Examples of youth unemployment in the Arab World.

The Arab world has the highest youth unemployment rate in the world. But unemployment has not been caused by one problem. This articles shows 5 unemployed young men and women struggling to find work for a variety of reasons which include political instabilities, low investment into new projects, difficulty of finding a “wasta” and poor availability of finance. Many economic concepts can be linked such as low investment during periods of low confidence and market failure where the labour market equilibrium quantity is too low. There is a risk of brain drain in the Arab states in the long term if the youth unemployment rates remain high, for example Hashem Dogoosh who’s a bio-chemical science graduate is planning to look for work abroad.

young workers

Masters of the Universe

After watching “The Wolf of Wall Street”, I thought that the pay stock brokers and bankers made was astronomical. I mean, even in 2014 bankers still get paid a lot; Jamie Dimon (CEO, President and Chairman of JP Morgan Chase) made $20 million for his work in 2013. Not too shabby huh? But are there people out there who make more than that (excluding the likes of Slim, Gates and Buffet etc.)? One career in particular, has one person earning more than 10 times the amount Jamie Dimon got paid in one month. It’s time to meet the real masters of the universe…

The world’s best-paid men

This House is for CAP. Year 12 debate.

CAP is a very controversial policy and has undeniably resulted in  some form of government failure. The CAP began in 1962 as a way to increase food production. It costs around Euro 55 bn  (KD 21 bn) per year in subsidies to farmers, funded by taxpayers. The Commission wants farmers to earn some of their subsidies, for example by protecting the environment, but farm ministers are fighting back. The subsidies available to some of the largest farm businesses can top Euro 1 million (KD 390 000) each year.  Below are some interesting links to help you develop your understanding of the scheme and therefore aid you in your preparation for next week’s debate.

cap in detail           for and against        food security     needs to be skimmed                                                                   frequently asked questions

China’s economy will definitely overtake the US. Wanna bet?

It is easy to assume that China will become the world’s new superpower from analyzing  the nation’s burgeoning GDP figures. However, recent data research shows that this assumption may be too far stretched. There are various intricacies and factors that determine whether China will either continue growing  or just go bust. Although it may seem too pessimistic to say that China will collapse, the theories below provide very convincing evidence that this fall maybe inevitable for the superpower.

One of the key problems with the Chinese economy  is the lack of personal consumption. One might say, ” well that’s easily rectifiable, just provide a stimulus like lower interest rates to jump start demand.”. Well, life ain’t that easy. One of the major determinants of this low domestic demand is the astonishingly low wages. About 43% of Chinese labor earn less that USD 2 per day. Furthermore, the impacts of the one child policy and nation’s communist political system has left the people in a frenzy of precautionary motives. Due to the one child policy, the average Chinese worker thinks that there will be no one to provide for him when he turns old and the state’s totalitarian values do not  ensure the provision of a pension, social security benefits and welfare benefits. So no wonder these people are pinching their pockets!

Demographics also play a huge role and from the looks of China’s demographic structure it isn’t looking pretty. due to large population of China it can be predicted that after the one child policy, there will be a large peak in the labour force. however, this large peak in 10-15 years will result in a large decline, bringing about a massive aging population that could threaten china’s ferocious growth and productivity. How is the Chinese government going to support this aging population and what are the reforms that have to be taken to ensure social welfare is given to those who need it?

But lets get one thing straight, reforms are  DEFINITELY NOT going to guarantee 7% growth and prevent China from collapsing. We all know that due to China’s communist political system and mass production manufacturing objective,  there has been a increased reliance on debt, investments from foreign parties, an undervalued currency and that the Chinese people have to suffer from low wages, poor living standards, lack of freedom of expression, lack of social welfare benefits and  corruption from politically affiliated individuals and organizations. However these are the very factors that have allowed china to achieve turbocharged growth and to become the manufacturing giant of the world. Michael Pettis , author of ” Avoiding the fall” reinforces this idea as he states that China’s deleveraging initiative to reduce its reliance on debt and credit expansion will not increase the pace of growth but actually decrease it . Furthermore, the failure of banks to recognize misallocated investments through bad loans alludes to the fact that all of these optimistic Chinese GDP figures that we see are actually overstated.  This fact has also been supported by VikramManishmarani, author of “BOOMBUSTOLOGY“, who states that China has been generating GDP without adding any economic value. Chinese developers backed by the government have been sprouting out new malls, suburban communities and exorbitant skyscrapers that are absolutely EMPTY! These aimless, squandering mercenaries have been building, demolishing and rebuilding an unused bridge just so that the consumption of new construction labour, cement and new raw materials will push up GDP figures. Pettis further reiterates that although these reforms have been discussed for the last 2 decades, nothing has been implemented as it clashes with nation’s political values and it will inevitably result in the power of the state and politically elite to be passed onto the everyday Chinese household. Some of the GDP figures are biased and its is a fact that hidden transfers from the household sector has been substantially inflating GDP figures. This lag of information to the western world makes us believe that China is growing at the speed of a cheetah ,when in reality, it may be otherwise. So is China really going as fast as it seems to be and what will be its future? If these reforms are implemented, surely growth will be slowed down .

Forbes columnist Gordon Chang, author of “The coming collapse of china ” also sides with the view that China is now going to go backwards. His theories state that China will soon undergo an revolution that will be brought on by their growth. Although the Chinese may face a lack of choice in their communist political party, Chang asserts that the people are starting to get the idea that they have choice, especially the higher tier workers that have gained from a rise in income. However, this new discovery of choice does not fit into the communist regime and this potent resistance is apparently too strong to allow China to be led to become a democratic nation. Chang again like the others reiterates that corruption by the politically elite is robbing the everyday man of  his share . Macau ,with only a few of it casinos , has become the gambling centre of the world and the corrupted communist leaders. The people are led by their short term perspectives into making ill fated decisions that instead having a  benign effect, only make China’s economy more unstable. Mass amounts of money invested by leaders into the economy have only postponed the problem but chang asserts that in the future, when China has to deal with this problem it will be too late. although his predictions may be inaccurate as we are currently in 2014 with no Chinese collapse, Chang expresses that the future social disintegration of Chinese society may be the fall of China.

Last but not the least, lets not forget the export sector. Due to the detrimental Eurozone crisis and USA’s debt overload, much of demand for China’s exports have fallen and we could see this as a flaw of China for relying to much on the European nations, thus making itself susceptible to the shocks that comes along with a collaborated collapse. Thus it seems that the export surplus is not really going anywhere and that China’s balance of trade may as well be shrinking.  This just alludes that China’s is possibly going to lose out on some of its major revenue influxes.

Guys I know that its a lot to take in and there are obviously really strong arguments that supports China surpassing the US, but this information is the just start to the revelations of how China is entering a super cycle and that it may be overheating its economy and is on the brink of an inevitable fall that will occur in the foreseeable future. Although it seems that reforms may be a way to prevent this  mess, the consequences of this restructuring may  not only be felt by China but also by the rest of the world , the nations which are China’s suppliers and investors. Whatever the case, it is increasing likely that China will not surpass the US of A but may instead slow down considerably. There are a lot of links below that explain this dilemma better than I do but I absolutely recommend that you all check out the videos below, they are really insightful. Peace.

other videos and articles:

Gordon chang again!!! new revelations bout china      Michael Pettis       lunch alert from dick morris         questioning chinas rapid growth

Maximum Prices.

All sorts of fun to be had with this kind of price intervention.  The rationale behind the introduction of a price ceiling is to make certain goods, deemed to possess significant external benefits affordable to those lacking effective demand. This in itself requires a normative judgement and can indeed result in a loss of economic and social welfare and government failure.  Good practice to develop your chains of analysis and evaluation skills as well as honing in on your diagrams.

thanks tutor2u

Minimum Prices.

There is a significant body of economists who are skeptical about the benefits a minimum wage brings to an economy, let alone real increases in it.  However the  US, Germany and the UK governments have recently signalled that they are in favour of minimum wage increases. Below is some interesting reading as you will discover it is not the relatively poor who may benefit from increases in the minimum wage rate.

occupy         thank you george            germany           more germany

Buffer stock schemes employ a minimum price for agricultural produce to guarantee a stable supply of food stuffs and a minimum income for farmers, and thus aid planning.  The scheme is a mixed bag of success and failure and has some great chains of analysis and evaluation points for you to sink your teeth into.

no buffer scheme           too much wheat          reform         coffee?

Has Economics failed?

Back in the early 20th century, everyone around the world was suffering from the Great Depression. Thanks to Economics and Keynes, politicians were able to implement policies and lift their countries out of the depression. When you come to think about it, without Economics, we’d probably still be living in the depression. Time and time again Economics has saved countries, but on how many occasions has it gotten countries into trouble? Could it be that without Economics, the majority of these events such as the crash in ’08, we’d be better off?

the failure of economics            the next keynes

The link below highlights the output gaps for developing countries in 2010,2013 and 2014. I don’t think there’s a better indicator out there highlighting the deceleration in Chinese economics growth.

output gaps

Finally, the last link takes a look at how the Bank of England. The unemployment rate in the UK has fallen to 7.1% since May last year, and with IMF forecasting UK growth for the year at 2.4%, will Mark Carney decide to raise interest rates?

uk labour market