Living on One Dollar A Day

Living on a dollar a day is a classical documentary which shows how people suffer around the world. The theme of poverty is clearly depicted throughout the documentary, henceforth making us to think about how we spend our money (Muhammad, 2013). Surviving beyond poverty lines is not an easy task as it requires proper budgeting. In addition, poverty deprives us the things we value the most, thus being forced to live without them. For instance, the characters in the documentary were forced to battle with hunger, which was against their wish.

Living in poverty as seen in the documentary, is similar to being forced to adapt in situations which most people cannot survive in. The idea of enjoying nice moments with friends and family is something which the poor tend to miss. In most cases, money earned cannot be able to sustain the family thus, lacking social amenities. For example, in the documentary, the four friends were forced to familiarize themselves with ways of spending less (Muhammad, 2013). They had to spend money on essential things, rather than on what did not matter the most.

                I was raised in poor family, where getting meals was a problem. My dad was a factory worker, and his salary was not able to feed the whole family. We were forced to eat a single meal a day, as a means of saving, hence using the rest of the money on other necessities. The thought of going to the movie, swimming, or even travelling to other parts of the world had never been on my mind. This made me feel as if I was living in some type of emotional jail. Whatever I wanted to have, I could not afford it, since my parents were not able to purchase it.  

                The scenarios in the documentary portray a life which requires one to think outside the box, and come up with survival tricks. In a world where money runs the economy, it is not easy to live in less than a dollar a day. In most instances, as a child, I would think critically, and come up with ways of saving the little money I received from my relatives. In do doing, I would be able to purchase whatever I wanted after a long period of time. Saving money little by little was not an easy task, because the pain of being hungry could not allow you to save money.

                The biopic also reminded me of how I used to purchase cheap foodstuffs by the roadside, hence saving the rest of the money I had (Muhammad, 2013). Moreover, my parents preferred cooking at home, instead of purchasing food from the hotel. Eating a single meal at home also had its own challenges, since one could not think critically, thus leading to poor performance in class. As a student, underperforming in class lead to psychological problems, thereby affecting the choices I made.

                In conclusion, living in abject poverty, does not only affect one negatively, but it also makes you to come up with ideas of making money. As a matter of fact, one becomes determined on achieving a certain goal due to less distractions. On the other hand, the idea of lacking basic amenities may also impact one’s life, thus making it impossible to achieve your goals.   

Reference

Muhammad, Y, B. (2013). Living on One Dollar. IMDB. Retrieved from: https://www.imdb.com/title/tt2625598/plotsummary?ref_=tt_ov_pl

Power, Economics, and a Return to Political Economy

Pareto optimality can also be regarded as pareto efficiency, it is a state of resource allocation that does not allow the reallocation of resources once allocated since the reallocation to make one individual better will make at least one individual worse (Atkinson & Stiglitz, 1980 P. 337). This means that resources are allocated in the most economical manner, despite this the allocation of these resources cannot be deemed fair or equal (Mornati,2013). An economy can be said to be in pareto optimum when the economic changes being made in the economy to favour one individual makes it worse for at least one individual. Pure pareto optimality can only exists in theory, many economic policies have been based on Pareto optimality since it’s very difficult to make changes in the economy without making various individuals worse off (Mornati,2013).  Social welfare is expressed as a function of the utilities indicators of people in the society. When it comes to deciding whether certain policies are desirable or not it is important to determine the effect the implementation if the policy will have on social welfare (Miltiades, 986, P. 482) Social welfare is developed and implemented depending on the country.

            In an economic context equity can be defined as fairness that is based on equal access and distribution of resources that are necessary in promoting welfare (Hodgson, 2010).  The matter of equity can only be understood by how followers of different political ideologies perceive it, it is important to learn how different groups view matters of economic equity. According to the opinion of many policy makers and economists, equality and fairness is more about morals and the ethics of individuals. The libertarian, utilitarian, Rawlsian and egalitarian views of equity differ from each other extensively. Defining and identifying equity is a hard task, it might prove impossible to point out complete equity but it is easy to identify inequality. Unlike simplicity and efficiency equity cannot be measured since it is a subjective concept.  Equity has stood as vital concept that is used in the development and reviewal of the tax system and policy. The taxation system is utilised by the government to improve the welfare of the citizens of a nation (Phelps, 1973, P. 418). Among the factors that contribute to inequality is the structure of the tax system.

The libertarian ideologies are based on free will and equal rights for every individual. Libertarians are a group of individuals that are recognised for campaigning for individual rights which leads to total freedom which is obtained through allowing people to maximumly utilize their capabilities while utilising the available resources as a means to an end (Nozick, 1973, P. 45, 46).  According to libertarians the rights of individuals are important and are prioritised over any other collective rights of a society. Libertarians are firm believers that that mechanism operating in the market allow the operation of free will. Nozick, a popular libertarian has explored the libertarian view and framework via the entitlement theory and concluded that no individual or a collective group of individuals has the right to control resources (Nozick, 1973, P. 48).  He paints a picture of a free market where individuals are entitled to holdings to include capital and earnings and have free rights to transfer these holdings.

 In most cases utilitarianism measures the concept of social welfare as the collective sum up of all the members of a society (Peter,1992, P. 121).  According to this view, if the welfare of one individual in a society increases it is okay to say that the welfare of the society as a whole has increased provide that the decrease in welfare that was recorded is less compared to the increase of the individual whose welfare has increased.  For many decades the concept of welfare economics has been founded on the Utilitarian philosophy, since it ensures that the available resources are distributed amongst members of a society with a focus on maximising the welfare of the members. Unlike the egalitarianism philosophy, this philosophy does not promote the idea that redistribution of resources is necessary while ensuring that all members of a society have equal resources (Stein, 2008).  Special consideration is accorded to transaction cost since they play a significant role in the utilitarian analysis since the loss that can be incurred through such costs is capable of reducing the chances of maximizing the overall welfare of the society.

            Among the four philosophies only the egalitarianism philosophy has come close to equating equality with equity.  This philosophy campaigns for equality for all people in a society. Egalitarians campaign for the equal distribution of income and wealth. Despite their view there are two compelling factor that argue against egalitarianism, the first factor is the failure to recognise effort, secondly if wealth and resources are to be redistributed there would be no way of creating equality since natural skills and luck cannot be redistributed (Marx, 2008). Rawlsian believe that individuals are in a binding contract with the society and they have obligations towards society that are dictated by the contract (Cohen, 1989, P. 929).  Equity and justice are some of the terms of the contract.  Rawlsian believe that the contract allows them to participate in the society as long as they fully observe the law. However, these rules must be fair and must allow all members of the society to participate fully (Cohen, 1989, P. 931). According to this philosophy there are two principles, which are; every individual in the society has equal rights and liberties and social and economic inequalities are used to solely satisfy two conditions, first applied to offices operating under all conditions in a fair and equal manner, second they are to  be viewed as a benefit that is derived from the least advantaged individuals in a society (Peter,1992, P. 122). It is assumed that the society and the members enter into the contract without considering any history of privileges to ensure that both parties are equal.

            A conflict between efficiency and equity objectives may occur when trying to maximize the productive efficiency of a market, this subsequently leads to a reduction in the equity and how equitable the wealth is distributed. For decades the debate about the conflict between these two has focused on addressing the inequality in a country or inequality being experienced in a region where the GDP is constantly rising (Choudhury, 1988). Academics and economists have argued about the possibility of equity and efficiency co-existing in a situation where both can rise at once instead of always being inversely related to each other.

Bibliography

Atkinson B. A., Stiglitz E. J., (1980). Lectures on public economics.

Cohen, G.A., 1989. On the currency of egalitarian justice. Ethics, 99(4), pp.906-944.

Hodgson, H., 2010. Theories of Distributive Justice: Frameworks for Equity. J. Australasian Tax Tchrs. Ass'n, 5, p.86.

Marx, K. (2008). Critique of the Gotha program.

Miltiades, C., (1986). Chapter 16: Welfare Economics” from Chacholiades Mitiades,        Microeconomics pp. 481-504

Mornati, F., 2013. Pareto Optimality in the work of Pareto. Revue européenne des sciences          sociales. European Journal of Social Sciences, (51-2), pp.65-82.

Nozick, R., 1973. Distributive justice. Philosophy & Public Affairs, pp.45-126.

Phelps, S.E., (1973) Taxation of wages income for economic Justice; Quarterly Journal of            Economic.

Stein, S, M., (2008). Distributive Justice and Disability: Utilitarianism against Egalitarianism.             https://www.degruyter.com/doi/book/10.12987/9780300128253.

Peter, J., (1992). “Welfare Economics “from Maloney, John, What’s new in economics pp101-    135

Choudhury, M., 1988, January. Conflict between the efficiency and equity goals of manpower     policies. In Forum for Social Economics (Vol. 17, No. 2, pp. 41-50). Taylor & Francis            Group

          BREXIT CAUSES AND CONSEQUENCES

 Outline

Title: Brexit Causes and Consequences

Thesis: Brexit has had negative social, political and economic effects on United Kingdom (UK) as it has created room for political divisions and instability in the country.

1. Introduction:
2. Thesis: Brexit has had negative social, political and economic effects on United Kingdom (UK) as it has created room for political divisions and instability in the country.
3. History of Britain and its experiences in EU that motivated its leave vote
4. Political Consequences
5. Change of government; Theresa May became the prime minister in the new installed government, given the role of helping complete the process of leaving EU.
6. Divisions in Politics; concepts of ‘hard Brexit’ and ‘soft Brexit’ has led to division among political leaders causing instability within the country.

• Economic Consequences of Brexit

1. How the employment sector has been affected
2. How employers are dealing with lack of skills and retaining of staff
3. Social Consequences of Brexit
4. Racism; Hate crime has increased since 2016 mostly in schools and colleges
5. Poverty; the number of children living in poverty has doubled since 2016 because the funding that EU provided to help eradicate poverty is no longer available.
6. Conclusion

Brexit has had negative effects on UK, the EU was beneficial for UK and it greatly contributed to its economic development. Unless a meaningful debate is held to understand what UK hopes to achieve in the world an itself, then there is a risk that UK will fail and not accomplish any goals with its Brexit decision.

Abstract

This article examines the decision for United Kingdom to revoke its membership of the European Union (EU). The paper analyses some of the reasons that led UK to leave the Union and the demographics of the leave vote. This research suggests that one of the main reasons that led to the leave vote by UK is the issue of surge of migrants into UK after the free movement without restrictions decision. This paper suggests negative effects of Brexit for UK both economically, socially and politically. Brexit led to deep societal tensions in matters of education, race, class and income. This research shows that Brexit has had a very negative impact on employment, where UK organizations are still struggling to find the right people to fill their vacancies as most EU workers are scared to come work in UK. The article helps in making sense of Brexit and outlines some of the approaches that can be taken to deal with post-Brexit consequences.

Brexit and Its Causes

The decision for British to leave the European Union was a shocking one and it shook the whole of Europe. This has been termed as the most significant event in Europe since 1989 after the fall of the Berlin Wall. Brexit has had negative social, political and economic effects on United Kingdom (UK) as it has created room for political divisions and instability in the country. Britain is country that has a unique history as compared to its European neighbours. It was a nation that has had a parliamentary democracy and so it has always been perceived as a nation that is independent. Britain was never a sympathetic model nation for EU; it only joined EU because it had no better options at the time (Bouoiyour & Selmi, 2018). 

There were many things that motivated the decision or Britain to leave the EU one of them being the 2003 decision by the Blair administration to permit for freedom of movement without restrictions to all the consent states of 2004 (Dhingra et al. 2017). Free movement without restrictions was hence allowed by the United Kingdom to all the compliance states from central all the way to Eastern Europe. All European member states preserved their agreement rights to limit free movement excluding for Sweden (Dhingra et al. 2017). This free movement led to a flow in the number of workers that came seeking for jobs in the UK. It was the decision of Britain not to limit free movement but in the end EU is the one that got accused for the flow of workforces in UK instead of the British government.  This invasion was supported by the economic catastrophe, as the Eurozone failed to source development across its nineteen members, the economy of the debtor states constricted abruptly and more people arrived in Southern Europe (Brakman et al., 2018).

The economy of British rectified itself promptly after this catastrophe because UK was in control of its coinage and debt; it had the authority to organize effective economic stabilisers. UK acted as the employment shock absorber because of the Eurozone addiction to monetarily inflexible economy procedures. The capacity of people that were moving to the UK from the CEE states and Southern Europe can be defined to have been a major factor that drove Britain to leave EU (Bouoiyour & Selmi, 2018). This is evident from the leave votes where areas within Britain that had a rapid flow of foreign workers voted to leave Britain. The areas where foreign workers were a common thing like in large cities like London, immigration did not really bother them and they voted to stay in the EU.

Political Consequences of Brexit

There were many political impacts of Brexit vote both for UK and for EU. One of the main risks for EU is that Brexit led the union to be looked at as weak, and it encouraged other states that are not comfortable in the union to leave (Rashica, 2018). As for UK, Brexit caused divisions in politics and it led to installation of a new government under Theresa May whose authority and competence was fatally compromised by the decision to call for a snap General Election in the year 2017. May’s position as a prime minister is exclusively grounded on incapacity of opponents within the party in regard to agreeing on would replace her (Corbett, 2016). May is currently being used to help warp up the process of leaving EU so that she can be blamed for all the consequences and subsequent problems.

Brexit has led to divisions in politics where some people wanted a ‘hard Brexit’ a position that would seek a clear break and application to the World Trade Organization for trade organizations (Brakman et al., 2018). Others preferred a ‘soft Brexit’ that sought to compromise and retain some aspects of the UK’s economic relationships with EU. Brexit saw the return of Eurosceptic neoliberals like David Davies and Liam Fox among many others to key positions within the government a thing that has led the debates on hard and soft Brexit to prevail even to date (Rashica, 2018). Divisions in UK’s politics mean instability in the economy and also the social elements of UK.

Economic and particularly employment Consequences of Brexit

An Immediate aftermath of Brexit vote saw a fall of the pound on the economic market (Corbett, 2016). The uncertainty about Brexit condensed investments by business by almost 6% which caused an employment decrease by almost 2%. However in spite of the early concerns about Brexit influences on employment, the proportion of employers looking to increase staff set counter to those that were looking to decrease staff has firmly improved (Dhingra et al. 2017). There is a sign of continued, healthy labour demand that is perpetual with official employment figures that suggests employment. In the period between 2016 and current day, the mixture of robust labour demand, low redundancy and a powerful 95% fall in EU residents joining the UK workforces has led to extensive pressure of occupation (Minford, 2019). 44% of employers as of the year 2018 experienced greater difficulty in recruitment while another 34% faced a similar challenge when it comes to retaining of their staff.

 Employers even in the current day are still experiencing a high proportion of vacancies that have become difficult to fill. 67% of the businesses that have marketed their jobs have had difficulties finding staffs that can fill these vacancies, which is a greater number as compared to the year 2017 where this percentage was at 51% (Minford, 2019). Given the shrinking supply of skills and labour, Brexit has not really reduced business’s interest in retaining EU migrant workers. A survey that was conducted in the year 2018 indicated that two thirds of organizations in Britain would continue to employ EU nationals (Anderson & Wittwer, 2018).

Most of the employers indicated that nationality was not a consideration when employing, skills of the candidates are what mattered. In the case of both the semi-skilled and unskilled roles, the employers indicated that the main reason they continue to employ EU nationals is because there are no British workers available to fill these vacancies (Anderson & Wittwer, 2018). In trying to deal with the recruitment challenges, most organizations in Britain have raised their starting salaries and others that had problems retaining employees have increased their salaries to try and retain these employees (Anderson & Wittwer, 2018). The employers have also had to practice the concept of up skilling the employees they have in order to fill the vacancies that are hard to fill. There are many other ways that organizations in Britain could attract staff other than salary increment. The organizations could for one provide more flexible working and clear career development all which will help the organizations to recruit and also retain these employees.

Social Consequences of Brexit

Brexit vote led to an increase in inequality including; cleavages between class, age, wealth, education and skills. Currency depreciation after the vote led people to be poorer as they were forced to pay more for the exported goods and their exported goods went for much less. Poverty has led people to turn on the minority and the minorities are today facing increased racism and abuse. It is estimated that seven in ten of minority people report racial discrimination, a very large number when compared to a percentage of fifty eight before Brexit (Teague & Donaghey, 2018). UK’s police force data has indicated that hate crimes have greatly increased to almost double in schools and colleges within Britain in the last three years.

 So currently, UK society is suffering from poverty, hate crimes and they are forced to deal with the issue of skill shortage in their hospitals and other areas that helped to develop UK. Before Brexit UK received funding to help alleviate poverty in regard to child poverty, homelessness and food poverty. People in Britain are now locked in poverty, it is estimated that almost a third of children in UK are living in poverty and in average classroom, about nine students come from families that are suffering financially (Teague & Donaghey, 2018). This population of poor children is expected to rise by the year 2020 where it is expected to be five million. The shape that poverty will take in UK is dependent on the response of the government, if they increase benefits for the poor then poverty will be decreased. But if it responds by business tax cuts and income tax for top employees, then poverty will deteriorate.

Conclusion

It is evident that Brexit has had negative effects on social, political and economic elements in EU. What is even sadder is the fact that it is not easy being confident that political leaders on both sides of the English channels are capable of the strategic thinking that is required in order to help keep EU and UK in order. UK-Europeans relations have helped understand that crisis management and problem avoidance is an insufficient strategy. UK assumes that the Union no longer matters to it, it however forgets that he remaining 27 states in the union will continue to be its greatest export market. Millions of nationals will live in each other’s territories and so the deep and pervasive economic and social links will still remain. What this means is that UK does need the union one way or another. EU was good or UK and unless a meaningful debate is held to understand what UK hopes to achieve in the world an itself, then there is a risk that UK will fail and not accomplish any goals with its Brexit decision.

References

Anderson, K. and Wittwer, G. (2018) ‘Cumulative effects of Brexit and other UK and EU‐27

bilateral free‐trade agreements on the world’s wine markets’, World Economy, 41(11), pp. 2883–2894. doi: 10.1111/twec.12726.

Bouoiyour, J. and Selmi, R. (2018) ‘Are UK industries resilient in dealing with uncertainty?

The case of Brexit’, European Journal of Comparative Economics, 15(2), pp. 277–292. doi: 10.25428/1824-2979/201802-277-292.

Brakman, S., Garretsen, H. and Kohl, T. (2018) ‘Consequences of Brexit and options for a “Global Britain”’, Papers in Regional Science, 97(1), pp. 55–72. doi: 10.1111/pirs.12343

Corbett, S. (2016) ‘The Social Consequences of Brexit for the UK and Europe’, International

            Journal of Social Quality, 6(1), pp. 11–31. doi: 10.3167/IJSQ.2016.060102.

Dhingra, S. et al. (2017) ‘The costs and benefits of leaving the EU: trade effects’, Economic

            Policy, 32(92), pp. 651–705. doi: 10.1093/epolic/eix015.

Minford, P. (2019) ‘The effects of Brexit on the UK economy’, World Economy, 42(1), pp.

            57–67. doi: 10.1111/twec.12771.

Rashica, V. (2018) ‘The Political Consequences of Brexit for the United Kingdom and the

            European Union’, SEEU Review, 13(1), pp. 30–43. doi: 10.2478/seeur-2018-0004.

Teague, P. and Donaghey, J. (2018) ‘Brexit: EU social policy and the UK employment

            model’, Industrial Relations Journal, 49(5/6), pp. 512–533. doi: 10.1111/irj.12235.

 Effects of Structural adjustment in Accra, Ghana

Outline

• Introduction
• In this section, I will discuss the different perspectives that people have regarding the impact that structural adjustment programs have and the impact they have on a country when implemented.
• Structural adjustment policies
• This section will focus on the policies that a country has to fulfill in order to qualify for a loan from the IMF. I will also focus on the challenges that countries must overcome in order to fulfill the requirements set by the IMF and World Bank.
• Impact on country
• This section will focus on the impact that Ghana’s involvement with the IMF and World Bank have had on its citizens. Despite the desire to speed up development and improve the living standards of its citizens, Ghana ended up alienating some of its citizens and this further fueled the spread of inequality in the country.
• Argument
• Despite the negative outcomes, the involvement with the IMF and World Bank had some positive outcomes for Ghana. I will however discuss how the benefits that emerged did little to unite the country but rather led to the spread of inequality.
• Conclusion
• The conclusion will summarize the impact that the policies from the IMF have had on Ghana and why involvement with the two organizations caused a lot of disunity in Ghana.

Effects of Structural adjustment in Accra, Ghana

Introduction

Structural adjustment is a process that involves the implementation of programs often provided and funded by the World Bank and the international monetary fund to help overcome an economic crisis or speed up the pace of development. However, in order to qualify for the loans and monetary support provided, countries seeking assistance from these organizations are required to abide to various economic policies structured by IMF. The assistance provided the two organizations is based on the idea that the challenges that citizens in third world experience is as a result of the impact that state intervention has on the economy of a country. The state involvement includes the expansive social service programs implemented by the state and also the control that they have over manufacturing enterprises. In their defense, the World Bank and the IMF argue that a free market is the best solution for helping to boost the economy and help people in third world countries to raise themselves out of poverty. Through the activities engaged in, the IMF and World Bank try to bridge the gap between the rich and the poor and in so doing, reduce the disparity that exists between urban and rural areas. Although the structural adjustment programs implemented by IMF and the World Bank help developing countries overcome some of the challenges they face, their use in countries in the global south have greatly contributed to the inequality that exists in countries like Ghana.

            When implemented correctly, the structural adjustment projects implemented by IMF and the World Bank greatly help in preparing a country for growth and in so doing, raise the living standards of its citizens. The intervention of the two organizations take control from the state and this helps to reduce the problems caused by the government’s involvement (Ericksen, 2015). A good example is the case where the state tries to assist people in the rural sectors. In Ghana, the states involvement before the implementation of the structural development programs from IMF led to a decline in market opportunities especially in the agricultural sector (Ericksen, 2015). The approach taken by the state involved lowering the price of agricultural products in an attempt to make them more affordable to local resident. This however had a negative impact on the farmers and agricultural industries and this led to deterioration of the people’s living standards. After the implementation of the structural adjustment programs, the regions experienced steady growth as the rural markets were deregulated and employment opportunities were created as a result.

            While the involvement by the IMF and World Bank could create great opportunities for growth, the success of the structural adjustment programs is greatly challenged by the organization’s determination to look after their own interest (Barry et al, 2016). Although the structural adjustment programs are designed to help the developing countries recover from a crisis or speed up development, the World Bank and IMF also benefit from the relationship established with countries in the Global South. Before deciding on what region to offer monetary support to, the two organizations also take into consideration the benefits that can be achieved from associating themselves with a country that is still developing (Barry et al, 2016). Added precautions in the form of structural adjustment policies are undertaken to ensure that the interest of the World Bank and the IMF are addressed as well. It is through these structural adjustment policies that the IMF and World Bank gain the foothold needed to influence and control the countries they give loans to.

Structural adjustment policy          

In order to qualify for the loans provided by the IMF, a country must follow the directives given by the organization and implement several policies. A good example of the policies that a country has to implement is the directive to cut government spending in order to reduce the budget deficit within the country (Palavi, 2016). While it is difficult for any external organization to influence the government of another nation, the IMF is able to do so by exploiting the country’s need for assistance. The IMF also requires the government of the country seeking financial assistance to raise tax revenues and further improve the efficiency of the tax collection methods used. While such an approach would be ideal in already developed countries, raising taxes in a country that is already undergoing a financial crisis makes it difficult not only for the government, but also the people expected to pay the taxes (Pallavi, 2016). Since the structural adjustment process is continuous, citizens have to bear with the harsh consequences of raised taxes before being able to benefit from the opportunities that will be created if the structural adjustment programs are successful.

            In order to abide to the provisions of the IMF, Ghana opted to privatize enterprises that were owned by the state and further reduced government expenditure by implementing cuts in social services. The country further increased the production of staple products like timber and cocoa meant for exports (Shah, 2012). In return, the World Bank provided funds needed to fund the country’s economic reform programs and while there were various advantages achieved as a result, the association with the World Bank and IMF did little to reduce inequality in the country.

The positive change brought about by the IMF and World Bank could not resolve the issue of inequality as the parties involved differed on what was sought after when Ghana was trying to speed up the pace of development (Logan, 2015). For starters, the IMF and World Bank considered development as positive economic growth and a good GDP. However, the state of a country does not necessarily reflect the state of the people and a good GDP was in no way a reflection of the citizens’ well-being. The structural adjustment programs mainly focused on reducing poverty and enhancing the country’s trade (Saprin, 2013). While their involvement did promote trade, the IMF and World Bank failed to reduce poverty in Ghana and this did little to curb inequality in the region including the capital city, Accra.

Despite the efforts made by the IMF and the Ghanaian government, the poverty levels went even higher after implementation of the structural adjustment programs even in the capital city. Despite recording a 75 percent increase on the minimum wage a within the first three years after the structural adjustment programs were implemented, the citizens could not enjoy the positive change due to the burden of implementing the needed changes (Hatchful, 2002). The country suffered from a rise in food prices and citizens were forced to pay high fees in order to receive social services. The cost of water was raised by 150%; electricity by 80%; and health by 1000 percent (Adutayo, 2015). While those living in poverty could not enjoy the opportunities created by the association with IMF, those below the poverty line found it difficult to afford basic necessities such as food and water (UN, 2017). Rather than seeking solutions that suited all citizens equally, the positive change only favored those that could afford it and thus creating a bigger divide between the rich and the poor.

Inequality was thus intensified as those in a position to enjoy the benefits of the structural adjustment programs had an advantage over those that were too poor to even afford the basic human needs. The wealthy in Accra had more opportunities to grow their businesses and engage in international trade by exporting their products to other countries (Bank, 2001). Even when taxes were raised and food became expensive, the profits gained through trade meant that the rich could afford the expensive lifestyle brought about by the policies introduced by the IMF and World Bank. Inequality was not only limited to people but also to communities living in different regions. Those in urban areas got the most out of the positive changes brought by the structural adjustment programs. Since the rich lived in different neighborhoods from those occupied by the not so well off, their communities grew for the better (Soludo, 2003). Those living in rural areas for instance could not fully benefit from the ventures undertaken as development was focused on regions that could bring about economic development. The living conditions were different in the urban areas compared to areas occupied by the poor and this further promoted inequality.

Transformation of inequality

The regional variation caused a lot of inequality in Ghana and its consequences were felt years after implementation of the structural adjustment programs. Ten years after its implementation, cities like Accra failed to benefit from the development promised by the IMF. It was estimated that half of the people living in the urban areas were living below the poverty line. In addition, the urban areas were yet to benefit from the opportunities sought after through the structural adjustment programs (Donkor, 2019). Wages were still relatively low, citizens lacked employment and access to good quality health care was still hard for majority of Ghanaians. The geography of the region added on to the inequality especially because 80 percent of people live in the rural regions. Furthermore, Ghana is divided into three savannah regions namely; the north, upper east, and upper west (Sembene, 2015). The savannah region is home to 12 percent of Ghana’s population, 18 percent of which are poor and 35 percent extremely poor (Adutayo, 2015). While the structural adjustment programs did promote trade through exports to other countries, those living in poverty could only produce food to be sold locally and therefore failed to benefit from the opportunities created. While those in the urban areas got a major boost from trade, the poor were not as lucky and this further increased the rift between the rich living in the urban areas and the poor in the rural regions.

In their defense, the World Bank and IMF argued that the advantages that would have been reaped from allocating resources to help develop rural regions would not create enough gains to bring about positive development in those regions. The structural adjustment programs therefore left out rural farmers despite the role they played in feeding the country as the rest of the population sought after the opportunities created from exporting goods to other countries (Adutayo, 2015). The IMF and World Bank were not only wrong in opting to leave out specific regions but also failed to fully understand the advantages that could have been achieved had the programs sought to help those in rural areas as well. Other than reducing the vulnerability of the farmers in regions left out by the structural development programs, including them could have benefited the whole country and not just the poor (Adutayo, 2015). This is especially because small farmers operating from rural areas tend to have a higher level of production per acre of faming land compared to farmers operating in urban areas. In addition, small farmers carry out farming activities on their own compared to farming in urban regions where farms employ workers to look after the farms. The rural areas would have therefore lowered the cost of production as there would have been lesser need for expensive methods of production used in urban areas.

The programs implemented in Ghana in order to meet the criteria for receiving loans from the IMF and World Bank spatialised the transformation of inequality in the country especially through attempts made to improve the infrastructure. Similar to the approach taken when deciding which regions were most suited for aid to boost agriculture, the programs also selected specific regions to focus on instead on trying to develop the entire country equally. The structural adjustment programs led to geographical isolation as most of the funds provided were used to develop the urban areas (Adutayo, 2015). Inequality was made even more severe because those in the rural areas could not access or benefit from the improvements made on infrastructure as projects to improve infrastructure like railway lines and transport networks as they were in the urban areas.

An argument can be made that the programs enforced by IMF and the World Bank were in no way the cause for inequality in Accra and the rest of the country. This is especially because the projects had positive outcomes whenever implemented successfully. While this may be the case, the requirements to qualify for the loan resulted in further deterioration of the citizens living conditions especially those in the middle and lower classes (Adutayo, 2015). In order to qualify for the loan the government had to reduce its expenditure and improve on the level of performance from the public sector. To achieve this, cutbacks were implemented and a significant number of people lost their jobs. Unemployment rates rose as a result and more people lived in poverty following the implementation of the structural adjustment programs.

Conclusion

The programs implemented by the IMF and World Bank had the potential to improve the living standard of all the people in Ghana if well implemented. However, there were conflicts of interest as the IMF and World Bank sought to serve their own interests as well, sometimes at the expense of the country they were trying to help. The decision to spatialize development and focus on some regions more than others meant that some regions got better opportunities than others. The unequal development led to the existence and spread of inequality especially because some regions were more developed than others. Despite its attempts to help, the Structural adjustment programs greatly promoted inequality in Ghana.

References

Adutayo A, (2015) “Conditional development: Ghana crippled by structural adjustment    programs” E-International Relations, retrieved from, https://www.e-        ir.info/2015/03/01/conditional-development-ghana-crippled-by-structural-adjustment-       programs/

Bank, W. (2001). Aid and Reform in Africa: Lessons from Ten Case Studies. United        States: World Bank.

Donkor, K. (2019). Structural Adjustment and Mass Poverty in Ghana. United Kingdom: Taylor & Francis.

 Eriksen, T (2015). "What´s wrong with the Global North and the Global South?". Global South Studies Center. Archived from the original on 2016-10-09. Retrieved 2016-10-06.

Kolavalli et al, (2019) “Ghana's Agricultural and Economic Transformation: Past Performance    and Future Prospects”. United Kingdom: Oxford University Press.

Gray, Kevin; Gills, Barry K. (2016). "South–South cooperation and the rise of the Global             South". Third World Quarterly. 37 (4): 557– 574. Doi:10.1080/01436597.2015.1128817. ISSN 0143-6597

Hutchful, E. (2002). Ghana's Adjustment Experience: The Paradox of Reform. Ghana: UNRISD.

Agyemang K, (2018). IMF and World Bank Sponsored Structural Adjustment Programs in           Africa: Ghana's Experience, 1983-1999.  United Kingdom: Taylor & Francis.

Logan F, (2015) “Did structural adjustment programs assist African development?” E-     International Relations, retrieved from, https://www.e-ir.info/2015/01/13/did-structural- adjustment-programs-assist-African-development/

McMillan, M. (2016). Structural Change, Fundamentals, and Growth: A Framework and Case             Studies. United States: International Food Policy Research Institute.

Palat, Ravi Arvind (2010). "World Turned Upside Down? Rise of the global South and the             contemporary global financial turbulence". Third World Quarterly.

Roy, Pallavi (2016). "Economic growth, the UN and the Global South: an unfulfilled        promise". Third World Quarterly. 37: 1291–1293. Doi:10.1080/01436597.2016.1154440

SAPRIN. (2013). Structural Adjustment: The SAPRI Report: The Policy Roots of Economic        Crisis, Poverty and Inequality. United Kingdom: Zed Books.

Sembene, D. (2015). Poverty, Growth, and Inequality in Sub-Saharan Africa: Did the Walk          Match the Talk Under the Prsp Approach? United States: International Monetary Fund.

Shah A, (2012) “Structural adjustment: A major cause of poverty” Global issues

Soludo, C. C. (2003). African Voices on Structural Adjustment. Senegal: Africa World.

United Nation, (2010). Combating Poverty and Inequality: Structural Change, Social Policy and             Politics.  Switzerland: United Nations Research Institute for Social Development.

United Nations, (2017) Income Inequality Trends in Sub-Saharan Africa: Divergence,      Determinants and Consequences. United States: United Nations Development Program,         Regional Bureau for Africa.

 France economy from 1997-2000

                                                Introduction

During the First World War, the seizure of its basic industries by German made the economy of French to be critically hurt. As the French credit continued to collapse, the French government decided to lend some money from the United States and use it to purchase manufactured goods and food staff (Copleston, 2003). The arrival of thousands of U.S. soldiers also resulted to increase in government expending for building materials and food. On the other hand, forced labor and the use of volunteers was the strategy that the French government used to solve the problem of labor shortages. Because of that, national debt increased steadily from 66 percent to 170 percent of GDP (gross domestic product). Inflation also become severe making the value of the franc to continue decreasing as compared to the value of the British pond.

1. What did the government do during this time to either help or hinder the economy?

In order to steer economic growth, better economic planning was instigated. The main focus of the first economic plan was on various economic activities such as transport, steel, agriculture, cement, and energy equipment. The second economic plan was to foster more and better scientific research, urbanization, housing construction, and development of manufacturing industries. The French government also signed a treaty with the United States which enabled it to obtain a new loan from the U.S. to finance those activities (Robert, 2012). Nationalization of industries was allowed without any political positions. In order to assist in reconstructing the French Economy, the value of all the resources that were stolen and smuggled into Germany were also recovered using the Monnet Plan. Ideally, during this time, better production strategies, political and economic innovations are also some of the factors that enabled the country to gain international status.

2. List the policies that were put in place by the government
3. a) Fiscal policy – the fiscal consolidation that the French government used was ultimately accompanied various structural reforms that were perceived to have the potential of fostering economic growth. The reason for that is because economic growth was regarded as being one of the crucial elements to enhance thriving fiscal adjustments through reducing the budget deficit and maintain price stability. As a result of that, economic growth rose steadily just because of the substantial depreciation that were initially implemented prior to the commencement of wage moderation and fiscal consolidations (Copleston, 2003).

            On the other hand, although economists perceived that the French could not have had the opportunity to increase the exportation of its products; it continued to experience steady economic growth. As much as structural reforms were concerned, economic growth was enhance through lessening labor market reforms as well as opening free markets for commodities and services. The objective behind that was to increase the level of competition which in return was to foster employment creation as well as productivity growth (Robert, 2012). Moreover, targeting wage bill and social spending was also regarded as being one of the most conducive means to enhance fiscal adjustments and limiting other factors that could hinder economic growth.

1. b) Monetary policy – Initially, monetary policy that the French government used were aimed to increase the rate of unemployment whenever it was perceived to have dropped below the recruitment threshold. As a result of that, it made policy-makers to come up with successful strategies, such as expansionary monetary policies that could enable them to revive the economy into full employment. According to the views of the economic activists, monetary policy could result into a heated economy but the self-correcting mechanism enabled the French government to reverse the course which in return generated economic stability. It is this reasoning that made the money supply in the economy to develop at a steady rate (Francois, 2014). Consequently, it was possible to respond to short-term and long-term objectives, for instance, exchange-rate and output growth considerations so as to stimulate the growth of the economy.
2. c) Supply policy – economically, supply policies are meant to spur economic growth through increasing the supply of goods and services, lower their prices, as well as increase the rate of employment. Between 19^th Century and 20^th Century, the French government came up with the supply policy to boost the supply of agricultural products into the market so as to moderate the existing socioeconomic inequalities. Taking into account the inflationary pressure, the escalating public debt, as well as the external and internal imbalances that were experienced during that time, supply policy was important because it enabled the government to retreat from direct economic interventions to adopting better market-oriented economic strategies, as well as privatizing vital state companies (Cette et al., 2017).
3. What was the intended impact of these government policies?

            Fiscal policy, monetary policy, and supply policy was meant to spur economic growth. As compared to other nations during the economic recession, the use of these policies enabled the French economy to stabilize its economy through increasing its GDP. Although it was a slow process, these policies were meant to increase the rate of employment, particularly among the youth (Francois, 2014). Moreover, as a means of increasing government tax, using these polices was to enable the government to increase consumer purchasing power through exports and imports. In order to modernize the economy as well as encourage economic growth, government expenditure was also to be managed as much as possible using tight labor markets and tax cuts. Accordingly, these policies were intended to ease the growth of capital investment and encourage industrialization (Robert, 2012).

4. What was the actual impact of the government policies?

            The use of the formulated French government policies were meant to steer economic growth through imposing economic controls on public and private business and on government instruments, for instance, taxation. One of the impacts of these policies was to make the merchants to depend on state protection against overseas competitors as well as extend the country’s affairs abroad. Moreover, the use of these alternating policies allowed the French government to have the potential of building an economy in which technological and industrial advances could be enhanced (Sutton, 2007). This also in return assisted in maintaining and protecting employees’ privileges and security. Initially, the erasing the debt the country had with United States enabled it obtain new loans to reinvest more in other economic activities such as financing industrial activities. Such policies also widened international market for exportation (Quinet, 2006).  

                                                                        Conclusion

            Continued productivity of a country is what is perceived to have the potential of increasing its GDP (gross domestic product) which in return improves the living standards of its citizens. Despite that, the microeconomic policies that the French government came up with managed to encounter the negative effects of the great depression that was caused by inflation, labor shortage, and resource scarcity, poor technological advancement, and so on. As the level of productivity continued to increase, it made the country to have a competitive advantage.

                                                            References

Cette, G., Corde, S., & Lecat, R. (2017). Stagnation of productivity in France: a legacy of the crisis or a structural slowdown?. https://doi.org/10.24187/ecostat.2017.494t.1916.

Copleston, F. C. (2003). 19th and 20th century French philosophy. London: Continuum

Francois, C. (2014). An Economic History of Modern France. Routledge Press.

Quinet, E. (2006). France: avoiding competition. Competition in the railway industry: An international comparative analysis, Edward Elgar, 81-110. https://books.google.co.ke/books?hl=en&lr=&id=VFy5TuUoWOcC&oi=fnd&pg=PA81&dq=France:+avoiding+competition&ots=BlxLTTLuc3&sig=Hv-uIGbB2v4vAt4fLOryKwiB7Ws&redir_esc=y#v=onepage&q=France%3A%20avoiding%20competition&f=false

Robert, L. (2012). French Liberalism in the 19^th Century: An Anthology. Routledge Press

Sutton, M. (2007). France and the construction of Europe, 1944-2007: The geopolitical imperative. New York: Berghahn Books.

Microeconomics assignment

The effect of current economic conditions on factory opening/closing  

 The article asserts that the manufacturing sector is central to the economic activities in regional areas and the world. Nations that have great powers such as the Roman Empire and the Chinese Empire have been producing the most goods as a result of technological capabilities (Stemler, 2016). During the industrial revolution, the invention of new manufacturing processes increased employment opportunities. However, the industrialized world led to great depression and caused an economic downturn. Also, the great depression affected consumer spending, and the loss of jobs and the demand for goods decreased. However, the loss of jobs resulted in a positive trend in the manufacturing industry since experienced productivity growth (Stemler, 2016). In other words, manufacturing became healthier since the job was a strength. In general, the great nations recovered from the great depression, and they were able to maintain their manufacturing capabilities. This resulted in the developed of manufacturing jobs (Stemler, 2016). However, it is important to understand that even though the manufacturing jobs accelerated in the great nations, the current economic condition is that firms must meet the customer expectations; that is new technologies, manufacture customized products, and demand variability.

 On factory opening/ closure, the current economic condition will increase factory opening and moreover, the factories will need technical change and operate on a global scale (Stemler, 2016). Due to the competition increase, the current economic condition expects the factories to improve the products and technology. Note that economic changes characterize the current economic condition. For factories to adapt to the changes and increase economic growth, they need technological improvement. My opinion is that the current economic condition, which is characterized by profound changes will increase the openings of new firms. Note that in today's economy, manufacturing firms generate national wealth, improves economic growth, and creates jobs (Stemler, 2016). Therefore, the changing economy will push manufactured to open more factories, but due to fundamental changes in consumer demand, factories will explore a new way of meeting consumer demands.

The effect of current economic conditions on monopoly power either neutral or regulated legal or illegal.

  Posner (2000) states that the current economic condition is dynamic. Therefore, the U.S antitrust law will not be able to regulate the current economy that focuses on manufacturing new products and services. An important point to understand is that the antitrust doctrine can address the current competitive issues, but it lacks technical resources. Note that the current economic environment is complex, and it is causing many changes. For example, modern industries that deal with intellectual properties require a monopoly position. These industries produce intangible properties which are expensive to create and have fixed costs (Posner, 2000). The author states that legal protection would help these industries to gain benefit, and free riders will not have the opportunity to use the intellectual property. However, legal protection will influence the consumer to change direction and purchase substitute products. Therefore, the creator of intellectual property will not gain marginal costs. Thus, these industries need price discrimination or the act of charging different prices for similar products (Posner, 2000). In other words, owners of intellectual properties need a monopoly system or complete protection of intellectual property.

 According to my opinion, the current economic condition allows industries to have a natural monopoly power to sustain competition. Note that the intellectual and industrial property has dominated the economy. Besides, the current economy is a high tech world where industries experience a barrier to entry. Note that industries that operate in a market where there is a barrier will make the surviving firms to enjoy a minimal profit (Posner, 2000). The natural monopoly will allow the first industries in the market to enjoy ownership, and more importantly, it will protect the critical resources.

References

 Stemler T., (2016).  The economy’s effect on the manufacturing industry. Plant Engineering.  Retrieved from: https://www.plantengineering.com/articles/the-economys-effect-on-the-manufacturing-industry/

Posner, R. A. (2000). Antitrust in the new economy. Antitrust Lj, 68, 925.

Advantages and Disadvantages of Tariffs

 Tariffs

One of the most debated about issue in global trade is the issue of protectionism.  Tariffs which are also known as customs or import fees can be defined as those taxes that are normally levied on imported goods by governments (Tsubuku, 2018). This tax basically includes the percentage of the total price of the product which includes the insurance and the freight. Tariffs normally work by increasing the price of the import; the higher prices help give an advantage to domestic products within the same market and this in the overall protects the industry of a nation (Tsubuku, 2018). There are those nations that believe it is important to set a certain amount to help protect domestic businesses and occupations. There are others that argue that this can cause retaliation from the trading partners, which could in the end foster more tariffs and hence block free trade.

Tariffs are normally in average 5% but they can vary in different countries dependent on the industry that is being protected (Xu & Lee, 2019). There are those countries that collect sales taxes, local taxes and some extra custom fees during the customs clearance. In United States, tariffs were especially important during its developmental years (Brewer & Trzcinka, 2018). United States had the capability of ensuring its undeveloped assembling industry and boosts leeway in different segments by imposing tariffs on its imports. These tariffs helped to raise the prices of the secluded products that were less costly most especially those that were invented in England and this urged the buyers to invest in home commodities.

Tariffs have both an income impact and a defensive impact, there are however few that are for income just. These are tariffs that are collected on imported products which are not produced in the importing country (Brewer & Trzcinka, 2018). These are tariffs main use is to ensure that household commercial businesses in the importing country, by raising the cost of the products that are imported which happen to be the same as those that are locally delivered (Hwang et al., 2017). This helps to create government income and to ensure that it has a defensive impact. There are advantages and disadvantages of tariffs;

Advantages

Facilitated trade can be defined as the most supreme tactic to help improve the growth potential of a country. This may however not be agreed with by some authorities, who may have some other objectives as their top primacy. Tariffs help in protecting certain businesses from isolated conflict, which can meet dynamic intents or political aims (Hwang et al., 2017). Whether the objectives of the tariffs are local needs or basic isolated approach intentions, these exchange trade barriers are appealing for the policy makers.

Tariffs help to protect young business ventures rom the global trade conflicts (Hwang et al., 2017). This hence helps them to develop without the risk of being snuffed out by much more developed isolated organizations. They can similarly be used to help guarantee that the regions that countries consider to be intentionally critical are protected. A nation may for example limit agricultural imports in order to back its own farmers, where it does not wish to place itself in a helpless situation where it is required to import all its provisions.

Tariffs can also be advantage to an economy by ensuring that its organizations have no withstanding playing field (Xu & Lee, 2019). A good illustration of this is the fact that most of the tariffs that exist are as a component against dumping laws. This mostly happens when a business that is based abroad offers products beneath its expenses or for less than it sells them at home with the goal of taking out opponents after which it will increase the prices later on.

Tariffs can also be used by authorities to help meet outside strategy targets. The tariffs are used as a stage that prevents equipped clash as an endeavour to try and stop undesirable conduct from various nations (Xu & Lee, 2019). A good illustration of this is a case scenario where a country relies on grain send out as the key driver of its economy, the risk of tariff can be an in number prevention.

Tariffs help ensure job opportunities for people locally. Tariffs encourage the locals to buy a home made product which is not only patriotic, but also helps increase company motivations to build factories within the home country (Xu & Lee, 2019). When tariffs are put in place they discourage products from outside getting into the country, which gives the local companies a chance to grow and create valuable jobs for the local people. Imports lead to cheap labour which affects the quality of living for the local people.

Disadvantages

Tariffs lead to increase of cost on imports, this normally affect the customers in the nations that apply the tariffs. When the exchanging accomplices strike back with their tariffs it ends up raising the expense of trading together and it at times cause reduction in item quality (Xu & Lee, 2019). Tariffs can cause profit-making enterprises to be less industrious because it leads to reduced global competition. The tariffs can also prompt interchange conflicts as the trade-off countries counter with their tariffs on imported products (Hwang et al., 2017). When the exchanging partners respond with their own tariffs, it raises the expense of working together for the exporters. All this situations can also trade off the nature of the products and managements as industries search for tactics to cut generation expenses. It is sometimes important for a country to have a trade deficit which is when a country has more imports than exports, in order to achieve a complimentary stability of trade. Acquiring more goods than giving can be advantageous for a country’s economy. When a country has a trade deficit, the country that has a surplus always ends up financing the deficit of this country (Hwang et al., 2017). What this means is that it is possible for other importing countries to fund a home country while they spend less for their products, thus constructing a more constructive balance.

Tariffs make reference to a valuation forced on trade products and managements.  Tariffs are normally used to help regulate trade, on the grounds that they increase the price of imported products thus making them more exaggerated to the end buyer (Xu & Lee, 2019). A particular expense is forced as an established tax taking into account the item, what more is that a viable valorem tariff is normally obligated in light of the worth of the trade product. Tariffs basically cause more production of less quality goods which sell at very high prices locally all because there is no competition from outside.

Tariffs are normally put in place to help reduce interests for imports while expanding interests for household items. Governments can also come up with tariffs to help protect nearby profit-making businesses from external competition, with the argument that the consumers generally pick trade in items when they are less costly (Hwang et al., 2017).

Conclusion

Singular buyer choice is one of the best shopper benefits to international exchange. When the tariffs are put on trade in trade products, the extended costs and lessened exchange exclude people from all choices that cab be available in the business segment. For instance if an American company do not supply a product like the foreign made; the consumers may be robbed the chance to purchase a product with the argument that, they caused a product to get off the market with a tax. Tariffs are largely utilized to help safeguard local businesses from overseas competition offering less costly merchandises. The increased cost of imported products as a result of the tariffs regularly causes the foreign businesses to turn away thus reducing the competition. This absence of competition dismisses the inspiration force from the local businesses to discover approaches to overthrow the prices of their products. This ends up bringing about advanced overall prices for the consumers an also a lack of growth that competition regularly source. Tariffs also have adverse effect on the trade equalization with countries against which they are exploited. Isolated nations regularly force their own specific tariffs because of the native tariffs, increasing the costs of traded products which cause lesser profits for the goods overseas. This not only leads to a loss of benefits for the residential makers who send out products but also lead to a loss of jobs on the local front given that the businesses have to reduce their manufacture or even close business both locally and overseas.

References

BREWER, R. M., & TRZCINKA, C. (2018). Financial markets 2019: Tariffs, earnings and

interest rates. Indiana Business Review, 93(4), 1–8. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=133820232&site=ehost-live

Hwang, H., Mai, C., & Wu, S. (2017). Tariff Escalation and Vertical Market Structure. World

            Economy, 40(8), 1597–1613. https://doi.org/10.1111/twec.12414

Tsubuku, M. (2018). Impacts of globalization on tariff settings. International Economics &

            Economic Policy, 15(1), 117–129. https://doi.org/10.1007/s10368-016-0368-9

Xu, L., & Lee, S.-H. (2019). Tariffs and privatization policy in a bilateral trade with

corporate social responsibility. Economic Modelling, 80, 339–351. https://doi.org/10.1016/j.econmod.2018.11.020

Unemployment in the United States

Introduction

Rates of unemployment are usually low during seasons of economic prosperity and rise during recession.  Unemployment in the United States can be measured in many ways. In the US an individual is identified as unemployed if they are jobless but have looked for employment for the last four weeks and can be available for work in case a job opportunity is found.   Unemployment comes with its own consequences. The unemployment report is written on a monthly basis by the US Bureau of Labor and Statistics. This report is one of the indicators of the financial position of the country. The rate of employment and unemployment gives a snapshot of the strength of the country’s economy.  The consequences of un employment in the US are both economical and non economical.

The last several decade in the US have been characterized by periods of unemployment and job loss. It is the belief of many Americans that employment stability in the country has reduced, job loss and unemployment are now a common feature in the country.  Macroeconomic trends such as technological changes, foreign trade, shift in production and economic down turn have been associated with unemployment in the country (Brand, 2015). These macroeconomic factors combine with firm level factors to influence the level of unemployment in the country. Economic losses as a result of unemployment occur across all demographic categories and across all industries.

Unemployment greatly affects the economy. When the rates of unemployment increase the Federal and State governments pay increased benefits to its citizens. In 2017, the unemployment rate in February was about 5%. Unemployment benefits which include food benefits and medical aid costed the nation $2.96 billion in that one particular month (Gleeson, n.d). Increases benefits end up hurting the economy since the country is forced to borrow money to pay off these benefits. Both the Federal and State governments are forced to differ in their spending or cut on costs in their budget or postpone future economic plans. The income tax collected by the government also reduces since the number of employed citizens reduces with unemployment.

Unemployment is very dangerous for the economy of the United States. Over 70 % of what the United States produces is used for personal consumption and for the unemployed citizens, and the individuals receiving government support cannot spend to prior levels.  When employment rates are high the GDP of the country reduces and this alters the allocation of resources of the country (Gleeson, n.d). Companies in the US pay a high price for unemployment. Unemployment benefits are financed largely, when unemployment is high in the states the government tries to make up for its spending on the unemployed by highly taxing the businesses.

Long time unemployment not only impacts the economy but the citizens of the country. Having a job is one of the elements of living a happy life. In 2009, the United States was faced by the highest level of unemployment that had not been seen again since 1982-1983, rates in the states were exceeding 10%. The unemployment rate in January that year was 7.7% and in December the unemployment rates had increased to 10%.  In the same year Nevada registered the highest increase in unemployment rates, from 9.6% in January to 13% in December (Pharr, et al., 2011). This state had the highest level of unemployment. Unemployment has a great impact on the mental health of individuals. The unemployed individuals register higher levels of mental health problems such as depression and anxiety. Unemployed citizens register the highest admission into mental health institutions. These individuals also register the highest number of people with chronic diseases such as cardiovascular diseases and hypertension (Pharr, et al., 2011). Research has verified that unemployment is a major cause of depression.  A study conducted in Nevada using secondary data from BRFSS in 2009 ascertained that unemployed individuals are highly affected by mental disorders.

There are many negative effects of job loss that are seen in the family of a worker who is unemployed.  In the United States negative effects of job loss on children have been limited to the male parent who is the father (Kalil & De Leire, 2002). Parents lay off from work often affects the grade retention of the children in school.  Children of unemployed parents rarely finish high school. Job loss and unemployment that stretches for a longer duration of time has the capability to affect the overall life of a child through family stress and reduced incomes.  Employment has dire social consequences such as poverty, debts, homelessness, increase in property related crimes, stigma and social isolation. These social problems worsen as the duration of unemployment increases.  Unemployment is among the major reasons that there is poverty in the US, Unemployed people experience a decline in their standards of housing, diet and healthcare. United States is one of the most prosperous nations in the world but as result of unemployment about forty three million people are living in poverty (Mark, et al., 2018).

Unemployment is costly even when the unemployed individuals are receiving unemployment benefits. Workers who stay away from the field of work can lose some of their job skills and may even find it harder to find a job (Nichols et al., 2013).  Unemployment also has less serious consequences such as, during recession people are forced to take jobs that are available. College and university graduates who are new in the job markets during this season are forced to take jobs that are below their academic level and low paying jobs for them not to remain unemployed. This might be better than being unemployed but lower wages and slow career development can continue for a long period. Research conducted shows that, graduate who enter the job market when the rate of unemployment are higher experience a slow career development even after a  long period of time since the time they entered the job market while graduates who enter the job market while the economy is at the peak and rates of unemployment are low experience fast career growth (Nichols et al., 2013).

Unemployment is one of the causes of a declining income and a decline in consumption of products and services.  Longer durations of unemployment have directs impacts on the family resources which increase with every week of unemployment. In the Great recession, the incomes of majority of the family fell up to 40% and more for long time unemployed workers. In 2011, the long term unemployed workers were almost as twice as likely to be poor as those who have not been employed for less than six months and almost four times poor than as those who have never had a single job in their life. About three of every four parent who is raising a family single handedly and were unemployed for more than twenty five weeks were became poor in 2011 (Browning, & Crossley, 2001). After a period of six months of unemployment for a member of a family the consumption of the family falls by 16% and by 24% if the unemployed member of the family was the sole bread winner of the family (Browning, & Crossley, 2001).  Unemployment is one of the causes of consumption fall in the United States.

Unemployment also impacts later wages. After enduring a period of unemployment, reemployed workers earn less of what they used to earn in their former employment life. This wage loss is as a result of longer durations of unemployment and the less favorable labor market conditions prevailing in the US (Brand, 2015).  When people are laid off from their jobs as a result of mass lay off they lose twice as much in their life time earnings.  In the United States unemployed workers are more likely to leave the task force.

Conclusion

            Unemployment is the state of being jobless but one has the ability to be employed. Unemployment in the United States has both economical and non economical consequences.  Economical consequences such as a reduced GDP and losses that are incurred by the Federal and State government as they pay off unemployment benefits.  Companies are greatly taxed by the government in order to compensate for the money it has used in catering for the unemployed. Unemployment has been named as one of the causes of mental health problems and chronic diseases in the country.   Examples of non economical consequences are increase in poverty rates in the country and increased rates of crime.

References

Brand, J. E. (2015). The far-reaching impact of job loss and unemployment. Annual review of sociology, 41, 359-375.

Browning, M., Crossley, T. F., & Winter, J. (2014). The measurement of household consumption expenditures. Annu. Rev. Econ., 6(1), 475-501.

Gleeson, p. (n.d). The Overall Effects of Unemployment. Retrieved from; https://smallbusiness.chron.com/overall-effects-unemployment-37104.html

Mark, P., William, D., Darrick H, & Khaing, Z., (2018). A Path to Ending Poverty by Way of Ending Unemployment: A Federal Job Guarantee. RSF: The Russell Sage Foundation Journal of the Social Sciences, 4(3), 44-63. doi:10.7758/rsf.2018.4.3.03

Nichols, A., Mitchell, J., & Lindner, S. (2013). Consequences of long-term unemployment. Washington, DC: The Urban Institute.

Pharr, J. R., Moonie, S., & Bungum, T. J. (2011). The impact of unemployment on mental and physical health, access to health care and health risk behaviors. ISRN Public Health, 2012.

 Effects of a Higher Minimum Wage

Introduction

Minimum wage is the lowest salary an employee is allowed by law to pay his/her lowest skilled worker.  The use of minimum wage as a tool to raise the wages of low income workers has being gaining momentum. Raising minimum wage also helps to bring income equality. The debate on the effects of a higher minimum wage on employment and long term GDP is an ongoing debate. A minimum wage has the potential to reduce income inequality as the lesser skilled workers at the bottom of wage distribution will earn more and their wages will be closer to those of the middle skilled workers.  Raising the minimum wage has the ability to shock the economy and bring about a ripple that will hurt low income earners. The economic theory has projected that the effects of a higher minimum wage are on the GDP are adverse.

Minimum wage is used by policy makers address public demands, to combat rising inequality, many of the workers who gain from minimum wage are individuals come from poor families with low income. Increasing this minimum wage leads to fewer employments. Most of the studies conducted show that low income earners who are the people with least skills are greatly laid off by firms when the minimum wage is increased (Sabia, 2015).

 When minimum wage is increased research conducted shows that the less skilled workers who are the low earning workers lose their jobs.  When minimum wage is increased to go beyond the equilibrium minimum wage it can cause unemployment because of the following two reasons: employers will be forced to lay off low skilled workers so that they can cater for inputs that firms cannot do without.  When the new higher wage and the new inputs come together the firms will be forced to increase the price of its products which will in return reduce the demand of the products thus lowering the labor demand.  The labor market is one of the most complicated markets but most important workers in this market have different skills and an increase in minimum wage will force employer to hire few low skilled workers compared to highly skilled workers (Neumark, n.d). However, firms will be forced to maintain few position for low skilled workers since the policy of minimum wage is employed to protect them.

 The effects of minimum wage increase are larger on a long term basis than the short-terms effects. In extreme cases some firms are forced to close rather than lay off its employees. Minimum wage increase reduces employment primarily through firms closing. An example is low quality restaurant closing following a minimum wage increase (Neumark, n.d).  If the labor market has only one employer (Monopsony), a higher minimum wage has the ability to increase employment. A higher minimum wage can also act as a motivating factor that will encourage the employees to increase their efforts.

 The chances of an increase in minimum wage affecting the economy of Ontario and Alberta are high because in Canada 8% of the population receive salaries that lie in the bracket of minimum wages.  If minimum wage rise it will reduce the level of gross domestic product since the increase in minimum wage will lead to higher real wages, which in return will push up firms’ marginal cost and thus inflation will increase as the firms try to adjust their prices in the short term (Neumark, n.d).  An increase in minimum wage will lead to a weak labor demand which will reduce employment and lower the hours worked by every worker.

 When firms are caught in crises after the minimum wage has been raised, their cost of production rises also, since the cost of labor which is a factor of production has risen.  In order to maintain the gap that existed between the wages of high skilled employees and low skilled employees firms are forced to maintain that gap by increasing the wages of the high skilled employees (Sabia, 2015). An increased minimum wage will make the employees to spend more thus causing demand pull inflation and the higher cost that will be incurred by firms will lead to wage push inflation.  Inflation means the prices have risen. This inflation will reduce the purchasing power of money which in return reduces consumption therefore lowering the GDP.

A higher minimum wage will increase the labor cost and output prices, lower the profits incurred by firms and bring about an adverse employment and hour effects each of which may lower the GDP. However, if a higher minimum wage will increase the earnings of the least skilled workers who keep their job and have a higher marginal propensity to consume the extra money than the owners of the firm or the least skilled workers who lose their job a minimum wage increase results in higher GDP (Sabia, 2015).

Conclusion

The minimum wage has been used as a tool to alleviate wages and income in equality. Raising this minimum wage has the ability to shock the economy and hurt low income earners and have an ambiguous effect of the GDP. Increasing the minimum wage decreases employment and mostly for low skilled employees.  Increasing the minimum wage can increase or lower the GDP depending on the factors in play.

References

Neumark D., (n.d). Employment Effects on Minimum Wages. Retrieved from;             https://wol.iza.org/articles/employment-effects-of-minimum-wages/long

Sabia, J. J. (2015). Do minimum wages stimulate productivity and growth?. IZA World of Labor,             (221).

             The key indicators of the economic gap that exist in the country of Lalaland is the fact that some of the monetary and/or fiscal policies that could have been used might have failed to maintain the economy. Taking inflation level into account, it should be understood that this is something that evolves when the economy continues to grow because of increased expenditure. Therefore, what that suggests for the country of Lalaland is the fact that as the prices continues to rise; the currency of the state will lose its value. As a result of that, its exchange rates will be weakened as compared to the currencies of other states. Despite that, it should be understood that some of the methods that can be used to control high inflation might work well or induce damaging effects. For instance, using price and wage controls to manage inflation can cause job losses or recession (Jordi, 2011).  The reason for that is because from economic perspective, inflation is perceived to be one of the factors that occur as the economy grows due to increased government expenditure. Basically, inflation evolves when the supply of money in the economy is excess. For instance, as the prices of goods and services continue to rise, it is possible for state currency to lose its value which in return weakens its exchange rates as compared to that of other countries (Rphanides & Williams, 2010). It is this scenario that results to unemployment and slower economic growth.

            To counter the effect of high inflation, one of the best monetary policies that can to be used by the country of Lalaland is the contractionary monetary policy. This is to imply that, in order to be in the position of countering the effect of inflation, such an economic policy will be intended at managing the supply of money within the country (Mishkin, 2007). This is done through increasing the interest rates which in return will assist in minimizing expenditure and credit lending hence decreasing consumer spending. Such a strategy is important because it has been acknowledged as to have the potential of halting economic growth (Rphanides & Williams, 2010). By using such an economic policy, it will give the state the capacity of determining whether it matches with the existing monetary policies so as to restore the economy. The reason for that is because in doing so it will become possible for the state to enhance equitable economic development (Akhand, 2013).

            In order to stimulate the economy, the government can also decide to use fiscal policy as one of the actions of stimulating the economy through taxation and expenditure. So as to be in the position of eliminating such the inflationary gap, the government can decide to decrease expenditure and in return increase or decrease taxes. Since this is one of the economic intervention through which the government uses to inject its policies, the aim will entail expanding or contracting economic growth (Alan, 2001).  For instance, the country can take the option of pursuing an expansionary fiscal policy as a means of fostering employment. This can be done through decreasing taxes as well as increasing government expenditure (Jordi, 2011). Lowering taxes will have the likelihood of increasing disposable income which in return aid in increasing consumption. Therefore, through altering the level of taxation and expenditure, the government will be in the position of affecting aggregate demand directly or indirectly.

                                                            References

Akhand, A.H. (2013). Macroeconomic and Monetary Policy Issues in Indonesia: Routledge Studies in the Growth Economies of Asia. Routledge, 2013

Alan, A. R. (2001). Handbook of Monetary and Fiscal Policy: Public Administration and Public Policy. CRC Press

Jordi, G. (2011). Unemployment Fluctuations and Stabilization Policies: A New Keynesian Perspective. MIT Press

Mishkin, F. S. (2007). Monetary policy strategy. Cambridge, Mass: MIT Press.

Rphanides, A., & Williams, J. C. (2010). Monetary Policy Mistakes and the Evolution of Inflation Expectations. London: Centre for Economic Policy Research.

             Taking into consideration the information collected, it is evident that high unemployment rates are the one that could have resulted to slower economic growth. High unemployment level results from low firm productivity which is coupled with little returns that such organizations obtain form the sales that they make. As the majority of the firms end up lacking competitive edge, it becomes difficult for them to enjoy the economies of scale (Ncube & Ndou, 2013). Therefore, the lack of incentivizing businesses to recruit more workers, it implies that the country do not have the capacity of spurring economic growth. Likewise, in the process of restricting government expenditure, unemployment also becomes an obstacle for breaking inflation. This does not also take into account the need of reversing other issues associated with overheated economy. Characteristically, what this collected information implies is the fact that the only option that the state has entail determining the productivity levels of its existing industries (Jordi, 2011). The reason for that is because it is the one that will give it the potential of stimulating economic growth. What all this implies is the fact that the process taking high unemployment into consideration, it means that such a scenario did not have the potential of balancing the economic wellbeing. The general lack of proper employment opportunities could have also contributed to retardation in economic growth (Keynes, 2018).

            From economic perspective, unemployment is something that limit economic growth.  Consequently, monetary policy is one of the factors that have been economically perceived to have the likelihood of maintaining price stability. Taking the cost of production into consideration, the low demand for a firm’s commodities with respect with decreased production is what result into the low demand for workers. Therefore the use of the use of the prevailing monetary policy both in the short-term and long-term will have the ability of cutting down interest rates. As such a step will be lowering borrowing; it has the ability of stimulating investment activities. The existing firms and those upcoming will be motivated to produce more, hence the need for recruiting more workers to cater for that (Keynes, 2018).

            The use of fiscal policies is one of the methods that have been approved to have the ability of increasing employment rates. To do so, the state will have to ensure that they have engaged expansionary fiscal policy so as to be in the position of increasing aggregate demand (Sexton, 2008). Nonetheless, with unemployment, the state economists ought to take into consideration the fact that such a policy will aid in diminishing the level of unemployment through encouraging firms to have a big picture regarding increasing production. The reason for that is because using enough human labor will in return result to increased production and profits from the sales they make. Such an objective can also be arrived at via decreasing taxation as well as increasing expenditure by the government (Friedman & Woodford, 2010). For instance, in the act of lowering taxes, it will become possible for the state to increase its disposable income. The effect of that is that it will assist in increasing consumption. In the long-run it will be easier to experience increased aggregate demand which ultimately will be emanating from continued demand for workers to work in firms that desire to manufacture or produce more (Ncube & Ndou, 2013). The importance of this is that it will ultimately lower what is termed as demand-deficit redundancy.

                                                            References

Friedman, B. M., & Woodford, M. (2010). Handbook of Monetary Economics, Volume 3B. Burlington: Elsevier Science.

Jordi, G. (2011). Unemployment Fluctuations and Stabilization Policies: A New Keynesian Perspective. MIT Press

Keynes, J. M. (2018). The general theory of employment, interest, and money. [Cham, Switzerland] : Palgrave Macmillan

Ncube, M., & In Ndou, E. (2013). Monetary policy and the economy in South Africa. New York : Palgrave Macmillan

Sexton, R. L. (2008). Exploring economics, [ECH master]. Toronto: CNIB.

                                                                Macroeconomics     

In macroeconomics, the liquidity preference framework describes the effects of inflation expectations and business expansions and recession have on interest rates. The equilibrium of the interest rates is determined by the analysis of the money supply and demand. In this case, the shift that occurs in the demand curve is as a result of price and income level. As the economy continues to grow and income rises, people will tend to use money as store of value, and at the same time, people will want to use more as the medium of exchange. As the level of income continues rising, the demand for money will increase at each interest rate and the demand curve shifts to the right. Similarly, the price level effect indicates that individuals are concerned about the amount of money in real terms. In terms of the goods and services, people care about the prices of the available products and services in case there is an appreciation of cost. In this case, the demand curve shifts to the right due to the increasing demand of money at each interest rate. Correspondingly, the aggregate demand-aggregate supply depicts the economy using the analysis of the change in the demand and aggregate demand curve (Dutt, 2012). The relationship between the quantity of goods and the general price level is presented in the aggregate demand curve. On the other hand, the relationship between the price level and the amount of goods that producers supply in the country is presented in the aggregate supply curve.

The statistics taken for Lalaland shows the inflation, unemployment and the economic growth that has occurred from the year 2016 to 2018. The results show that inflation has continued to increase, the unemployment rate continued to decline, and the economic growth continues to increase since there are more job opportunities. The increase in the money supply and fall in interest rate leads to higher investment and hence resulting in an increase in the employment level.  Additionally, the economic growth will increase due to the increased level of investment as well as the income. The increase in the supply of money in the economy of Lalaland country has led to higher income levels and employment and also an increase in the rate of inflation in the long run.

The statics shows that the country has experienced a long run economic boom as a result of the proliferation in productivity, which results in a rise in the level of employment. Similarly, the level of inflation has continued to rise as the country experience an increase in the economic growth. In the demand curve, the aggregate demand for money will have a progressive to shift to the right even if the country has reached to its potential gross production and full employment and hence pushing the macroeconomic equilibrium into the steep portion of the aggregate supply curve. As a matter of fact, the firms will continue to produce if they demand for their goods is high which will enable them to maximize their profit. An increased demand for the goods produced domestically increases the employment opportunities and also contributes to the economic growth. In this case, the inflation continues to increase with the increase of economic growth since the demand for money is high.

Reference

Dutt, A. K. (2012). Aggregate demand-aggregate supply analysis: A history. History of political economy, 34(2), 321-363.