The Great Economic Problem

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Күн бұрын

In this video, we discuss how different markets are linked to one another. How does the price of oil affect the price of candy bars? When the price of oil increases, it is of course more expensive to transport goods, like candy bars. But there are other, more subtle ways these two markets are connected. For instance, an increase in the price of oil leads to an increase in demand for oil substitutes, like ethanol. And when the supply of oil falls, oil should shift to higher-valued uses. But, which uses? How do we decide where to use less oil?
This brings us to the great economic problem: how to most effectively arrange our limited resources to satisfy our needs and wants. Which approach - central planning or the price system - is better at solving this problem? Join us as we explore this question further.
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00:00 Introduction
00:30 How oil affects candy bars
02:18 How oil affects brick driveways
03:49 Solving the great economic problem
04:30 Central planning approach
05:06 Central planning problem 1: Too much information
06:31 Central planning problem 2: Too few incentives

Пікірлер: 33

@MarginalRevolutionUniversity Жыл бұрын

Continue learning with practice questions: mru.io/0qn

@brunovudulp 8 жыл бұрын

How can people dislike this video? So informative, they must be really angry or denying their reality

@longnewton1 3 жыл бұрын

It's over-simplified and ignores the problems of growth and capitalism. Simple.

@ameetkumar3178 3 жыл бұрын

Fantastic sr

@Michelle_odko614 7 жыл бұрын

Thanks a lot .

@AmateurCooking 7 жыл бұрын

nice video

@ameetkumar3178 3 жыл бұрын

Its very helpful

@ameetkumar3178 3 жыл бұрын

Nice channal thx

@Kolokommouna 2 жыл бұрын

The gentlemen kantorovich, glushkov and stakhanov would like to have a word

@tinyleopard6741 3 ай бұрын

@Kolokommouna As a mathematician, even Kantorovich noticed the difficulty of the optimal transport problem in its most simplest forms with massive assumptions, and the necessary information and kind and quality of information and the arbitrariness of how to integrate all of this to pick an optimal transport plan. The theory is there but doesn't mean what you think it means, and the gathering of the information itself needs the process to happen in the first place, which is what markets do anyway.

@thiagodelsole 3 жыл бұрын

It's easy put the "central planning" as a vilain in those lectures and the free market like the golden rainbow. There is plenty of positives aspects in the marxism and plenty of positives aspects in the free capitalist market. It's curious like statunitians economists always put the marxism like a terrible mistake. All the teorys need to be studied in a impacial point of view. All that said, I´m really happy for this course, it's amazing. Tks a lot MRU for bringing all this content for the world.

@dadinagasai2263 3 жыл бұрын

There is no incentive for common folk in central planning to work. People are not guided by their self interests, instead they are guided by self interests of few people who control the "central planning system" Its just slavery in new form.

@thiagodelsole 3 жыл бұрын

@@dadinagasai2263 well, if you put in this way of thinking, average people will work hard their whole lives to only survive and "pay the bills". In the free market few people owns the riches. And we already are in the hands and interests of few companies and people. We need better distribution of the incomes, rich companies and millionaires must pay more taxes to support social projects. We can learn a lot of good things in the Marxism.

@andrealvares5148 3 жыл бұрын

" There is plenty of positives aspects in the marxism" Uh, first, 'marxism' is a sociological/philosophical concept, not an economic one. It's about the class struggle. What you're talking about is the Marxian economics. It had its importance, indeed, but now, 150 after Das Kapital was published, it is just another page on the HET textbooks, just like The Wealth of the Nations. There's a reason why basically every single important economic scholar since the XX century rejected the Marxian approach. The first is the poor methodology, which wasn't of course Marx's fault, it was what they had on his time. The second is the fact that most of his premises are simply put, wrong, and if anything he said was right, it's already part of the mainstream.

@Kolokommouna 2 жыл бұрын

@@dadinagasai2263 uhm, have you ever heard of stakhanov? Socialist emulation, the competition between workers to increase efficiency in exchange for material and moral rewards, was a big part of Socialist production across the eastern block.

@turnthefrogsgay Жыл бұрын

I was thinking the exact same thing. I'm watching this series for a microeconomics course and, so far, it just seems like a giant advertisement for capitalism. Not to mention, there are several racist af bits mixed in to various videos.

@ramonramirez262 9 жыл бұрын

2nd

@1kaelacordova 9 жыл бұрын

1st

@ravenlorque3234 3 жыл бұрын

@d.m.collins1501 Жыл бұрын

Weird to use oil as a POSITIVE example of how markets work well. When, you know, we're turning our planet into a desert. Maybe a planned economy would do better about incentivizing NOT digging up every last scrap of fracked oil or tar sand and shoving it into the atmosphere.

@tinyleopard6741 3 ай бұрын

@d.m.collins1501 Desertification has restraints by climate. Also, the oil companies that inefficiently use oil are those state-ran companies in the rentier states, the oil-rich countries, because they have massive socialist policies propped up by the oil companies they have.

@edoardosavioli1472 3 жыл бұрын

but USSR did not go from the plow to the atomic bomb in 30 years?

@dotred107 Жыл бұрын

Don't think the average person in the Soviet Union was engaging with atomic science.

@longnewton1 3 жыл бұрын

... increased demand for ethanol and sugar also leads to deforestation in Brazil. This ‘externality' and the huge cost to the environment and millions of people due to the effects of climate change that is accelerated as a result, do not appear anywhere. Indeed, spending to deal with the impacts will boost GPD - this is the stupidity of capitalist economics. Take another example, the Exxon Valdez oil spill off Alaska, despite the huge environmental damage it caused, it actually boosted local GDP due to the spending on clean up. We need to fully cost in environmental damage and charge the oil companies among others for the damage to the climate that have caused.

@Andy-em8xt 2 жыл бұрын

Um yeah. There's already a well known concept in economics called externalities where there are social costs not incurred by the buyer or seller. Nobody says markets don't have flaws (except extreme ideologues). This channel has multiple videos on market failures like externalities and the inadequacy of markets to provide public goods. That said those are an exception to the rule, not the rule itself. When you first learn econ you learn the basics and fundamentals.

@Andy-em8xt 2 жыл бұрын

And boosting short term GDP is not really the goal. The goal is to sustainably increase long term growth and wellbeing. GDP is a good though imperfect metric for measuring economic activity and is highly correlated with other metrics of wellbeing. Labelling this as capitalistic economics is kind of absurd. It's just economics. Keynesian economics isn't socialist economics either, it's also just economics (Which the broken window fallacy you just mentioned was a criticism of). Yes a lot of ideologues weaponize aspects of economics to push their own political agenda, but this doesn't make economics less true.

@Kolokommouna 2 жыл бұрын

@@Andy-em8xt capitalist economics in a literal meaning are economics that describe the system of capitalism, one of many forms of economics throughout the millennia In a political sense, capitalist economics are the sub-branch of the literal meaning that looks capitalism under a favourable light. This view presents economics as less of a solid science and more as a field in dialectical conflict, were opposing views clash and evolve in search of the truth. To say with out a doubt that economics are 'just true' is ridiculous under that view, since it would imply contradictory ideas being simultaneously in effect, a fallacy

@longnewton1 3 жыл бұрын

Your description of central planning is so clearly biased. Most economies including the US, have a degree of central planning. It’s about degree, not one or the other. Less bias please.

@brianmelton7946 3 жыл бұрын

The great economic problem: too many billionaires, but no money to keep the poor from slipping further and further behind.

@greenleafyman1028 2 жыл бұрын

Yes, indeed a problem. I'm not calling for absolute equality but the big portion of world's wealth must be owned by the majority of the population for balance flow of money.

@longnewton1 3 жыл бұрын

Neoliberal economics 101!