Saturday, October 3, 2009
Two Masters Speak on Power of Markets
The "free market" lectures--we had them last week at Stanford--are my favorites in Economics One. I wear this Adam Smith tie, give a short summary of Smith's writings, read his story of the woolen coat from the pages of his Wealth of the Nations, and then we all watch Milton Friedman's two-minute pencil lecture on YouTube, where you can see that he also wore an Adam Smith tie. We then dive into the technical explanation of how with competitive markets the price system leads to an efficient allocation of resourses and production. I only wish Smith were on YouTube. Next week we consider monopoly, which is not a story of efficiency.