all right welcome to this first lecture on economics you've been journeying through this class on justice for multiple weeks now and now we're going to take a deep dive into economics well maybe not a deep dive but we're going to get introduced to economics and so the focus of today's lecture is to get the basic principles of economics in place what we want to do is walk away with an understanding of how economists view the world and this is going to be critical as we move forward and think about how justice and morality intersect our
lives as consumers workers and citizens in a marketplace economy and with these principles in place we'll be ready to ask and answer questions like what does economics have to do with justice what is economic justice and how should christians think about justice in the economy all right so that's the plan that's the goal um before we really get into the principles i'd like you to do one thing i want you to take out a piece of paper all right it doesn't have to be big just a piece of paper and what you're going to do
is you're going to keep score excuse me you're going to keep score and this is what you're tallying this is what you're recording anytime i refer to the word justice right so if i say justice literally or allude to it write a tally mark and then write the minute mark of the video okay so justice christianity or morality in general all right justice christianity or morality you're going to write a tally mark and then the minute mark on the video and this is going to be useful for today's lecture but also future lectures okay so
as we introduce these principles of economics we need to take a step back economics is a discipline um a field of study that has a lot of misconceptions about it if i'm at a party and somebody learns that i'm an economics professor nine times out of ten the first question they ask me is about the stock market and economics is a lot to say about the stock market but we're probably not going to talk about it in this class maybe tangentially but there's a lot more to economics than simply buying and selling stocks and bonds
and what's happening on wall street okay this first definition comes from miriam webster economics is the branch of knowledge concerned with the production consumption and transfer of wealth all right let me say that again the branch of knowledge concerned with the production so what are we making consumption what are we consuming and then transfer of wealth who gets what all right and so if you heard that definition and you immediately fell asleep you're like my wife right she finds that explanation that take on economics to be quite boring and to be honest i'm with her
so let me offer my definition my definition is a little bit different it incorporates what miriam and webster define economics to be but it's a slightly different take and a bit more useful for the purposes of this class and our time together so i'm going to define economics as the study of how humans cooperate and compete to meet their material needs all right the study of how humans cooperate and compete to meet their material needs if i was with christians if i was filming for gfg gfu digital perhaps i might say the study of how
humans steward god's gifts and creation to promote human flourishing all right so there's a lot of overlap between these definitions but but obviously some differences as well okay hopefully you're keeping score first mention of christianity write it down right it was in our third definition we're almost ready for the principles a couple more things to get in place first though the next thing we need to define is a word uh scarcity scarcity let's define that is simply not having enough of something all right scarcity not having enough of something we've all faced this we face
this every day maybe you think of your your income how much money you have in your wallet or purse right now and you think man if i just had a little bit more money i could buy a new car a new pair of shoes or maybe if you had a little bit more money you wouldn't have to take out a student loan to go to fox right so there's not enough income for you to do maybe all the things that you want to do we tend to fixate on income but we face scarcity and resources
right if i had a car maybe i could get a job a little further away maybe i could go to the coast this weekend um time right we all face a scarcity of time there's simply not enough time to do all the things that we want to do in a day in a lifetime right so this scarcity is pervasive economists believe it's everywhere it affects our decisions and it affects everyone and excuse me scarcity is to economics what the stars are to astronomy or god is to theology scarcity is the beating heart of what economics
is about it's the puzzle it's the problem it's the challenge that economists are trying to to understand but before we dive into these principles these principles are going to be related to the ways that people live their lives how dr peach decide to buy a cup of coffee in the morning or not buy a cup of coffee in the morning people decide what to do for their jobs their careers etc before we set the stage with how people live their lives within the economy through these basic principles we want to take a broader view of
the economy in general and when we think about how economies are structured there's three ideas three notions we want to have in mind and these apply to a different extent at different places in different times but in general each of these is present in in every economy the first is tradition right so when we're thinking about how are we going to structure our economy one way we might do this is through tradition and we can think of tradition as simply doing things the way that we always have right so if the united states were a
more traditional economy what that means is i i would be a mechanic right my dad's a mechanic so i would follow in his line of work i would serve as some sort of apprentice he'd teach me the ways of being a mechanic and then i become a mechanic the value of this is there's there's very little uncertainty i know exactly what i'm gonna do when i grow up from from the go there's no questioning there's no going to the career center and trying to figure out your strengths and weaknesses nope doesn't matter you're a mechanic
the problem with that is for someone like myself i would be a horrible mechanic i can assure you i would be the worst mechanic and cars would be breaking down everywhere the second way that we might structure economy is through command command is doing what someone tells you to do right and often when we look at an economy that's based on command or economic decisions that are a function of being commanded to do so it's the threat of violence that's motivating the decision right you need to do this and if you don't i will hurt
you or perhaps something like incarceration you need to do this and if you don't you're going to prison finally the third way is through markets markets will define as a place of voluntary exchange it might be something like a stock market on wall street where people are buying selling buying and selling shares in an economy it might be two kids trading baseball cards or comic books right voluntary exchange and then anything in between we have housing market we have a labor market uh markets are everywhere and the thing to know about markets the way that
they differ from command and tradition is their chaotic element within a market rarely is anyone in charge right if i want to sell stocks and tesla i'm free to do so if i want to buy stocks in tesla i'm free to do so nobody's going to tell me whether i have to or not right when we think about the products we buy the cup of coffee i had this morning nobody told that farmer to start a coffee farm to bring it to market and hopefully sell it in newberg right they just did so on their
own initiative and so in any economy we're likely to see a mix of these elements at play right if we think about the united states in 2021 markets are pervasive again like i said there's housing markets labor markets there's a lot of chaos in what's happening there's a bit of command right if i wake up tomorrow and i decide i don't want to have car insurance that i'm an amazing driver there's no threat of me getting into an accident that would not be a good idea because if i get pulled over i'm going to face
a heavy fine if i ignore that fine you know more penalties would follow there's also a bit of tradition i can see this in my family both my brothers are mechanics right so they followed in the family line of work their mechanics they're good at it and and certainly my dad as a mechanic influenced that decision so we're there we're ready to cover these principles of economics and what we're going to do today is cover five this is a consolidated list this is a list that hits the ones that are most pertinent to our discussion
of justice that we'll have later in the semester second reference that was justice if you take an economics course you'll see that there's many other principles that we're not going to cover which is fine principle number one there is no such thing as a free lunch all right so this is not like strict academic language but will get it gets to the heart of the matter principle number one there's no such thing as a free lunch so let's unpack what i mean by that if you think about what you're doing right now let's use that
as an example at this moment you are watching this video somewhere maybe you're in a dorm room maybe you're at home who knows you're watching a video this idea of a free lunch though begs us to ask what else might you be doing right now all right so what else could you be doing maybe you could be taking a nap maybe you could be at work maybe you could watch a video for another class right there's all these other things that you could be doing right now and so when we decide to do something whether
it's watch a video play basketball whatever economists want us to think about what we're not doing right these alternatives these things that we could be doing but we've decided not to right so maybe you could be working instead of watching this video so the way then that that alternative that other choice working ought to influence your decision to watch this video you should be thinking about things like well how much money could i make if i worked for an hour or the length of the video or a day what could i do with that money
and economists believe that you should think about this foregone right it's not the price tag for the course right that's your tuition but it's money it's a resource it's something that you could earn that you're not earning right now because you're doing something else right if we or if we think about a social issue economics is a social science so we're concerned about the individual but also society at large and if we take an issue like education right there's all kinds of problems with education in the united states and maybe we believe that the government
should spend more money we should devote more tax dollars to education and that would improve life outcomes well the economist may agree with that statement they may disagree but in that they want us to think about what other uses could those tax dollars be put towards maybe we really need roads maybe it's national defense maybe it's public health who knows but there's these alternative uses and if we spend money in one area that means that that money would not be spent in another all right i'll give you one more example perhaps you're watching this video
and you're very tempted to skip it like oh my gosh economics is the worst there's so many other things there's so many amazing things on instagram right now or maybe you think i know what i should do i should watch this in double speed right i'm going to cut it in half right so if these thoughts have entered your brain you're thinking it like an economist right you're you're responding to opportunity cost you're thinking hmm maybe there's something better that alternative not watching the video my sitting in double speed is more valuable to me in
this moment than this alternative right and so if you were to do that right you're responding to opportunity cost which brings us to principle number two principle number two says are all stated this way that people usually know what's best for them all right so if you've decided that what's best for me is to watch a video on double speed or to skip it entirely nine times out of the 10 the economist is going to say you've made your decision you know yourself better than i do that's fine right but the problem with this is
is twofold one maybe it's the right decision for you right there's certainly people have plenty of friends that can listen to a podcast on double speed they pick up everything they're tracking with the interview and they finish it in half the time great the problem is for those of us that think they can learn at double speed and can't right so when i try to do that i miss half the conversation my brain wanders i miss large segments of it because i'm thinking of something else because i can't track right and so what the economist
would say is that might not be the best decision for you but it's your decision you own it and you deal with the consequences right we don't need to have a regulation that says everyone must listen to podcasts in normal time right most economists would say that's a waste it violates this principle of people knowing what's best for them well with that silly example we can extend that a little bit further that there's often times that people think they know what's best for them and maybe they don't or maybe they think it's best for them
and they're ignoring how their decisions impact other people right i deal with this constantly as a parent i have two young children and recently my son my son's 11 he's become interested in hunting i'm not a hunter if he wants to hunt that's fine with me the issue for my son though is he doesn't have a conception of how dangerous weapons are right so the other day we're talking about buying a compound bow he wants to buy a compound bow which i'm okay with as long as it's used responsibly and that's where the kind of
rubber hits the road i say jed jed's my son you know if you buy this bow you can't you can't shoot it at home and he has this dumbfounded look on his face why dad well i said jed our neighbors are right next to our house we live in the suburbs not a very big yard um jed it would be really easy for you to shoot an arrow if you miss the target it's going to go into our neighbor's yard you don't know what our neighbors are doing you could really hurt somebody so he looks
at me and he says why wouldn't miss right so his self-assurance is not well-founded he's never shot a bow i can assure you he will miss and he will miss often right so in his his idea of his self-interest what's best for him is to buy a compound bow and shoot it in our backyard i can assure you that it's in nobody's self-interest um and while we have this instinct as a parent we see this in society as well right okay we also see this instinct this kind of parental instinct in society as well over
the last few years there's been a big social shift in the ways that we think about marijuana right when i was growing up marijuana was illegal um there was huge public information campaigns to discourage the use of it and now it's not in in many states right we used to think it wasn't okay and now we've changed our mind right in terms of the legal code of the land and that's impacted the economy right it's impacted the economy drive through any town in oregon well not any but many and you'll see dispensaries where there were
none before you'll see people consuming this where they didn't before and this has had economic questions uh but certainly this is also impacting the way that people live their lives right maybe it's a change for the better maybe it's a change for the worst but we see this again this instinct to limit the ways that people pursue their self-interest at the social level okay third principle markets are a great way to coordinate production and consumption so going back to that first principle when we figure out what we're going to make what we're going to consume
it turns out that markets are a really good way to do this and this is really a function of the the second principle that people know what's best for them right forcing me to become a mechanic would lead to really awful automotive repair allowing me to become a professor hopefully leads to students learning economics right but when we think of this this idea of a great way so i said markets are a great way to coordinate production and consumption we need to put some more teeth to that and we'll do this in a later episode
in a later lecture but this this a great quote-unquote great way um we need to flesh that out what do we mean typically economists mean material affluence so the things that we own they might refer to income how much money do we make they might refer to the number of jobs so we need to put some teeth to this evaluation of a great way all right two more principle number four it's good to live in community right it's good to live in community so within these markets as people are buying and selling things it's better
to have more people to buy and sell from and this is for a few reasons right so if i live in a community i as an individual can start to specialize right so for me that means teaching economics fourth bakery it means baking bread and scones and cookies and as you do this right you're responding to opportunity cost economists believe it's better to specialize to be really good at something right rather than being a jack of all trades and a master of none right so if we think about uh we'll use my life as an
example if every day i had to wake up and make my breakfast from scratch right mill the grain bake the bagel um i don't know what i would do for coffee because coffee wouldn't grow very well in oregon uh go get the eggs from the chicken all of these things right they'd be so time intensive i'd never get anything done or it'd take me hours just to make breakfast right or if my car is broken down it's going to take me hours to fix it and so on but by specializing right so specializing in teaching
i can then earn income and i can pay the baker for their bagels i can pay the mechanic to fix my car right so i begin to rely on other people right so i rely on them and then in some way they're going to rely on me maybe they send their kids to george fox or to another university but they're relying on others for education right and that allows for people to be better at what they do and adam smith has a famous quote that goes somewh something like this that economic affluence or economic well-being
is limited by the extent of specialization so as we become more specialized more focused better at what we're doing a singular task perhaps the economy does better and better and this is true at the local level right i talked about my baker my auto mechanic and so on but it's also true at the international level right so i rely on a coffee farmer from ethiopia perhaps or a garment worker in bangladesh so there's this reliance built into the global economy as well that economists think is very valuable last principle last principle for today principle number
five says the government can influence market outcomes the reason we need this principle is that we need to recognize that government isn't just another actor in the economy right so earlier i referenced the legalization of recreational marijuana right this is something government facilitated because we've given government the power to do so right prior to the legalization if i stood up and said i think everyone should be able to smoke marijuana and therefore i will do so that's not gonna fly right or if today i stand up and say the law should be different me saying
that does not change the law right so government in many ways is acting as the referee of the economy it has the power because we give it the power to change the economy it can change the rules it can change the laws it can transfer wealth right so there's many different things the government can do and it's outside of the economy it often has different objectives power becomes an issue there's different ways that government operates and it's important to recognize those and so as we have this principle in mind it's important to note we haven't
said the government's perfect we haven't said that it'll always make the right decision we haven't said that it's run by saints or sinners for that matter that it should change outcomes just that it's capable of changing outcomes in a way that i as an individual or a corporation isn't and this will be important as we dive further into issues of justice and morality so as we bring this lecture to a close let's let's uh offer a few parting thoughts the first is that markets have provided unprecedented levels of income and material fluence right if you
were to walk around newburgh just walk around newburgh today some at some point and you would be in one of the wealthiest areas in human history right and newberg's not even the wealthiest area in oregon let alone the united states but if we look at all of human history newberg would be one of the wealthiest areas of human history you'd see people driving cars that cost more than many people make their entire lives right using handheld devices that can communicate with anyone in the world instantly these devices can tap human knowledge from the beginning of
time right so we see all of this affluence everywhere but at the same time you'd also meet people that were desperately poor okay at the same time you'd also meet people that are desperately poor that are lonely or greedy they're held in the clutches of addiction right so while economics and markets have blessed us in some ways with this material well-being there's also been costs and in many ways new problems new problems for us to consider and this is what we'll spend a lot of time with in in the next few lectures okay so look
at your scoreboard all right remember at the beginning of the video i asked you to keep a scoreboard your tally for justice christianity and morality if my count's accurate there should maybe be two or three tally marks which is not very much for a course on justice so the question is why my answer is this when we are introduced to economics we're given a worldview we're given a tool right and a tool is aim whirl yesterday i was building a grill my family got me a grill for father's day and i used a screwdriver for
many of those steps that screwdriver is not good it's not evil it's simply a screwdriver and that's what economics is it's a way to approach the buying and selling of things the ways that we facilitate material well-being and understand that so that more people can live slightly better lives and a tool is great when it's used in the right way right so that screwdriver when i use it to build my grill it works great but when i misuse it right if maybe i use it to make pancakes the next morning stir it in the batter
it's not really good at that i'll probably get sick because it probably has chemicals all over it when we use a tool in the wrong way we might get the wrong conclusions we might be led to very weird misguided places and so with these economic principles while we can begin to understand the mechanical nature of the economy we don't have much to say about issues of justice and morality and those are the issues that we'll take up in our next lecture
