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Lecture 2
Macroeconomics
Where
is the
iPhone
made?
ARM Holdings
Wolfson
Marvel
Skyworks
CSR
Linear Technologies
NXP
National Semiconductor
Sharp
Samsung
Toshiba
Infineon
Broadcom
Numonyx
Micron
Dialog Semiconductor
Texas Instruments
STMicroelectronics
Silicon Storage
RF Microdevices
Cirrus Logic
U.S.
U.K.
Germany
Korea
Japan
Taiwan
China
Made on Earth
Design
Manufacturing Parts
Assembly
Packaging
Shipping
Marketing
What would you
have to be paid
to never use the
Internet again?
Then you must
be a millionaire
Only possible
because billions
of people have
learned to
cooperate with
each other
To serve one
another
The most
creative-destructive
device ever
invented
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
What is worth the most?
Optimize
Tradeoffs
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.
Economic Models
Simplified Version of
Reality
Value in Prediction
Incentives Matter
Change Incentives
Change Behavior
Incentives are
more important
than goals
Consequences
matter more than
intentions
Unintended
Consequences
Macro Micro
What is wealth?
Anything people
value
What is capital?
Anything people
can use to create
value
Get wealthy
by making
others happy
Every person
has the power
to create
wealth
Because every
person has the
power to make
someone happy
Ideas
IntellectualHumanPhysical Financial
Inventions
Culture
Entrepreneurs
The Capitals of Innovation
Innovation
Human Beings
Markets
Innovation
AValuable Invention
Market-Successful
CreateValue
Ideas
Inventions
Continuous Innovation
Poverty to Prosperity
Innovation
Ideas
Inventions
Innovation
Ideas
Inventions
Innovation
Production
Innovation
Continuous Innovation
Shanghai 1990
Shanghai 2013
88 keys
How many songs are possible?
U.S. Farmers
1800 - 90 percent
U.S. Farmers
1900 - 45 percent
Gasoline engines
replaced horses
U.S. Farmers
2012 - 2 percent
What happened to those 88 people?
Learning English
Access to the world’s
knowledge
Scriptures Economics
Spirit
Magic Machine
Trade is a
Magic Machine

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