Measurement of Output: Gross Domestic Product

Gross Domestic Product is a really yucky name for a very important term.  GDP is pretty much all the completed goods and services within a country's borders measured by dollars.  Just looking at a country's GDP over a set amount of years gives a good indication of whether the economy is well or not.  The estimated current GDP for the United States is $142.4 billion or $142,400,000,000.

The latest GDP growth measure was 2.2% as of the first quarter of 2012.  This is a mediocre growth rate compared to the growth of China (8.1%) and India (6%).

The GDP per capita (per resident in the country) in the US is considerably strong at a $48,100 per capita.  One of the highest in the world. Highest being $105,195  for Luxembourg as of 2010 reports.

Business Cycle

The Business Cycle, or also known as the Economic Cycle, shows how the economy acts over time.  Below is a picture of the cycle. This cycle is ideal, but does not occur perfectly in the real world.   

It is a law of nature that the economy has to crappy sometimes.  When the economy is in recession, many unneeded businesses are destroyed to make room for companies that are more fit to prosper.  The trough is when the economy stops sucking and then starts to rise.  During the recovery, the economy expands to allow a higher influx of money to flow through.  At the peak, the economy stops growing and starts to suck again.  Over a period of time, multiple cycles make the economy grow in size. 

Comparative Economics: Communism

Communism falls at the completely other side of the spectrum than Capitalism.  It is frowned upon by many due to is history with the Soviet Union, Cuba, and North Korea, though it really isn't that bad...in theory.  The theory of communism states that the means of production are owned by the workers and are distributed equally.  It also dictates that once a socialist country sees how working for each other is beneficial to themselves, there will no longer be a necessity for government, hence will turn communist.  Again, this only works in theory.

In this system, there are no buyers, buyers don't exist because businesses don't exist. There is no poverty, everyone is cared for economically.  The only things produced are the things that people need to stay alive.  Just like capitalism, communism ends up destroying itself.  It assumes that everyone will reach such an enlightened stage where they work for practically no motivation and that this enlightenment will make people cooperate with each other without law.  This is not currently possible because everyone is a stupid dumbass...but what a perfect world it would be if we weren't.

In practice, the economy is controlled by a central authority.  The authority makes every decision for you.  This authority typically uses violent force to keep people in check and claims that pure communism will eventually be or already is established.  For example, in North Korea, the government tortures and kills anyone who speaks out against it.  It also brainwashes its citizens to think that the rest of the world is in shambles and that their society is perfect and that their leader is a god; this is all while they are all starving to death.

What The Heck Is Economics!?!

Economics is a social science that looks at how people's unlimited and competing desires are satisfied by the scarcity of limited resources.  For this reason, everyone can't have everything they want, so the economy must decide what is to be produced, how it is produced, and for whom it is produced for.  In the US economy, this is decided by consumers and their buying habits.  Whatever they buy is what is to be produced.  It is produced how they want it. And it is produced for them because they have the money for it. We essentially have economic "votes" whenever we buy something.

For example, iPads! iPads are produced because we, as gluttonous consumerists, want a flat electronic device to entertain our limited mind spans.  They are produced with high quality materials and cheap labor because we want the best thing at the lowest price.  And it is produced for those who have enough money to buy it, which is some people in the US, but not all. So, the economy decided that not everyone gets an iPad because not everyone has money....sad....actually, not really...why would you buy it? Really, why??

Comparitive Ecomonics: Free-Market (Capitalism)

Yes! Free-Market Capitalism! The economic system that we in the United States grew up with and contributed to.  Politicians always say to "leave the markets alone" and "the economy will repair itself" and other stupid crap like that.  When they say these things they reference the theory of Capitalism.

And that's all it is, a theory. Not a law of nature, a theory. Nothing more.

All it means is that the government shouldn't interfere with any business, so businesses will do what they need to do to offer the the best product at the best price for the buyers.  This creates competition between companies to make the most profit from customers.  This system ideally keeps money circulating in the economy so fast that the government doesn't need to provide help to anyone.

In this system, people and businesses are to fend for themselves economically.  If someone loses all their money or can no longer work, the government is not obligated to help them.  They will pretty much sit in a corner and die.  If someone is super wealthy, they can easily take over other businesses and create a monopoly.  This is how capitalism essentially destroys itself...once monopolies are created, competition disappears.  Without market competition, monopolies are able to charge outrages prices for items that people want and need. Then the economy isn't a free-market anymore...but again, this is theory

In reality, there is no such thing as perfect capitalism.  The current market in the United State isn't necessarily "free".  There is a lot of government intervention to help the interest of the consumer.  Such as welfare and anti-trust laws are examples of the government intervening in the economy.  Even though the theory says to have minimal government help, it is necessary in order to facilitate competition.