The Recipe Economy

To hear the lecture, click here.

If we can put a man on the moon, why can't we cure poverty? (think of New Orleans; or third world countries)

You can design a space vehicle, but you cannot design an economic system

Economy is embedded in a cultural and political system and all these systems co-evolve

Evolution vs. Intelligent Design

We don't know how to nation-build, because nations are not built

The Bar Mitzvah Candy Theory of Wealth and Poverty--some kids grabbed a lot of candy, and there was not much left for others

The Growth Ethics Theory of Wealth and Poverty--wealth requires a work ethic, a public service ethic, and a learning ethic

The Bags of Flour Measure of Long-term Growth

In 1500, it took three person-days to produce one bag of flour. Today, in the U.S., in three person-days, we could produce 430 bags of flour.

Until 1500, very little growth. Most of the growth that has occurred in all of human history took place in just the last 100 years.

A graphical illustration:

Economic Problem--transform land, labor, and natural resources into goods and services that satisfy human wants

Think of Recipes

Behind the Food Court there is a farm, where plants and animals grow spontaneously in adequate but limited supplies...
Coming into the Food Court each day are consumers, who want meals. At different times of the day, these same consumers work in the Food Court, earning income to pay for meals.
When the Food Court economy was relatively undeveloped, there were only a few recipes. They required a lot of work to prepare, and the meals were monotonous, low in nutrition, and not very tasty. Over time, however, people discover new recipes, which add variety, efficiency, and pleasure to the Food Court. This is the process of economic growth.

Capital in the Recipe

The effectiveness of our recipes is measured as the average value of goods and services produced per person. Called per capita GDP

Progress Against Poverty: Other Countries Catching up with highly-developed countries

Progress Against Poverty: the escalation of income in the United States

Income DistributionPercent of Households
$75K and up8.226.1
$50K - $75K16.718.0
$35K - $50K22.315.0
$15K - $35K31.125.0
under $15K21.715.9

Components of the escalator: overall economic growth; individual family improvements

Reprise: Three Ethics of Growth