Category: Essentials of Economics: Ch 01
The start of a new year is a time that many of us make New Year Resolutions. Generally we have broken these before then end of January, but a new web site called Stickk.com aims to helps us keep the resolutions. Can economics help us rationalise the process of making resolutions? In the article below Tim Harford (the Undercover Economist) looks at incentives and what economics can tell us about New Year Resolutions.
Rationalising resolutions MSN Slate (22/12/07)
Questions
| 1. |
Assess the importance of incentives in determining people’s economic behaviour. |
| 2. |
How does the analysis of ‘rational behaviour’ help us understand the economic choices people make? |
| 3. |
Discuss the likely success of the business model developed by Stickk.com. |
With the news this month of the death of Boris Yeltsin, it has been an opportunity to look back at the economic legacy of the first democratically-elected President of Russia. Boris Yeltsin took over at a time when all goods were scarce and the industrial infrastructure was crumbling. He adopted policies of extensive privatisation and abandoned price controls. To what extent has this created the Russia of today and what is the legacy he has left behind?
Yeltsin’s moment The Economist (subscription) (26/4/07)
Yeltsin’s economic legacy BBC News Online (24/4/07)
Questions
| 1. |
Explain the reasoning behind the policies that were adopted by Boris Yeltsin in his early years in office. |
| 2. |
Discuss the extent to which those policies enabled the development of the Russian economy. |
| 3. |
Assess the current state of the Russian economy. |
China, in a contentious new law, has given its people additional private property rights and protection of private assets. Many were worried that this eroded fundamental socialist principles, and it can be argued that this moves China further towards becoming a market economy.
China announces new property law BBC News Online (9/3/07)
China passes new law on property BBC News Online (16/3/07)
Questions
| 1. |
Examine the implications for the Chinese economy of the new additional property rights. |
| 2. |
Discuss the advantages and disadvantages of the new law giving additional private property rights. |
| 3. |
Assess the extent to which this moves China closer to being a free market economy. |
Recent economic history has led many commentators to believe that a free-market capitalist economy is the only efficient method of allocating resources. The transition of former Eastern Bloc economies has furthered this perception. In the article from the Guardian linked below, Andrew Murray considers this argument and argues that capitalism may not be the be all and end all of economic organisation.
No, capitalism is not the only way to order human affairs Guardian (8/3/07)
Questions
| 1. |
Discuss the arguments for and against using a free-market economy as the principal method of resource allocation. |
| 2. |
Assess the principal reasons for the transition of planned economies to market economies over the past two decades. |
| 3. |
Examine the validity of the arguments raised by Andrew Murray in his article. |
The kibbutzes in Israel have always been renowned as a system where everything is evenly shared. However, with the news that Israel’s oldest Kibbutz has agreed to essentially privatise itself and start paying people according to ability, it seems that the reach of capitalism and the market system is now almost total. What alternative systems are left to organise and allocate resources? With most forms of socialist organisation more or less discredited as an efficient way of allocating resources, it seems that globalised capitalism is all that is left. However, in the article from the Guardian below Timothy Garton Ash argues that capitalism may, by its very nature destroy itself.
Global capitalism now has no serious rivals. But it could destroy itself Guardian (22/2/07)
Israel’s oldest Kibbutz votes for privatisation Guardian (20/2/07)
Questions
| 1. |
Describe the changes that have taken place in the system used to allocate resources in the Degania kibbutz. |
| 2. |
Assess the reasons why the Degania kibbutz has decided to pay members according to ability. |
| 3. |
Discuss the validity of Timothy Garton Ash’s argument that global capitalism is in danger of destroying itself. |