The following link is to a video charting the growth of China and the UK over the past 200 years and projecting forward to 2014. The video is from Gapminder, a site that allows you to compare countries’ performance in terms of a large range of economic and social indicators.
The introduction to this video states, “200 years ago, United Kingdom was a leading nation of the world – both in regard to health and economy. In this video, Hans Rosling details UK’s 200-year journey, to present time, and also shows that China, in the coming five years, will narrow the gap to UK faster than ever.”
Crisis narrows China–UK gap Hans Rosling, Gapminder (2/6/09)
Questions
- Why has the gap in GDP per head narrowed between the China and the UK?
- Why is the gap likely to narrow further over the next five years?
- Identify the factors that will determine how much the gap is likely to narrow in this period.
Are businesses concerned solely with profits or sales, or do they take broader social objectives into account? Is ‘corporate social responsibility’ (CSR) a key part of their decision-making? In other words, do they care about the welfare of their employees, about being honest with shareholders and customers, about being energy efficient and non-polluting and about caring for local communities? In general, do they make a genuine attempt to be ethical? One view is that they should do this because, in the end, it’s profitable to do so. Another view is that they should be socially responsible because they have a duty to be so.
In the current economic climate, CSR is being tested. Is CSR something that should be inextricably part of everything a firm does? Or is it a luxury that can be dispensed with when times get tough? The first article below looks at this issue and comes to a fairly optimistic conclusion. The other articles look at approaches to CSR in various countries.
A stress test for good intentions The Economist (14/5/09)
The Future of CSR: 2009 report CSR Asia (05/09) (This may take a little while to load: try right clicking and saving it before opening)
CSR efforts score well in trusted brand poll BusinessMirror (Philippines) (29/5/09)
Minister Presents Corporate Responsibility Index Awards Australia.TO (28/5/09)
CSRwire Welcomes New Members to its Global Network of CSR News and Information CRSwire (27/5/09)
Straight Talk about Corporate Social Responsibility The Huffington Post (13/5/09)
Social Responsibility WA Today
See also the UK government’s CSR site Corporate Social Responsibility
and Business in the Community’s Corporate Responsibility Index
Questions
- Explain how self-interest can go some way to making companies more socially responsible.
- Why may the free market fail to provide the optimum level of CSR?
- To what extent does the current recession threaten CSR? Are there any ways in which it could encourage companies to be more socially responsible?
Imagine putting together a dream team of economists to tackle the current recession. Who would you choose? Larry Elliott, the Guardian’s economics editor considers this game of ‘fantasy economics’ in the linked article below. In the process, he makes a number of criticisms of economists for saying little about what caused the current crisis and how such crises could be avoided in the future.
As students studying economics you might want to defend economists against this attack. After all, virtually every time you turn on the radio or television or open a paper, there are economists explaining what has happened and what should be done about it. So see if you can mount a defence against this attack – and maybe put together your own dream team of economists!
It’s a funny old game: where is the dream team of economists to tackle the slump? Guardian (1/6/09)
Profiles of many the economists referred to in Larry Elliott’s article can be found at the History of Economic Thought website. You can access this from the Sloman Hot Links tab above and then click on site C18.
Questions
- Explain why economies with deregulated financial markets are likely to experience macroeconomic instability (‘boom-bust cycles’).
- What are the benefits of studying perfectly competitive markets and general equilibrium theory?
- Write a brief defence of the use of mathematics in economics.
- Does experimental economics allow economists to take a ‘more nuanced and relevant approach’ to studying economic behaviour and devising appropriate policy?
Competition authorities in the USA and Europe tend to have a different approach to firms that have a dominant market position by virtue of their ownership of specific intellectual property, such as software codes. Thus companies such as Microsoft can exploit network economies, thereby making it hard for rival firms to compete. After all, if most people use Windows, there is an incentive to keep using it so as to be compatible with other users. Similar arguments apply to the ownership of physical property, such as ports, airports, railways and power lines, where the owners may choose to deny access to competitors.
So should companies such as Microsoft grant rivals access to their intellectual property? Would such access increase competition, or would it be a disincentive for rivals to innovate? The following article from The Economist considers the issue and refers to a recent paper by Sir John Vickers, former head of the Office of Fair Trading and now Warden of All Souls College, Oxford and President of the Royal Economic Society. He argues for a mid-way course between Europe and America – more interventionist than in the USA, but less rigidly regulated than in the EU.
What’s mine is yours The Economist (28/5/09)
Competition Policy and Property Rights, John Vickers Oxford University , Department of Economics, Discussion Paper Series (26/5/09)
See also
‘Intel inside’ could be outside the law
Questions
- Explain what is meant by ‘network economies’ and give some examples.
- What are the arguments for and against requiring companies to give rivals access to their intellectual property?
- If companies are required by the competition authorities to give others access to their intellectual property, should they be allowed to charge their rivals for using such property, and, if so, how would the authorities determine the appropriate amount?
Until changes in their governments, both the USA and Australia were unwilling to sign up to the Kyoto Treaty on climate change. But things are changing. In both countries, cap and trade bills have been proposed by their administrations (see A changing climate at the White House). In the USA, President Obama’s bill would see the imposition of carbon quotas aimed at achieving a reduction in greenhouse gas emissions by 2020 of 17 per cent, with emissions trading allowing an efficient means of achieving this. In Australia, Kevin Rudd’s Labor government plans to introduce quotas and emissions trading in 2011 to achieve a 25 per cent reduction in greenhouse gases by 2020.
But are there lessons to be learned from the European Emissions Trading scheme? The following articles look at some of the issues.
Cap-and-trade off Houston Chronicle (23/5/09)
US climate change bill passes key hurdle Telegraph (22/5/09)
Obama climate change bill defies Republicans to pass key committee Guardian (22/5/09)
Cap and Trade Debate CNN (video) (22/5/09)
Historic emissions trading scheme bills tabled Sydney Morning Herald (14/5/09)
A pattern behind fire and flood Sydney Morning Herald (25/5/09)
Interview with Australian Climate Change Minister, Penny Wong ABC (21/5/09)
Can Copenhagen achieve much? ABC PM programme (includes link to audio) (20/5/09)
Plunging price of carbon may threaten investment Independent (9/2/09)
EU ETS emissions fall 3% in 2008 Environmental Expert (18/5/09)
European investors call for carbon trading revamp businessGreen (20/5/09)
The carbon scam 21st Century Socialism (19/5/09)
Economy and the environment: growing pains Guardian (17/5/09)
See also
European Union Emissions Trading Scheme Defra: emissions trading
Questions
- Discuss the merits and problems of cap-and-trade systems for reducing carbon emissions in an efficient and effective way.
- Is the price of carbon a useful indicator of the success or otherwise of cap-and-trade schemes to reduce greenhouse gas emissions?
- In what ways does the current recession (a) aid, and (b) hinder the introduction of tougher schemes to tackle global warming?