Econ 101: First Principles (the Elon Musk Method)
In today's video I discuss what it means to "argue from first principles" a concept I was first introduced to by Elon Musk (CEO of Tesla Motors and SpaceX), and then I apply First Principles Logic to the field of economics. This video is for both beginners and advanced individuals. The point is not to "dumb-down" the discipline but to boil it down to its essential components which I believe provides value to people with all levels of understanding.
Alternate Version of the video (in some countries it's blocked for copyright violations :/ )
PHOTO of the First Principles from the video. I didn't include it in this post because I didn't want it to be the thumbnail :)
Yet ANOTHER great post, @andrarchy! At this point, I'm pretty willing to follow your logic down nearly any rabbit hole. Keep up the great work!
Farther down we go then! :)
That was fantastic!
Love educational and inspiring videos like this. Looking forward to more andrarchy. Keep up the amazing work.
Very happy you like it. Thanks for the positive feedback, that's what gets me to make these!
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Some great insights. I think drilling down into your own 'first principles' helps to cut out a lot of random half baked ideas and allows you take an honest look at your own understanding.
A nice way to kind of 'reset' your understanding. I'll be giving it a go. Good stuff.
Perfect
since i joined here a little over two weeks ago I've been researching and trying to learn as much as possible. you just boiled most of what i learned in the first week and half into 12 minutes. This could have saved me a lot of headaches and waking up in the middle of the night because a random thought bugged me and had to be checked.
hahaha, well sorry I didn't make it sooner :) But it definitely makes my day to hear this :)
haha don't be sorry, you've given me some new things to look into now. I have to look into first principles and see how i can apply this as well as looking into that factory it looks and sounds amazing.
Thanks @andrarchy for dumbing down what it means to "argue from first principles."
This is all news to me, and I look forward to seeing how I can apply the first principles of logic in my business and/or life.
Awesome video by the way!
So glad you found it valuable. Let me know if you make any breakthroughs!
Thanks @andrarchy, and I'll keep you updated if I make any breakthroughs.
Great video and economic thought-exercise!
@andrarchy because you asked for input and thoughts, I will give my '2 cents' (see what I did there? ...poor economics humor).
Fiat currency can be anything and its value is strictly determined on what the market (community) agree it is worth. We could all switch from dollars to seashells if everyone agreed to. The value would vary due to a number of factors, including the total number of shells available in our economy. But the biggest factor of value is what the community believes them to be worth. If one day we decide to switch to green coconuts instead of seashell, then the value of shells goes down dramatically.
If you want proofs for your theories, then look at the evolution of money from commodity, to representative, to fiat. How each are used and the variance of relative value over time tells a compelling story.
During the period when commodity money ruled, a bag of rice was worth a bag of rice. Anything else would be negotiated based upon many different factors. You may get 3 chickens for your bag from one person while, the next may only give you a basket of eggs.
Representative money was fixed by a central and controlled structure. A bank, merchant, or government would provide a coin, paper, or some ‘proof’ that was redeemable for one bag of rice and only that. You could offer your ‘proof’ as part of a barter and the holder could redeem it for exactly one bag of rice.
The rise of fiat money changed everything. Create a token like the dollar bill and if everyone agreed it was the primary currency, accepted for trade, the system works. It is all based upon the cumulative negotiated power of what the token is worth at any given moment. It may be worth 3 chickens. But if the majority of people think it is only worth 2 chickens, then people only accept it at that value point. The buying power determines the value. Buying power is determined by buyers and sellers at any given moment.
That is how I understand it, at the Econ 101 level.
Thats was interesting :)
Thank you for information :)
You're not that far from Mises Praxeology, what is in essence his "first principles" of economics.
It starts with the action axiom: people act in order to satisfy some felt uneasiness. And then goes on about people having to make decisions on how to use scarce resources (economics).
Tom Woods explains it quite well:
These praxgirl videos are also good providing more implications (though she is just a paid actress):
This looks good, watching now!