If the world were easily explained by some meta production possibilities curve that included every single possible output, I wonder which “output” most people are spending their time, energy, and money. It might seem odd to boil the entire world of production into this simple curve (but economics by its nature is a simplification).
I was reflecting on this because I’m going to a venture capital summit on education in a few days. Reading over the program, I see people who are trying to explore unchartered territory where adventurers have gone before without much success. Very few of the educational startups funded in the previous decade made it (with the exception of the few winners, which were quite large — UPhoenix).
Sometimes, I have this feeling that lots of the economy is about simply transferring value from one hand to another, without much net gain in social value. Some people might have a higher concentration of resources than others, which allows them to buy more things, but ultimately it’s not a game changer.
Think back to macroecon, there are only two ways to “move the curve”.
The two main determinants of the position of the PPF at any given time are the state of technology and management expertise (which are reflected in the available production functions) and the available quantities and productivity of factors of production. Only points on or within a PPF are actually possible to achieve in the short run. In the long run, if technology improves or if the productivity or supply of factors of production increases, the economy’s capacity to produce both goods increases, i.e., economic growth occurs.
Now, I’m no John Maynard Keynes, but this is how I read the last paragraph:
We’re passionate about education and technology because we feel like it shifts the curve. Here’s to helping the economy get bettr.
Respond to me on Twitter: @AshBhoopathy or follow the discussion on HN.