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Dialogue: 0,0:00:00.00,0:00:05.42,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,0:00:09.26,0:00:12.73,Default,,0000,0000,0000,,- [Alex] Today, we begin a series\Nof talks on the price system.
Dialogue: 0,0:00:12.73,0:00:16.17,Default,,0000,0000,0000,,Not one market in isolation\Nwith demand and supply,
Dialogue: 0,0:00:16.17,0:00:19.88,Default,,0000,0000,0000,,but how markets link people\Nand places all over the world.
Dialogue: 0,0:00:20.41,0:00:23.100,Default,,0000,0000,0000,,A key part of this whole story\Nis going to be the role of prices.
Dialogue: 0,0:00:24.74,0:00:27.55,Default,,0000,0000,0000,,Something that you'll be hearing\Nquite often is that a price,
Dialogue: 0,0:00:27.55,0:00:30.73,Default,,0000,0000,0000,,it's a signal wrapped up\Nin an incentive.
Dialogue: 0,0:00:30.73,0:00:33.71,Default,,0000,0000,0000,,So we'll be talking about signals,\Nabout incentives,
Dialogue: 0,0:00:33.71,0:00:37.17,Default,,0000,0000,0000,,about speculation and prediction,\Nand much else beside.
Dialogue: 0,0:00:41.76,0:00:44.64,Default,,0000,0000,0000,,We're going to begin\Nwith markets linking the world.
Dialogue: 0,0:00:44.64,0:00:47.43,Default,,0000,0000,0000,,We've already talked\Nabout the rose as a global product
Dialogue: 0,0:00:47.43,0:00:49.01,Default,,0000,0000,0000,,but it's not just roses of course.
Dialogue: 0,0:00:49.01,0:00:50.89,Default,,0000,0000,0000,,Take a look\Nat the products around you.
Dialogue: 0,0:00:50.89,0:00:55.79,Default,,0000,0000,0000,,An iPhone designed in California\Nhas parts from the United States,
Dialogue: 0,0:00:55.79,0:00:58.11,Default,,0000,0000,0000,,from Kentucky, from Texas,\Nfrom New York.
Dialogue: 0,0:00:58.11,0:01:00.61,Default,,0000,0000,0000,,The rare earths\Nare from inner Mongolia.
Dialogue: 0,0:01:00.61,0:01:03.56,Default,,0000,0000,0000,,Some of the chips are produced\Nin Korea and Taiwan.
Dialogue: 0,0:01:03.56,0:01:06.90,Default,,0000,0000,0000,,The gyroscope comes from France\Nand from Italy.
Dialogue: 0,0:01:06.90,0:01:10.91,Default,,0000,0000,0000,,It's assembled in China.\NSo where is the iPhone made?
Dialogue: 0,0:01:11.76,0:01:14.24,Default,,0000,0000,0000,,It's really made here in the world.
Dialogue: 0,0:01:14.24,0:01:18.39,Default,,0000,0000,0000,,It's a world phone like many\Nof the products we consume today,
Dialogue: 0,0:01:18.39,0:01:20.74,Default,,0000,0000,0000,,it's produced by thousands,\Nhundreds of thousands
Dialogue: 0,0:01:20.74,0:01:24.21,Default,,0000,0000,0000,,of people all brought together,\Nall cooperating
Dialogue: 0,0:01:24.21,0:01:26.29,Default,,0000,0000,0000,,in order to produce a product.
Dialogue: 0,0:01:26.68,0:01:29.27,Default,,0000,0000,0000,,Now take a look at this picture.
Dialogue: 0,0:01:29.27,0:01:32.23,Default,,0000,0000,0000,,It shows something utterly familiar\Nbut I want you to see it
Dialogue: 0,0:01:32.23,0:01:34.66,Default,,0000,0000,0000,,deeper now with new eyes.
Dialogue: 0,0:01:35.22,0:01:38.47,Default,,0000,0000,0000,,We have here grapes from Chile,\Npineapples from Brazil,
Dialogue: 0,0:01:38.47,0:01:41.75,Default,,0000,0000,0000,,Kiwis from New Zealand,\Nall of these within a hand's breath
Dialogue: 0,0:01:41.75,0:01:43.26,Default,,0000,0000,0000,,of one another.
Dialogue: 0,0:01:43.26,0:01:45.11,Default,,0000,0000,0000,,Think of all the farmers,\Nall the truckers,
Dialogue: 0,0:01:45.11,0:01:47.78,Default,,0000,0000,0000,,all the airline pilots\Nwho have worked together
Dialogue: 0,0:01:47.78,0:01:51.05,Default,,0000,0000,0000,,to bring this literal\Ncornucopia to you.
Dialogue: 0,0:01:51.05,0:01:53.24,Default,,0000,0000,0000,,And what do we call this place?
Dialogue: 0,0:01:53.24,0:01:55.28,Default,,0000,0000,0000,,Think of the name now\Nwith a new meaning.
Dialogue: 0,0:01:55.28,0:01:57.78,Default,,0000,0000,0000,,We call it a supermarket.
Dialogue: 0,0:01:58.07,0:02:00.92,Default,,0000,0000,0000,,When we read the news\Nor see it on television,
Dialogue: 0,0:02:00.92,0:02:05.40,Default,,0000,0000,0000,,we're often told about conflict,\Nbut there's another story,
Dialogue: 0,0:02:05.40,0:02:09.39,Default,,0000,0000,0000,,a deeper story, a story\Nwhich is all around us everyday,
Dialogue: 0,0:02:09.39,0:02:14.45,Default,,0000,0000,0000,,although sometimes it's hard to see\Nand that is a massive,
Dialogue: 0,0:02:14.45,0:02:19.06,Default,,0000,0000,0000,,a tremendous amount\Nof worldwide cooperation.
Dialogue: 0,0:02:19.88,0:02:24.55,Default,,0000,0000,0000,,Hundreds of thousands of people\Nfrom Kido to Chicago cooperated
Dialogue: 0,0:02:24.55,0:02:27.77,Default,,0000,0000,0000,,to bring the rose\Nto our handsome young man
Dialogue: 0,0:02:27.77,0:02:31.04,Default,,0000,0000,0000,,and they did so voluntarily,\Non the basis of self interest,
Dialogue: 0,0:02:31.04,0:02:33.83,Default,,0000,0000,0000,,without central command\Nor central direction.
Dialogue: 0,0:02:34.59,0:02:37.62,Default,,0000,0000,0000,,This is the invisible hand\Nin action.
Dialogue: 0,0:02:37.62,0:02:42.04,Default,,0000,0000,0000,,Self interest coordinated\Ntowards the social good
Dialogue: 0,0:02:42.04,0:02:44.09,Default,,0000,0000,0000,,through the use of markets.
Dialogue: 0,0:02:45.36,0:02:48.60,Default,,0000,0000,0000,,Even in economics,\Nwe often focus on competition
Dialogue: 0,0:02:48.60,0:02:51.69,Default,,0000,0000,0000,,but the deeper story\Nis cooperation,
Dialogue: 0,0:02:51.69,0:02:54.69,Default,,0000,0000,0000,,worldwide cooperation.
Dialogue: 0,0:02:54.69,0:02:58.90,Default,,0000,0000,0000,,What markets do is coordinate\Nthe self interest
Dialogue: 0,0:02:58.90,0:03:01.09,Default,,0000,0000,0000,,of many different people
Dialogue: 0,0:03:01.09,0:03:02.88,Default,,0000,0000,0000,,who ultimately\Nhave different goals,
Dialogue: 0,0:03:02.88,0:03:05.12,Default,,0000,0000,0000,,different preferences,\Ndifferent insights,
Dialogue: 0,0:03:05.12,0:03:07.87,Default,,0000,0000,0000,,different knowledge,\Ndifferent circumstances.
Dialogue: 0,0:03:08.48,0:03:11.82,Default,,0000,0000,0000,,What markets do, they coordinate\Nthe different interests
Dialogue: 0,0:03:11.82,0:03:13.90,Default,,0000,0000,0000,,and knowledge\Nof these different people
Dialogue: 0,0:03:13.90,0:03:17.96,Default,,0000,0000,0000,,to produce extensive cooperation\Nand mutual gain.
Dialogue: 0,0:03:18.64,0:03:22.100,Default,,0000,0000,0000,,That's one of the deep lessons\Nof economics. Thanks.
Dialogue: 0,0:03:23.98,0:03:25.63,Default,,0000,0000,0000,,- [Narrator] If you want\Nto test yourself,
Dialogue: 0,0:03:25.63,0:03:27.90,Default,,0000,0000,0000,,click "Practice Questions."
Dialogue: 0,0:03:27.90,0:03:31.17,Default,,0000,0000,0000,,Or, if you're ready to move on,\Njust click "Next Video."
Dialogue: 0,0:03:31.17,0:03:35.77,Default,,0000,0000,0000,,♪ [music] ♪