Journal

What I have learnt

 The book “Common Sense Economics” by Gwartney, James D provides great and powerful information which help readers to understand the essential elements in economy (Gwartney, 2016).  I have learnt various key points on economics and I have understood wealth and the reasons why nations prosper.  First, I have learnt about the key elements of economy. In this area, I have learnt that one of the key elements is incentives. This means that in creating economic decisions based on costs and benefits, incentives should control the decisions since it works as a powerful tool which helps in understanding the people’s behavior (Gwartney, 2016).  Other important point in incentives is that it also impacts the political choices since voters supports the political candidates and policies which benefits them and opposes the political options which imposes higher personal costs and diminishes their benefits. On the point of key elements, I have also learnt about trade and how it promotes economic progress. It promotes progress in that it creates economic value by taking goods and services from people who do not value them and moving them to people who need them (Gwartney, 2016). In other words, trade creates value through exchange of goods with trading partners.

Apart from the essential elements of economy, I have learnt about the economic progress and the sources which bring the progress. In this area, I have learnt that one of the major sources is legal system which protects the economy. Legal system plays a significant role in providing protection of property rights.  In this case, trade and property rights go hand-in-hand and legal system protects the rights of the property such as ideas and ownership of labor and prevents invaders and property transfer (Gwartney, 2016).   Other point is that legal system reduces the trade uncertainties and ensures that there is an evenhanded enforcement of contracts.  On sources of progress, I have also learnt that competitive markets ensure progress through the utilizing of available resources effectively and bringing innovation (Gwartney, 2016). On this point, firms which fail to produce quality goods in competition are expelled from the market and successful businesses compete with rivals through various ways such a using innovation to produce quality goods.

 In learning about economic progress, I have gained some new ideas on elements of clear thinking which helps individuals to understanding how the government is involved in economic progress. In this case, I understand that government ensures economic progress by ensuring individual rights and access to goods and services which markets are unable to provide (Gwartney, 2016).  It ensures security, order and enforcement of rules and citizens are protected from any harm.  Other point is that for government to bring economic progress, the political rules should be neutral to the self-interest groups and citizens (Gwartney, 2016).  Generally, national wealth is created through competitive markets, rule of law and trade exchange and all these acts as a cornerstone in bringing progress and wealth.

 

            Apart from learning about the national wealth, I have gained knowledge based on personal prosperity. In this case, there are practical choices which people can choose and follow in order to create a prosperous life. The first important point is that people should follow the principle of comparative advantage (Gwartney, 2016). This means that in trade, people should understand other markets and their business activities as well.  It is important to focus on areas which produce comparative advantage and use the specialization in order to produce goods of high quality and high value.  Since trade  benefits both business operators, business  should  discover the  areas which require  more productive activities and ensure high commitment and comparative abilities  in order to produce quality products hence  create high productivity  and  prosperity (Gwartney, 2016). Other key point is that in order to create a prosperous life, people should think entrepreneurially. It is important for people to have personal skills and knowledge in making business decisions and by using personal talent, it will be possible to produce new products and create profitable opportunities.  On the point of creating prosperous life, I have learnt that it is important to Save money in order to create a securable life, a financial future and more important reduce financial stress hence create a quality life (Gwartney, 2016).

What I think

 I can express my thoughts and say that it is important to understand the wealth and property in both micro and macro economics. In understanding wealthy, business should value trade.  I believe that trade is a key element which has placed American businesses in high position through production of quality products and exchange of goods and services (Gwartney, 2016). Trade brings a high consumption of products hence creates larger outputs.  I put emphasize on trade to allow people understand that it should be the key elements of economics.  Through trade, business will have the opportunity to specialize in a particular area and as a result, there will be products quantity. In other words, I believe that if businesses follow the principle of comparative advantage, the economy will progress and there will be availability of different goods and services hence the demand will be met (Gwartney, 2016). I would also like to add my thought on competitive markets. This area should be valued most by business since   through competition, businesses which do not have power will leave the competitive market and give successful business room to bring innovation, increase productivity and bring economic progress.

 

 

 

 

 

 

Reference

Gwartney, J. D. (2016). Common sense economics: What everyone should know about wealth and prosperity.