I chose the chapter about economic growth (chapter 16) because I believe that it would be most useful to use that topic at this time since the global economy has been experiencing a downturn in the past months. In chapter 16, the different indicators of growth are discussed as well as different ways to illustrate growth. I find these aspects interesting since there are, indeed, a lot of ways to show economic growth. For example, the use of a Production Possibility curve to measure growth is a common tool. This chapter says that in order for growth to occur, the curve should execute an outward shift. But I think it cannot be applied to all countries. Maybe it is applicable to developed countries because it is easy for them to shift to a higher Production Possibilities Frontier (PPF). In developing countries, however, economic growth means moving from inside the PPF to reach the point along the PPF (Crafts 139). Also, growth will not always occur just as long as the PPF curve shifts outward. According to the Solow Growth model, growth will start to slow down as the economy approaches its steady state level (Crafts 140). Just like in microeconomics where there is the law of diminishing marginal utility. Although Solow did not mention about a diminishing economic growth, the steady state level of an economy is like the satiation point wherein growth will slow down.
Also, this topic brought the study of macroeconomics to a new level since it does not only talk about the usual AS-AD curves in macroeconomics but it also tackles the "society" part of economics. Yes, it discusses about the Aggregate demand and supply and the Production Possibility curve but it enables us to understand the global economy in a broader perspective.
"The Battle of Ideas": A Macroeconomic Perspective
In the first episode of Commanding Heights, The Battle of Ideas, the contrasts between Keynesian economics and Austrian economics are very noticeable. From Lenin's revolution against the global economy to Von Mises' free market. During the World War I, Lenin was against the free market and even said that globalization exploits men. Communism took over Russia. The state had implemented heavy public intervention. When John Stalin came, the idea of central planning was introduced. The government had so much power over wages and prices. This was the main idea of Keynesian economy. Public intervention is needed in order for an economy to develop or attain growth. On the other hand, there's this Austrian economics that constitutes the laissez faire approach to the economy - that free market is essential to attain a good economy. But what is really appropriate in order for an economy to grow Is it the Keynesian or Austrian
In the world today that globalization is so prevalent, is it really beneficial for a country to apply the Keynesian thought of heavy public intervention Well, lessons from the past may have the answers to that. In the Battle of Ideas, when Lenin decided to impose heavy public intervention, the Soviet Union did not really prosper at all. Although communism was rampant in their time, having the government