Big general ideas

Question 1

How did the West get rich first?

Answer 1

1) First to scape the Malthusian Equilibrium through industrialization
2) West was the first to adopt and stick with a free market economy
3) First in which the scientific mindset got widespread
(Enlightenment)
4) West found ways to identify NPV > 0
5) Western economies developed social norms that encourage trust in strangers
6) Western economies wound up with more efficient institutions that made political rent-seeking not as profitable

Question 2

What is the evidence that the market is efficient

Answer 2

1. Event Studies work: stock prices rise and fall in sensible ways to the stock market
2. ( Lucas Critique:
   3.