Economic Systems and Macroeconomics: Crash Course Economics #3

In which Jacob Clifford and Adriene Hill teach you about Economic Systems and Macroeconomics. So, economics is basically about choices. We'll look at some of the broadest economic choices when we talk about the difference between planned economies and market economies. We'll get into communism, socialism, command economies, and capitalism. We'll look at how countries choose the kind of system they're going to use (spoiler alert: many end up with mixed economies). We'll also look into how individuals make economic choices.

Thanks to the following Patrons for their generous monthly contributions that help keep Crash Course free for everyone forever:

Mark Brouwer, Jan Schmid, Anna-Ester Volozh, Robert Kunz, Jason A Saslow, Christian Ludvigsen, Chris Peters, Brad Wardell, Beatrice Jin, Roger C. Rocha, Eric Knight, Jessica Simmons, Jeffrey Thompson, Elliot Beter, Today I Found Out, James Craver, Ian Dundore, Jessica Wode, SR Foxley, Sandra Aft, Jacob Ash, Steve Marshall

TO: Everyone
FROM: Martin

To gild refined gold is just silly.

TO: Dana
FROM: Cameron

Still holding out. We're going to make it!

Thank you so much to all of our awesome supporters for their contributions to help make Crash Course possible and freely available for everyone forever:

Raymond Cason, Marcel Pogorzelski, Cowgirlgem, Chua Chen Wei, Catherine Emond, Victoria Uney, Robin Uney, Damian Shaw,
Sverre Rabbelier

Want to find Crash Course elsewhere on the internet?

[kffjmcu]

*Main outtakes of this lesson*
1) As a social order, we have to figure out three things:
- What will we produce?
- How to produce it?
- Who will get it?
2) Two different economic systems: market economies and planned economies.
a. In _planned economy_, government controls labor, land and capital.
b. _Communism_ is primarily defined by the lack of private property. Class-lessness is a symptom of having no private property. There are no communist countries in the world.
c. Often _socialism_ has some private property and some public ownership.
d. _Command economy_ is totally controlled by government.
f. In _market economies_, individuals control production to get profit.
*Invisible hand* - the unintended social benefits resulting from individual actions.
"It's not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from the regard to their own interest."
The mechanism of the invisible hand is that if you produce unwanted or shoddy products, a competitor will produce better more desirable products and put you out of business. This results in businesses that produce the things that people want/demand most, at lower prices.
3) Modern economies are neither completely free market nor planned. There's a spectrum of government involvement.
4) Circular flow model.
a. Modern economy is made above households (individuals like him and you) and businesses.
b. Businesses sell goods and services to households in product market.
c. Households earn the money by selling labor to businesses.
d. Businesses pay for the resources on resource market.
f. Government also buys products and resources, i.e. to buy cars from businesses and hire policemen to drive them.
e. Government gets the money from taxes, households and businesses (and borrowing).

[stas]

Some notes if anyone needs em!

Economics systems are made when we figure out
What to produce
How to produce it
Who gets it
-2 current day economic systems are market economies and planned economies (which comes down to who owns and controls the factors of production) → Karl Marx classified these as Land, labour, and capital
-Planned economies have government controlling the factors of production
-Karl Marx summarized Communism as the abolition of private property → no country has ever been communist
-Socialist countries have a mix between private and sub-public ownership
-Command economy = everything controlled by the government (including output), which is opposite to a free market economy (or capitalism) where individuals own the factors of production, and government stays out of production, commerce, and trade → meaning businesses make things with the sole purpose of profit
-Invisible hand of the market = the unintended social benefits resulting from individual actions → why companies that make shitty things go bankrupt
-Government steps in in free markets to regulate production (to ensure proper standards of employment etc) and to maintain rules of law and provide public service like bridges and schools (things that won’t turn a profit)
-Modern economies are a spectrum of planned and free economies with varying levels of government intervention (North Korea ←most countries→ New Zealand)
-Circular flow model:
-Businesses sell goods through the product market to households
-Households pay for goods by selling resources (labour) to business through the resource market
-Government then steps in and helps regulate things by using taxes, and borrowing money
→ gets more complex with international relations, trade, and finance sector
-Your moral compass dictates what you believe is the appropriate level of government intervention, like providing a safety net for those with low incomes, or straying away from those who are in poor situations due to personal choices like drugs or gambling

[Ironfistinavelvetglove]

As a 30 year old who NEVER paid attention in school, I LOVE THESE VIDEOS!

Thank you to everyone involved.

[nakylaowens]

when you have an AP Economics Exam in two days, and you're about to binge-watch six hours of CrashCourse videos

[AirsoftPwnage]

As someone with experience in Economics and having taken Economics courses, this is an amazing way of summarizing important economic concepts in a simple way. Sure, some things I would show a bit differently, like expanding the circular flow diagram a bit, but this is an incredible start. Keep it up CrashCourse! Bringing information like this to everyone is so valuable.

[KadeeJo]

I can't even believe how engrossing economics is turning out to be. Jacob and Adriene do an excellent job of making economics both engaging, and understandable. THANK you.

[ahphodg]

This is a new subject for me that I am trying to learn. Never had economics classes so thank you for making this video series.

[nits]

"Well, actually, it will end, when humanity ends, because microscopic organisms..."

Aight I've learnt enough.

[cheongth]

Jacob should become a rapper. He talks too fast

[adrianhallsey]

This show is amazing. I'm from Mexico. I just discovered this YouTube channel and I can't stop watching all of your different programs. Keep up the good work.

[Nellak]

"There's always an opportunity cost."
Sounds like someone's been watching full metal alchemist.

[kevinhull]

I found this video through my microeconomics course (which, though I just started it, am enjoying immensely!). Anyway, in reference to the trade-off with government regulations between lower pollution and car prices, here is an idea:
Increase the availability of public transportation. This will reduce the *need* for cars, which will help households save on insurance and maintenance, which allows resources to go towards other wants. Plus, mass transit has a lower carbon footprint. Furthermore, the costs of pollution can potentially be quite disastrous.

Thus, I think regulations are worth it.

[killerfrenchy]

8:02 "It's not that they're heartless, it's just that they don't operate in the realm of feelings." Ya and that's the problem with taking their advice without any argument. We're humans, not corporations, we're supposed to decide to give a crap about others, not be amoral because it's more convenient for us. I'm so glad I don't live in the states. No offense guys, but I am perfectly ok with my taxes paying for social programs for those that can't afford stuff. And as for the helping smokers or gamblers, as long as I'm also helping to prevent that single mother out there somewhere from going bankrupt trying to pay for their sick child's medical bills, I'm happy with paying for the free loaders as well.

[RochesterOliveira]

I'm gonna tell you guys, Econ was one of the most hated subjects in my graduation (Business Administration), but this series is pretty awesome. Can't wait for the next episode!

[MustafaMianTheGuyWhoLikesPi]

"Nobody really cares about the new iPhone if there's a bomb dropping on your head"

They predicted the Note 7. #conspiracy

[laynevandoodle]

I'm in an intro Econ class in college right now, it's one of the 2 classes I need to graduate. I never had economics in high school, & I'm having such a hard time understanding it. I really appreciate these videos, i hope they help me, because my final is next week ;_; wish me luck.

[deadasfak]

That's an awesome AC/DC belt buckle

[GustavoSilva-nyjc]

It's heart breaking that the only content we have of Adrienne is this, i'm totally in love with her teaching skills and could listen to her for hours! Dream teacher.

[sirmungus]

Thank you for the "and a bunch of lobbyists"

[tisonvoigt]

I LOVE the Crash Course series and am happy to support it through Patreon. I wanted to leave a bit of constructive criticism for Mr. Clifford or the director of this series on economics. And I mean this with the utmost respect because I am a terrible public speaker, Mr Clifford, please slow down and/or enunciate better. English is my first language and even still it is at hard times to follow because of how quickly you speak.

Please keep up the great work!! I just finish micro and macro econ at university and am excited to see how you teach what I just paid over $1, 000 to learn. :)