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Unit 5: Unit 5: Long-run Economic Growth and Savings, Investment, Spending, and the Financial
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Economic Growth

In your readings for this Unit, you learned about the strongest contributing factors to
promoting economic growth and how governments can encourage, or discourage
that economic growth.
Analyze the roles of physical capital, human capital,
technology, and natural resources in influencing long-run
economic growth of aggregate output per capita, and how
governments can contribute, or discourage long run growth
through their policies and institutions.

The role of physical capital (which is just basically manmade physical assets) is the
more a country or company has of it, the more they can produce services and good.
(Gale Encyclopedia, 2000)

Human capital is basically an employee’s skill set, which this acknowledges that
not all employees are created equal. There is a positive economic value associated
to higher performing employees. Education, experience, talent, and knowledge all
matter in human capital. (investopedia, 2012)

Why is technology important? Because technology drives the advancement of
mankind, whoever has the technology and markets the technology, can usually
generate much revenue surrounding the best technology. Having more technology
allows us to basically to produce more output…with a certain amount of inputs.
(wellesley.edu, 2012)

Natural resources come in two types: renewable and non-renewable. The reason
these are important because they carry economic value and have to be factored into
the equation for harvesting and maintaining a consistence stream of available
resources – this directly relates to economic net benefits.
(washington.edu, p. 2)

Governments can contribute by encouraging a supportive environment, by doing
things like managing efficient financial markets, competition policies and open
frameworks for trade.
(www.un.org)

Governments can discourage growth by not investing in the technology, by not
maintaining efficient domestic financial systems, and by imposing tariffs and other
taxes on companies.

References

Gale Encyclopedia of Economics. (2000). Physical Capital. Retrieved July 7th, 2012 from
http://www.encyclopedia.com/doc/1G2-3406400717.html.

www.investopedia.com. (2012). Human Capital. Retrieved July 7th, 2012 from
http://www.investopedia.com/terms/h/humancapital.asp#axzz1zysSmj7u

www.wellesley.edu. (2012). Lecture 14: The Role of Technology in Economic Growth.
Retrieved July 7th, 2012 from
http://www.wellesley.edu/Economics/weerapana/econ102/econ102pdf/lecture%20102-14.pdf.

www.econ.washington.edu. (n.d.). Natural Resource Economics. Retrieved July 7th, 2012 from
http://www.econ.washington.edu/user/ellis/econ435/Chapter14.pdf.
www.un.org. (n.d.). Economic development. Retrieved July 7th, 2012 from
http://www.un.org/Docs/SG/ecodev.htm




Video 1
I find it very interesting when he mentions the United States as the first place
holder, but also includes Hong Kong.

How exactly is competitiveness determined? And why shouldn’t population
matter? For instance, the United States has 311,591,917 people and Hong Kong
has 7,068,000 people. I always find it quite amazing when people compare the
US to countries that are the size of one of our states. For example, I’ve heard
many comparisons between the US and Canada...and how well Canada does
things. Well Canada has 34 million people, that is the whole country; which is
roughly equal to California’s population. It’s easier to get things done when
you’re not the size of America.

Video 2
And it looks like why America made it back to the number one position in 2011
was due to success in the financial sector. They mention “quality” as being an
important ingredient in the recipe for successful competitiveness. I totally agree
with this, and believe America really needs to work on quality of products and
services we offer to ourselves as well as those global products and services we
offer the world.

The resilient and resistant ideas are pretty interesting concepts. I’m guessing
America is resilient.

I liked the idea of cultivating national champions.

Something that was mentioned about the iPad, about it being designed in
California but assembled in China, would change. They said America would look
into doing the assembly here...I don’t believe that will ever happen for three
reasons. One, Apple’s ideology is to use foreign slavery to save huge amounts of
money. And two, there almost always has been secrecy surrounding the
manufacturing of Apple products. I don’t see Apple employing Americans due to
Apple’s “Big Brother” corporate attitude. And three, Apple isn’t known for
following all the rules when it comes to the environment. When Apple products
are made overseas, there are by far less regulation than if that same product was
made in America.

So Professor, do you believe that corporations should be regulated? Or do you
believe regulations affect the profit margin and competitiveness?


http://www.google.com (2012). “Population” Retrieved on 07/07/2012, from
http://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=coun
try:US&dl=en&hl=en&q=united+states+population.

http://www.google.com (2012). “Population” Retrieved on 07/07/2012, from
http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_totl&idim=cou
ntry:HKG&dl=en&hl=en&q=hong+kong+population

http://www.google.com (2012). “Population” Retrieved on 07/07/2012, from
http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_totl&idim=cou
ntry:CAN&dl=en&hl=en&q=canada+population


07/08/2012 6:44pm
Video 3
So, video 3 was pretty interesting. I found the idea that most companies are not
innovating to be quite an eye opener, but nonetheless it sounds completely true.
This would explain why America is no longer the powerhouse it once was. American
power really came from manufacturing and now we outsource most of the
manufacturing to other countries like China, mainly because of cheaper labor.

So how do we innovate more? Well, Larry said it, you need very small engineering
teams, with really smart people; if the teams and the company get too large, the
innovation gets muddled and lost. I'm a software engineer (with a life-time title of
being a computer systems engineer), and I can tell you, most companies I've
worked for are more concerned about petty, internal politics, immediate monetary
returns, and their image - in the most superficial of ways. Corporate tyranny has
gone a long ways in completely killing innovation.
---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page



07/08/2012 07:01pm
Video 4
So, I got 2 things from video 4. One, you cannot stop innovation (kind of a
no-brainer really). And two, costs of innovation are as important, if not more
important, than the innovation itself.

I have had friends work at Symantec and currently have a friend working at
Symantec now, and let me tell you, Symantec has big issues with turnover
rate. Why is this important? Because as new technology is being developed
by some great talent inside Symantec, that same talent isn't staying with
the company. So what you have is Symantec scrambling to try to figure how
half their own stuff even works. This is bad for internal moral, bad for the
product line, and ultimately bad for the customer - as they are receiving
products that no longer have their maker's support behind them.
Corporations really need to work harder on recruiting great talent, as well as
keeping that talent. Technology innovation, in general, is suffering from this
corporate phenomenon.


---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page




07/08/2012 07:13pm
Student discussion response
I agree that too much government interference hinders companies, but I wonder
exactly how much control the government should take? I hear all the time that
government should basically take a hands-off approach to corporations, that
corporations should just manage themselves; I don't agree with this. If anything
has been proven, it's that corporations are not responsible with their power; they
need regulation. My belief is, the larger a company is, the more regulation it needs.
This is to ultimately protect the American economy. No company should be allowed
to bring down the economy because it has made poor financial decisions.



---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page



07/08/2012 09:10pm
Student discussion response
Technology can definitely allow us to save time and money, though the real
issue I see in America is investment, investment in engineers. After all,
technology just isn't some magical phenomenon being generated in thin air.
It takes time, talent, and the belief that investing in engineers, is investing
in the future of America.

Something that you may not know, and is quite sad, that most engineering
positions are being outsourced to other countries. I have witnessed even
within my own field, computer science, (over the last 18 years) the
engineers around me dwindle down to almost nothing.

I really believe the future of America lies within the support and cultivation
of our engineers and scientists. But as of right now, we are in dire need of
change.



---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page



07/09/2012 10:13pm
Student discussion response
Corporations have become the new evil empires, and yes they have
amassed great wealth, and yes most of them have broken the rules to do
it. Large corporations are sucking this country dry, exporting all our jobs,
keeping all the money at the top, and worst of all, acting like CEOs and
other executives are God’s gift to this planet. Here’s a CEO for you, he gets
a 44 million dollar severance package:
http://www.dailyfinance.com/2012/07/06/duke-energy-ceo-to-get-44-millio
n-in-severance-for-3-days-of-wo/.

Corporations can’t be trusted with making sound decisions, because they
obviously cannot.
And, I don’t mean the small companies either. When corporations become
“too big to fail”, then it’s the government’s responsibility to make sure they
don’t punch holes into our economy that could possibly bring down the
whole system. This is what our forefathers believed, this is what I
believe. No man (or company) shall be given enough power to bring this
great country to its knees, which has just recently happened because
nobody was behind the wheel.

Poorly run government is the least of our problems. Crystal palaces with
their kings and queens pose a much larger threat to the fabric of America.

---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page




7/10/2012 12:42am
Video 5
I got several things from this video:

One, being productive is almost the same as being competitive. Most
American innovators have known this for a very long. The real challenge is
getting the people with the money to invest in high quality production.

Two, Michael says traded wages determine local wages in a region. I'm
guessing this means that the higher the regional production of any given
product, the higher the wages in that area. I'd like to know more on how to
boost traded wages (beyond urban core).

Three, building healthy economies is not so easy. Most of us laymen
already know this. Michael talked about urban core and shifting leadership,
but I don't think corporations would ever do that just because of startup
costs and economic cultural shift.

Four, which left me a little confused, he mentions we have a worker
shortage, then goes on to say we have high unemployment; a little confused
about that.


---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page
7/10/2012 12:52am
Video 6
1st watch
Pretty interesting video. I like the unlocking the hidden opportunities for
production. Liberating information was kind of glossed over though. What
exactly did he mean by that? We are living in the age of information.

2nd watch
Ah, of course, basically a few high-tech sector companies are really driving our
economy through data driven decision making. I wish he would have given a few
more examples. Also, if we go on what we've been learning, there needs to be
more competition between companies to drive competitiveness.

---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page




7/10/2012 11:03am
Video 7
I found that China may end of producing the world's most popular brands, pretty
interesting. Currently I look at China products as low budget, whereas Japanese
products are top notch. An example would be the Lenovo laptop, pretty low budget
really. In comparison, Sony makes the Sony Vaio laptop, a very nice, high end
laptop.

---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page


7/10/2012 11:12am
Video 8
The global market is growing exponentially, what I find very interesting is
that it is getting harder and harder to predict what future economies will
look like. Obviously America needs to step up its game. It’s only a matter of
time before America realizes it cannot continue outsourcing the most
precious commodity we have, our jobs. We need to bring jobs back to
America in a big way, all the while trying to figure out how to make high
quality products and services at an affordable price.
---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page




7/10/2012 11:36am
Video 9
I don’t believe poverty is extremely complex like the video states. If you
don’t have something that is valuable to others, something that people will
pay for, then you’re going to be poor – plain and simple (that's a person, a
company, or a country). Just look at any of the top 25 impoverished nations,
their country’s assets are extremely low. Capitalism only works if you can be
a part of moving product (somewhere in the process from beginning to end),
and nations that don’t have a product to move, cannot compete in global
markets. So what is the solution? Basically they need skills. Skills like
manufacturing would be a great start. But eventually you would want them
developing their own products, and selling those products in a free market.

Many of the developing countries also have extreme corruption within their
governments; this is not helping them - it is exasperating the underlining
conditions of poverty. It’s going to take way more than just opening a local
daycare to pull countries out of poverty. There are no easy solutions. Many
countries will stay in poverty unless they pull themselves together, and pay
attention to more successful countries. And in the end, it doesn’t matter how
many millions and billions of dollars America pours into countries in poverty,
they have to learn to be self-sustaining on their own, and that is ultimately
their responsibility. Don't get me wrong, I'm all about helping people, but
Americans need help too. We need to make ourselves stronger before we
run off throwing hundreds of billions of dollars onto sinking ships.

---------------------------------------------------------
Eddie Jackson
GOK - Philosophy Major/Liberal Studies
http://eddiejackson.net university page

				
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