Economic Principles

The basic concepts of economics are not hard to understand because they (mostly) agree with common sense, but together they create a powerful framework for comprehension. Almost all economists across the political spectrum subscribe to the same basic economic concepts even though they may argue about priorities, policy, data and data interpretation, and many detailed economic mechanisms. This primer covers the basics of “free market” economics with emphasis on how productivity changes, trade, and immigration impact workers. No higher math is required.

Content of Economic Principles

Free Markets, Supply and Demand

Markets

Markets have been around since the earliest days of human civilization, having existed in ancient Babylonia, Assyria, Phoenicia, Israel, Greece, […]

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Free Market Caveats

So, if the free market is so great at allocating resources and meeting the needs of consumers, why doesn’t the […]

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Factors of Production

Factors of Production

When you make (almost) anything you need materials such as wheat flour, wood, steel, or plastic, which in turn come […]

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Natural Resources

Natural resources (aka raw materials) are all the materials and capacities which are provided by nature such as land, minerals […]

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Capital

In common parlance when we speak of “capital” we often mean “wealth”. In economics, capital is classically defined as the […]

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Other Factors of Production

Recently some economists have posited “entrepreneurship” as a separate factor of production. The entrepreneur is thought of as orchestrating the […]

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Productivity

Measuring Productivity

Businesses are always striving to minimize the cost of producing a given level of output. When designing a factory, for […]

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Productivity Summary

To recap, labor productivity refers to the value of output (say dollars’ worth of cars) produced when compared to the […]

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Productivity

The world we live in is incredibly complex. Sometimes it helps to create an imaginary world where we can think […]

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International Trade

International Trade

While most people understand the benefits of trade on a free market within a country, free international trade is not […]

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Comparative Advantage

Consider two countries, we’ll call them Rich and Poor. Rich is fully industrialized and has, on average, twice the productivity […]

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Can Trade Hurt Wages?

The assessment of trade just given indicates that international trade is always a good thing, that it just extends the […]

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Balance of Trade

We have made the blanket assertion that free trade, in currency if not utility (think overall happiness, we’ll get to […]

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Migration

Immigration

In the prior section we looked at how productivity and trade affect employment. Both cause changes in employment between sectors […]

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Capitalism, Socialism and All That Jazz

The Free Market and Utility / Happiness

The Role of Government in the Economy

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