Tuesday, August 11, 2009

AP Economics: Production Possibilities Curve (Circular Flow with Supply and Demand and Absolute and Comparative Advantage)

The production possibilities curve is often described as the issue of `guns vs. butter,' or a model illustrating the relationship between a nation's investment in defense and civilian goods. The model is obviously simplified for the purposes of a graph but it illustrates how much a society should devote to defense and military spending as opposed to how much a society should devote to consumer products and goods.

The origination of the actual phrase is not known but one well-known theory is that it arose from populist and reformer William Jennings Bryan's (March 19, 1860 – July 26, 1925)

A Republican satire on Bryan's "Cross of Gold" speech.

Graphic source: this image is in the public domain due to its age.

resignation as secretary of state in 1915 during the Wilson Administration. At the outbreak of World War I, the leading global exporter of nitrates for gunpowder was Chile. Chile had maintained neutrality during the war and provided nearly all America's nitrate requirements, as it was also the principal ingredient of chemical fertilizer in farming. The export product was sodium nitrate, a salt mined in northern Chile.

With substantial popular opinion running against U.S. entry into the war, the Bryan resignation and peace campaign (joined prominently with Henry Ford's efforts) became a banner for local against national interests. Bryan was no more pro-German than Wilson; his motivation was to expose and publicize what he considered to be an unconscionable public policy.

The National Defense Act of 1916 directed the President to select a site for the artificial production of nitrates. It was not until September 1917, several months after America entered the war, that Wilson selected Muscle Shoals, Alabama,

after more than a year of competition among competing political rivals. A deadlock in Congress was broken when Senator Ellison D. Smith from South Carolina sponsored the National Defense Act of 1916 that directed "the Secretary of Agriculture to manufacture nitrates for fertilizers in peace and munitions in war at water power sites designated by the President." This was presented by the news media as an issue between "guns and butter."


Cf. Guns versus butter model.

Bade and Parkin, Chapter 3.1.

Cf. "Now muscle shoals has got the Swampers" (the studio band) in the song "Sweet Home Alabama" by Lynyrd Skynyrd (by the way of mockery, deliberately misspelling the name of their unpopular high school physical education teacher).

Muscle Shoals long has been associated with a rich cross-pollination of musical styles that originated in the area. Black artists from the area (Arthur Alexander

Arthur Alexander, "You Better Move On"

and James Carr

James Carr, "The Dark End of the Street," 1967, later covered by white and black artists alike including Elvis Costello, Ry Cooder, Aretha Franklin, Linda Ronstadt, Percy Sledge, The Allman Brothers, Richard Thompson and Linda Thompson, as well as Porter Wagoner and Dolly Parton. The song is a classic example of the "Muscle Shoals Sound."

are ideal examples) who utilized white country music styles in their work and white artists from the Shoals frequently borrowed from the blues/gospel influences of their black contemporaries, creating a generous melting pot of music.

In the early rock 'n' roll era, Sam Phillips, founder of nearby Memphis-basedSun Records, lived in the area and, and stated in his autobiography that Muscle Shoals (primarily radio station WLAY (AM), which had both "white" and "black" music on its playlist) influenced his merging of these sounds at Sun Records with Elvis Presley, Jerry Lee Lewis, and Johnny Cash. Also based in Memphis is the creative and related black and white concoction originating from Stax Records.

Thereafter, during the rock era, the Beatles were influenced by Arthur Alexander,

recording his "Anna (Go to Him)," a song written and originally performed by Alexander. His version was released as a single by Dot Records on 17 September 1962.

Not to be outdone, the Rolling Stones also recorded and performed live Alexander's,

"You Better Move On."

Another British invasion band, the Hollies, also recorded "You Better Move On" in 1964.

AP Economics: Opportunity Costs

Opportunity Cost: The Soviet Choice for Growth

The lesson plan references a well-know Soviet plan about "Five Year Plans," a scheme by which the government planned to improve the lot of the people.

The phrase about "five year plans" was popularized in American culture by the rock band Creedence Clearwater Revival. "Who'll Stop the Rain"

Graphic source: qualifies as fair use under United States copyright law.

is a song written by John Fogerty and originally recorded by Creedence Clearwater Revival for their 1970 album Cosmo's Factory. It was one of three double sided singles from that album to reach the top five on the U.S. Pop Singles Chart and the first of two to reach the #2 spot on the American charts. In 2004, Rolling Stone ranked it #188 on its "500 Greatest Songs of All Time" list.

During 1970, right after the Great Society programs of LBJ and of course the resigned but somewhat angry feeling of the song, many see "Who'll Stop the Rain" as a thinly-veiled protest against the Establishment, with the final verse referring to music, large crowds, rain, and crowds trying to keep warm, indicative of the band's experience at the Woodstock Festival in August of 1969.

There is also a line during the song's second verse about "five-year plans and new deals wrapped in golden chains" that may indicate a general cynicism altogether about all politicians. I believe Fogerty was much more specific in his target, and based on his working-class Catholic roots, and general aversion to all politicians, both on the left and the right, he had a more focused target.

He opposes government intervention of any sort. Note that "five year plans" is an obvious reference to the First Five Year Plan (1928-33) of the Soviet example, an obvious target, but Fogerty continues against "new deals," a more pointed critique of a generally popular American plan of FDR. Yet Fogerty equates the two schemes in one line of the lyrics. He is opposed to any government intervention or plan, whether the leftist Soviet variety or the New Deal American president type. Note that both are described as: "wrapped in golden chains." The issue is scarcity and both the Americans with FDR, and the Soviets with Lenin and Stalin, controlled their respective societies, limited freedom, and re-distributed social production.

In any case, the half-minute long fadeout of the song, which reprises the repeating guitar pattern from the intro, seems to reinforce the song's main theme of the 'rain' continuing to go on, interminably, as one politician after proposes one idealist plan after utopian scheme right up until the present.

Cf. Wikipedia.

"Who'll Stop the Rain," John Fogerty

Long as I remember the rain been comin' down.
Clouds of mystery pourin' confusion on the ground.
Good men through the ages, tryin' to find the sun;
And I wonder, still I wonder, who'll stop the rain.

I went down Virginia, seekin' shelter from the storm.
Caught up in the fable, I watched the tower grow.
Five year plans and new deals, wrapped in golden chains.
And I wonder, still I wonder who'll stop the rain.

Heard the singers playin,' how we cheered for more.
The crowd had rushed together, tryin' to keep warm.
Still the rain kept pourin, fallin' on my ears.
And I wonder, still I wonder who'll stop the rain.

Lyrics are quoted for educational purposes only; the copyright remains in the hands of the lawful owner.


Cf. Stone, pp. 10: comparative advantage and, 42, increasing, 35-36, 35f, production possibilities frontier and, 34-36, 35f.

Bade and Parkin, Chapter 1.1, 1.2

The Nazi-Soviet Non-Aggression Pact, more exactly known as The Molotov-Ribbentrop Pact, 1939.

Cf. Perestroika

AP Economics: Choice

The Economic Perspective

* Scarcity and choice
o Resources can only be used for one purpose at a time.
o Scarcity requires that choices be made.
o The cost of any good, service, or activity is the value of what must be given up to obtain it.(opportunity cost).

Cf. Bade and Parkin, Chapter 1.1, 1.2.

Obama Tracking Citizens

The White House Office of Management and Budget plan to end a ban on federal Internet sites using comprehensive tracking and surveillance technologies.

American Civil Liberties Union spokesman Michael Macleod-Ball said the move could "allow the mass collection of personal information of every user of a federal government website."

The Electronic Privacy Information Center (EPIC), the Electronic Frontier Foundation, and the Center for Democracy and Technology have also objected to provisions of the change in policy. Google technology, the most sophisticated tracking available, has already been accomodated and exempted from Federal policy. EPIC Executive Director Marc Rotenberg stated: "Our primary concern is that the GSA (General Services Administration)has failed to protect the privacy rights of U.S. citizens."

The Fourth Amendment

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.