Economist Guide: 3 Lessons Adam Smith Teaches Us

in #steemit8 years ago (edited)

For all the attention Adam Smith receives as the father of modern economics, most of his lasting influences are best classified as moral and social – maybe even anthropological. Smith was a Scottish professor of moral philosophy at Glasgow, and most of his economic insights were byproducts of this pursuit. Smith championed self-interest as enlightening and beneficial, and he viewed political or business power with contempt.

Smith was wrong on many of the details of his economic theory; like Karl Marx after him, Smith operated under the assumption of the now-defunct labor theory of value, for example. Smith either ignored or never fully addressed other aspects; he lacked a full-bodied theory of prices and made virtually no mention of time factors. Still, there are some valuable economic lessons left to be learned from his classic book, “An Inquiry into the Nature and Causes of the Wealth of Nations.”

  1. The Main Causes of Economic Growth Are Division of Labor and Accumulation of Capital

“Each individual becomes more expert in his own peculiar branch, more work is done upon the whole, and the quantity of science is considerably increased by it.”

Adam Smith begins “The Wealth of Nations” with a simple discussion of the division of labor within a pin factory. From that point forward, his focus never really deviates; in some ways, “The Wealth of Nations” is a tribute to the nearly endless applications of this fundamental economic concept.

The division of labor increases productivity for three reasons: it saves time and reduces setup costs, repetition and specialized education lead to increased dexterity and productivity, and it encourages the invention of machines or automation in the specialized areas. Smith didn’t discover these truths, but he did bring them together.

Smith also makes frequent reference to the stock of an economy, meaning savings and accumulated capital. Without pre-existing capital, businesses and entrepreneurs can’t hire workers, build factories or begin production. Smith understood that an economy requires savings to grow, for savings fuel investment and credit.

  1. Voluntary Exchange Will Not Take Place Unless Both Parties Believe They Will Benefit

“Give me that which I want, and you shall this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of.”

It’s inaccurate to think of economics as a science about market gains and losses. What economics really studies is how separate individuals benefit each other; namely that they do so unintentionally. Smith’s crucial insight is that markets and society improve naturally when people are allowed to trade freely.

Basic deductive logic proves that people do not enter into a trades voluntarily when they don’t expect to gain; otherwise they would not make the trade and would be better off staying put. Each successful trade sends a signal in the market that a certain good or service has value; if this happens enough, greater forces will be mobilized to bring about that good or service in greater abundance.

Nobel-winning economist Milton Friedman once said, “Most economic fallacies derive from the neglect of this simple insight, that market participants trade to benefit themselves.” Friedman and Smith also knew that interfering with voluntary exchanges has the opposite effect.

  1. Government Intervention Disrupts the Efficient Distribution of Resources on the Market

“But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.”

Though Smith believed in a functional, limited government, he didn’t want governments interfering with trade. Smith most famously used this argument against the prevailing economic theory of his time, something he labeled as “mercantilism,” because it favored subsidies and tariffs. Smith showed that free moving markets maximize the efficient flow of resources, which maximized the public good. Overreach by bureaucrats only hinders this process because it interrupts with crucial market signals.

Even though two trading partners accidentally create greater value by voluntarily exchanging, no third party can create additional value by forcing an exchange to take place – nor can a third party create additional value by forcefully interfering with the exchange of two separate parties. Rather, Smith felt that politicians and crony businessmen would likely use power to enrich themselves at the expense of the poor.

Source: Investopedia

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@jennamarbles "I'm not good at math, but I get about 3,000 votes of users (I will appreciate for more exact calculation in comments)"

I made a calculation for you

26000331f5.jpg

that is, to get an equivalent value should be 261 780 votes of users with 100 USD amount on account balance, or 11135 accounts like yours
You can check it here VOTING WORTH OF JENNAMARBLES

It is even worse than I thought, I stare in disbelief! These are unattainable figures.
This decision, would solve this problem:

The weight of vote of 1 account has to be always equal to 1 dollar. But each subsequent vote reduces vote cost. So 100% of Voting power = $1, 80% = $0,8 and so on. Speed of restoration from 0 to 1 depends on quantity of STEEM POWER — 10 steem power restore, voice weight completely in 1 week, 1.000.000 steem power in 10 seconds. It would bring much more balance in long-term prospect. Also would solve a problem, whales, dolphins and gudgeons.

I hope you will be heard, I fully agree

That suggestion would make rich people powerful and richer, and keep poor people powerless and poor. Money should never rule things. It will always end up in corruption. Power corrupts. Absolute power corrupts absolutely.

Those 261780 maybe just make an account and that's it and 'whales' invested a lot of money to have that voting power,stop complaining and let it be like it is.You can't judge someone for what he is doing.Why don't you invest a lot of money to become a whale and do what you want to do? And don't tell me you don't have that money, I don't have it too, but I stopped complaining and do something different.

That just enforces the rule by the rich. That makes this site like any other site where money buys visibility and it's not revolutionary in any way.

Business is business, nothing personal

" A user, first appeared in the resource, sees huge amounts and dreams of the same content value. But in the long range, seeing the same authors at the top, people do not feel anything but disappointment, envy and malice. Unable to find sufficient recognition, authors are leaving the project." I fear this too.
We need to keep everyone who does the work in AND here. No issue with people on the trending, it's amazing to be there but when every one of your posts is a "winner" how do you push yourself to get better?
Knowing that there's a limited number of winners and some spots are "reserved"- how do new people stay motivated?!
It's something that needs our attention...

Thats an awesome post, Jenna. Hopefully Ned and Dan are reading it (and voting for it of course as well). :-) - IMO the different weight of the votes is very useful. This is an incentive for anybody to acquire Steempower to get more voting power.

I consider that it would be more fair to make the identical weight of vote, with a difference in quantity. The person, with 10 STEEM on the account can make 1 dollar vote a week. The person with 1000000 STEEM can make 100000 dollar vote a week. It will be fair. Also will allow to reward bigger number of authors.

in this case we would have a fraud with dozens of bots that will be upvoting one "author" once a week - and giving him weekly $.
Let's say, I have 1000, or at least 300 different akks, that have 10 or whatever STEEM for 1$ hit.
All of them have a fake identification and some stupid posts to looks real - no spam hidden in their fake identety.
Also they're able to upvote twice a week to spread the power.
But all of them upvote me with their 1$ in different time till the end of the week.
So in the end, 1 of this bots that randomly chosen as the "author of the week" recive 300$
And you can cash it out or use it to improve your botnet, to have more profit in the next round or long term
No spam, but still a fraud

It is necessary to exclude the possibility of automated voting interesting idea was proposed by @desmonid https://steemit.com/steemit/@desmonid/idea-to-reduce-potential-for-bots

@jennamarbles If you don't mind, would you check my blog to get the other side of this debate? It boils down to these solutions to control bots don't work. Upvote bots are voting because they follow a tutorial and most of them make nothing, because they vote immediately instead of waiting 30 minutes for the cool down timer to finish.

This means someone is trying to learn to program and doesn't care about the monetary rewards. Give them something more lucrative to do that is bot appropriate such as detecting plagarism, identity theft and sock puppets would be a far better option.
Anyways click my name, check my last few blogs out, get both sides of the story and let me know what you think.
Thanks..

p.s. You linked Dan's response to me villifying bots, but didn't link my post that triggered it, if you would be so kind as to add the initial post from me, I would be appreciative. This way I don't have to chase down and explain myself over and over again because Dan misunderstood some things I said and I didn't catch his response until it was almost too late. So my final rebuttal is way the heck down at the bottom and buried by like 1000 other responses.

For example, in this article you can see the benefits and a great idea in conclusion.

Most of your botbuilders are researchers, educators, and enthusiasts. You could end up with the first social media network where human and AI work together to police content, determine mood, uncover criminal intent (see my post on mediashare), incentivize quality content production etc, all while doing things people are just doing naturally. These aren't all chatterbots you're dealing with.

And also pay an attention that the "enthusiasts" making a bots are usually step ahead of the guys trying to solve the problems after it already appears.
They are just have a plenty of time for their "creativity"

I am disturbed more that these boats break natural ranging of posts. It isn't remuneration. Thousands of other authors with their original content can't get in hot because of actions of boats.

Oh one more thing... This auto upvote bots you're worried about skewing things? The curation reward goes to you the original poster if the bot upvotes you in the first 30 mins. So I don't know that I would be getting too upset about it.

great post. You are fully right. Currently the reward system is not really welcoming to newcomers.

Here my thoughts about that:
To 1: Number of voters can be misleading, because currently you can make easily double accounts. I would suggest another solution that goes directly to the root of the problem:

Implementing an Universal Income
My suggestion is to make some kind of universal dividend to all fully verified accounts. Verification of account can be done per video chat or local meetups. The list of verified accounts can be voted on the same way like currently the witnesses. Once we have fully verified accounts I would suggest to cancel all or a big part of the curation rewards and distribute it as universal dividend to all fully verified accounts. This will soon increase the voting power of all fully verified minions.

Use a lottery to display trending posts
Further I would suggest to show by default trending posts in the following way: Each time you reload the page the top displayed articles are drawn like in an lottery. The more votes they have the more chance to be displayed at the top site. So even an small vote can increase the chance significantly to be displayed at the top site. This would also solve the problem, that the top voted posts get even more votes, just because they are displayed at the top.

Liquid Democracy - Implement delegation of voted
Further I would see botvoting not as a bug, but as a feature if done right.
In away botvoting is delegating your vote. If all participants can use delegation of votes in an easy way, we could create some kind of liquid democracy. Just imagine a whale would delegate his vote to all fully verified accounts then also minions would have a fair chance of upvoting something in an significant way. Or the wale could delegate his vote to some kind of audit organization or simply people he trusts. The wale could look from time to time if votes are conflicting and can remove people or add from his delegation list.

Make the payout linear instead of exponential
Also I would suggest to make the payout linear not exponential. I know exponential payouts are mend to hinder self votes, but his could be done in an more fair way and so or selfvotes are easy to detect and can be downvoted by wales.
this would also have the effect, that even with small steem power you can give some cents to posts (currently you need round about 300 steam power for one cent).

Reduce rewards / votes if the same account is voted again in the last 30 days
For example simple halve the vote if the same account is voted again in the last 30 days. This would lead to an much more fair payout distribution and hinder / reduce selfvotes.

Just my two cents.. Im looking forward for your thoughts about it!

I would rather earn 1% off a 100 people's efforts than 100% of my own efforts." John D. Rockefeller :)
Every bullet has its billet - Every Post has its comment

I was thinking about bots as well. I think that one way to go about it is to make steemit an invite-only system, where you would actually have to sacrifice your steem power to invite other people. That way, there will be far fewer bots

Anything that would improve the platform is a welcome development.

Great post @jennamarbles I really like the unique perspective you took on the whole bots thing.

I'm not pro bots or anything but I can see some advantages in bots

  • they help new users grow rapidly, by upvoting their content (if your content is good, you will get on one of those upvote list
  • the produce value for Steemit as a platform, growing the amount of Steem
    -they curate posts (this still has to be worked on, sometimes they vote shit)

Maybe there are other advantages and I'm sure there are disadvantages, but we will see how the platform is going to evolve

very digestible read. Limit the number of votes? Nu-uh. There are penalties in effect. That's like limiting likes on fb, reddit and others. Maybe it will add a special feature like Tinder where you can only do One Super Like or Something? Devs are up on testing these ideas which is why steemit in beta mode :) Thank you for contributing your thoughts and implementations.

the thing is that by limiting that you also limit the casino effect which is an important part of getting new people on steemit. it's a balance....

Upvoted! I'm tottally agree with the author.

At first, I thought some of the bots that posted to threads I created were cool but they've certainly started getting on my nerves. There's one that ranks the readability of your post which is a neat idea (until it starts comparing you to Mitt Romney lol) but it isn't accurate and posts instantly to threads (alongside a couple instant-comment bots which just say "thanks, upvoted").

What do you think of comment captchas for low steem power users?

It seems to me it is worth entering not only for commenting but also for vote, vote by and large is microtransaction, to it costs belongs more seriously. I like the idea stated in this article: https://steemit.com/steemit/@desmonid/idea-to-reduce-potential-for-bots

Interesting points, I think after last improvements, quality of the posts increase. I see almost on every trend or sections different posts getting rewarded. Not particular one dominating. I agree though we still have to push it forward and keep improving the system/platform.

found same discussion elsewhere today and got idea...

would be good to have a middle ground - keep the algorithms for the trending page as they are, BUT also add another category that's for highly-voted but not so highly-rewarded posts...

would allow people to still see the top rewarded, highest paid votes - BUT also filter what they're viewing so they could focus their votes on lesser-paid articles too.

Best post ever seen on steemit upvoted for you. if have some seconds please review my post https://steemit.com/nature/@simranverma/amazing-footage-shows-hawaii-volcano-smiling