It is likely to be a busy few days on our servers as entries flow in for RES essay competition. This is link to use
Posts from the ‘Economics’ Category
A hat -tip to Andrew Ireson for spotting this article that was hidden amongst the double-dip recession mania of yesterday.
Firms have won the right to retire workers at the age of 65.
In a landmark case, the court set out new guidelines meaning that companies must consider a range of alternatives to retiring an employee and be able to show a specific public interest justification in each case where retirement is imposed.
These justifications could include making it easier to recruit younger workers, being able to promote middle management, and being able to plan for the future and train others, as well as being able to end the careers of older workers with “dignity”.
The judgment signalled that, at a time of high youth unemployment, it is in the public interest for older staff to leave companies to open up job opportunities for younger people.
Read more on the article here.
I have to confess that I don’t actually know any One Direction songs but given that they have just completed a sell out tour of New Zealand and reduced teenage girls to levels of hysteria not seen since The Beatles, I thought I would use them to review elasticity as we approach our school exams.
Up on to the interactive whiteboard I popped the following image – two pictures of the band and the four types of elasticity we cover – price, income, cross and price elasticity of supply. I then told my students that two types belong in each category and invited them to figure out which went in to which.
After a bit of discussion we finally got around to what I was looking for – price elasticity of demand and supply the coefficient is not important as the price change causes quantity demanded / supplied to always go in one direction, however income elasticity can be two directions (depending on whether it is a normal or inferior good) as can cross elasticity (for substitutes and complements).
Further discussion could then be had on such issues as the elasticity of demand for their concert tickets and how boy bands from my era (The Jackson 5) were so much better…
Teacher of Economics and/or Business Studies at A Level, for September 2012
This is a great opportunity to join a successful department in an independent day school which offers outstanding facilities. We are looking for a full time teacher who has a passion for Economics and/or Business Studies and who can teach up to A2 level. Ideally, we are looking for someone able to teach both subjects but would consider applicants with a specialisation in one or other of the subjects at the level offered to students.
This post will suit someone new to teaching or a qualified teacher looking to gain further experience. If you feel you have what it takes to inspire and enthuse our very able students and are willing to participate in the wider life of the school, we would love to hear from you. For further details and to download an application form, please visit the school website.
The post will be advertised in TES and closing date for applications is Wednesday 16th May. Accommodation may be available if required.
The second in our series of online revision clinics for A Level Economics will take place on Monday 30 April 2012 at 9pm (UK BST). The focus of this free one-hour revision clinic will be the Unit 2 exam on macroeconomics, covering AQA, Edexcel, WJEC and OCR topics. Students who wish to get live support from our Economics team will be able to login to the clinic on this blog entry; please use your FB, Twitter or OpenID details to login.
Yesterday I spent a fascinating evening in the company of Aidan Heavey, Founder and CEO of Tullow Oil plc, Africa’s leading independent oil exploration business and the top performer among FTSE-100 listed businesses on the UK stock exchange. It has approximately 100 production and exploration licenses in 22 countries.
Tullow Oil is an oil exploration business – their job is to find oil and use the latest technologies and top-level human capital both to find it, drill the wells and bring oil to the ground.
Tullow is different from the fully vertically integrated companies such as Shell or BP who explore, extract, refine, distribute and then sell oil to consumers. Their main focus is in Africa and they have become the biggest licence holder for oil exploration in a continent that many observers believe is in the early stages of a period of very strong economic growth in the years ahead.
Some basic background on Tullow:
* Operations in over 22 countries
* Employ 1,400+ people
* Explore, appraise, develop and produce oil and gas
* €1 billion+ operating profit in 2011
* No.27 in the FTSE 100
* Market value of £14 billion
* Capital spend in 2011 of $1.4 billion
Aidan Heavey discussed the history of the company – from unpromising beginnings in a small town in Ireland (a country that has no oil!) through to the most recent news of vast oil discoveries in Kenya. He focused in particular on the role that Tullow Oil has played in the economic development of Ghana and especially the investment in the Jubilee Field in a country that had no pre-existing infrastructure or deep-water technology in the oil exploration and extraction business.
The capital intensity of Tullow’s operations is breath-taking. Dropping a well in the Jubilee Field cost $100 million and it took a further $3.5 billion to get the oil flowing to the surface. The oil field was developed in a record 40 months – to put that into context, it usually takes over seven years from oil being discovered to a new field being developed. The first oil extraction took place in December 2010 and Ghana is now a world-class oil producing country with the potential for a transformational effect on their growth and development prospects. Tullow employs over 250 people in Ghana, over 85% are Ghanaian and over 1,500 contracts awarded to Ghanaian contractors.
Tullow Oil Ghana IPO Advert
The company has continued to enjoy rapid growth in recent years built around the regular discovery of new oil fields around the world. Tullow opened its thirdmajor new basin in offshore French Guiana in 2011 and just a few weeks ago Tullow made its fourthmajor new basin discovery in Kenya.
Crucial to their success is in recruiting some of the top geologists in the world – they employ over 200 of them and they are a major recruiter of geo-scientists from top universities. The quality of their human capital is absolutely essential ands they have worked closely with University College Dublin to develop industry-specific courses and build up an expertise that few other players in the industry can enjoy. Here is a wonderful example of the benefits of joint ventures with universities not just to supply highly skilled UK and other EU graduates but also to provide courses for Tullow’s African employees many of whom come to the UK to study on scholarships and who are frequently top of the class beating their Far East Asian counterparts.
Share Value and Share Prosperity
I have blogged before about the emerging idea of shared value put forward by business thinkers such as Michael Porter. Shared value is creating economic value by creating social value and it was clear to me that Tullow embraces this idea with passion and with significant financial backing. Tullow has a big commitment to social enterprise activities and to sustainability in the regions in which they operate – this short video focuses on Uganda.
How do you measure shared value?
* Economic value is still measured by profit
* Social value – measuring the social impact of business activity
* Businesses are doing lots of measuring of social impacts (e.g. CSR reports) – but are these being reported as part of the profit and loss account?
* The financial markets (investors) are still too focused on short-term
* There is an increasing blurring or “for profit” and “not-for-profit”; business models which are a hydrid of trying to earn a return which also provides a societal benefit
* Business is increasingly looking for a sense of purpose
One of their new projects is Invest in Africa and you can expect to see this logo appearing on Sunderland FC’s shirts when they step out into a new Premiership season in August 2012.
Founded by Tullow Oil, Invest in Africa is a business-to-business initiative to encourage long-term investment across the Continent. It is designed to:
- help build and develop local capacity
- boost domestic job markets
- develop skills
- stimulate economic growth
A few points from the floor discussion
Peak oil theory:
Only 3% of the world has been explored for oil, there is no shortage of oil in the world – what is keeping oil prices high is a mixture of factors including a shift in the profits of oil extraction away from oil companies towards sovereign governments, and the long-term rise in world oil demand driven by growing population and rising per capita incomes. As world oil demand rises, extracting known reserves of crude becomes harder as the marginal cost of extra oil output rises
The power and influence of modern corporations
In emerging countries, modern corporations with a total commitment to shared value and long term thinking can do more than the governments of advanced nations. Traditional models of overseas aid have become largely discredited; corporations will bring much needed investment into a lower-income country but investment will only flow when governance and institutions have improved. There are some countries in Africa that Tullow Oil will simply not deal with because of corruption and failing institutions.
The vital importance of top quality geo-science
Around the world, one in eight wells drilled find oil, Tullow’s success rate is above 70%!
Ghana – GNI per capita
Export Value and Export Volume Index
Foreign direct investment for Ghana – net inflows
Technological advancement, economic development, population increase – are they signs of a thriving society? Or too much of a good thing? Based on the best-selling book A Short History of Progress, this provocative documentary explores the concept of progress in our modern world, guiding us through a sweeping but detailed survey of the major “progress traps” facing our civilization in the arenas of technology, economics, consumption, and the environment. Featuring powerful arguments from such visionaries as Jane Goodall, Margaret Atwood, Stephen Hawking, Craig Venter, Robert Wright, Michael Hudson, and Ronald Wright, this enlightening and visually spectacular film invites us to contemplate the progress traps that destroyed past civilizations and that lie treacherously embedded in our own. Leading critics of Wall Street, cognitive psychologists, and ecologists lay bare the consequences of progress-as-usual as the film travels around the world – from a burgeoning China to the disappearing rainforests of Brazil to a chimp research lab in New Iberia, Louisiana – to construct a shocking overview of the way our global economic system is eating away at our planet’s resources and shackling entire populations with poverty. Providing an honest look at the risks and pitfalls of running 21st Century “software” (our accumulated knowledge) on 50,000-year-old “hardware” (our primate brains), Surviving Progress offers a challenge: to prove making apes smarter was not an evolutionary dead end.
This highly interactive programme on Al Jazeerah a few days ago focused on the impact of foreign aid on the African economy. It runs for 35 minutes but there is plenty of interesting debate and many comments flying in on the twitter feeds. Plenty of discussion that might inform a revision session on the future for the African economy and the debate over the effectiveness of aid programmes.
African aid: helpful or hazardous?
If it is, then many African countries have more resources than they thought according to this report from Aljazeera
a) Using a PPC, explain the effect on a country that suddenly finds it fop have increased
A good article for some unemployment figures evaluation from anforme in the form of the rising number of people underemployed
…reports the BBC
a) Using a S&D diagram, explain the likely effect on the static caravan market of imposing VAT on static caravans
Fantastic, data packed revision aid from tutor2u, BUT, note that it’s not OCR specific and so if there are things in here you don’t think we’ve covered, they’re most likely not specifically needed for OCR
The BBC reports a plunge in CD sales
a) Using the list of the determinants of demand, explain why the demand for CD’s is falling
b) Show this effect on a demand diagram
Here is a revision blog on some of the key economic challenges facing the seventeen member nations of the Euro Zone or Euro Area
Europe needs more growth because it is exceptionally hard to emerge successfully from a debt crisis without achieving more growth first. Recovery from the 2008-09 recession has been weak and uneven. Some Euro Zone countries have done well – Germany in particular – but too many of the Euro Zone’s performers are suffering from semi-permanent recession and a fundamental lack of competitiveness
Governments cannot ignore signals from the bond markets. Soaring government bond yields have reflected the growing risk of sovereign debt default with Greece in the forefront of the crisis (the 2011 hair cut is a default by any other name) and Spain and Italy lurking in the background.
Banks hold a lot of sovereign debt so an endemic fiscal crisis leads to a highly fragile and vulnerable banking system which needs to rebuild their balance sheets and which will remain reluctant to expand lending – this limits ther scope for recovery – the credit crunch is not over.
Can the Euro Zone grow their way out of a debt crisis?
Deep and painful fiscal austerity can make the debt problem even worse and for many economists, defaulting on debt is inevitable because of the scale of fiscal austerity needed to cut debt – it is socially and politically unacceptable and it makes little economic sense. Cutting state spending and raising direct and indirect taxes simply takes demand out of already weak economies and causes the welfare bill to rise. This risks creating a spiral of economic weakness, deflationary pressures and high public sector debt.
Democratic institutions in southern Europe are not as well entrenched as in Western Europe. Greece has become dependent on the EU Commission, the European Central Bank and the IMF for their bail-outs – this is known as the Troika. Greece is likely to need a third bailout, of €50 billion, in 2015
Containing the debt crisis does not solve the debt crisis – politicians have spent most of 2011 and the early months of 2012 trying to buy time with bail-outs but unemployment continues to grow and real incomes are declining in many countries. A slowdown in some of the leading emerging nations will also hit export growth from the Euro Zone.
The European Central Bank (ECB) has attempted to relieve the liquidity problems of EU banks by providing them with loans available at very low interest rates. But it makes banks more profitable without having to lend it to real world businesses and consumers. Banks can simply borrow money at low interest rates and then buy high yielding government debt. There is little evidence that economically useful lending to businesses is growing, instead the banks’ exposure to government debt grows and makes the risks from default even higher.
Recession in the Euro Zone will clearly have a significant effect on the UK economy. Over 50% of our trade in goods and services is with Euro Zone countries so a descent back into recession wil be an external demand shock for Britain.
What might happen if the Euro Zone breaks -up and Greece and others default? If a country leaves the Euro Zone and devalues their currency – perhaps by as much as 40% – and the move succeeds then the pressure on the other weakner economies inside the single currency area to do the same will be huge.
The big issue is that too many of the countries inside the Euro Area are uncompetitive with fellow members of the single currency and increasingly uncompetitive with rapid growth countries to the East. The World Economic Forum recently ranked Greece below a number of developing economies, including Namibia, Rwanda and Chile in terms of international competitiveness.
Supply-side economic reforms to make labour markets more flexible, to lift productivity, control unit labour costs and stimulate innovation will take many years to have a major effect, by the time they do, the Euro Zone could be a shadow of the group of seventeen countries that entered with such optimism from 2001 onwards.
The capacity and efficiency of our transport infrastructure has a huge bearing on the supply-side potential of the economy and in this Channel 4 news video, the CEO of British Airports Authority argues that Heathrow is now full to bursting. The Conservative and Liberal Democrat coalition manifesto in 2010 ruled out a third runway at Heathrow – to the relief of those (including me) who live under Heathrow flight paths. But without much needed investmnt in air transport, there are fears that UK business will suffer and the economy will become less attractive to inward investment.
According to BAA (owned by Spanish infrastructure company Ferrovial), 77,000 people are employed inside the airport’s perimeter, with a further 59,000 jobs supported across London. In a recent research report commissioned by BAA and produced by Oxford Economics, a failure to support Heathrow over the next ten years could cost 78,800 jobs from tourism, 55,300 jobs from foreign investment and 7,300 jobs from exports to emerging markets – 141,400 jobs in total
By 2021 lost GDP could total £8.5 billion a year – £3.6 billion from tourism, £4.5 billion from foreign investment and £410 million from exports.
A quote from Colin Matthews, CEO of BAA plc
“The centre of gravity in the world economy is shifting and we need to forge new links with emerging markets. Instead, we are edging towards a future cut off from some of the world’s most important markets, with Paris and Frankfurt already boasting more flights to the three largest cities in China than Heathrow, our only hub airport.”
Here is an example of monopsony power in the labour market and the risk of exploitation of employees. Britain’s largest recruitment agency, Adecco, is being accused of short-changing temporary staff by rounding down their holiday pay. Hundreds of thousands of people are employed by contract recruitment businesses – this is a timely reminder of the importance of employment legislation as a means of protecting the pay and conditions of people in vulnerable jobs.
This short Al Jazeerah report looks at the aftermath of the Deepwater Horizon disaster and the impact it continues to have on the regional fishing industry. Two years since oil company BP’s Deepwater Horizon rig exploded in the Gulf of Mexico, resulting in a massive oil spill, fishermen in the region are still suffering. The explosion killed 11 people and resulted in the worst accidental offshore oil spill in US history.
Join Geoff Riley and other members of the tutor2u team for a free online revision clinic here (Monday 23rd April) on the tutor2u Economics Blog. Starting at 9.p.m. (BST) = we’ll be here for an hour to help with any revision problems or queries you might have. Please note – the focus will be on students taking a Unit 1 exam on microeconomics (markets and market failure. We’ll be able to cover all the main exam boards, including AQA, Edexcel and OCR.
This blog entry will host the online discussion. To participate when the event is live, you will need to login using either your Facebook, Twitter or OpenID account.
This is well worth watching! It is an 8 minute discussion from the Economist which examines what is being called “The Third Industrial Revolution” – based around the digitisation of manufacturing processes. Concepts such as 3d printing and advanced robotics are discussed, as are concepts such as competitiveness, productivity and product personalisation. One possible consequence of these changes might be that high quality manufacturing may begin to move back from lower-wage economies such as China and back to economies like the USA.
It was great to host Geoff and Mo (see below) here at King’s in Madrid last Friday as 100 students from three schools gathered for the AS and A2 Macro Revision Workshops that have toured the UK this spring – a fantastic boost to their study programmes a few weeks before exam season starts.
The only difference to the UK format was Mo’s talk on the Chinese economy given at the end of the day. This is clearly Mo’s area of expertise and it gave the students a real insight into what it means to have your economy experiencing 10% yearly growth for the last 20 plus years.
The talk was peppered with astonishing facts like Beijing airport’s terminal three having more floor space than all five of Heathrow’s terminals, the ghost cities that have been built without a single inhabitant, the incredible speed with which a high speed rail network is connecting this vast country, the world’s largest shopping mall etc – the sheer scale of these infrastructure projects is breathtaking and is testament to the ambitions and aspirations of the no longer sleeping giant – as Geoff mentioned, China can no longer be classed an emerging economy, she has emerged! (108 Giant Chinese Infrastructure Projects That Are Reshaping The World). Big thanks to Geoff and the team and see you next year!
Finally, Peter Day was in great form last night on radio 4 analysing China’s real estate bubble and he starts in Ordos new town (some eery images here), one of the ghost cities Mo was referring to in his talk here in Madrid. Surely thousands of acres of empty housing estates are a pretty clear indicator that a property bubble is taking place – here in Spain, you don’t have to travel far to find evidence of the aftermath of the irrational exuberance that led to Spain’s current predicament!
Here is a set of data that can be used to make your current students feel good about taking Economics and perhaps posting it outside your classroom may even attract a few more!
This interactive set of data from the Wall Street Journal compares the earning power of U.S university graduates with their degree major. The table is presented in alphabetical order to start with but click on the average wage column to resort it and there you have it – economics majors outperform engineering, finance, and I.T majors!
A good question to pose is whether teachers like myself with Economics degrees bring the average up or down – I think I know the answer to that…
Economics teaching opportunities like this don’t come along very often – a chance to join the Economics team at Westminster. Details below (don’t forget to mention you saw this on the tutor2u Econ blog!)
Westminster School vacancy for a full-time permanent teacher of A-level Economics
Westminster School is a leading independent school with a top academic record
Start in September 2012
Class sizes 10 – 15, girls and boys; only sixth form teaching
Economics is the third most popular subject at A-level in the School with between 65 and 75 studying it in each of years 12 and 13
The job includes running or assisting with extra-curricular activities, of which there is a wide choice: sports, cultural, charitable, trips and expeditions at home and abroad
Generous salary scale; TPS pension
Westminster School is committed to safeguarding and promoting the welfare of children and applicants must be willing to undergo child protection screening which will include checks with past employers and the Criminal Records Bureau
Westminster school is an equal opportunity employer
Look at our website www.westminster.org.uk. To apply, send a CV, application form and covering letter by 4 May to our Personnel Bursar, Miss Helen Newman at email@example.com or 17 Dean’s Yard, London, SW1P 3PB
Short-listed candidates will be invited to teach a demonstration lesson to Westminster pupils towards the end of the week beginning 7 May. Those through to the final round will be asked to attend interviews at the School on 21 May.
Please direct any questions to me or Miss Newman, as appropriate.
Simon C Hawken
Head of Economics Department
This comprehensive new revision presentation by Geoff is designed to provide support for AS Economics students (and their teachers) in the final stages of their revision for the Unit 2 paper on macroeconomics.
This excellent news video from Channel 4 news looks at the changing pattern of employment in the UK economy. The number of full time workers is dropping and there has been a big switch towards part-time employment. Who are the winners and losers in our labour market as the fragile recovery struggles to maintain momentum?
For our final meeting of the year for the school’s Entrepreneurship Society, we are delighted to welcome Aidan Heavey, founder and CEO of the FTSE-100 firm Tullow Oil. Colleagues who would like to come to this event are extended a warm welcome. From nothing, Heavey has built Tullow Oil into Africa’s leading independent oil company, operating in 22 countries. It is one of the fastest growing businesses in the world and is making major investments in South America. Tullow Oil last week announced record financial results with an annual profit before tax of over $1billion
Aidan Heavey is among the world’s most successful oil exploration executives and has enjoyed some of the biggest paydays seen at a stock market-listed company. Aidan is a director of Traidlinks, an Irish-based charity established to develop and promote enterprise and diminish poverty in the developing world, particularly Africa.
The meeting takes place at 8-40pm on Tuesday 24th April
This is the form to use when submitting essays for the 2012 RES competition. The closing date for essays is midnight on Monday 30th April
There´s no denying it, technological advancement and the web is a massive part of many of our lives and according to this Economist Daily Chart, in Britain alone the internet economy is forecast to contribute well over 12% of GDP by 2016!
Having blogged recently about some amusing examples of what was once cutting edge technology, below is part of an alternative take on how many of us take for granted the amazing gadgets and gizmos we have at our disposal today.
On the new Economics TheoryBuster course, the emphasis is less on developing understanding of assessment objectives, schemes of work and suggested teaching approaches and more on mastering the fundamental and often conceptually difficult AS and A2 theory that can be so hard to pick up from a textbook.
The first running of this course is on 26 June in Central London.
We think this course will ideally suit teachers who are experts in other fields and who are picking up economics teaching from scratch, perhaps within the context of an existing department. It will also be ideal for new teaching colleagues who are a year or so into their teaching of Economics.
Places on Economics TheoryBuster can be booked using this online form:
Topics that will be covered include:
- Market structures and business objectives (A2 unit 3)
- Comparative advantage / free trade / protectionism (AS unit 2 and A2 unit 4)
- Exchange rates / Marshall-Lerner / balance of payments (A2 unit 4)
- Elasticities (AS unit 1)
- How markets work/clear (AS unit 1)
- The Keynesian./Classical distinction and its relevance for AD/AS analysis (AS unit 2 and A2 unit 4)
Details here of a new CPD course for colleagues who wish to focus on renewing and improving their department’s approach to the teaching of A2 Economics courses. A2 Essential Economics will focus purely on core topics teaching strategies for Units 3 and 4 for AQA, OCR and Edexcel. Further details of the course programme are provided below.
The first running of this course is on 13 June 2012 in Central London. Places on the course are available at just £175 (+VAT) and can be booked online here:
A2 ESSENTIAL ECONOMICS
The course will aim to support delegates by:
Developing deep understanding of assessment objectives for A2 Economics for all major exam boards, highlighting how to maximise student marks in exams, top tips for teaching and how to develop the higher order exam skills
Analysing suggested schemes of work for A2 Economics and topic order
Introducing all key A2 topic areas and developing the essential economist’s analytical and evaluative toolkit for micro and macro, with basic theory, derivation of diagrams, common errors, top tips and suggestions for teaching.
Topics to be covered will include:
- Business economics (including development of cost/revenue diagrams, analysis/evaluation of resource allocation in all market structures and business objectives)
- Labour market economics
- Free trade and protectionism
- Exchange rates
- Development economics, poverty and inequality
Great argument in favour from the BBC
…are proposed, says the BBC
a) How likely are such packets to reduce the market failure in the tobacco market?
Fantastic clip from the BBC
a) Using a S&D diagram and the determinants of S&D, explain the rapid rise in sales of bullet proof cars in Brazil
Here is a revision download containing some key theory diagrams and accompanying explanation for topics in business economics / theory of the firm / market structures.
Sky have this good example of allocative eficiency in the use of scarce resources
a) Why does this story reflect the concept of allocative efficiency?
I have put together a unit 1 micro markets and market failure question focusing on the economics of motorway congestion and road tolls. It is available as a pdf download if colleagues would like to take a look. I will post some suggested answers in a few days and link back to this blog.
In 2011, overall motor vehicle traffic volume in Great Britain was just 1 per cent higher than in 2010, at 306 billion vehicle miles. Cars accounted for 79 per cent of all motor vehicle traffic, light vans accounted for 14 per cent and heavy goods vehicles accounted for 7 per cent. 20 per cent of traffic was on motorways in 2011. The annual growth of vehicle traffic volume in has slowed considerably in recent years as demand for vehicle use has been affected by the recession and a rise in the real cost of vehicle fuel at the pumps. Other expenses have also led to a sharp rise in the real cost of motoring for millions of motorists.
The Department for Transport continues to forecast that traffic will continue to grow on all major arteries and that by 2025 the English road network will be 27 per cent more congested that it was in 2003. Of the roads maintained by the Highways Agency, the A14 between Rugby and Felixstowe and the A1 in the North East of England have been put forward as likely projects to be offered to the private sector as toll roads in the near future.
Exam Practice Question
Here is an A-Z quiz where you type in the answer to 26 concepts on the A2 micro course. Created using Zondle this game uses the Bubble Shooter game. Details below
Bubble shooter game
* You have color bubbles to blow out
* You have to form three contacting bubbles in one row to make them blow and disappear.
* During the bubble shooter game, periodically the bubbles go closer to you, with a new line of bubbles. You have to look out, because is the bubbles once reach your level, the game’s over !
In this excellent 20 minute talk Professor Geoffrey Heal from Columbia University discusses the broad concept of society’s capital including natural capital. He focuses on the limits of GDP as a measure of economic progress in a world that depletes all forms of capital including natural capital. Net Domestic Product (rather than GDP), HDI, HPI and adjusted net savings all get a mention in his talk. Being rich and being sustainable are rarely the same thing.
He defines sustainability as “keeping the total value of a nation’s capital stock in tact” and this definition encompasses all forms of capital (physical, intellectual, social, human, natural). Economic development changes the profile of a nation’s capital stock – for example industrialisation leads to deforestation and a rapid run down of natural capital, replaced often by life-changing physical capital, intellectual capital and human capital.
Living standards have been raised through this substitution process but the fundamental question central to the whole environmental debate is the extent to which the natural stock of capital can continue to be run down at present rates.
The weight of scientific knowledge says that the answer is no – we cannot replace a stable climate by more human and physical capital under a business as usual pathway. Heal argues for strong sustainability – giving bigger emphasis to protecting and maintaining eco-systems.
Geoffrey Heal, Donald C. Waite III Professor of Social Enterprise, Columbia Business School, New York at the panel entitled “Managing the Global Commons: Growth, Inequality, and New Thinking for Sustainable Economics” at the Institute for New Economic Thinking’s (INET) Paradigm Lost Conference in Berlin. April 14, 2012.
“It is not that human beings are irrational, it is that they are human” Here is a terrific short film on the causes of financial instability and the cracking of faith in markets. The Institute for New Economic Thinking has just launched the first of a series of short documentaries on economics Click below for the first of them
Financial stability, or the lack thereof. Leading thinkers speak out on what they feel is at the core of the problem. Featuring: Joseph Stiglitz, Gillian Tett, David Tuckett, Stephen Kinsella, John Kay, David Weinstein, Steve Keen and Dirk Bezemer. The focus is in criticising heavy reliance on neo-classical economics.
Winning and commended essays in the RES essay competition must be properly referenced – this is one of the criteria used by the judges – good essays will draw on a range of sources and offer a proper bibliography at the end – here is a tool that will help
This 12 question – Type the Answer – Revision Quiz created using Zondle focuses on globalisation
Here is Chart 4 in our occasional quiz! Today’s chart focuses on the changing nature of the UK labour market in recent years. There are two data series to identify – in each case the chart shows the monthly level of each variable – look carefully at the two axes, a split scale is being used. Data A refers to the right hand axis and Data B refers to the left hand axis.
Can you identify what is being shown here? The answer to chart quiz 3 can be found below.
Here is the answer to the last Chart Quiz (3)
The chart shows the annual balance of trade in oil. For many years the UK has been a net exporter of oil because of revenues from exports of oil in the North Sea. But exploration and production of North Sea oil has declined greatly over the years and the UK has now returned to being a net importer of crude oil – indeed the deficit widened considerably in 2011 partly because of the surge in world oil prices back above the $100 a barrel level.
Test your understanding of some key Unit 4 macro concepts with this quick quiz created using Zondle
Here is the sub-heading from the report in today’s Daily Telegraph: “Royal Mail is limiting the number of stamps it supplies to retailers now to ensure it profits from record price rises later this month.” The report goes on “Royal Mail confirmed on Thursday that it had imposed a cap on the number of stamps every shop could buy. Retailers said it was refusing to restock them when they exceeded their allocation.” Ian Murray, the shadow postal affairs minister, says that he will be writing to regulator Ofcom about this rationing of supplies.
There has been particularly heavy demand for stamps ahead of the 30% price rise at the end of the month from small businesses who still rely on postal deliveries. The BBC gives the example of an optician in Scotland who sends out 5,000 reminders a year to patients; the owner is planning to buy 10,000 stamps before the end of the month thus saving £1,400.
The reports include some good examples of classic response to a shortage of supply: not exactly a black market, but an unofficial market is developing on e-bay, where a sheet of 100 first-class stamps can be bought for £50. This is £4 above the current face value – but from the end of the month the sheet will be worth £60.
Is Royal Mail’s action to limit supply to retailers an abuse of monopoly power, and how would it be dealt with if the Royal Mail were a private sector enterprise? Discuss.
Here is a revision presentation for A2 microeconomics on the economics of nationalisation. This is the process of taking an industry or assets into public sector ownership by a national government it raises important issues concerning economic efficiency and welfare in different markets.
In a fresh move to reduce consumption of cigarettes, legislation has come in force banning the displays of cigarettes for sale in large retail stores. The display ban will apply to shops of more than 280 sq m (3,014 sq ft). Newsagents and small stores can display cigarettes until 2015, giving them time to refit shelves and cabinets.. It is part of the armoury of interventions that have been tried over the years to change consumer behavioural – from real terms increases in cigarette taxes to bans on advertising and ever-stronger advertising and health campaigns. The focus of the ban is to influence younger smokers by removing cigarettes from point of sale display – will it be effective?
This news report below from Al Zajeerah looks at the new measure
This commentator doesn’t think the policy will work
A short BBC news video here on rapid growth and development in the Brazilian city of Manaus, on the banks of the Amazon river. A new bridge across the world’s biggest river and a healthy manufacturing sector are providing many new jobs. But what of the ecological challenges and threats that this creates?
There have been a lot of excellent resources on this blog relating to the different approaches that the government might take to reduce the negative externalities of excessive alcohol consumption. But most of them (for example, taxes and minimum prices) also affect those who enjoy modest amounts of alcohol such as a glass of wine (or two) with dinner. Why should these people pay a much higher price when they do not cause any negative externalities?
If I buy a nice bottle of wine from an off-license for a dinner party then I might think that I have nothing in common with drunken youths causing all manner of negative externalities. But a new study shows that like or not, I am involved in some way. This article explains how liquor outlets themselves have negative externalities of production – rates of serious crime double within 900 metres of an off-license. The more liquor stores an area has, the more likely it is to have a higher rate of serious violent crime, regardless of poverty and other factors. So even if I am not committing any crimes it seems that anything that reduces all people’s ability to buy alcohol from these shops (and reduce their profitability) will lead to a more socially desirable level of output.Therefore all consumers of alcohol from these outlets should contribute towards this goal. Your thoughts?
In any case, I am sticking with the argument that small amounts of alcohol actually has positive externalities of consumption – evidence here!
But perhaps Homer Simpson puts it best…
Surely this is just a case of basic economics?
What do you think, are the criticisms justified?
Here is chart 3 in our occasional chart quiz series. This chart focuses on the annual trade balance for a key industry in the UK. Look at the data below – it shows the annual balance of trade i.e. the net value of exports minus imports. As you can see there have been some big swings in the balance of trade over the years and in recent times we have moved from having a trade surplus to a trade deficit. Which industry do you think this chart refers to?
Here is the answer to the previous chart quiz (number 2)
Chart quiz 2 shows the monthly level of car production in the UK. Notice the dominance of cars produced for export – the vast majority of new passenger car vehicles made in the UK are destined to be sold in overseas markets. And the rise of car export production is good news not just for the industry but also for those regions where production, investment and employment are rising.
In April 2012 Nissan announced that it will create more than 1,000 jobs after the company announced it is to build a new hatchback at its Sunderland plant. Soon the Sunderland plant’s workforce will stand at a record 6,225, supporting annual production of more than half a million models and providing demand for hundreds of component supply businesses throughout the UK and especially in the North East.
Car exports have been boosted by a fall (depreciation) in the value of sterling against the Euro and other currencies.