Michael Sestak Professor Stephanie Cole Econ 210 23 August 2014 Economics 210 Reading and Response Assignment 1 Economics is the fundamental key to understanding global finance. There is an old, pithy adage that remarks: “Money makes the world go ‘round.” This may be true, but it is economics that determines the price. All around the globe, the greatest intellectual minds study economics—the highest summit of social sciences. The study of this science is unfathomable in depth. For one to have a perfect understanding of economics, one must also have a perfect understanding of human behavior. Yet who can predict the complexities of human beings when a million shifting variables strive to influence the final outcome? The 21st century’s …show more content…
The world’s greatest minds, ranging from Aristotle to St. Thomas Aquinas have attempted to define and explain the basic tenants of good and bad economy. The great philosopher, Aristotle (384-322 BC), was the first to study the theory of economic activity and record his thoughts for posterity. He divided economics into two categories: economia and chrematistike. Economia involved making a living through the production of food, clothing, furniture, tools. He considered these orderly, dependable pursuits to be the backbone of healthy economic growth. The opposing division, chrematistike, involved investment banking, profit accumulation, and interest financing. Aristotle considered chrematistike to be hazardous to the well-being of society. Nearly a thousand years later, the Catholic Church’s most illustrious theologian, St. Thomas Aquinas (1225-1274 AD), based his own study of economics on Aristotle, yet added a moral component to the analysis of money and trade. This moral element can be summarized in one word: Justice. St. Thomas Aquinas defined Justice as a “cardinal” virtue—that is, one of the four corners, or fountains, from which all other virtues flow. St. Thomas defined this virtue as “the constant and permanent determination to give everyone his or her rightful due.” The Christian notion of “do unto others as you would have them do unto you” meant that selling something for more …show more content…
Ibn Khaldun (1332-1405 AD), a philosopher, historian, and statesman, combined economics to other fields of study, including history, sociology, and political science. Of particular note, he explained the notion of the “Laffer curve.” The Laffer curve states that a growing government will naturally demand increased wealth and increased wealth demands higher taxes. But higher taxes means less tax revenue since the citizens will eventually become discouraged to work. Ultimately, the demand for higher taxes will destroy the