It may be true that you will never need to consciously apply the economic theory of the invisible hand in whichever endeavor you choose, however it may be the very foundation that you build on if you choose to pursue economics as an academic discipline. The invisible hand theory was used as a metaphor by economist Adam Smith to describe the self-regulating nature of the marketplace. Used in conjunction with the economic forces of self-interest, competition, and supply and demand the invisible hand theory can be a valuable aid when trying to understand the state of the economy at different points in time. It can also be a helpful tool to formulate strategies to improve the efficiency of a given economic situation.

The Invisible hand provides a justification for the Laissez-fair economic theory which proposes that the best approach to solving an economic crisis may be by taking a “hands off” approach with little governmental intervention. The state of the economy will not be constant or accelerate until the demand created from the needs of a community become constant. Until then the economy will fluctuate more or less with the cyclical needs of the populous.

Religion brings up an interesting aspect of economics. Specifically I am referring to the cyclical patterns of spending and saving induced by the calendar events in a given year. These periods were formed in accordance with the seasonal harvest periods as they apply to different regions of the world. Religion provides a general explanation for the predictable events that take place during the course of the 365 day cycle that the earth travels through. For example Christianity encourages the sharing of resources during winter when resources and work become scarce. In December markets rely on the values and beliefs engraved in Christians, Jews, and other religious denominations to facilitate the exchange of goods, services and money during times when humans would not naturally do so. It is interesting to observe correlations between the economy and the strength of a religious following. This view can help to explain some of the natural hostility that arises between religious and ethnic groups. When one person from one part of the world comes to another part of the world where the climate and seasons differ, their religious consumption patterns may offend the natives because of their awareness of the patterns of scarcity and abundance of resources at a given point in the year. For example if a Christian tried to celebrate Christmas in a part of the world where it would not be practical to do so hostility may arise to protect the way that the community functions.

It is because you are frugal that you do not understand the consumption needs of those who buy compulsively or to fulfill a perceived necessity. Many times individuals may buy things just to buy them and do not give a thought as to why they bought what they did, all they know is that they receive a positive feeling from consuming things. As humans we are natural consumers. If we did not on a basic level consume food, water, clothing and shelter we would not survive. Before we lived in societies and communities we were on our own hunting and gathering in order to survive. When we caught game or acquired a necessary resource our bodies would release a hormone in our sympathetic nervous system such as dopamine and serotonin as a reward for preserving, and perpetuating one’s life. Now we live in societies where we are no longer required to hunt and gather in order to survive. We have not yet fully evolved mentally out of the state of the hunter gatherer so it makes sense that some people still receive a dose of a given neurotransmitter every time they buy something regardless of the necessity to that individual’s survival. Successful marketers have tapped in to this theory and manipulate people through certain media to stimulate or impede our behavior in the market.

Consuming to impress (specifically expensive cars and clothes) can also be explained by our innate drive to dominate and attract or repel different social and economic classes of people to facilitate the reproduction of our species. Social Darwinism theorizes that those with superior genes will be chosen to reproduce and make our species stronger. This is not limited to physical characteristics but also includes mental capacity and the ability to generate income in order to provide.

These are all theories that help to explain the nature of economics. It can be difficult to understand certain economic phenomenon but if you apply different disciplines in conjunction with economics you can better understand the way that the economy works. By studying other disciplines as well (electives or minors) you can better understand and apply the teachings of economics.

Black Friday

Only after you have absorbed an economic concept does it seem like common sense. Economics is like any other discipline in life. Take for instance riding a bike. At this point in life if someone asked you how you ride a bike you would probably say “its common sense”. But think back to when you were learning to ride a bike or drive a standard car and all the frustrations and difficulties that you struggled through. Once you understand the “common sense” fundamentals of economics you can apply them in ways that you had not thought of before. The way that you, (and most people), have been introduced to economics (principles of micro and macro economics) you are left little room for variance and practical alternative economic perspectives (at least at first). Although boring, these necessary fundamentals lay the foundation from which you build upon a system of knowledge (If you follow the discipline).

Let us go back to the beginning to the essence of economics which is "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses." This means that available resources are insufficient to satisfy all wants and needs. Through this definition you can begin to see how economics becomes more than taxes, business, money and other things you “don’t need to know about”.

Being Black Friday I thought it would be appropriate to analyze this day from an economic perspective. Every year on this day following Thanksgiving businesses have sales to incentivize consumers to buy their products in hopes of going “into the black” (become profitable). This is all part of a larger cyclical economic system designed to make people feel as though they need to buy things in an attempt to boost the economy.

Typically Black Friday uses low prices as an incentive to buy things, but there other techniques, like planned and technical obsolescence, that are used throughout the year to add to consumer’s desire to buy.

Obsolescence is the state of being which occurs when a person, object, or service is no longer wanted even though it may still be in good working order.

Sometimes marketers deliberately introduce obsolescence into their product strategy with the objective of generating long-term sales volume by reducing the time between repeat purchases. One example might be producing an appliance which is deliberately designed to wear out within a predetermined length of time of its purchase, pushing consumers to replace it within this time period. This tactic is what is known as planned obsolescence.

Walk into a Best Buy or a Wal-Mart, stop, look up and take a minute to think: Where did all of this stuff come from? These products are all made from natural resources that are extracted from the earth in one form or the other at different rates. Some of the natural resources are exhaustible making them a scarce and limited resource. Next think about all of the chemicals and toxic materials that were used in the process of bringing these items into existence. We inevitably face trade offs between environmental degradation and the production and consumption of goods.

Our nation has been raised on advertising and television to believe that we need to buy things in order to feel good about ourselves, chasing cars and clothes perpetuating a never ending cycle of consumption only to be persuaded by the “next best thing”.

only after you have absorbed

Eco |>()$t

I found it very interesting to learn about the economic trade offs between development and environmental degredation. This seems to be a constant problem in our society today and it is fascinating to see an economic point of view dealing with this issue. Overall this blog showed me some examples of what we have learned in economics, but in an actual job setting. It helped solidify some of the topics I was unsure about.

Eco

...umm

hey, this is zach, dont know what you want mrs healy...

http://trackmill.com/free-rider-2/Tracks/711088

Okay this is Spencer I have no clue what you want me to write but yeah...