Jonathan Webb, Chapter 12, Question 6

       Reading the two passages about how trade makes us richer and trade creates losers cought my attention the most. I thought it was funny but important how he went from talking about all the advantages of trade to the bad side affects of it. About trade making us richer, he says, "productivity is what makes us rich, specialization is what makes us productive. Trade allows us to specialize" (275). He gives examples of why it's better for people in Seattle to engineer airplanes rather than spend their time on making shirts where people in Banglesesh can do it because they do it best there while the people in Seattle do best by engineering planes. I agree with that. But when he gets into telling about how trade creates losers is where I question him. He mentions in trade, the Gaines outweigh the losses. An examle he gave was In Maine there is a shoe factory where many were employed but the the company notices that it can move the factory to Vietnam and pay those workers a lot cheaper than the ones in Maine. He then brings up that someone had written him, they're going to stay poor no matter what. He agreed but went on talking about how it's still better for the factory. My question is, why can't they keep the factory in Maine and keep Americans employed. Yes it's more expensive, but those workers can use the money they get and donate to the people in Vietnam. The people here might not know how to do anything else Either!Like he says no matter what, someone is going to lose out. But I think we need to focus on employing people in our country first rather than having these business take advantage of others. But again, he's an economist, and they think about the long run. Trade facilitates growth. But where do you draw the line on when is it not the best option to think about the long run? Or is the long run always the best option?

Griffin Pontius, chapter 13 question 6

       While discussing human capital in this chapter,  Wheelan writes about skills and how they matter in a developed world; what really caught my attention was when he began to talk about how little of incentive there is to attain skills if one does not live in a "skilled" area.
Wheelan ends his paragraph with the following quote, "If a nation starts out skilled, it gets more skilled. If a nation starts out unskilled, it stays unskilled."
       This idea was a foreign one. It seems like common sense that people would want to continuously push themselves to become better people. But in unskilled countries, it seems to be the oppisite.  Wheelan provides a great example of how a skilled worker needs other skilled workers to be successful. (The heart surgeon needs nurses etc) He then goes on to explain how there is much less of an incentive to become skilled if those around you are the same way.  It shocked me that this was the case, but at the same point it makes sense.  It really makes me wonder what kinds of things these unskilled people (who are very trainable) could become.  Who knows, it sounds crazy, but Micheal Oher was that way, who's to say there aren't more like him?

Nathalie Heidema, Chapter 12, Question #12

People and businesses do things that make them better off so is it with (international) trade and globalization; the benefits from them far exceed the costs involved. Trade makes us richer by freeing our time and so allowing us to do what we can do the best - and thus be productive. Productivity, then, is what makes us rich and specialization is what makes us productive. Trade allows us to specialize ad therefore it's so essential. "Trade makes the most efficient use of the world's scarce resources." The downside of it is that it also destroys (especially low-skilled) jobs (even though in the long run they are replaced by new, more efficient ones). The economic gains from trade outweigh the losses, but the losers lose badly. To avoid that, protectionism tries to save jobs. Although it's clear that they saved a certain amount of jobs, it's difficult to estimate how many new ones could have been created. And so by cutting off the trade in order for businesses to survive, a country is made poorer and less productive. That's how by imposing taxes on Brazilian oranges , the government Mae a trade barrier out of this tax. The orange juice became $0.30 more expensive and by taking this money from common citizens it benefited merely the interest group - the orange growers in Florida. 

Trade is also good for poor countries, too. It gives them access to developed markets, export industries pay higher wages and create more competition for workers (which raises wages elsewhere) and also they are introduced to foreign capital, technology and new skills. 

Economic development is not necessarily just bad for the environment. It's true that with production pollution is involved, but as we get richer we care more about the environment and have more resources to help it. It's tricky with the climate change though. As China and India are getting richer, they produce more and build more plants that release a lot of CO2 emissions. The solution would be promoting growth in ways that minimize environmental damage and impose carbon tax. 

Zach Du, Chapter 13, Question 6

The part which talks about Geography's effects on economy really caught my attention: "Given the varied political, economic, and social histories of regions around the world, it must be more than coincidence that almost all of the tropics remain underdeveloped at the start of the twenty-first century" (303). Development expert Jeffery Sachs gives us the answer of why these tropical weather has negative effects on economy: in the tropical areas, where always has high temperature and heavy rainfall, food production is much less efficient than European countries and it's much easier for diseases to spread all around the town; on the other hand, Chicago for example, would have much lower possibility to suffer diseases, because its cold weather could control mosquitoes, therefore reduce the spread of any bacteria.  

Peter Webster Chapter 13 Question 6

Human capital and money are clearly very important in creating and maintaining a successful economy, but they are much more important in a failing economy. By failing economy I am referring to countries like Ghana, Chad, Haiti, etc. Bringing human capital and money to these countries may really develop the economy. It will bring innovative ways to do things, increasing the productivity. With money, technology and equipment will be purchased. Since a lot is done through human labor in poor countries, productivity would be increased tremendously using machines. If people are coming from a country with a successful economy they could bring ideas to other countries to help develop another economy. Bringing education and basic medical supplies would decrease a lot of illness and increase human capital, leading to jobs.

Julia Carle, Chapter 13, Question #7

After reading chapter seven of Naked Economics  is mainly about how economics knows how to solve many economic problems, but at the same time, economics doesn't know major economic issues. Wheelan even stated "we do not have a proven formula for growth that can be rolled out in country after country like some kind of development franchise" (296). What I've learned from reading this chapter though, is that economics doesn't know exactly how to have every country be as prosperous as ever. I also learned the sad truth when it comes to the impoverished part of the world which is two billion people. That is a crazy high number that I wish wasn't true. I knew poverty was a big problem worldwide, but I was completely oblivious to how many people are affected by it. It has broadened my perspective on worldwide poverty. It's made me feel more grateful that I was born into a relatively prosperous economy compared to others around the world.

Maddie Binning, Chapter 13, Question #4

The solution to fixing the economy of developing countries is not a simple one. While the things Wheelan suggests such as fixing the government and their policies, finding the resources to properly use human capital, and raising up women make logical sense in the fight to bring these countries into the healthy world economy, success is questionable. The many steps it would take to fix a countries financial situation is far more involved than many of these corrupted governments will be willing to take part in. Intervention from other countries often gets messy and threatens to create conflict. For these reasons and others, the success of the developing world depends on the reformation of government in a number of countries hence creating a very involved and difficult path to success.

Olivia Barr, Chapter 13, Q.7

     While reading this chapter I was astonished by the number of complex issues aside from poverty itself that keep poor countries from economic development, and ultimately escaping the grips of widespread poverty. Things as seemingly insignificant as not granting property rights can serve as a major hindrance to economic development. Some of the most prominent factors of widespread and prolonged poverty is lack of human capital, infrastructure, and economic activity, but it is unfair to blame "laze" citizens for these things because if they are forced to spend large amounts of time protecting property that is only nominally theirs, they can not be expected to get a formal education that would enable them to get a good job and contribute to the economy, or even create low cost methods for developing infrastructure within the weak economy of their country that could arguably light the path to economic development.
     It was also very shocking to me to read that poor economies foster political and social unrest. That is not something that I had not known before reading this chapter, but I hadn't fully realized the importance of that fact. While living in one of the most stable countries in the world, both socially and economically, we are a target for groups who are radically disheartened by the conditions within their own countries, so as a result the United States Army sends troops and drones to combat these issues; maybe a better response to fighting terror groups is to identify the issues that contribute to poor economic circumstances in their countries of origin, and provide guidance in eradicating them before they become extreme enough to foster radicalism rather than giving the countries more reason to dislike the US by sending troops into their land.

Angela Scharf, Chapter 13, Q.6

     A part of the reading that interested me was the passage about no excessive regulation. This section refers to the government regulations that are unnecessary and provoke corruption within the bureaucrats. Government officials, especially in underdeveloped countries, tend to enact excessive civil codes and rules that make opening businesses difficult and unnecessarily time consuming. The natural human tendency is to want to avoid these regulations, and in order to do that these entrepreneurs pay off individuals in the government, further promoting corruption. This allows the business to open earlier, but sets their income back because of the cost of bribes. This passage explains that the excess regulations are only helping the well-off government officials, while discouraging business owners who need the money. This cycle proves to be detrimental because these excessive codes decrease productivity and potential spending, therefore bringing down the GDP and doing more harm than good. 

Jona Bakke, Chapter 13, Question #7

Something that I found particularly interesting in Chapter 13 is the observation that having natural resources does not make a country more successful or wealthy, but may actually be more harmful than helpful. Wheelan points out that Israel, who has no natural resources, is much wealthier than other Middle Eastern countries who have vast oil reserves. And Japan and Switzerland are much better off than Russia, who has far greater natural resources. This seems backwards; I would expect that resource-rich nations would naturally be wealthy from their ability to make profit off of their natural reserves.

However, Wheelan explains that having natural resources changes an economy and can actually be harmful. Mineral riches can lead a country to spend much of its time and resources exploiting these reserves, which takes assets away from other industries. Also, an industry of natural resources is prone to random price swings. Furthermore, countries that are rich in resources often do not use the money they acquire from these resources to better their nations. Wheelan states, "Money that might be spent on public investments with huge returns- education, public health, sanitation, immunizations, infrastructure- is more often squandered" (Wheelan 309). This idea that having natural resources can actually be more detrimental than helpful to an economy is very interesting and is something that I had never thought of before.

Darby Quast, Chapter 13, Question 6

While reading chapter 13, the passage about the importance of women in an economy struck me as very interesting.  Wheelan compared not investing in girls or women, to a farmer only planting on half of his land.  I always knew and believed that women should have equal rights as men, but I never realized how important this is to an economy.  In the Arab League, the per capita income growth has been only 0.5% a year.  This is lower than any other place in the world except for sub-Saharan Africa.    One of the problems thats causing this is women's status in these arab countries.  I also found the study in the Ivory Coast very interesting.  It showed that when women in developing countries get more money, they spend it on things like housing, nutrition and housing, where men spend it on tobacco and alcohol.  If Saudi Arabia ever wants to be one of the Top 10 countries in the world in technology, they are going to start using all of their recourses, not just half.

Nathalie Heidema, Chapter 13, Question #7

There are policies (and geographical endowments) that make the difference between rich and poor countries. First of all, effective government institutions are essential for a country to develop and grow. A country needs laws, courts, basic infrastructure, efficient collecting of taxes and so on. This, however, must be done in an honest, transparent way because corruption is what kills economic growth. Resources are allocated badly, innovation stifles and foreign investors are subsequently discouraged. Why are former Soviet countries doing so badly in comparison with Western Europe? For  sure the corrupt politicians have a lot to do with it. Another thing is property rights. Providing formal property rights makes countries most valuable assets (land) more productive and it encourages work. Next, human capital is what makes us productive, which subsequently determines our standard of living- wealth. Increases in education and training of labor forces is what has a major impact on countries growth and growth in income, it also improves public health and decreases infant mortality. Also, geography plays a role in wealth too just 2 out of 30 rich countries lie in the tropics. The weather can be attractive but it is bad for the food production and spreading of diseases is easier (malaria). Trade is also crucial for domestic businesses and industries in order to face international competition and thus grow stronger, which makes the economy stronger. The government should conduct responsible monetary and fiscal policy (not heavily over-borrowing) but avoid excessive regulations. Other points (but not less important) are democracy, gender equality and no wars. Natural resources might seem to some as determiners of wealth, however, why do resource-poor countries like Japan or Switzerland have far better economies than Russia or oil-rich Middle Eastern countries? Creating wealth is taking inputs like human capital and producing things of value. Poor economies are not organized to do that. That's why 2 billion people live on less than $2 a day.

Madison Webster, Chapter 13, Question 6

It was semi strange to me to think that skilled workers succeed most where there are other skills workers. This seems weird because I feel as if a skilled workers' time would be more valuable in a location where there is an absence of skilld workers therefore their talents would be rare. However, this is not the case. If a country is unskilled, they will stay unskilled because the resources are unavailable to remove themselves from this title. If a country is skilled, the will stay this way because there are numerous people to learn from and grow in a skilled area. Not to mention practice the skill they acquire. 

I was able to see this first hand. I traveled to Haiti this past February with 60 others on a medical mission trip. My father is an ophthalmologist and this was his fourth time down in Haiti to do surgeries and volunteer in the community. Since the rules regarding health and privacy are more lenient, I was granted the opportunity to join my father in the operating room to watch him do surgery. By my surprise, he was actually helping to teach a local Haitian ophthalmologist. This woman was skilled but was surrounded by an unskilled environment so was unable to practice her work. It took a number of skilled workers to arrive in order for her to succeed in a skilled environment. 

Taylor Bye, Chapter 12, Question 6

A KFC in the middle of Bali. Seems a bit odd, does it not? Maybe back in the 1980's when Charles Wheelan first saw this sight on his trip to India. Now it's common to see McDonald's and KFC's and other primarily American companies anywhere in the world, as well as seeing products from China and Germany here in the states. And that's a good thing! Maybe it makes me some kind of snob, but I can tell you that if I can afford a German car when I'm older, I will jump into that before any American car. This brings us to the overall analysis of economics found in Chapter 12: globalization and trade.

What I find interesting is that depending who you ask, globalization can either be a very good or bad things. It's quite relative...in fact, it's quite amoral. For example, a form of isolationism would keep certain American workers in their jobs but would slow down both our economy as well as the world's. Ask that American worker if isolationism is the way to go, he or she would probably say yes because they get to keep their job. Ask an economist, the answer would be a solid no. Ask someone who likes to avoid conflict and unfairness and they would probably frown upon globalization. But ask those higher-ups in the business world who are making millions off of people a half a world away and they'd be all for it.

Trade and globalization stimulates our interconnected economy and makes us good economists because we have to take into account how our spending/saving actions are affecting the world economy. Yes, it may cause some people to lose their jobs and an unfair competitive air, but it's working to better the economy as a whole not only for us here in the U.S. but everywhere.

Rita Hammer, Chapter 13, question 6

The majority of this chapter was about policies that economists believe make a country wealthy or poor. The part that stuck out to me the most was that natural resources matter less than we think. I always thought of countries with an abundance of oil, coal, etc were extremely wealthy; however, Wheelan points out that "Isreal, which has no oil to speak of, is a far richer country than nearly all of its Middle Eastern neighbors that have large petroleum reserves." It was surprising to me that Wheelan even pointed out that abundant natural resources may actually be harmful to the growth of an economy. His point relates to the importance of trade. He says,"they (mineral riches) divert resources away from other industries, such as manufacturing and trade, that can be more beneficial to long term growth." This statement puts things into perspective for me, especially when talking about poor countries. Having stuff simply doesn't make any country rich; however, having skilled, educated people and the ability to trade does.

Sophie Gunderson, Chapter 13, Question 4

Over the past summer, I participated in a World Vision Mission Trip with my church to a small town called Wallace, West Virginia. The culture of this Appalachian town was very different than the culture I grew up around in midwest Minnesota. In short, I was able to realize the huge wealth gap that is present in the United States through hands on experience with a family I worked with all week. However, instead of striving to get out of the immense poverty they lived in, I saw that it was generational poverty that was not going to end soon. They had no will to end it and they saw no way they could end it. This community had been working in coal mines their entire lives and had no other skills. So, once the mines shut down, they were out of jobs and out of luck.

While reading Chapter 13, my mind wandered back to this family and to this community. Charles Wheelan focused more on the different countries in the world that struggle with poverty and the continuous cycle of it but even though the United States is one of the most developed economies in the world, we struggle with the same issues as the poorest. At the very end of the chapter, Wheelan says, "things become better when there is an overwhelming political will to make them better." Along with the infamous saying of "where there's a will there's a way",  I think that with increased political effort and increased human capital, these families and countries living in ill poverty can be better off. Wheelans provides many ideas and examples throughout the chapter other than human capital but at the end of the day, it comes down to the will to make it happen and carrying through with that will.

Taylor Bye, Chapter 13, Question #3

It probably shouldn't be a surprise to me, but funny enough it is; that government is so involved in the economy of a country. I guess it just never occurred to me. Maybe it's because when I used to think economy, all I thought of was Wall Street and the stocks in specific companies. However this chapter, along with the whole of this semester, has proved me to be extremely wrong.

Economists Daron Acemoglu, Simon Johnson, and James Robinson had a theory about what would determine the economic success of a developing country. They believed that the success would directly correlate to the success of the countries that had formerly colonized them. They found that countries that had been colonized successfully by European countries had flourished while those that were difficult to colonize were much worse off. The impact of this was to highlight the importance of a stable, non-corrupt governing body in establishing the steadiness of a country and its economy.

Of course, I cannot hope to live in a country whose government is perfect, but since I reside in a democratic now, I at least have a say in who will end up in charge. This bit of this chapter made me think long and hard about how I will choose to stay informed and vote when the next election rolls around. I will look for someone who will establish as stable of a foundation for the country as he or she can and I will look for someone with good economic and social sense. I will not be mindless in deciding who runs the country I'm living in for as Acemoglu, Johnson, and Robinson found, whatever kind of government runs the country, makes the country what it is.

Peter Webster Chapter 11 Question 6

I found what he said about the gold standard to be interesting. The gold standard backed up American dollars in gold. A good thing about this was that it provided exchange rates that were consistent and predictable. The government couldn't print new money unless it had enough gold to backup the currency. The problem is that when money is backed by gold and it has a problem like in the Great Depression, foreigners want gold instead of money. Then the government has to increase interest rates, although that is the opposite of what people need during a depression. So the gold standard is no longer in use as it failed during the Great Depression.

Kiera Ziegler, Chapter 11, Question 7

This chapter caused me to look at currency differently. I now see that a country wants to maintain the value of its currency not only for its own economy but so that's it is appealing to the global economy. He used the example that if Mexico's currency had stronger buying power we would exchange our money for pesos so we could purchase more with less and live better.  When Wheelan said "National borders are political demarcations, not economic ones," this provided me with am entirely new view on global economy. The borders make the world seem separated and disconnected; however one thing we all have in common in money. Also, when Wheelan talks about currency exchange, I always though you would just exchange a dollar for a dollar, however that is not the case. The value of each currency must be calculated to know how much to exchange.

Harris Worthman, Chapter 11, Question 7

While I was reading chapter 11 of Naked Economics there was about two pages about the importance of the exchange rate between countries. If the correct value of exchanging different currencies is not equal then it is liable to have those that take advantage of the system to make a profit. It is also important to exchange for the right value in another currency because, in one instance, the author, Charles Wheelan, went to China and though he exchanged 100 dollars of his money for what it said it should be exchanged for in his book, he realized his book was outdated and he ended up only receiving about 13 dollars in return. The exchange rate is important not only for the average person but for governments as well. Many governments are afraid that when they receive money from another government that they recently created more money just to pay off their debt. That makes the value of the money they payed them to down.

Jonathan Webb, Chapter 11, Question 6

   When he said that, "in a modern economy, more than three-quarters of goods and services are no tradable." that was a big surprise to me. Because of the examples he was talking about earlier in the chapter about the car trades and my own experiences in my life I thought it would be that number just for tradable goods. The whole Mumbai example got me thinking just how relative the world is. I mean, some who is struggling here in the United States could have the same kind of benefits as someone would who is doing successful in a 3 world country. But the fact is, would they be happier in the U.S. or there. Or if you think the oppisate way, some famous rapper in Africa is getting all these benfits, but if they came over to the U.S. and earned the equivalent as what he was earning in Africa, it obviously wouldn't be as nice. So again the question would be, would that rapper rather live in Africa getting his benefits there, then"highlife" in Africa but worse conditions or to the U.S. making less and not getting the same benefits but living in better conditions with more opportunities?

Max Hobrough, chapter 11, Question 7

In chapter 11 they talk about international markets and how they operate and how they can relate each other. I think the most interesting section of this chapter is how they actually use the Big Mac Index all over the world to compare prices in the economy. This is an easy product to do a comparison because all over the world it has to be made with the same ingredients. This meathod can determine how strong an economy's currency is compared to other countries. Now though this is not as effective because different economy's have been crashing and the fast food lifestyle has gone down the drain. Another part of this chapter that seemed interesting was that Pepsi made a barter agreement with Russia for vodka because their currency was so soft and weak that it would be worthless for Pepsi to use. This system can be very effective because it can cut out all of the negative externalities for the most part, when it comes to the rate of exchange in currency. If more people started to do this they could get what they wanted without all of the unnecessary eceonomics effects.

Zach Du, Chapter 11, Question 6

In Chapter 11, the part which talks about relationship between China and US really caught my attention. "China's export-oriented development strategy depends on keeping the renminbi relatively cheap. To accomplish that, Chinese government recycles accumulated dollars primarily into U.S. treasury bonds, which are loans to the U.S. federal government. Both parties get what they want (or need), at least in the short run" (266). James Fallows stated that:"Without China's billion dollars a day, the United States could not keep its economy stable or spare the dollar from collapse" (266). But on the other hand, "The Chinese have it worse. Suppose America's debt burden grows beyond what U.S. taxpayers can (or are willing) to pay back. The U.S. government could default- simply refuse to honor its debts" (267). This means if US prints more money and creates inflation, the debts would automatically lose its value. What's more interesting:"In fact, every person in the United States has over the past 10 years or so borrowed about $4,000 from someone in the People's Republic of China" (267).