Joe has just gotten a raise down at the doll factory and decides to spend some of it on a doll for his daughter. He is enraged to discover that the price of a doll has gone up in this well-written cartoon lesson in economics from John Sutherland.
There have been many theories in economics over the years. Your opinion of this film may depend on which theories you espouse, however informally. Early French economists believed that all economics was based on farm production and thus only money spent on farm improvements was of economic value. Everything else was parasitic. There is some validity to this idea; if anyone is to live and work, he must eat. At a basic level, any other activity, from mining to writing computer programs is enabled by food producers producing more food than they can eat.
This cartoon adopts a more sophisticated thesis: the price of goods or services is the accumulated sum of all the labor that went into producing it, from mining the raw materials to shipping them to the factory, to assembly to transporting and selling the finished goods to the end purchaser. Constant output means that any increase in labor costs along the way is inflationary. Increased productivity is the sole countervailing force.
This is economics 101. Anything further than that often descends into theoretical discussions that have been argued about for all of history and all come down to the question of who deserves the surplus.
This cartoon ignores that question and instead sticks to its discussion of labor costs. It does so clearly and interestingly.
There have been many theories in economics over the years. Your opinion of this film may depend on which theories you espouse, however informally. Early French economists believed that all economics was based on farm production and thus only money spent on farm improvements was of economic value. Everything else was parasitic. There is some validity to this idea; if anyone is to live and work, he must eat. At a basic level, any other activity, from mining to writing computer programs is enabled by food producers producing more food than they can eat.
This cartoon adopts a more sophisticated thesis: the price of goods or services is the accumulated sum of all the labor that went into producing it, from mining the raw materials to shipping them to the factory, to assembly to transporting and selling the finished goods to the end purchaser. Constant output means that any increase in labor costs along the way is inflationary. Increased productivity is the sole countervailing force.
This is economics 101. Anything further than that often descends into theoretical discussions that have been argued about for all of history and all come down to the question of who deserves the surplus.
This cartoon ignores that question and instead sticks to its discussion of labor costs. It does so clearly and interestingly.
