Category: Essential Economics for Business: Ch 09
Al Gore’s contribution to the global climate change debate is not in question and he has, along with the IPCC, been awarded the 2007 Nobel Peace Prize for his work in raising awareness. If you haven’t seen his film “An inconvenient truth” then do get hold of the DVD – it may just be the most interesting PowerPoint presentation you will ever see! However, does he really understand the nature of the debate? The article below suggests that he has not yet taken account of the most fundamental trade-off in dealing with climate change – the trade-off between our own quality of life and that of our descendants in the future.
Save the earth in six hard questions MSN Slate (22/10/07)
Questions
| 1. |
Explain what is mean by a trade-off “between the quality of our own lives and the quality of our descendants’ [lives]”. |
| 2. |
What is meant by the term ‘risk-averse’ and how is this relevant in the climate change debate? |
| 3. |
Consider the questions raised by the article. Discuss how relevant the conclusion reached is in the light of these questions. |
Cement may be quietly emerging as one of the biggest obstacles to lowering carbon emissions to reduce the extent of global warming. The cement industry rarely features in media analysis of the ‘worst polluters’, but in fact the industry is responsible, because of the high energy requirements of manufacture, for more than 5% of carbon dioxide emissions. A building boom globally has fuelled demand for the material. Concrete is the second most used product on the planet, after water, so what can be done to reduce the impact of the industry on the environment?
The unheralded polluter: cement industry comes clean on its impact Guardian (12/10/07)
Questions
| 1. |
With reference to the article, identify the main external costs resulting from the production of cement. |
| 2. |
Discuss the view expressed by Dimitri Paplexopoulos, managing director of Titan Cement that “.. [c]ement is needed to satisfy basic human needs, and there is no obvious substitute, so there is a trade-off between development and sustainability“. |
| 3. |
Discuss policies that governments could adopt to try to move the market for cement towards a more socially optimal level of production. |
The article linked below is a blog article by George Monbiot looking at the rise of neoliberal economic views and discussing whether these are simply an intellectual justification for the rich and powerful to reinforce their position.
How the neoliberals stitched up the wealth of nations for themselves Guardian (Comment is free) (28/8/07)
Questions
| 1. |
Write a brief summary of the neoliberal views of the founder of the Mont Pelerin Society – Friedrich Hayek. |
| 2. |
Explain the neoliberal argument that “….. we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm.“ |
| 3. |
Discuss the view espoused by George Monbiot in the article that neoliberal policies like “minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions” serve to make the elite even richer and simply act as a “wealth grab“. |
British Airways has been fined £270m for their part in a price-fixing cartel. Fines were levied by both the US Department of Justice and the UK Office of Fair Trading following an agreement between British Airways and Virgin to fix the level of surcharges charged to passengers as a result of rising fuel prices.
Where’s Branson’s apology? BBC News Online (Robert Peston blog) (7/8/07)
BA’s price-fix fine reaches £270m BBC News Online (1/8/07)
OFT defends ‘snitch’ policy Guardian (5/8/07)
BA boss speaks out over price fixing Guardian (3/8/07)
How arch rivals colluded to hike up cost of air travel Guardian (2/8/07)
Questions
| 1. |
Define what is meant by the term ‘price-fixing cartel’. |
| 2. |
Explain the characteristics of a market that are most likely to result in a cartel. |
| 3. |
Discuss policies that the government could put in place to prevent this kind of price-fixing arising in the future.. |
The widening of the M6 will cost £3bn or £1000 an inch. What does this fact tell us about the government’s green priorities? Are we really leading the world on climate change as the government likes to claim? In the article below Ashley Seager (Economics Correspondent for the Guardian) looks at these issues and argues that we may be the poor man of Europe when it comes to ‘green’ policies.
Green means slow to this government Guardian (6/8/07)
Questions
| 1. |
Explain what Ashley Seager means by the sentence “What the government has also not done is send out new “price signals”, as economists call them” (paragraph 7). |
| 2. |
Explain what is meant by a feed-in tariff (FIT). Why does Ashley Seager argue that this is a vital policy tool in the fight against climate change? |
| 3. |
Discuss two policies that the government could adopt to help raise the proportion of renewable energy generated in the UK. |