[MUSIC] The last principle we'll introduce this week is the principle of
trade particularly that trade benefits everyone.
And, again this principle has to do with the actions of all individuals, the first
few principles we did has to with the actions of all individuals people, the
first few principles we did, has to do with the effects of people interacting
with each other, and then, the last two principle we've
done has to do with the effects of peole interacting with each other.
Now, there's two, main major, major benefits of why trade is good or why
trade benefits people? And, the first one has to do with
specialization, so it's, it's, it's not that difficult to understand
holistically. Again, let's, lets explain it with that
example. Say that you have a friend and you guys
are going to organize a birthday party for some third person.
And let's assume that you, the person kind of like the lead organizer is, is
you're very good at cooking, you cook very well and very fast,
and you're also very good at cleaning the house, you clean the house very good,
and very fast. These are the best, main two things you
have to do to organize this party. You have to cook food for your friends
and you have to clean the house so people find the house clean when they come to
visit the house. Now, your friend here John or Roger,
whoever, is actually was going to help you or is
offering to help, but, he's actually very bad at both
things. He's actually not, I mean he cooks okay
but he cooks very slowly and he's also not very good at cleaning the house,
particularly he takes a long time to clean the house.
The question is you only have two hours to plan this party.
should you actually offset the offer that John is giving you? Now a lot of people,
at first site, will say, well, clearly, no,
because why would I spend time, why would I spend my, you know? If John
is not as good as I am with doing both things probably not,
to gain anything, letting the, me, letting him help, help.
But that's not, if you think about it that's not the best answer,
because the best answer would be that, since your time is limited, you probably
should spend the time use doing that thing that you're even better at and then
let John do the other thing. Meaning that, say you, you're, you're
probably you're very good at cooking and you're very good at cleaning, but most
likely you're better at cooking than you are cleaning or better at cleaning than
you are at cooking, right?
Among yourself, you're probably better at one of those two things, right? So,
suppose that you're actually so, you're actually a great cook and you, you, you
clean well, but you are not as good at cleaning as you are at cooking.
Wouldn’t it be great if you spend your time cooking that way you can make the
most that people would eat the best food and really fast?
And then John has two hours to clean, so he can, he can be slow but he has two
hours to clean. So, now, you have your two hours that you
can spend and completely on the thing that you are the best and John takes a
little more time, but he has a two hours to do it,
so you both, you do the things together, the house will be clean and people will
eat the best food. If only you have to do it, then people
will not eat as good food, because you, you want to have to spend to sacrifice
some cooking for cleaning. Right? Our and the house will be cleaned
probably the same way. So because specialization is, is, is that
way, we usually always benefit when we trade, when we trade with people.
This is a reason that you could think that yourself as a good writer or a good
or, or someone who actually, if someone teach you how to make a shirt, you're
probably very good at it, but you do, you're good at other things
too. So, this is a reason why we don't make
our own shirts, because yeah, we can spend time sewing our shirts or sewing
our clothes, but we have to use that time to do something else.
So, each of us decide to specialize in one thing that we are the best and we
trade that with some else who's willing to do the other thing. So specialization
and and trade always benefit, because we all have our own individual
things that we're good at and we like to specialize in those things, because we
can do the most doing those things. That, the second reason why trade
increases benefits for everyone is because every time we make a trade with
someone else, we actually trade because we actually want what the other person
have and were willing to give up something that we have. And when that
happens, there's value created, automatically, there's value created,
there's happiness in society. Now, how that works and how is the case
the best way I can explain this to you is by letting you watch how I introduce this
in my regular class, with my students during class.
Let you see that and then we can come back and kind of discuss what happened
during that game. Alright.
So here is what I'm going to do. In a moment, I'm going to give you, I'm
going to give them. Oh, let me do that first.
I'm going to give them, each of them a present,
and then, remember this on your student evaluations, alright? so I'm going to
give each of them a, a gift. Let me start here.
And then once I give you the gift, I want you to think about what you have, because
here's what I'm going to ask you. I'm going to ask you your name.
I'm going to ask you to describe the gift you got to the class and then I'm
going to ask you to give a number from one to ten to the gift that you have.
Ten, I really really like this. One, this is crap.
I don't like at all. Right? So, when I give you a gift, think about the number
you want to give it. Alright, here we go, and there's yours.
I have this nice thing for you here oh, this is nice for you, and I have between
oh, this one here the Vaseline here. All right?
and then, I'm going to start here. This is all, all the gifts are very random.
You got that. nice. Alright.
You got there. [LAUGH] here is yours,
here is yours, and here is yours. All right?
So [SOUND] and then I want someone out here.
Let's see, who's good with math out here? I want to have you here.
in the, you're not very good with math. Right?
I want to have you. Here is, here is what you have to do,
right? It's very, very hard. Everytime, they say a number, you add it
up, right? So you're going to add the numbers up and you tell me the total.
That's, that's, you can do that? [INAUDIBLE] Alright.
Well, you don't make, so why don't you back her up, right? So, and we all keep
track on your mind right? All right. So, I gotta start here with the guys who
had more time to, your name, what, describe what you get in
whatever detail you want, and then how many points you have, all right? I'm John
I got a pink razor. That's nice.
[LAUGH] And I'd probably give it about a three.
A three, right?
Pink razors? Yeah. All right.
Is it because they're pink or? Well, you don't have a shaving cream, so.
Oh, the shaving cream. well, someone else there is [INAUDIBLE].
All right. Three points, so that's three.
my name is Jun, I'm a sophomore and I got a little sponge
thing. you know what that for? You know what
that's for? [NOISE] All right, you got it, right?
[LAUGH] So now that you know, do we agree that we know how many points? give it a
four. A four, alright.
We give it a four. All right.
What have you got? my name is Nan, I have a female deodorant bar.
[LAUGH] Guess I give it. How do you know it's female? because it
says Secret on it. [LAUGH] alright, alright.
And I guess I give it a four. A four, so have four, eight, and three,
got 11. Alright.
I'm Justin, I got hair styling mousse. [LAUGH] Nice,
alright. probably give it a three.
A three, alright. So we got a whole, it's 11, and three,
got a 14. I have Vaseline.
Okay. [LAUGH] I'd give it a.
So you have plenty of time to think about what to do, right? Yeah, [LAUGH] give it
a ten. [NOISE] Give it a 10.
Vaseline is always a very popular item here.
Alright. so we had our 14 to 24.
Alright. I'm Emma, I have an eight pack of crayons
and I'm. Nice,
okay. Probably give it an eight.
Alright, that's pretty high, eight, So you got what you wanted almost, right? So
that's 24, and eight. Thirty-two.
Thank you, right.
I'm Jordin, and I got Anarchy body spray. Hm.
Very cool. I'd probably give it a five.
All right, a five, Anarchy body spray. It's probably men, I suppose, right? Yes.
all right, all right. So, skipping school at 32, 37, all right.
I'm Raven, and I have men's shaving cream.
Oh, he wanted some shaving cream over there.
[LAUGH] All right? So, hey, why don't you guys, what'd you
give that? a two. A two,
all right. So it's not completely useless, right?
All right. So, what was.
Thirty-nine. Very good, alright.
my name is Mardessa /g and I got some men's boxers.
Nice. [LAUGH] And they're Christmas by the way.
And with tools. Yeah, I bought it,
they were on sale. [LAUGH] It said clearance
[LAUGH] Oh, I left the price tag here. That's how you know how much I spend on
it, right? [LAUGH] I give it a two. Alright, a two,
not really useless. And what the score today so far, 41.
I'm Melissa, and I got little gift bags. Okay.
It says, it says love. It says love. Yeah, it all says love,
right? I gave it a six because Valenties Day is
coming. and you can, you know, it's better when
you get something. Yeah.
That says love, but you can give it to somone to.
Right. alright, so here's what the total, what
the tally was? 47. 47, so here is what I want you guys
to do. I'm going to give you 30 seconds so you
can trade your gift with someone else so you can get something better, alright?
your 30 seconds, trade, see if you can get rid of the, of what you have,
particularly those who get low numbers, and then I'll ask you again, alright.
So go for it. [NOISE] There's plenty of chances out
there. The guy with the pink razor got rid of
it. Alright.
[NOISE] And, and you got? And you got the boxer shorts, that's good.
And you, keep the glass, the Vaseline, you didn't even try.
[LAUGH] Alright. What's the point, right?
Okay. So,
here is what we're going to, I'm going to ask you again what number you give to the
thing you have now, alright, and then, we're going to keep track of this.
Here we go. I have the pink razor.
Nice. And I'd give it a ten.
Ten, alright very good. I got a purple spongy thing, I give it a
ten. Alright, I'm glad that, I'm glad that,
this is called A loofah.
All right, so that's what we're going to called this spongy thing.
[LAUGH] That's what I call it too, that spongy thing, so I was wondering. That's
why I decided to give this, so I can know how we call it, right?
[LAUGH] Alright, so we have, we have ten, ten, 20.
I have a styling mousse and I'd give it at a six.
Alright, so we got 26. I took the deodorant and I'd give it a
six. That's six, that's a lot better than
four. So we have twenty-six, thirty-two.
Alright? I kept the crayons and I'd still give
them an eight. That's good.
[INAUDIBLE] you made me think that you're more valuable, right, because you're,
yeah, you end up with them? So, 32, thirty eight, no, 40.
I still got the Vaseline and I'll still give it a ten.
[LAUGH] Okay, good for you. Good for you.
All right. and you have plenty of time even more
time to think of what to do with it, right? Alright.
[LAUGH] I got the shaving cream and I'll give it a nine.
Alright, so we've got 49, I think so far.
I got the Axe body spray and I'll give it a seven.
59, 59? Wow. Okay, 59. You got a seven? Yeah.
Okay. 63.
I got the mistletoe boxers and I. Nice and yeah, they were on [INAUDIBLE]
[LAUGH] Yes. I'd give it a seven. All right, we are at
seven. All right. Particularly you said around Christmas
next year, right? So. I got Love gift bags and I'll give it
a ten. How was that? Eighty. So without trade,
how much was it? 47.
With trade, how much was it? 80. 80,
okay. First economic principle, and this is all recreated here in kind of an
amusing way, but it is important. Trade creates value.
Trade creates value, that's one thing we learned in the class.
And also, you get the gift and you can keep it, alright? So thank you very much,
give them a round of, round of applause. [SOUND] So what do you think? I guess as
you saw in, in the class, the, you know, the moral of the story is very simple.
Every time people trade, the value that people have increases.
And we, we can sum that value after we have all those trades.
In general, those ten people should be happier than they were before.
Every time there's a trade, the trade occurs, because people who were engaged
in that trade, saw value in that trade. So, trade creates value and that's one of
the things we're going to try and talk about during the, during the course.
[MUSIC] Produced by OCE, Atlas Digital Media, at the University of Illinois,
Urbana-Champaign.
