Special lecture Economics - by super time saving learning method - you can study it at home -
Lecturer by Hidetsugu Arima
１．Economic system = Mechanism of resource allocation
Economics is a social science that studies how people (citizens) can be happy using the "market economy" which is the mechanism of resource allocation.
We will think about how to make the country prosperous, how to improvethe people's living, etc.
Resource allocation is to produce the goods and services necessary for social life using scarce resources and distribute them to the public (members of society). This mechanism of resource allocation is called the economic system.
Resources are raw materials of goods and services. In addition to natural resources, it refers to human resources such as labor and technology.
Meanwhile, the happiness mentioned here is the life that is satisfied by consuming goods. Economy is an activity that satisfies materialistic desires.
The research field of economics is broadly divided into three: economic history, economic theory, economic policy.
２．What is Economic History?
Economic history is a study of the history of the economic system. By grasping the true shape of economic phenomena and analyzing the actual state of social order in each era, we will explore the norm of economic system (ideal form).
The importance of economic history lies in researching past economic phenomena and extracting new wisdom (economic theory) from there. This implies "Things present are judged by the things past".
Current economic system is capitalism/market economy.
There are many countries in the world. The country has an obligation to make the country prosperous and make the people happy.
Currently, the economic system adopted by Japan, the United States and many other countries is called Capitalism/market economy.
Capitalism and market economy is an economic system that leaves allocation of resources to private firms.
Capitalism is an economic system in which capitalists who possess production means pursue their own business interests and supply goods and services to society.
On the other hand, the market economy is an economic system in which firms (capitalists) produces goods and services that apportioned among households (consumers) by trading through the market.
In other words, capitalism and market economy refer to the same economic system.*
*Same economic system (Note)…Please refer to the following file.（pending）
（The economic system by which the government decides resource allocation, denying capitalism is called socialism. In countries where socialism is chosen, there are China, Vietnam, and others.）
３．What is economic theory?
Economic Theory is the study of how to make the lives of citizens optimal (happy) by using the economic system.
What is the "optimal" state ｏｆ our society ?
Optimization is to make the best state in the constraints. Constraints are conditions and limits that prevent free activities and the formation of things.
Restrictions on resource allocation are resource scarcity. It is the lack of raw materials and labor needed to make things (goods and services).
In other words, optimization is to raise the utility (satisfaction level) obtained by consuming goods to the highest level in the constraint of scarce resources. At this time, the people's lives (activities to satisfy their desires) are in a happy state.
Although it is difficult to capture the optimal state, in economics, we are trying to capture ｉｔ by establishing two criteria of "equilibrium" and "full employment".
"Microeconomics" and "Macroeconomics"
Economic theory is divided into microeconomics and macroeconomics. Both are social science to study optimal state.
In microeconomics, we are conducting research on whether the economy is "balanced (equiliblium)" by market mechanism (price adjustment mechanism) and research on "market failure".
Ｍacroeconomics ｉｓ ｔhe study on whether or not the market economy realizes "full employment".
４．What is Economic Policy？
Economic policy is the government actions to solve the deficiencies of resource allocation which market economy mechanism could not solve.
Economic policies are broadly divided into two types: short-term policies and long-term policies.
Short-term policy is a means to influence aggregate demand in market transactions, there are fiscal policy and monetary policy.
Fiscal policy is the use of government expenditure such as public works projects that affect the market economy by purchasing goods and services in the market.
Monetary policy is that the Bank of Japan (central bank) regulates money supply. In the event of economic recession or deflation, monetary easing takes place, increasing the volume of money supply.
Long-term policy is a means to affect the aggregate supply in market transactions.
①Deregulation promotes free competition and increases potential output.
②Government promotes the creation of infrastructure for new industries and technology development so as to increase the potential output.
③With the introduction of global progressive taxation system, we correct income disparity and resolve dissatisfaction of workers.
Thomas Piketty (Capital in the Twenty-First Century 2013) suggests "a global tax on wealth" as a remedy of income disparity problem.
参考 ： References