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Data Response Reflection March 30, 2010

Posted by Avu in Section 2.
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I guess today is the day that I get to pat myself on the back and congratulate myself. This is without a doubt my best IB HL Economics evaluation type of assignment since the offset of this course. I managed to get a total of 33 out of 34, with a perfect 14/14 in the Diagrams and Definitions section and a 19/20 in the Data Response section. I remembered all the definitions due to thorough review and astute recollection during the test. Perhaps I was lucky that the Theory of the Firm diagram I had to know was perfect competitions, which is arguably the most simple of the lot. However, I choose not to discredit myself in my clearly transcendent attempt at this evaluation. The one point I lost was, as stated earlier, in the Data Response section. However, the point lost was not in the evaluation, which I completed thoroughly. The point I lost was on question C, regarding the lack of an imposition of taxation of airline fuels and its relationship with profits. I was meant to include a Theory of the Firm diagram that presented marginal cost not equalling marginal revenue due to taxes, and how that would result in lower profits, but I included an indirect tax diagram instead. I will need to read these questions and think of how best to answer them in the future. However, I’m quite impressed with myself in this case.

In Russia… GDP Calculate You March 29, 2010

Posted by Avu in Russia, Section 3.
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Over the last decade, Russia’s GDP increased on an upward trend up until 2008, improving from about 250 billion dollars to 1.6 billion dollars. This is good.

Russia’s GDP per capita increased from $6000 to about $16000 in the same time frame. This is good.

Economic growth was on an upward trend the whole time. Increased of 8-10% were common from 1998-2002, before it regressed to around 4%. From 2008-2010, Russia experienced negative growth. This is not good.

I can conclude that as Russia’s GDP increased, its GDP per capita. Russia’s HDI was also on an increasing trend over the same time frame, so it can be shakily concluded that increases in GDP can, in some cases, correspond with increases in HDI.

Putin is awesome.

The Argument of the Ages. I’m Right Don’t Worry… March 18, 2010

Posted by Avu in The Economist Outside of Class.
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Is capitalism so deeply flawed that all attempts to ensure the public good are doomed to failure?

Capitalism may be flawed, but it is far less flawed than really any other economic system, at least on a pragmatic basis. To the leftists who gleefully rejoice at the current economic state: this isn’t because of present day capitalism, it’s because of regulation. The system isn’t flawed, simply the execution is.

This Guy: runs the command economy (to the ground)

It’s acceptable that there was much greed and money-hunger involved in the offset of the current debacle, but the government also has a duty to protect the assets of her citizens. Granted, Wall Street capitalists aren’t exactly angels, but their imperfections by God come second to the imperfections of government regulators, who are, of course, humans like the rest of us. With that in mind, what can we do? Should we limit the greed of the private sector by expanding government? Or should we tackle government ineptitude by shrinking and centralizing its power? From the evidence of past occurrences, we can’t possibly take an extreme stance, so we need to take the happy middle ground, the so-called via media. To avoid a cop out, however, I will take the initiative to say that the facts and logic lead us to lean towards a capitalist market structure. Firstly, capitalism can help develop poor countries into rather developed ones. On an empirical basis, it is obvious that markets that allow economic freedom through an open market consistently outperform those that are less free. To the critics: there is no evidence that economic freedom creates greater income inequality. Conversely, the evidence appears to suggest that even the poor live longer, are more educated, and enjoy standards of living in free market economies. Market economies require, and provide, property rights, flow of information, rule of law, and mechanism for contract enforcement, which are invaluable in developing poor countries as it helps the little people. These are the same little people who are fallaciously claimed to be hurt by the same market structure. Think of the consequences of going against the market. For example, Sweden, who’s economy was flourishing, began to falter in the 1950s due to newly implemented government security programs and rising taxes. These barriers discourage business and without their expansion, economic growth is irrevocably stunted. Of course, capitalism isn’t perfect. Capitalism is derived from market forces, which are in turn derived from the imperfection of human beings. Therefore, as inept as governments may be, they need to regulate the market. Profits and welfare don’t always align perfectly, evidenced by the cigarette industry and the healthy food industry. Because of this, there does need to be some government intervention down that happy middle path, but the regulation must only tackle failures in the market, not market forces that don’t hurt individual human rights. When it boils down to it, capitalism if efficient and best for the people. People understand property ownership. Resources can be turned into money easily, and the world can be more prosperous. However, there are extenuating circumstances that must be circumvented in order to have capitalism be successful. One such circumstance is the fact that property rights are often blurry as, in less developed areas, nations, and cities, property isn’t perfectly documented and can be lost before able to produce capital. While the fruits of capitalism are quite attainable in other economic forms, the legality of ownership is not so, and it is therefore difficult to prosper. With ownership comes trading chips. Every piece of property can be used as collateral or credit. With this can come invariably better existences. However, we all must agree that capitalism has its flaws. As described with pithy in the essay of two young economists, morality and profit are completely disconnected. This results in the Wall Street angels doing whatever they can to make that extra million. With only market forces, unchecked, people’s demands will be met with supply.

It's all about the Benjamins, baby

Therefore, if one demands child prostitution, weaponry, death, or other, for lack of a better word, questionable, demands, they will be met with the market. This means that the simple wishes of a psychopath or pedophile will be granted by the market at the cost of human dignity, rights, and in terrible scenarios, human life. This is, like with cigarettes and unhealthy foods, demonstrate the flaws of capitalism. However, they can be tackled. The flaws can be beaten. Again, perfect capitalism doesn’t perfectly work. There must be a hybrid. The crux of the matter, though, is that this hybrid must be leaning towards the market, not towards command. So now, as we ask whether capitalism is so deeply flawed that all attempts to ensure the public good are doomed to failure, we come up with a conundrum for the ages. While we can agree, and if dissenters revel, in its imperfections, we must agree that, compared to any other market structure, one with economic freedom is undoubtedly least flawed. While happiness may not be derived from capitalistic wealth, other things are. Wealth leads to longer life expectancies, opened horizons, new opportunities, and greater accessibility to the fruits of life. If these don’t lead to happiness, I don’t know what does. As it is though, whatever may create a better life must be rooted in the loose formation of a market.

Yeah, that's the other option


Market Failure/Externalities of Elderly Care; Voicethread March 7, 2010

Posted by Avu in Section 2.
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I was really prepared for this and totally had a script