[Music] well thank you very much thank you and the whole team at later life learning for the opportunity to meet with you all online i wish it was in person but there are advantages to doing it by zoom namely we've got people from across canada in this course that we wouldn't be able to do if it was in one location on the other hand i do recognize that um uh there's a difference so in the way you learn when it's uh online rather than in person and the and the connection so i i thank you for your uh sticking with this and your your patience and your goodwill as we as we do this course uh online it's a wonderful program that later life learning offers through innis college and um i really encourage people to check out the other courses as well thank you to the participants for giving up a chunk of your autumn uh to join us every friday uh to learn about uh economics uh most people's eyes glaze over uh when they think about economics they think the topic is too technical to mathematical too mystical uh and they start to think uh well i'll leave that to the experts but one of my favorite slogans is that economics is too important to be left to the economist and we'll talk about why as we go through this course but uh i absolutely reject the idea that average people don't know about economics uh anytime somebody comes to me and says well i'm interested in economics i just don't know anything about it i asked him a few questions um first of all you know for good portions of your life did you have to drag your butt out of bed on monday morning and go off and do a job yeah okay did you earn some money in that job yeah did you pay the bills with the money that you earn from that job and hope there was something left at the end of the month yeah did you support your family uh with your earnings and also with your unpaid labor in the house by caring for them and cooking and cleaning yeah well then guess what you know everything there is to know about economics uh work uh consumption reproduction uh and community and that absolutely is the bread and butter uh of economics as we'll talk about as we go through this course so um i try to make it as de mystified and as accessible as possible in fact i've spent a good portion of my professional career teaching economics outside of sort of formal higher education settings i have taught at universities as well but i've done more teaching uh to trade union members to members of adult ed or economic literacy courses to community groups and community programs uh even to high school students and other young people not in a formal economics course but as an opportunity to learn about the economy what it is and why we should care about it and why we should all jump into the debates about the economy part of the i would say anti-democratic nature of how economics is traditionally conceived and taught uh is that by leaving it to the experts we're kind of saying the rest of us don't have a valid view or valid perspective because we don't know how to invert uh matrix algebra uh or uh do some of the other technical tricks of the trade and that's absolute nonsense the reality is we're all part of the economy we all play a role in the economy in fact the average working person does more for the economy than all of the paper traders down on bay street uh with their flipping bonds and stocks and derivatives those things don't actually create real value but an average working person when they go and do their job with their brains and their brawn does create value so we are the economy in that sense and we have a right to intervene and speak about it and express our preferences and make demands of the economy uh and part of our goal with economic literacy uh such as this course is precisely uh to give people the legitimacy and uh the knowledge a bit of knowledge but also the confidence to say economics is too important to be left to the economists now uh speaking of economists they also say an economist is someone who's good with numbers but didn't have the personality to become an accountant okay so i'll just you know i'll just kind of put that word of warning out there that's like the you know the safe harbor statement that you hear at the end of the ads for rrsps you know test returns are no guarantee of future performance economists are someone who's good with numbers and didn't have the personality to become an accountant okay there you go you're a fair warrant and uh in honor of our first course today i will point out i'm wearing my uh my my best economics tie which is uh all this currency uh on it it's a it's a a wide tie kind of 70s retro there and you'll learn through the course i i'm a real 70s retro guy at least as far as economic policies are concerned uh it is american money on this tie i should point out so if it was canadian dollars which it should be the tie would only be about eighty percent as wide as it is so keep that in mind uh okay well um what i'd like to do now is uh i will start uh sharing some slides and we will uh go through this uh initial uh lecture and uh we'll uh cover some material for some introduction to the whole course uh but then also um the first uh kind of lecture a bit of it we'll have one lecture uh each week and i'll talk for about an hour uh as merle mentioned you can throw questions or comments into the chat and then uh after a short uh a short break uh we'll come back together for uh a good chunk of questions and i really look forward to hearing from you so a little bit about me merle was very generous in uh in covering uh all of that uh higher education and so on and so forth i was raised in alberta my first degree as merrill mentioned was at the university of calgary just down the hall from me in my office when i did my honors degree there was a master's student by the name of stephen harper who was also studying economics at the university of calgary somehow we went different ways in life but that's uh that's all fine uh also uh studied in uh the united kingdom and uh america uh unlike some economists i didn't go into the banking industry or business or even academia i worked for a trade union when i finished my phd the former canadian auto workers union uh which then uh after 2013 um uh joined with an another big canadian union and formed unifor so unifor you you you probably have heard of it's the largest canadian private sector trade union and a great organization i still stay very closely in touch with in 2015 i finished my career at unifor and i moved with my family to australia for a few years where we set up a new research uh think tank on labor economics called the center for future work uh and then more recently i've moved back to canada most of the time i still do quite a bit of work in australia but i'm mostly uh based here in vancouver and i will acknowledge that i'm coming from the unseated terrain of the musculum squamish and slay with first nations here in vancouver and uh want to acknowledge that and pay my respects to their struggle for uh self-determination uh so um talk a little bit about how we're going to do this course just a kind of an introduction so you know what you're in for here uh we're going to meet 10 fridays uh every friday from one o'clock eastern uh except for november 12th which is a kind of a reading break at the university of toronto in his college so um we will um skip that week and then take up the following week i should note innis college uh of course is named after the great uh canadian economic historian harold innis uh who uh was one of the uh economists who helped to figure out uh canada's uh economic structure and how unusually reliant we were on the extraction and export of staple products heralding us invented the staples theory as it's known uh which pointed out the strengths but also the weaknesses of an economy that depends on boom and bust in all of these different stable industries from fish to furs forestry wheat and minerals and now of course uh bitumen and uh the lessons of harold linus are still absolutely valid and my position at mcmaster university is the herald innes industry professor of economics uh so um i love it i just love it that uh innocence's legacy lives on including through uh in this college and their partnership with uh later life learning um i have a full outline for the course that talks a little bit about each week's topics and the specifics that we're going to cover in them no homework okay don't worry there's no homework and the course outline is posted at that website center for future work dot ca uh forward slash ll course um so uh that's where the course outline is and then that's where i will also post the notes uh the lecture notes from each week um in fact i'll try to post the next lecture notes ahead of time for those who are interested you could print off the lecture notes and you know take your own notes as we go through so that material uh will be there and then also if you miss a course you can go back and pick it up and um uh and then at the very end of the course we'll post the video recordings of the lectures just the lectures uh not the q and a uh each week we'll have an initial presentation of about one hour in length uh five minutes to rest our eyes and uh grab a coffee and anything else that we need and then a q a for the remainder of course um we have a textbook that i'll talk about in a minute and each week there are some chapters assigned from the textbook again there's obviously there's no homework there's no tests so it's entirely up to you if you'd like to do the readings but i do recommend it because it gets into more detail than we can in the course of our lecture and um i do think that the textbook is accessible it's meant to be accessible to engaged non-specialists uh is what i is what i call it uh i thought of calling the book economics for dummies but number one i thought that was insulting uh and sort of reinforced the idea that uh uh you know ex-economics should be left to the experts which is exactly what i'm railing against all the time uh so then i thought okay i'll call it economics for engaged non-specialists that's what i call it the publisher said no way that is not going to sell uh so we came up with economics for everyone instead uh from time to time uh on different weeks i'll i'll recommend uh an article or two from you know the sort of uh popular media or um policy journals or other blog sites or other other resources and i'll mention those on the um on that website above as well and i do want to emphasize that i welcome your input and questions as we go through the course we do have the q a session at the end of each session uh but uh if again as merle mentioned if we can't get to them all then that's uh that's fine uh you're welcome to send me questions or comments or feedback or there are probably topics that you'd like to learn about or hear about anyways that uh are not going to be covered in the core curriculum and if i hear from you about those topics that you'd like to learn about um i may be able to uh sneak them into the uh curriculum for the rest of it so that's uh a bit about the course now i'll just kind of quickly summarize the full uh course outline is on that uh website um and you may have received a notice for it already but uh the way we're gonna organize we're gonna go through these 10 topics the economy and economics what is it that's today's course number two a little bit on the history of economics and economic history those are two different things the history of economics is how economists have evolved their thinking over time about the economy economic history is about how the economy itself has evolved number three is going to be devoted to uh work and employment and how we work and how we produce and in particular the issue of tools and how we use tools in our work number four we're going to talk about some of the uh inequality dimensions of our economy and in the in the workplace in particular um how workplaces are organized uh between owners bosses and workers and what all that implies for how the economy functions number five we're going to talk about government and the economy and how we understand the role of government uh and then in the rest of the course we'll uh jump into some kind of topics that help to you know pull out special angles of how the economy is working we'll talk about uh distribution and inequality we'll talk about the economy and the environment an absolutely vital uh subject these days we'll talk about money in banking and finance the wheelings and dealings of the markets that we hear so much about too much about uh in fact in day-to-day economics discourse we'll have a special session on covet and what's it what it's done to the economy and how we're going to come out of the crisis and hopefully build back better and then finally um you know you will detect in the course of the next 10 weeks an occasional tone of criticism from me about how the economy is functioned and what's wrong with it and so at the end of it in the tenth session we'll talk about how do we build a better economy what are some of the policy measures and structural changes and attitude changes and cultural changes that can contribute to an economy that works better for people for communities for the environment and that's when i really really like to get on my soapbox at the end i was a trade union economist as you know that's where i spent most of my career a union economist will strike some people as a contradiction in terms uh you know what are you talking about union economist unions are there they just screw up the economy how can you have an economist union economist that's like saying military intelligence you know or uh ethical investment or dare i say progressive conservative uh things that just don't make sense so uh at union economist i think actually it it makes sense for unions to have economists and many do now um i was one of the only union economists uh at the beginning of my career but and now there's there's lot which is great and i think that uh every again every institution and every constituency and every stakeholder in society needs to have an economist uh to help their members understand what's happening and help them advance their legitimate perspectives and goals uh talk a little bit about that textbook economics for engaged non-specialists title scrapped economics for everyone a short guide to the economics of capitalism and uh this book started out as a adult education course just like we're taking right now that's where this book came from we taught uh economics for trade unionists through the um paid education leave program at the caw caw was a great a pioneer in ongoing education for union members including in broader issues like economics and we pulled all the material together and then uh thought afterwards you know what this has broader application broader use broader value and so we publish the book this is the second edition of the book it has been translated into several languages and is used around the world um i think the the best value of the book is is the sort of accessible common language in it and they're almost no math uh very few figures uh lots of cartoons and lots of day-to-day life analogies um there's a website that goes with the book if anyone wants to look at some of the supplementary materials there economicsforeveryone.ca um you can learn a bit more about uh the book and different resources that go along with it including further readings um and even videos and and get this uh a word search puzzle okay you can if you're really bored on sunday afternoon download the word search puzzle from our website and you can spend the afternoon finding the names of dead economists and other topics uh in the in the word search that's how good it gets uh anyways um one thing that's on that website that uh i should mention in particular is there's a glossary um of course you know there's there is lots of jargon i try to stay away from the jargon but there is jargon and terms and concepts that come up and uh we've got a great big glossary of different terms that's on the website it isn't included in the hard copy of the book because the publisher thought it would take up too many pages but it is online and in the book you will see certain terms if you're using the book you'll see certain terms that are highlighted in bold small caps and those terms all have a simple definition of them in the glossary so you're welcome to check out the site even print off the glossary and keep it as a resource as we go through the whole course this book is not compulsory you don't have to have it but i will be speaking from the book at different points and i do think it's it's useful for those in toronto uh you can get the book at another story it's my favorite book store in toronto on roncesvales avenue uh they've been supplying it to lots of people who've registered and i called them yesterday and they still got lots of copies so you're welcome to go there to pick it up or they'll deliver it as well if you prefer that way during the pandemic and you can also get it at all the other usual spots i never send people to amazon to buy it uh but uh you uh you can certainly find lots of places to get the book if you like so uh finally uh i do like to think of this as a conversation uh that will carry on and you're welcome to engage in that conversation you can engage on social media if you like there's my twitter handle and the center's twitter handle um you're welcome to tweet from this course uh if you like that's fine with me uh we also have a mailing list through our center for future work uh we we have an office in canada now here in vancouver where where i'm uh broadcasting from as well as our office in australia and we publish on the economics of work and wages and uh future of work and technology and sustainability uh if you'd like to get normal regular updates uh you can join our our mailing list there or uh just uh send an email uh with the request to join and we would look forward to staying okay that was the uh introduction to the uh course uh itself i'll just wet my whistle with a bit of my timmy's doable double here and uh let's jump into our first topic for the course the economy and economics what are we talking about when we talk about the economy and um where are we going uh in terms of economic literacy and why are we learning this we're going to be referring to chapters one and two of the book for those that are following along and uh the topics that we're going to cover we're going to talk about the economy what is it the purpose of the economy uh we're going to talk about economics as the study of the economy how we measure the economy how we evaluate the economy what is a good economy our bad economy how do we know whether the economy is doing better or not um and then we're going to throw in what i call the c word we're going to name our economy the one that we live under here in in canada capitalism uh talk about what is capitalism as a particular form of economy uh what are its key features and then a little bit on uh how we understand capitalism and these are the key terms that we'll cover in the in these chapters uh of the book in this lecture and these are the terms that are all in that glossary uh that i mentioned if anybody would like to uh jump online and uh print off or just consult that glossary you'll see short definitions of all those terms so what is the economy anyway uh you know we hear these days uh a lot about the economy in fact every day we hear about the quarterly gdp statistics and other uh quantitative indicators we see the uh pages in the uh financial reports uh and other uh other news on the economy and worst of all worst of all in my books we hear this guy joe blow broker joe blow broker who comes on tv uh every day at 5 00 and 5 30 and 6 or on the radio even the cbc the people's broadcaster feels compelled to have the daily market update uh to tell us whether the stocks went up or the stocks went down and uh someone like joe blow broker will come on and say oh oh well bill the the markets are up two points today and then the interviewer will say oh blow broker tell us why and joe blow broker will say well bill investor confidence strengthened investor confidence strength then the next day they have him back on and he says well bill the markets are down two points why joe because investor confidence weakens oh well that's highly informative isn't it that's like listening to don cherry who thankfully we don't have to listen to anymore uh after this after the third period of the game well don why did the leafs lose because the other team scored more goals dawg so anyways you don't learn too much from those daily market updates but the fact that they're there every day is meant to tell us that that's where the action is that's what's important what goes on in the markets the buying and the selling and the uh pointless ups and downs of the financial markets well uh news for you it isn't the economy that isn't the economy that at best plays a big role in the economy uh at worst it screws up the real economy where uh people actually produce useful things and it gets way more attention and way more favors from government and society than it deserves the economy is not uh quarterly statistics and daily market updates the economy is something much simpler and humbler and it can be summed up with a four-letter word work w-o-r-k that is a four-letter word okay i have a ph.d in economics i can count before uh so uh and it feels like a four-letter word doesn't it on monday mornings i know some of our audience are retired and don't have to do this anymore but some of our audience still is working which means uh monday morning the alarm rings you groan you roll over you haul yourself out of bed and uh and get yourself off to your job and in the course of that job you're exerting productive human effort aka work that is uh you're using your brains and your brawn your your brains uh your ability to communicate conceptualize solve problems your brawn your ability to move things around and we use both of them in our jobs and we do those jobs in all kinds of settings we we do them in sort of a hard working blue blue-collar type jobs like construction we do them in service industries whether that's private services like restaurant meals that are served or personal services or business services we do we use those skills to produce value-added in public services like health care we think about that a lot these days health care education aged care child care where we're caring for other people in every case uh we're dragging our butts out of bed on monday morning going off and doing a job and every one of the people on this picture is producing more real value added for our economy than uh the paper traders uh who are buying and selling pieces of paper that are not ultimately useful well i shouldn't i shouldn't generalize i'm being too extreme there you can use that paper you can use it the wallpaper you can line your birdcage with it in a pinch if if there's been a run on toilet paper as we've seen in the last year you can always use it for that as well but the real value added in our economy is produced by human beings never mind uh the market updates and the quarterly statistics think about the economy uh being our work as human beings uh producing the goods and services that we need to survive and thrive why do we get out of bed in the morning and go and do that work because we have to support ourselves and that's true at an individual level because we have to learn and earn enough income to support ourselves and our families and it's true at the economy-wide level that is the engine that drives the economy forward it's people doing work in all of those different forms uh and uh places uh without work uh or broadly defined as productive human effort nothing happens in the economy so this idea that is often promoted that you know workers are disposable that workers are going to be eliminated by robots in the future that workers uh you know are tossed out on the street whenever they're not needed you know sometimes that happens obviously but worker workers and work in general are not disposable in fact they are the economy gross domestic product gdp as we'll talk about literally is the sum total of the value produced by people doing their jobs that's what the economy is and i like to start teaching economics with this as kind of a reframe because i think it um turns upside down a bit some of the conventional wisdom uh that we uh hear every day about who's important and who isn't important and it's the captains of industry and the financiers and the bankers and the stock brokers who are really leading the way um and you know in some cases they are making the decisions that shape our economy unfolds but the reality is it's other people the vast majority of people uh who are doing uh hard work physical and mental work uh that uh creates the value added that makes up uh our economy so um you know i like to think of this uh in our day-to-day lives uh you know again when people say i don't know about economics and then i challenge them with those questions uh about their own work and their own consumption and their own family their own community paying their own bills um i think about that as the economics of everyday life as opposed to the economics of uh financial market speculation and you can see your everyday life in your neighborhood if you took a walk around uh your neighborhood and uh looked at it through an economic lens uh these are some of the ways that you would see the economics of everyday life uh in action you would say what kind of work are people doing how are they using their brains and brawn to produce useful goods and services and that can be people on an on a page job where they're earning income it can also be people in an unpaid role at home caring for kids caring for elders cooking meals cleaning and doing unpaid work in the community as a volunteer soccer coach say um there you have people doing work producing value then um as i mentioned we we do that work to produce the goods and services that we need in order to survive and thrive that means we're going to consume some of what we produce we're going to enjoy the fruits of our labor by consuming the goods and services whether that's the clothes we're wearing and the home we're living in the essentials of life the food we're eating or the um good things in life the restaurant meals the entertainment the travel the recreation the care the education those are all ways in which we consume the output that we produced with our labor and that's a key part of the economic link as well what is being invested we'll learn more about investment as the course goes on but by investment in real economic terms we are not referring to buying an rrsp or speculating on bitcoin god help us uh what we're talking about in economic terms is taking some of what we produce and then not consuming it but instead pumping it back into the economy into our communities into our workplaces so that they can do better in the future that is the real definition of investment not buying a financial asset rather taking real output and reinvesting it in the economy for future productive purposes so are we seeing that happening are we seeing investment in our communities are we seeing investment in our homes are we seeing investment in businesses are they going high-tech are they using new machinery or are they just kind of running down the machinery and trying to make as much money as they can for a while until it all falls apart are we seeing investment in our infrastructure are we seeing uh both the physical infrastructure like roads and bridges and utilities or what about the social infrastructure child care centers and hospitals and clinics are we seeing investment in our environment or are we just taking the environment for granted and running it down as well now i am wearing uh my my dollar bill tie in honor of our first uh session today and money is part of the economy money is not the point of the economy or the goal of the economy again contrary to uh the amount of uh attention that it's uh but uh money uh certainly in a way greases the wheels of what's going on we live in a money monetary system where we pay for stuff that we buy and sell and and we use money in different forms obviously not just dollar bills in our wallet anymore we've understood that in a big way in the pandemic people hardly have any money in their dollar in their wallets anymore it's all plastic and credit and debit um and uh and so on but it's still money and it uh the role of money is to facilitate and lubricate all the transactions that go on in the course of the economy so where does money come from what does it do how do people get it how do people pay for the stuff that they need to buy uh above and so on uh finally if we're going for a walk in our neighborhood then we know full well we're going for a walk in the environment uh well for good or bad it is an environment and everything we do in the economy has a place in the environment uh we need land to work and live on we need air to breathe and water to drink and we need resources that we extract from the environment hopefully in a sustainable way hopefully we learn to do that in a sustainable way because everything every job that we do involves materials that were harvested from nature one way or another uh what economists typically call the free gifts of nature the things that are around us that we use in our work and we are learning uh slowly uh maybe not fast enough but we are learning that we have to put the environment into all of our economic analysis and understand what our economy is doing to the environment and um think about ways to reduce the impact on the environment so that we can keep breathing that air and drinking that water uh so that's the economics of daily life and if you went for a walk in your neighborhood uh you could see uh the economy at work in your daily life and your hood uh so here's a here's a cartoon from economics for everyone um i do want to give a shout out to tony biddle he's a graphic artist and designer in toronto if any of you work in organizations that need graphic art and design think about tony he's a wonderful progressive creative writer and illustrator and designer uh here's one of his cartoons here's the economics of daily life in this particular neighborhood and the woman at the bottom says everything that makes up the economy is right here you can see work happening in different ways uh you can see consumption people buying food and the other essentials of life you can see investment you see that building being built with a crane in the background that's a form of economic investment we're doing work that's being plowed back into the economy in the form of a lasting asset that will be used in economic production uh going forward and then of course we see the environment uh for good for bad uh and for ugly we've got a park there that's nice but on the other hand we've got a lot of pollution happening as well so it's all right there and then the fellow besider says um you know sure but where can we buy a beer and i am mentioning over and over again the essentials of life that we need to survive and thrive and i definitely put beer in that category and uh there is a beer industry that employs a lot of people okay adds a lot of value uh so as i kind of hinted at the beginning my goal is to try and demystify economics and make it accessible and understandable uh for engaged non-specialists uh or everyone uh and uh and that's because uh there's an anti-democratic tendency in conventional economics and the way that it's taught the way that it's understood and the way that it's used and communicated um and uh we often hear about economics uh as if it's a barrier or a limit or a constraint on what we can expect from life and if we want more from life well we just kind of have to face the hard cold economics of it all and in general i find this kind of conception of economics is invoked in a sort of deliberate way to try and disempower people from demanding change and to legitimate or justify the status quo of our economy which reflects a certain set of circumstances and a certain group of uh vested interests if you like so we often hear about uh economists who come on tv in their blue suits now i got to be careful here i'm wearing a blue suit today i will point out though that because i'm on zoom i'm not wearing a whole suit i'm only wearing half of it okay there's my jeans on the bottom half anyways i'm glad i had the genes on that doesn't always happen on zoom these days either uh so anyways uh you often see economists who come from a certain place in society uh working for a big bank working for the chamber of commerce even working for a business faculty at a university you know which is usually named after some ultra-rich person these days uh and there's no doubt that the uh biases of that trickle down into how economics is taught at universities as well and we have to understand that there's a certain uh that how you see the economy depends on where you're standing what is your perspective what side of the tracks uh you're living on and that affects uh economics as well there's no neutral pure scientific aspect to economics and everyone deserves to have the the uh the confidence and enough knowledge to say wait a minute that's one way of looking at the economy but from my perspective in life i see it this way and that way is as legitimate and probably more legitimate than the person in a blue suit on tv saying well you've just got to tighten your belts in order to get down the budget deficit or wrestle inflation to the ground or establish a competitive tax system or all of the other uh standard tropes that we hear from economists telling us why we have to make do with less so uh the economy is the sum total of the human work that we do the goods and services we produce with our brains and our brawn why why do we drag our butts out of bed on monday morning to go off and do that well because we're living beings and we have to do that work we have to produce those goods and services to survive and thrive we always have had to the economy is not new and we'll learn this more in our next session on economic history but from the day that human beings descended from the trees somewhere in east africa somewhere around 200 000 years ago okay we've had an economy it's changed a lot hasn't it but it has always been an economy defined as a sum total of the human work that had to be done uh to survive and thrive um we want uh what we need uh food clothing shelter and the other essentials of life but we want more because we're not uh just uh subsistence creatures we want uh the full uh joy and life and love that we can get from life so we want uh education and we want care and we want entertainment and we want travel and we want comfort and we want fun so in order to get all those things they don't fall from the sky like manna from heaven they're produced through the hard work of our collective economy so in that regard the purpose of the economy is to meet those human needs the human needs to survive of subsistence and to have a full life and this is another really important point to keep in mind when we're thinking about economics and how we understand it uh an economy that doesn't meet human needs very well is not doing what it's supposed to and the fundamental goal of the work that we do and how it's organized and what we do with what we produce and how we use it and how we share it the fundamental goal is always meeting human needs and ensuring that human beings can have a a viable life a good life um a rich life and if that isn't happening then the economy is doing something wrong and this is really important because we often hear kind of jargon you know about the fundamentals you know and when we hear about the fundamentals it's someone in a blue suit standing on tv explaining why the budget deficit has to be reduced or explaining why inflation has to be uh reduced or explaining why taxes for uh international companies have to be cut because we have to get the fundamentals right and there's all kinds of things that are wrong with that way of understanding economics including this idea that just by cutting taxes and everything else you're going to somehow unleash the autonomous power and magic of the economy that's just not how the economy works but the biggest thing that's wrong with that is thinking that the fundamentals are something other than how well people are doing there's nothing more fundamental than whether people are prospering and whether they have the goods and services that they need for a comfortable safe full life whether they enjoy a bit of security and stability in that life instead of worrying that they might be thrown out on the streets the very next day so in this sense the idea of the fundamentals uh is where we try to refocus the discussion on meeting uh human needs uh okay so we get out of bed monday morning we go to work we produce goods and services um those are kind of the two broad categories of the economy of of our output goods uh by uh we refer to things that we can touch basically tangible products big and small you know from your smartphone that you carry in your hand all day to the house that you live in or large buildings and structures uh the clothes that we uh wear uh the cars uh hopefully electric soon that we drive around it uh those are products goods goods that we make but services are just important uh in the economy services is when we do something we use our work to do something for someone else and we're not directly producing a tangible product but we are producing value added for sure and we're producing something that we need whether that's a restaurant meal or being taught in school or being able to speak to someone on that smartphone that we're carrying around uh cared for by healthcare professionals we obviously need that these days um both goods and services are important it's not like one is more real than the other there is an old-fashioned idea that somehow the services economy is less important less reliable that's nonsense services in fact make up a growing proportion of total output about 70 of gdp today consists of value-added services but the dividing line between goods and services can be a fuzzy one we always use goods when we produce services you have to have tools and technology and likewise production of any goods uses services as a lot of input so uh in a way a bit of an arbitrary distinction distinction we need them both goods and services and importantly for us if we define the economy as the sum total of our work that applies equally well that formula applies equally well to both goods and services they're both produced exactly the same way we start with our brains and our brawn our capacity to do productive work we throw in the free gifts of nature that we are lucky enough to harvest and hopefully can continue to harvest in a sustainable way including uh wood and plants and water and minerals and then we combine all those things to add value and produce useful goods and services that's what the economy is and it applies equally well in both the goods and services sectors so we've defined the economy let's talk a little bit about economics economics is often portrayed as a kind of technical mathematical subject you know you you make it write down a mathematical formula describing some relationship you draw a graph a chart and a graph most common is supply and demand graphs if any of you have had the misfortune of studying economics at college or university you'll have seen endless supply and demand graphs one line going down one line going up and they always cross in the middle at the point of uh nirvana or ecstasy or whatever we want to call it um but economics is not physics economics is not math economics is actually a social science we are studying human beings the economy is a sum total of human effort and production and it's human beings and by the way none of us work on our own uh even you know uh robinson crusoe had uh had his wingman friday uh to work with them and we of course work in much uh more collaborative complex ways nobody works alone uh the term i i hate perhaps the most in all of economics and business is this term self-made billionaire self-made billionaire i was reading about uh today where some you know they've come up with a list of the youngest self-made billionaires in the world self-made billionaire seriously you know they didn't sit in a room and just invent something that then was worth a billion dollars they always worked with other people even if they didn't inherit a big chunk of it from their parents which is how it usually happens that's the self-made references that they supposedly went from rags to riches very very rarely happens but they didn't do it by themselves they had suppliers they had consumers they had teachers they had customers they had a government that supplied the infrastructure in which they operate those are all social functions those are all uh ways that we interact with other human beings um and that shapes uh the work that we do what we do with uh what we produce and what the outcomes are uh so important to remember economics is a social science and that's one of the reasons why it's complicated and contested there's no right answer in economics there's always a range of views and which one is dominant depends on who's more dominant and where it's coming from now economics is conventionally divided into two categories what they call microeconomics is where you were studying in theory the behavior of individual people and individual consumers and individual businesses and how they supposedly respond to incentives and so on and so forth macroeconomics is in theory the study of how the whole economy fits together and how we perform in terms of economic growth and inflation and income distribution and so on uh this distinction is pretty artificial and it isn't successful and there's been you know i think a growing understanding in recent years that you really can't divide the micro from the macro they all uh they all fit together um and uh and that's the best way to look at it and then very importantly as i've hinted at already um economics is not uh you know a pure uh positivist science with the right answer uh economics is contested and controversial and evolving and economists themselves are not there just to describe the economy and understand what's happening they always have views about what they think would make it work better and those views again will depend on their perspective their analysis but also their position in society and for that reason we we have to be skeptical uh we have to have uh caution when listening to economists and be ready to sort out you know what's useful knowledge and analysis from the agenda whether it's outright there or hidden agenda there's an agenda in economics that we have to be sensitive to and critical of and understand that economics is changing there's been huge changes just even in the last decade in how economists understand things like government deficits for example and the importance of public programs like child care and so on so economics itself evolves and part of what makes it evolves is how society evolves and looking at the changes and conflicts in society uh poke and prod economists to get them to think differently okay last few minutes let's talk about measuring and evaluating the economy uh the most common measure i've already referred to it is gross domestic product or gdp this is a statistic that adds up the value of all the goods and services produced in the economy for money that for money part is important the gdp misses things that are not produced for money gdp includes what happens in the business sector of the economy that's about 85 percent of the economy where we produce where where goods and services are produced by private companies who are trying to make a profit out of it but gdp also includes the goods and services produced in the public and non-profit sectors of the economy including health care and education and so on absolutely adds to gdp so don't for a minute take the argument that you might have read in the national post or somewhere else that says the business sector produces the wealth and government goes out and spends the wealth that isn't how it works the public sector produces goods and services as surely as the business sector and the goods and services that they produce are as valuable or even more valuable i dare say in the middle of a pandemic than what the private sector produces normally gdp changes over time some of the change is due to just simple inflation meaning things got more expensive but we try to separate that out and look at what's called real gdp so we're adjusting the growth in the total value of gdp and taking away the amount that was due to pure inflation the rest of it should reflect a change in the actual quantity of goods and services that are produced although it's hard to measure we're also often interested in gdp per capita that is taking the total sum value of goods and services produced and then dividing that by the population that way we have a sense of how we're doing on a kind of a pro-rated basis given the size of our economy gdp is the most common way to measure the uh economy but it should never be uh used as a as the ultimate arbiter of progress or success pdp is an important statistic it's a relevant statistic but it isn't a perfect statistic and it isn't our goal it does not include the value of work that isn't performed for money so unpaid work in the home and volunteer work in our communities it does not consider how gdp is distributed uh which is important uh if one person got all the gdp and everyone else was starving and there are places in the world that are not far away from that then uh the fact that gdp is high means nothing about how the average person lives and it also doesn't include whether the output is useful or destructive so classic examples are the value of military production uh is that in gdp yes it does is it useful we could argue or another classic when a oil tanker crashes and the oil spills all over we spend a lot of money trying to clean it up that adds to gdp did it make us better off well better off than not cleaning up the oil that's true but the gdp is not a measure of how how useful and how the output translates into human condition and we should never assume that higher gdp is good our goal is not to grow gdp our goal is to meet human needs keep that in mind i'm going to say it 100 times during this course until you're sick of it also there's been a lot of debate about how we measure gdp or how we measure the economy there's lots of other options for measuring the economy that we talk about i'm sympathetic to that discussion we'll consider it a little bit on the other hand we've got to be realistic and just changing the way that we measure something isn't going to change the decisions that are made at the top over what work is being done and what we're doing with the output of our work i i don't agree that just getting rid of gdp as a measure will somehow fundamentally change how the economy is structured we've got to change how decisions are made and who's making them if we want to fundamentally change how the economy is structured how do we evaluate the economy what is a good economy where we're producing the goods and services we need to stay in a lot stay alive to survive and thrive alive thrive and and survive wow i could get a hip-hop rhythm going with that here's my beatbox got my butt out of bed today to see if i could survive and thrive and live no i'm gonna stick to economics i think the goal of the economy is to meet human needs and if it's meeting human needs then it's doing just that and functioning well if it's not then it's not and um our evaluation of the economy has to be broader than just whether increased gdp or not and how we evaluate the economy depends on where we fit into the economy as well as on our own just our personal values and preferences uh i think there's lots of different criteria to evaluate the economy there's no particular right answer to this question but you know let me just ask you for a quick second how would you evaluate the economy uh think about uh a one-word answer to that how would you decide the economy was doing well or not and uh just throw it out in the chat it'll be an interesting uh thing i know that um i'm not sure if everyone can see the chat or not i suspect not but throw it in the chat anyways because we'll see the chat and i'll be interested to see what your one-word answers are i have my view on what makes a good economy how you would evaluate it and i discussed that on page 28 to 30 of uh economics for everyone i came up with seven criteria prosperity we do want to have a good standard of living we want to be comfortable and prosperous security is a different thing than prosperity you can have a very high standard of living but if you were worried it could be taken away from you tomorrow that would affect your life that would first of all affect your happiness you'd be really stressed and it would affect how you lived your life innovation i do like an economy where people can be creative and think of new ways of doing things and have do more than just sort of follow a recipe and innovation has been the driving force of economic progress since we've climbed down from the trees we're naturally programmed it seems and biologists are understanding that or social anthropologists are understanding that naturally programmed to learn uh from what we do and try to do it better uh choices uh people i think should have choices not just over what brand of toothpaste they buy but over how they live their life what they want to do for a living where they want to live how they would consume equality is an important goal in and of its own right separate from the the issue of poverty or lack of prosperity even if you have a you know even if you're a sort of comfortable living standard if there's large differences between you and the other people that you live with that has uh an impact because then people go around thinking what what did i do wrong why am i a failure uh so equality has an important goal sustainability obviously in terms of our relationship to the natural environment we'll talk about that uh democracy and accountability do we have a say in how the economy works and how it uh unfolds now gdp is not the be-all and end-all and i want to uh probably just finish this uh part of the of the lecture by talking about one other approach that has been developed to evaluate the economy and evaluate different countries uh regions economies the united nations development program has for about a quarter century published something called the human development index and the human development index gives a score to different countries or regions on the basis of three different measures of well-being one of them is gdp so they're still saying that gdp matters and it does matter um because we have to have a good quantity of goods and services that we produce in order to meet our needs and be comfortable but they also try to get directly at issues of are we meeting human needs and the two that they picked out were life expectancy and education and they basically produce a score with those three components equally weighted and it's fascinating you know i i know i i'm a i'm a nerd i like to jump into spreadsheets and play around with them but it is fascinating to see how this approach alone changes uh what we think of as a successful a successful economy because it's no longer just about producing as much as you can that's never been the goal even it's a question of how do we translate that into human well-being human development index is not perfect i i don't think it's fully accurate but it's better than just ranking countries according to gdp that's for sure so uh if you google a human development report you can go and find some of the interesting statistics where they break down countries of the world they give each one a human development score and then they have the three components life expectancy years of schooling and they use something called gross national income rather than gdp but it's roughly the same thing and the countries of the world are ranked uh most recent ranking for 2020 was canada was 16th wow it wasn't that long ago we were first in this list so that tells you something about how you know things have changed in canada over that time um interesting we're just above the united states uh so we rank better than our our cousins to the south and i know that that we we think about that a lot in canada in fact we're we're always patting ourselves on the back in canada saying well at least we're better than the americans in fact we could get a national repetitive strain injury try this with me right now just pat yourself on the back like this for a while you're going to get a crank in your neck before you know it uh anyways it's not it's not such an achievement to say we're doing better than the americans but look at that the americans have way higher gdp per capita than canada quite a bit higher yet we know uh it does not translate into human uh human well-being the last thing that's really interesting on the un list is they have a they tell you where you score by human development and compare it to where you score by gdp alone so this is capturing the extent to which the rankings change based on whether we're focusing on human needs or just straight up gdp so canada scores better than it would five places better than it would if countries were ranked just according to gdp uh whereas america ranks seven places lower than it would if we were scoring just by gdp their gdp is quite high but their human conditions in many ways are terrible so this is a really interesting because it shows you how much are we translating our production into human needs which is a fundamental question uh for economic my judgment or um you know i'll i'll share with you all i do i do visit a sex therapist regularly for you know some issues and she is always telling me it's not what you've got it's what you do with what you've got okay and i think that fits economics very well frankly in this case it's not how much gdp you've got is what you do with what you got anyways if you look at countries in the world on that issue of the gap between human development and their gdp ranking you get some really interesting findings there's five countries where they have large gap where they do much better on human development than you would expect given their modest or low levels of gdp so those are countries that are taking what they've got and using it well cuba at the top of the list cuba has a higher life expectancy than america and much better education uh and top-rate healthcare for a poor country that's quite something so you know lots of issues in cuba lots of problems but no doubt they're taking what they've got and channeling it into human uh well-being on the other hand there's countries around the world that have a lot of gdp and are terrible at translating it into human well-being equatorial guinea is a small dictatorship in africa it's got lots of oil money and the people are miserable uh interestingly enough four other oil producing countries there that do not take their gdp and translate it into well-being oh alberta where i was born richest province in canada by far the highest covet infection and their hospitals are clogged there's another example of a jurisdiction with high gdp that is failing to meet human needs so that's a provocative thing to end our lecture on but i don't want you to make your work overtime on this uh we have used up our time for this uh lecture a couple of other points that i'll come back to um either next week or in the questions about capitalism i mentioned as a particular type of the economy i think actually i'll save that that'll fit nicely with next week's lecture [Music] [Music] you