.!
Sir can you add Managerial accounting videos to your contents because you are the only teacher with his explanation I learn very quickly
Thank you!
that was interesting economists are not always true
Thank you ❤❤❤
Just by the way:
The Bavarian constitution contains the highly interesting statement: "The entirety of economic activity shall serve the common wellbeing, in particular a guarantee of dignified existence for all and a gradual enhancement of living standards for all sections of the community." Compare this to the German Basic Law: "Property entails obligations. Its use shall also serve the public good. Expropriation shall only be permissible for the public good" And yet nobody cares...
When resources are are in short the next best thing is chosen
Would you guys recommend following these lectures for my PrIncipal of Economics course? We're using Sloman's book (9th edition) as a reference and I'm not quite sure whether it'd be fully aligned with the syllabus. Thanks in advance!
Empower your work force
Gotta love dat Artificial Scarcity
Coverage is superior!
Very nice sir❤❤
PLEASE do a comparison between Austrian and Kenyesian economics video.
Very informative! very comprehensively explained. I got the Basic introduction about microeconomics and macroeconomics.
We all have rights
The problem is when rights impose on each other or those with polical and econmic well being..
It may be said that rights are up side down
Self-interest does not always exclude the interests of others.
But I think LOVE IS ACTUALLY A SCARCE RESOURCE, it's so scarce that such things as manipulation, consumerism, malevolence... would disguise themselves as love.
It's scarce and valuable
@KhanAcademy who brings the concept of economics first ? And why ?
Why the concept of demand and supply bring in economics ??
Please reply anyone ...🙏🙏
Wonderful explanation 👏
sir, I am connected to khan academy by Google as well as RUclips pls make a video on basic entities of economy I am in class 9 and in this topic in our text book, consumers, types of consumers, importance of consumers, and same as for producers ... and at last direct role of government and indirect role of government thank you may you read my comment...
I should be doing calculus but here I am because the virus might collapse the economy and I have no idea what even this means really 🤷♀️ this right now might be good to get educated on
(cont) He was also worried what Great Britain was doing to places like India and realized that investors could make much more money investing abroad rather than investing locally while making much less. The context of the "invisible hand" has more to do with a person's conscience (guiding him to invest at home, but making less, because it was the right thing to do. At least this is how is was taught to me.
That logic goes that one wishes to maximize their own self-interest, not just profits.
I define "exploitation" as "the usage of a person's work capacity to gain profit while not paying the respective person a) a wage sufficient to realize his human rights in the country he is residing in or b) a wage above a) but not adequate to the amount & importance of the work". And since I have been to China twice, I must admit that the working conditions at the local fabrics are exploitative and therefore unbearable. The same problem exists in South Asia. One cannot deny this.
These videos are amazing!
Very good video Khan Academy. Thank you for posting.
Very well explained..!
Khan videos are excellent, Thank You!
I'm trying to get a better understanding of what happens to money when spent on goods from a foreign market, and what conditions are needed for that trade to happen. Im reading Hazlett's "Economics in 1 lesson" and realized there is more to exchange of dollars for foreign goods than I thought and can't find a decent lesson on it anywhere... any video or PM me a link to anything would be helpful. thank you.
Very helpful channel.
talk more about modern critique of macroeconomics,
The 2nd video to this introductory lesson
murder and theft.... you're a true wonderful soul
Nice overview.
I recommend you check out the books "Judgment Under Uncertainty " and "Rational Choice in an Uncertain World".
They don't have anything to do with Economics, I merely suggest them due to what I believe you might interested in, based on your comment. :)
Can i get notes of these lecture
I love introduction videos.
Thanks for the vid. Very informative
You are on the coolest person, like all of your videos
While I respect a lot of Adam Smith's major points, I would probably lean more to a Keynesian approach especially looking at the nature of today's economy and market as a whole. A little government involvement in "good" economic times can be a good thing. Pure competition will ultimately lead to inefficiencies and economic collapse
I'm half way through Wealth of Nations at the moment, and it's not what I expected. Smith rips into the wealthy again and again, and the way they use government to harm the public good. One example was the injustice of laws preventing workers from associating to raise wages, but no such restriction on owners conspiring to force wages down.
I am curious about why you believe "Pure competition will ultimately lead to inefficiencies and economic collapse". And what does government involvement do to be a good thing at any time?
Why would you lean towards Keynesian approach. It caused the great depression.
The US government had to increase spending so it increased taxation and this in turn mean people had less money to spend.
Thanks
An excellent introduction to economics and how to differentiate between macro and microeconomics.
I am doing BA hons with research in economics.........
Want to the content is for college level students.......as my semester just started
love is a scarce for me
Let the invisible hand...
Is more so today with regards to the innernet
I'm not good at math
But I recognize trends
You must learn of economics to see how and why you get screwed by companies
Great introduction