Macro 2

2. Lecture 2
Macroeconomics

3. What would you
have to be paid
to never use the
Internet again?
Then you must
be a millionaire

4. Only possible
because millions
of people have
learned to
cooperate with
each other
To serve one
another

5. The most
creative-destructive
device ever
invented

6. What does it cost to ship an iPhone from China to the U.S.?
54¢
450,000 iPhones cost about $242,000 to charter
Fuel accounting for more than half the expense. 44,700 gallons

7. What is worth the most?

8. Optimize
Tradeoffs

9. Tradeoffs
Mileage Safety
A 2001 National Academy of Sciences study estimated that the traffic
death toll attributable to past downsizing was approximately 2,000
lives per year.

10. Economic Models
Simplified Version of
Reality
Value in Prediction

11. Incentives Matter
Change Incentives
Change Behavior

12. Incentives are
more important
than goals

13. Consequences
matter more than
intentions

14. Unintended
Consequences

15. Macro Micro

16. U.S. Farmers
1800 - 90 percent

17. U.S. Farmers
1900 - 45 percent
Gasoline engines
replaced horses

18. U.S. Farmers
2012 - 2 percent

19. What happened to those 88 people?

20. If you want more wealth
you more need productivity
productivity requires innovation
innovation requires inventions
inventions require ideas
ideas require people

21. What is Wealth?
What People Want

22. Wealth requires Innovation
People are the ultimate
wealth
Innovation requires ideas
Ideas require people

24. Get wealthy
by making
others happy

25. Every person
has the power
to create
wealth

26. Because every
person has the
power to make
someone happy

29. Learning English
Access to the world’s
knowledge

30. What if
Steve Jobs
had been
born in
Syria like
his father?

31. Scriptures Economics
Spirit

32. 10 Questions
1. What is GDP?
2. What is GDP per Capita?
3. What is the Average GDP per capita on earth?
4. What is the GDP per capita in your country?
5. What is innovation?
6. Are all inventors also entrepreneurs?
7. What are the six capitals of innovation?
8. What is the source of wealth?
9. What is the Magic Machine of economics?
10. Will a hurricane increase GDP?

34. Magic Machine

37. Trade is a
Magic Machine

38. Science
Hard
Soft

39. Most people
Most of the time
Economics is a
Soft Science

40. Ideas
Inventions
Innovations

41. Ideas - Everybody
Inventions - Inventors
Innovations - Entrepreneurs

42. Innovations
are market-tested
successful inventions

43. ideas
inventions
innovations
3%

44. Six Capitals
of Innovation
A framework for understanding
prosperity and poverty

45. Intellectual
Financial Physical
Human
Culture
Entrepreneur

46. Intellectual
Financial Physical
Human
Culture
Entrepreneur

47. Entrepreneurial
Capital
Make innovations
out of inventions

48. arbitrageurs
perceivers
synthesizers
value creators
converter
Entrepreneurial
Capital

50. Inventor Entrepreneur

51. What if
Steve Jobs
had been
born in
Syria like
his father?

52. Thomas
Edison
Inventor and
Entrepreneur
Very Rare

53. Human Capital
trust
health
trust
skills
knowledge
personality
relationships

54. Trust
Integrity
Competence

55. I look for three things
in hiring people.
The first is personal
integrity, the second is
intelligence, and the
third is a high energy
level.
But if you don’t have
the first, the other
two will kill you.
Warren Buffett, CEO,
Berkshire Hathaway

56. Physical Capital
natural resources
time
buildings
equipment
things than make things

57. Physical Capital
natural resources
renewable
non-renewable