Econ Essay 3.txt

Card Set Information

Econ Essay 3.txt
2012-10-08 15:43:56
econ essay

econ essay 3
Show Answers:

  1. (Essay 3) What is social capital? Explain why high-social-capital (high-trust) economies may be more successful than low-trust economies.
    • Social capital- people’s capability and knowledge of how to work together successfully in building economic relationships
    • Hypothesis 1: cultures that have relatively high
    • amounts of social capital and trust will be more economically successful
    • Hypothesis 2: US social capital has been falling
  2. Why a decrease in US Social capital?
    • Mobility: people move because of work so that have less time to join social groups
    • Entertainment: the more that people watch TV, the less they trust others.  Deals with the nature of watching TV
    • Education: people learn trust and build networks by joining community organizations
    • Political Issues
  3. (Essay 3) Low-trust economies
    • Most businesses are family owned
    • Trust is natural within families
    • Punishment for non-cooperative behavior is easier inside a family because of emotional ties
    • Face potential limitations- lack of skills in the family, “I’m family, they can’t fire me”
  4. (Essay 3) High-trust economies
    • More chance for economic success
    • Bigger talent pool- even if started by family, it hires whoever is most talented
    • Access to more financial resources- large and vibrant stock markets. Investors are less afraid that you will steal their money so they are more likely to buy stock
    • Better government- good job providing public goods/services.  Work harder to treat everyone equally.  More resources for infrastructure