International Economics Essay Example | Topics and Well Written Essays - 750 words

International Economics - Essay Example Services sector as it contributes almost 78 percent in U.S economy. If U.S. or for that matter any of the developed countries such as UK, France, Germany, Japan has to increase the international trade, their contribution has to come through the services sector because they are dominant contributors in the GDP. The reasons that services cannot be traded as freely as goods can be are attributed to the following. 1. Many services are non-transportable; it requires geographic proximity between producer and consumer countries. 2. Many services cannot be mass produced; mostly they are tailored as per the geographical needs posing a difficulty in the international trade. 3. Many services go along with the supply of the goods and they cannot be separated to impart the benefits to the consumers. Example is cars imported from Japan or China into US with 3-4 years warranty. Servicing cost is included in the original price. 4. It is difficult to export the services from developed countries (U.S) to developing countries such as India. The reason is that the cost of producing the services in a developing country is much lower than the cost incurred in developed economies. The glaring example is IT (Information Technology) services outsourced to countries like India, China where the cost of production is much less. Answer 2. Difficulties in the Balance of Payment (B.O.P) of the U.S in the present time US is facing Balance of Payment problem since last many years and it is steadily increasing from 1 percent in 1995 to almost 8 percent of the GDP now. The reasons for such high deficits are many and varied and can be enumerated as per the following. (Riley, Geoff 2006) 1. It is an indication of high consumption with a weaker industrial sector. Consumers are spending beyond their means leading to higher household debt. 2. A trade deficit is also an indication of loss of employment and output. It is a net leakage between income and spending. 3. Currency value (read $) comes under pressure against other leading currencies and continue to depreciates as deficit continues or rises. This also necessitates an increase in interest rates by the central bank. Answer 3. Compare and contrast the structure of the E.U and the USA (NAFTA). NAFTA (North American Free Trade Agreement) is a treaty between Canada, Mexico, and the United States. NAFTA has been operational since 1994. It governs the entire North American trade. NAFTA agreement has removed the tariffs between the member countries Mexico, Canada, and U.S for goods shipped between them. This has resulted into the purchase of goods by Mexico in large quantities from U.S. This results into savings for Mexican companies on imports and it saves American company considerably on shipping costs. In contrast, EU has large number of member countries in it fostering similar cooperation among them. The major difference between these two is that EU members trade in a common currency but NAFTA members do not have any common c urrency. Moreover, EU has its own political charter in contrast to NAFTA who does not have any. Answer 4. Explain Ricardo’s theory of trade and compare it to the H-O theory of trade? The theory of comparative advantage is behind the international trade in which both the countries benefit from the trade. Ricardo explained this in his book on the Principles of Political Economy and Taxation giving example of England and Portugal. Portugal produces wine and cloth with less labor compared to England for the

Stakeholder Analysis- Fracking Essay Example for Free

Stakeholder Analysis- Fracking Essay Pursuing hydraulic fracturing as a top manager of Chevron, I will describe the dilemmas that are associated with fracking. The first problem with this procedure is finding the appropriate land and leasing it from the landowners. With talk around the country, it can be difficult finding land because of landowners’ personal experience with the practice of hydraulic fracturing. In southwestern Pennsylvania there have been cases of animal birth defects, faucet erosion, stomach pains, and other health issues; in response, according to the New York Times, â€Å"Range Resources maintains that a D. E.P. study from 2010 indicates no air pollution of any kind† (Griswold, 2011). The country is torn in the middle of believing in natural gases and not believing. According to Huffington Post, â€Å"A report that the Congressional Research Service, which provides policy and legal analysis to the U.S. Congress, published in November also seems to support the industry’s sales pitch: ‘Given existing data, most indications point to the changes in the natural gas industry as positive to the overall U.S. economy’ (Peeples, 2013) but there are still skeptics. The issue that my company is facing in expanding the operations within this industry is, mainly, the uncertainty of the long term effects the fracking procedure is possibly contributing to. According to msnbc, â€Å"fracking is causing earthquakes. Federal scientists presented a new study this week to the American Geophysical Union that suggests natural gas drilling is the likely culprit behind a skyrocketing number of earthquakes in the Raton Basin in Colorado and New Mexico†¦ companies began injecting what’s called ‘wastewater fluid’ from natural gas drilling into the Earth† ( Gentile, 2012). Different publications are distributing articles of studies of health effects and environmental issues that hydraulic fracturing are causing. This in response is effecting the possible growth for Chevron. My team is conducting a stakeholder analysis and we have determined several stakeholders which include: the government, D.E.P., media, owners, shareholders, environmentalists, general public. Also established are the interests of each stakeholder. With the general public interests being in their health, voting is one power they could use to voice their concerns. Environmentalists and the D.E.P. are interested in the pollution fracking is causing and the D.E.P. could use their legal power to help regulate the pollution. The concerns of the shareholders are the profits of the company and voting is their power they could use to fix problems within the organization. With the power of economics, the owners are interested in the success of the company. The media is concerned with the public knowing both sides of the issue. Lastly, one main interest in the government is the reconstructing of the economy and what hydraulic fracturing could create in jobs. The stakeholders that are most likely to resonate with the public are the general public, media, and the environmentalists. With media producing stories of the public being affected by the pollution and the environmentalists undergoing studies on the environment, this could create a negative image on fracking companies. Considering all the stakeholders, the one stakeholder that holds the most urgency is the general public that is being affected. The general public is the most urgent because they are being victimized and their voices are being heard throughout the country which is causing confrontational issues. Different coalitions could be formed by the environmentalists and the government. Different politicians could lobby to get a bill pass and environmentalists could form to fight bills. My recommendation for the company’s consideration is to invest in more resource of the different affects fracking is causing and to fix the environmental issues that are caused. Ideally, Chevron should follow the triple bottom line perspective because all three elements (planet, profit, and people) are strongly involved. But with the uncertainty of the new procedures and all the different effects, the stakeholder approach is more realistic for Chevron. Chevron could prioritize their stakeholders and focus on each of their needs. This company holds ethical responsibility to the general public because of the health hazards that are surrounding the drill sites. The legal responsibility the company has is to follow the regulations that are formed by the D.E.P. Works Cited 1.) Grizwold, E. (2013). The Fracturing of Pennsylvania. http://www.nytimes.com/2011/11/20/magazine/fracking-amwell-township.html?pagewanted=all_r=1 2.) Gentile, S. (2012). Fracking is transforming our energy economy- but its also causing earthquakes. http://tv.msnbc.com/2012/12/08/fracking-transformed-our-energy-economy-but-its-also-causing-earthquakes/ 3.) Peeples, L. (2013). Fracking in Pennsylvania Sets Up Dilemma For Locals: Quick Money Or Long Term Health Concerns. http://www.huffingtonpost.com/2013/01/25/fracking-pennsylvania-natural-gas-lease-landman_n_2546824.html?ir=greenutm_campaign=012513utm_medium=emailutm_source=Alert-greenutm_content=FullStory

Difference between Coasean and Pigouvian Solution to an environment problem

Difference between Coasean and Pigouvian Solution to an environment problem Explain in your own words the difference between a Coasean and a Pigouvian solution to an environmental problem? Which type of solution do you prefer, and why? The Explanation of the Difference between Coasean and Pigouvian Solution to an environmental problem. In a very simple way, Pigouvian solution prefer to use government intervention to solve externality while Coasean solution prefer to use market method to solve externality. In detail: Pigouvian theory is based on the method of modern economics especially based on welfare economics; and Pigouvian theory provides a perspective systematic study of the externality problems. According to Pigouvian theory the marginal private net output and marginal social net output has following relationships: Besides the increasing of marginal private benefits, if other people can still get benefit from the private activities, then the marginal social net benefit is greater than the marginal private net benefits; on the other hand, if other peoples benefit is decreasing due to the private activities, then the marginal social net output is less than the marginal private net output. In the first situation the society will get the Marginal social benefit; in the second situation the will face the Marginal social cost. Actually, Externality is caused by the inconsistency between marginal private cost and marginal social cost. .Without externality, the marginal private cost of production or consumption of an item is equal to the cost of itself. When there are negative externalities, there will cost to compensate these externalities. By adding marginal private cost with the marginal external cost we will get the marginal social cost. On the other hand, when there are positive externalities, the benefits which generated by business activities are not fully occupied by the company, but will also become some external social benefits. Through economic model, Pigou shows that because of the presence of external economic effects, the Pareto optimal allocation of social resource can not be achieved by purely individualistic mechanism. Since there is a deviation among the marginal private benefit and marginal social benefit, marginal private cost and marginal social cost; therefore the maximization of social welfare can not be achieved only through free competition. The Government should take appropriate economic policies to reduce this deviation as much as possible. The proper policy is that: when the marginal private cost is less than marginal social cost ( negative externality ), government should impose taxes; when the marginal private benefit is less than marginal social benefits (positive externality) then the government should provide incentives and subsidies. Pigou believes that by using such taxes and subsidies, the externality problem could be internalized. And such policy is known as Pigovian solution, and the tax is called Pigouvian tax. Pigovian solution has been widely used. In the field of infrastructure, the policy is who invest who benefits; in the environmental protection, the policy is who pollute who pay(a.k.a Polluter Pays Principle PPP). Over the years, the problem of how to internalizeof external effects is dominated by Pigouvian theory. To some extent, Coase theory is developed through the criticizing of Pigouvian theory. Coases critique of the Pigovian solution are focused on the following three aspects. First, the externality is very complex; it is not as simple as one side damages the other side. For example, in the case of chemical factory vs. residents, it is unfair to tax the factory without discussing whether the factory has the right to emission or not. Because, it maybe the case that the factory is established years before any resident areas was setup, and in this case, the factory may have the emission rights(The example of factory vs resident is from Ronald CoaseThe problem of Social Cost, Journal of Law and Economics Vol 3:1(1960)). In order to reduce the emission, perhaps the government should encourage residents purchase the redemption instead of just posing tax on the factory. Second, in the case of zero transaction costs, the Pigouvian tax is absolutely unnecessary. Because in this case, through voluntary negotiation of parties, the optimal allocation of resources can be reached. In th is case, with the help of clearly defined property rights, voluntary negotiation can also achieve the optimal level of allocation just as the same effect through the Pigovian solution, then why should the government intervene? Third, even in the case of non-zero transaction costs scenario, we still need to balance the cost of using government and using voluntary negotiation. Pigouvian solution may be an effective institutional arrangements, it also maybe an inefficient institutional arrangements. According to Coase theorem: If the transaction cost is zero, no matter how the initial definition of property rights is, optimal allocation of resources can be achieved through market; if there is non-zero transaction costs situation, then maybe the institutional arrangements and choice is important, however people still need to do a cost-benefit-analysis of about the government intervention. In order to solve the problem of externality, Coasians market solution could just be as useful as Pigovian solution. Coasian solution shows that even there is a market failure it doesnt automatically means we should use government intervention. Which type of solution do you prefer, and why? I dont prefer either one, I think a mix use of both solutions will be more helpful. ThePigovian theory/solution has some limitations. First, the Pigou theory presupposes there is a function of the existence of the so-called social welfare, and the government is the natural representative of public interest, and the government can perceive the public interest and then choose the right policy to reduce the externalities in economic activity through intervention. However, the fact is that public policy itself maybe flawed. Second, the use of Pigovian solution is based on the premise that the government knows the cause of externalities can calculate all marginal costs or benefits, however it is impossible for any government to obtain all information to make a Pareto optimal allocation of resources. In theory, Pigouvian solution is perfect, but the actual implementation maybe largely constrained. Third, government intervention also makes costs. If the cost of Government intervention is more than the losses caused by externalities, then there is no reason for use to use g overnment intervention .Fourth, the Pigovian solution may cause the rent-seeking activities, which will lead to waste of resources and distortions of resource allocation. On the other hand, the Coasian solution is also limited. The fist problem is that in order to make the Coasian solution work, the market should be developed, however, for many developing countries, the whole economy system is still in transforming, I dont think Coasian solution can work very well without a certain protection level toward property right. Second, the costs of voluntary negotiation transaction need to be considered. The feasibility of voluntary consultation is depending on the size of transaction costs. If the transaction costs are higher than the social benefits, then why should we have such negotiation. Third, the voluntary negotiation is based on the premise that property rights are clearly defined. In fact, some property rights of environmental resources such as property rights are often difficult to define or very costly to define. For the environmental pollution problems, policy makers should consider the characteristics of pollution sources, the different costs of regulatory management and institutional arrangement; they should also consider the degree of maturity of the market and many other conditions. Only through a comprehensive consideration can we achieve a better solution.

John Stuart Mill and Utilitarianism Essay -- Philosophy Morality John

John Stuart Mill and Utilitarianism Utilitarianism defined, is the contention that a man should judge everything based on the ability to promote the greatest individual happiness. In other words Utilitarianism states that good is what brings the most happiness to the most people. John Stuart Mill based his utilitarian principle on the decisions that we make. He says the decisions should always benefit the most people as much as possible no matter what the consequences might be. Mill says that we should weigh the outcomes and make our decisions based on the outcome that benefits the majority of the people. This leads to him stating that pleasure is the only desirable consequence of our decision or actions. Mill believes that human beings are endowed with the ability for conscious thought, and they are not satisfied with physical pleasures, but they strive to achieve pleasure of the mind as well. He claims that people seek pleasure and reject pain. There were some moral problems that Mill ran into with his principle. One of the first problems was that actions are right to promote happiness, but wrong as they sometimes tend to produce unhappiness. By moving a victim from a mangled car would be the noble thing to do but what if pulling him from the wreck meant killing him. He intended to produce a happy outcome, but in the end he created an unhappy situation. Utilitarianism declares that men can live just as well without happiness. Mill says yes, but men do not conduct their lives, always seeking happiness. Happiness does not always mean total bliss. Another problem is that some pleasures are more alluring than others. Pleasure does not deal with just quantity, quality is also important. The old saying, â€Å"You ... ...ale. I think that people intend to do good and the people that produce a bad outcome due to their actions have a disorder it is not necessarily and intended evil. I also believe that we do conduct our lives in hope of happiness. We would not run the race if we did not hope to win. Of course there are going to be losers but with out losing you cannot really pleasure the act of winning. Mill did not prove a justification for what happiness is to the whole. I do not think everyone has the same desire for happiness. We each share similarities but all have different ideas of what happiness means. Rap music might offend my grandmother but LL Cool J loves rap music and never intended to offend my grandmother. All of the cases presented in utilitarianism and Mill’s views are very vast. Mill does have some good points but really avoided justifying his theory.

Hero’s Journey

Each person undergoes a unique journey in their life. However, each person goes through the same basic steps; Choosing different paths to make each journey unlike anyone else’s. The Hero’s Journey is a journey that everyone will take during their life. We should acquaint ourselves with the type of journey we are on in order to successfully complete our journey. I had traveled down the wrong path and had gone from using marijuana occasionally to being physically addicted to methamphetamines. I knew it was wrong but I couldn’t stop myself. I needed something to motivate me to change my ways and become a better person.To begin, the hero’s journey is initiated when the hero is removed from their comfort zone. This irresolute feeling is agonizing, confusing, and manifests a Call to Adventure. A call is in demand when the hero has room to grow and develop: when he must change. My personal Call to Adventure was when I overdosed and nearly died, landing me in the hospital for weeks. The hero must answer this calling in order to satisfy this need to grow, face the unknown, and to gain something of magnitude. I knew now was the time to change my ways and get my life back on track.While I was lying unconscious on the hospital bed, I can clearly remember somebody telling me that I would die if I didn’t change my ways. I never figured out if it was God or a person talking to me but it definitely hit home with me. This was where I made the decision to get clean and change my life. This was the jumping-off point; it was now or never. After I decided that, I knew there was no going back. After I was released from the hospital, with the help of my doctor, I convinced my parents to send me away to inpatient rehab. That is where I encountered my first trials and challenges.My first trial and challenge was going through the withdrawls from the drugs. I was sick, nauseous, and delusional for about a week until it all got out of my system. That was probably the hardest part. I kept imagining was being in a fire and then directly into an ice bath because of the raging fever I had. After that subsided I could start to work on my issues and start to deal with my addiction. My next trial and challenge came when I was released and went to hang out with my old friends. At first, I had no idea what to do when I saw my old friends using drugs so I just stopped going out.I had no social life for a time so I decided to try to get back with my old friends and not use. This is what led up to my final battle/climax. The final battle/climax of my personal hero’s journey was when I went to a party with my friends and had promised myself that I wouldn’t use drugs. Unexpectedly, somebody had brought some and everyone was joining in on it. I had to choose between using the drugs and getting my life back on the downward spiral that It was on a couple months ago, and between walking away from the situation and keeping my life on tr ack.Even though everyone was pressuring me to do it, I stayed strong and didn’t; I left and went home instead. I had chosen to keep my life on the path I was on, the path to success and sobriety. My atonement phase was almost as hard as the rest of it. I had to confront the issues that I had suppressed with drugs during a crucial development period in my life, emotionally. I had always coped with my emotions by using drugs but that was no longer an option so I started going to the gym to let off stress. There has been nothing negative about getting my life back on track. My home life with my family is much better. I am much happier overall.My return phase consisted of successfully going back to school with the kids I used to use drugs with and be able to function without giving in to the peer pressure. It was here that I became the master of two worlds. I was still friends with all the kids that I used to do drugs with but I was sober and had sober friends at the same time. T hese two worlds were vastly different but I am still able to balance my time between them so nobody feels like I am no longer friends with them. I am confident that I can handle the peer pressure of kids at school and outside of school now and that is crucial to my journey to adulthood.

Frank Lloyd Wright essays

Frank Lloyd Wright essays Frank Lloyd Wright pioneered modern design through the use of organic architecture in over 400 buildings and houses. Wrights intricate detail and revolutionary style makes him one of the most celebrated architects of the twentieth century. "...having a good start, not only do I fully intend to be the greatest architect who has yet lived, but fully intend to be the greatest architect who will ever live. Yes, I intend to be the greatest architect of all time." Frank Lloyd Wright (autobiography). Wright was born in 1867, to a Welsh family in Wisconsin. Frank began his higher education at the University of Wisconsin studying engineering at the age of 15. In 1887, Wright left Wisconsin on a journey to Chicago. This early move forever changed Wrights life and secured his dream of working in architecture. Wright became a draftsmen at a little known firm and designed his first home for his two aunts. Wright became frustrated with his small company and joined the famous architectural firm Adler The booming industry present in Chicago greatly influenced Wrights design. The city had burned in the infamous fire of 1871, and the coming industrial age called for architecture unlike any in the past. Skyscrapers emerged in Chicago and its bustling downtown area created many jobs for Adler and Sulliven. Wright began to work designing homes for the new suburban areas of Chicago contrary to his firms orders. Wright became at odds with the partners for his residential designs and left the firm in 1893. Wright began his own architectural firm and began designing residential homes using the Prarie School style. Low-pitched roofs which blend the houses into nature became Wrights specialty. Demand soared for Wrights work and he produc ...