ECONOMICS VS WEALTH OF NATIONS

ECONOMICS VS WEALTH OF NATIONS



ECONOMICS VS WEALTH OF NATIONS

The key to understanding the behaviors of economics is being able to observe past and present activities and give a logical explanation of why the outcomes are what they are. In a sense, all people are economists when they decide where to send their kids to school, how they plan their financial future, where they plan to work. It's all about using what you have seen, analyzing it, and attempting to position yourself in the best spot possible. A true professional economic advisor is someone puts more time into analyzing what has happened and then advising groups of people, as in countries or cities or businesses, to the best position possible to take advantage of future happenings. These are the advisors that Jane Jacobs seems to mistrust the most in her book Cities and Wealth of Nations: Principles of Economic Life. Jacobs doesn't dislike past economists that have advised countries, she merely states that they are making decisions off of the wrong observations in activities of nations. Jacobs believes the place we should be observing is cities, a smaller model in which correct analysis can be taken. Jacobs does a meticulous job presenting her point, providing examples of actual cities and their actions in attempting to develop or maintain their economic situation. In this paper we will analyze the basic points Jacobs illustrates, by posing questions and attempting to answer them. By the end of this report we will understand the main aspects of understanding national economics by examining city economics.

The first chapter in the book is called Fools Paradise. Basically, Jacobs points out with many examples of times when wrong calls were made in maintaining, rebuilding, and creating a strong economy. And in Jacobs's bombardment of info, her point comes through. Something is missing. Why is it that policies singled out as the key to success in successful economies has also been cause for failures in others (6). To explain this contradiction, economists will fall on the default excuse of cultural causes (6).

There is obviously something at work here that is not being accounted for. It's much like when scientists wanted to understand electricity, they had to eventually break it down to electrons and protons, the smallest part, yet it controlled the outcomes of electricity. The same with nations, they are the grand scale that we see outcomes, but there is a smaller part at work that must be understood to fuller predict and nurture our economy to health while keeping it in control. Cities are the little electrons and protons of this world that must be understood to foster a prosperous economy.

According to Jacobs', economic life develops by grace of innovating; it expands by grace of import-replacing (39). These are the two main aspects of creating and maintaining a strong economic atmosphere in a city. Innovation is simply improving efficiency of production (40). There is always a better way to produce and distribute goods, ...