Hello Avery. I enjoyed reading your analysis of the chapters this week. To begin, however, I must disagree with your initial statement of the economy always remaining in disequilibrium. The economy is always working towards equilibrium and typically reaches it until the next problem arises that needs to be solved. This does not necessarily mean that the economy is always in disequilibrium, but instead sometimes. On a more positive note, I like your questioning of why it is harmful to know why a customer wants something and not just focusing on the goal of satisfying them. Knowing why a customer wants something can add value to the product and can determine what satisfies customers. I think that this piece of information would be important to know to gain more customers and improve your product. Going on to the next topic in this chapter, the ripple effect was very interesting to read. There is always a ripple in the economy based on events, whether they happen or not, the outcome is just different. We face the reality of getting necessities or things of enjoyment, and whichever is more important is the thing we focus on. When the shopkeeper’s window broke, he had to replace it and therefore supported the glazier. However, if his window didn’t break, then he was going to use that money to buy a new pair of shoes, which would have supported the shoemaker. It is weird to think about our opportunity costs and purchases because sometimes what we intend to buy ends up being something else due to an unforeseen event. This follows into the section of destruction, which is considered good for the economy but not for us. Your quote shows that destruction does not help people despite communities working together to get through the upbringing.
“Destruction is consequently not a way toward increased prosperity, as we saw above, and cannot be thought of as an empowerment of those directly affected” (Bylund, 2016, p. 82).
I agree with you that war is not good, despite the economic booms that occur to bring people together in times of trouble. War should not have to happen for the economy to fall back into equilibrium, but I understand the positive difference that is made when it does occur.
In the next section, I really like how you brought up a theme in chapter six that was discussed in chapter 7 about how natural disasters change how people value things. When a natural disaster occurs to take everything away from us, we learn what is more important to us and the things that we replace first are the things we value more. Necessities always come first with luxury items replaced last. I grew up in Moore, Oklahoma where we have had countless acts of devastation due to tornadoes. We always band together as a community to help each other out, learning that real value comes from the people that we have to get us back on our feet. Moving on to the topic of regulation, I like the quote that you used that is the base of the whole chapter.
“…the purpose of regulation is to change completely or influence behavior in some specific way to thereby cause a different outcome of the production and activities that take place in the market” (Bylund, 2016, p. 102).
Ineffective regulations do nothing to effect production or the economy because nothing about it is changed. One way that Bylund explained this was the example you provided about Adele and her orchard. I think this happens a lot when businesses and people try to go around government laws to satisfy their wants and needs when regulation tries to stop certain things. It is difficult for the government to fully enact something because there is always some way to avoid breaking the law by doing what is not stated in the print. Effective regulation comes into play when taxation is involved that raises the prices of what the government does not want. This makes people choose other products and services to save money and drives the thing that was taxed out of the system. I really liked your explanation of this whole section because you described almost every important point Bylund was trying to get across to readers. Regulation creates another ripple effect in the economy because when businesses are pushed out of the system, other businesses prosper from more customers. Former employees then must find new jobs, which can help the other businesses by keeping up with the growing demand, but also hurt them because they have to pay more people. This ripple effect is never ending because there will always be more regulation and even prohibition that changes how businesses and consumers live.