Chinese investment a boon for Pakistan.
Historically close relations between Pakistan and China have been solidified as a result of the continuing progress of the China Pakistan Economic Corridor. Trade between the two countries, already at a high owing to the countries` close relations, will go up significantly, and will add to Pakistan`s GDP, as a sea port at Gwadar is established and the fabled `Karakoram Highway` is resurrected by Chinese investment. The investment will open up both extremes of the country, in the southern province of Balochistan which lacks capital infrastructure to develop its vastness of resources, and the far north, where the geopolitical situation of recent times has prevented much development there. Economists argue over the real value of the investment to Pakistan, as they say the loans owed to China will add too much to Pakistan`s already burgeoning negative balance of payments, but hope in the country is high, especially given China is Pakistan`s major economic partner and ties between the two countries are as strong as ever. Foreign investment is also bound to increase in the region, especially at Gwadar, which the Pakistani government hopes will be able to match Hong Kong and Singapore in size, though that remains to be seen with past investments in the country being wasted and continued political instability and security threats in parts of the country undermining development efforts. For China, and the asian market as a whole, CPEC will open up the region, offer more trade options, and help develop the region more as a whole.
https://www.economist.com/news/asia/21728619-china-pakistan-economic-corridor-project-carries-risks-massive-chinese-investment-boon
Saturday, September 9, 2017
Friday, September 8, 2017
Trump and the Debt Ceiling
This week, President Trump, made it look like he was open to the idea of removing the requirement for congressional votes in relation to the limit on federal burrowing.This is an action, that is largely synonymous with leftist economic trends, Democrats usually being in support of big government, which entails increased government spending for which the monies must be gotten from somewhere. The "somewhere" as discussed in class,is burrowing. The move if officially endorsed by the president will prove yet another, in his long line of policy flip flops seeing as it is the antithesis of Trumps campaign stance on the matter. When there are no more government funds available, congress lifts the debt ceiling or the limit on the amount of money the government can burrow. The article below, discusses the fact that the USA expects to run a deficit this year. The country intends to stay on its feet, by issuing debt, to cover its lack of money, and maintain the image and reality that it is capable of repaying its debtors.
https://www.washingtonpost.com/business/economy/debt-ceiling-shift-signifies-a-remarkable-political-evolution-for-trump/2017/09/07/a65b318a-9401-11e7-89fa-bb822a46da5b_story.html?utm_term=.73410c577301
https://www.washingtonpost.com/business/economy/debt-ceiling-shift-signifies-a-remarkable-political-evolution-for-trump/2017/09/07/a65b318a-9401-11e7-89fa-bb822a46da5b_story.html?utm_term=.73410c577301
The Rise in US consumption in August
In this article Richard Curtin explains that “The Sentiment Index has been
higher during the first eight months of 2017 than in any year
since 2000,
which was the peak year of the longest expansion in U.S. history.” Overall
2017 has had a higher consumption rate than the previous years. Consumption
has increased and has changed GDP as well. The consumer sentiment index
rose to 96.8 in August from a final reading of 93.4 the month before.This capitalized August, meaning that the consumption rate is continually increasing over the entire year of 2017. Hurricane Harvey occurred too late for the survey, which could change the continuous consumption increasing rate.
The rise in consumption can be due to the fact that consumers are
optimistic about their personal financial conditions. Consumers optimism
about their personal financial conditions can be a big factor for computing
the overall consumption level. If consumers feel that they have more disposable income than they would be more likely to spend more money than they did before.This increase of consumption can be fueled by low levels of unemployment and changes in inflation and interest rates.These factors might affect the consumption in more expensive items like cars and diamonds. People will be more likely to spend their income because they have little incentive to save.
which was the peak year of the longest expansion in U.S. history.” Overall
2017 has had a higher consumption rate than the previous years. Consumption
has increased and has changed GDP as well. The consumer sentiment index
rose to 96.8 in August from a final reading of 93.4 the month before.This capitalized August, meaning that the consumption rate is continually increasing over the entire year of 2017. Hurricane Harvey occurred too late for the survey, which could change the continuous consumption increasing rate.
The rise in consumption can be due to the fact that consumers are
optimistic about their personal financial conditions. Consumers optimism
about their personal financial conditions can be a big factor for computing
the overall consumption level. If consumers feel that they have more disposable income than they would be more likely to spend more money than they did before.This increase of consumption can be fueled by low levels of unemployment and changes in inflation and interest rates.These factors might affect the consumption in more expensive items like cars and diamonds. People will be more likely to spend their income because they have little incentive to save.
Making sense of capacity cuts in China
Around the world, shares are up and people are investing
more on new buildings and equipment. There are many events that factor into
this upturn, but The Economist looks
to China as the spark for change. As we learned, normally growth comes from the
investment of new facilities, but in China they have been cutting back and
tackling their overcapacity problem which has boosted the economy. China
accounts for roughly half of the global production of steel, coal, aluminum,
glass, and cement; but the unused steel capacity equated the total output for
the next four biggest producers. This excess weighed on global prices and
deflated profits for all. China has an idea to cut production which would raise
prices and increase profits. Now we see that coal and steel prices and profits
have soared. As optimistic as this sounds, the tendency towards overcapacity
still lurks and there are several shortcomings including the concerns that high
prices will lead once more to surplus capacity.
https://www.economist.com/news/leaders/21728640-investors-have-been-cheered-sweeping-cutbacks-they-should-look-more-closely-making-sense?cid1=cust/ednew/n/bl/n/2017097n/owned/n/n/nwl/n/n/NA/62219/n
Thursday, September 7, 2017
Hurricane Irma's Surprising Effects on Florida Gas Prices
As the state of Florida prepares for the rare category 5 Hurricane Irma, the population of Florida is getting ready for the worst. As many have seen the recent damages that Hurricane Harvey has inflicted to the state of Texas, many Florida locals are stocking up on the bare essentials in preparation for the inevitable. Florida residents are attempting to stock up on water, food, and gas. Yet, the sudden rush for gas has had a surprising effect on the standard gas prices.
Most storms will take out a certain area of a state, allowing fuel suppliers to target and effectively resupply that area. Hurricane Irma is predicted to effect Florida statewide. This leads to a rush from all of Florida's 67 counties. James Miller, director of Florida's communication with Petroleum Marketers and Convenience Store Association stated, "The shortages that we're seeing are very sporadic and temporary. It's not an issue of supply. It's an issue of resupply." This statement shows that Florida will have enough gas to fuel up the citizens, but their main issue will be refueling them after and during the hurricane.
Not only is their an imminent catastrophe, but also the gas prices have risen in the state from a statewide average of $2.35 to $2.71. This increase is due to the recent Hurricane Harvey which dropped U.S. gasoline futures 2 percent. This is one of the many unlucky outcomes of back to back natural disasters.
https://www.cnbc.com/2017/09/06/hurricane-irma-is-having-an-outsize-impact-at-floridas-gas-stations.html
Most storms will take out a certain area of a state, allowing fuel suppliers to target and effectively resupply that area. Hurricane Irma is predicted to effect Florida statewide. This leads to a rush from all of Florida's 67 counties. James Miller, director of Florida's communication with Petroleum Marketers and Convenience Store Association stated, "The shortages that we're seeing are very sporadic and temporary. It's not an issue of supply. It's an issue of resupply." This statement shows that Florida will have enough gas to fuel up the citizens, but their main issue will be refueling them after and during the hurricane.
Not only is their an imminent catastrophe, but also the gas prices have risen in the state from a statewide average of $2.35 to $2.71. This increase is due to the recent Hurricane Harvey which dropped U.S. gasoline futures 2 percent. This is one of the many unlucky outcomes of back to back natural disasters.
https://www.cnbc.com/2017/09/06/hurricane-irma-is-having-an-outsize-impact-at-floridas-gas-stations.html
Laborforce Participation Rate Lagging in America's Southeast Despite High Job Growth Rates
Despite the American Southeast being "ground zero" for the most recent recession and the burst of the housing bubble, its economy has rebounded well and is actually growing rapidly, especially in the job market. In fact, Florida, Georgia, North Carolina, and Tennessee are among the highest ranked states in terms of job growth.
While the job market in these states is expanding, the labor force participation rate is decreasing. The article provides various reasons as to why this may be the case. First off, it is commonly known that many people flock to the south after retirement. It is very likely that a large portion of those who are not participating in the labor force are retirees from other states that decided to settle down in the south. There are also a great deal of ex-convicts in this region. It is very difficult for these people to find firms that will accept their application for employment, which will ultimately lead them to discontinue their job search. In addition, large numbers of people are leaving rural areas and flocking to urban areas in the region. This leaves jobs open in the rural areas that are so common in the southern region.
These conditions leave the south's already booming job market with many more available positions. It is crucial for the region to attract people from other areas of the United States to help increase there struggling participation rate. I believe that if the region has a vast potential for overall economic growth. If it can attract new laborers of various education levels to fill the current openings, then consumption will increase. This will increase production in the region and will help the job growth rate to continue trending upwards and the economy of the southeast will flourish.
https://www.cnbc.com/2017/09/06/american-southeasts-job-market-booming-but-workforce-isnt-growing.html
While the job market in these states is expanding, the labor force participation rate is decreasing. The article provides various reasons as to why this may be the case. First off, it is commonly known that many people flock to the south after retirement. It is very likely that a large portion of those who are not participating in the labor force are retirees from other states that decided to settle down in the south. There are also a great deal of ex-convicts in this region. It is very difficult for these people to find firms that will accept their application for employment, which will ultimately lead them to discontinue their job search. In addition, large numbers of people are leaving rural areas and flocking to urban areas in the region. This leaves jobs open in the rural areas that are so common in the southern region.
These conditions leave the south's already booming job market with many more available positions. It is crucial for the region to attract people from other areas of the United States to help increase there struggling participation rate. I believe that if the region has a vast potential for overall economic growth. If it can attract new laborers of various education levels to fill the current openings, then consumption will increase. This will increase production in the region and will help the job growth rate to continue trending upwards and the economy of the southeast will flourish.
https://www.cnbc.com/2017/09/06/american-southeasts-job-market-booming-but-workforce-isnt-growing.html
Storm's Impact on Oil Industry is Felt at Gasoline Pumps
Oil prices in the United States rose due to Hurricane Harvey devastating the Gulf of Mexico and several offshore oil rigs. A large amount of the damage hit the South, but the country is being affected as a whole. Gas prices on average took a 5 cent jump across the nation at the end of August. This hurricane basically knocks Texas refineries out for the time being, depleting the price of crude oil (nowhere to refine it), and increasing gas prices at the same time. Tom Kloza, global head of energy analysis for Oil Price Information Service.
The cause of the increase is not damage to the refineries, but supply in general. This will hit lower paid Americans more, because a larger percent of their income goes towards gasoline. The situation could be relieved more shortly, because the Energy Department might release 500,000 barrels of crude oil, so gas prices can stabilize. This will be the first emergency release from the Strategic Petroleum Reserve since 2012.
https://www.nytimes.com/2017/08/31/business/energy-environment/storm-oil-industry.html?rref=collection%2Ftimestopic%2FOil%20and%20Gasoline&action=click&contentCollection=energyenvironment®ion=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=collection
Gas prices continuing to go up
Hurricane Harvey has caused not only the state of Texas's gas prices to go up but the U.S. as a whole is now being effected. Gas prices in Texas have reached in some places 8$ a gallon while the rest of the country has seen gas prices up around the $2.45 area. Which is a 10 cent increase in the last week. On Monday the U.S. information administration reported the average gas price of $2.40 which is up 16 cents from last year at the same time. Eight refineries in the Texas gulf coast have been shut down due to hurricane Harvey which is about 25% of the oil refining capacity of the U.S.
With Hurricane Irma on the way this could mean even more refineries being shut down in the gulf coast causing an even bigger spike in the price of gas. With the supply of gas continuing to go down will the U.S. be able to keep the price of gas low enough so people who live in the states hardest hit by the storms be able to afford to put gas in their vehicles? Does this mean the U.S will have to start depending more on foreign oil?
http://fortune.com/2017/08/31/hurricane-harvey-gas-prices-national/
With Hurricane Irma on the way this could mean even more refineries being shut down in the gulf coast causing an even bigger spike in the price of gas. With the supply of gas continuing to go down will the U.S. be able to keep the price of gas low enough so people who live in the states hardest hit by the storms be able to afford to put gas in their vehicles? Does this mean the U.S will have to start depending more on foreign oil?
http://fortune.com/2017/08/31/hurricane-harvey-gas-prices-national/
What is the projected impact of hurricane Irma on U.S. Airlines?
As the second hurricane approaches, airlines are put into a frenzy. Major U.S. companies such as Delta and American Airlines have already begun shutting down operations. Shutting down of these airlines has immediate economic impact. Miami is home of one of the largest American Airlines bases (12th busiest base in America) and obviously a key money-maker for the city. They also have had to cancel flights coming back from Europe, South America, and the Caribbean. I would expect American Airlines stock to decrease gradually and expect northern-based U.S. airlines to gain from it. However, Delta (who is spread out throughout the U.S.), is going to take a blow. Their main location, Atlanta (the busiest airport in the world), is in the path of Irma. The category four hurricane will not only impact the airports; it will be impacting foreign business in the south. Traveling from the south to overseas clients (or vice versa) has become very difficult. The United States will be without significant income sources for several weeks. Although airlines only contribute roughly 5% to the U.S. GDP, I expect the nation's GDP to be negatively effected in upcoming months. I expect this because our airlines bring great business to our nation (and also to our countries).
http://money.cnn.com/2017/09/06/news/hurrican-irma-florida-airlines-prepare/index.html?iid=SF_LN
https://www.faa.gov/air_traffic/publications/media/2016-economic-impact-report_FINAL.pdf
As the second hurricane approaches, airlines are put into a frenzy. Major U.S. companies such as Delta and American Airlines have already begun shutting down operations. Shutting down of these airlines has immediate economic impact. Miami is home of one of the largest American Airlines bases (12th busiest base in America) and obviously a key money-maker for the city. They also have had to cancel flights coming back from Europe, South America, and the Caribbean. I would expect American Airlines stock to decrease gradually and expect northern-based U.S. airlines to gain from it. However, Delta (who is spread out throughout the U.S.), is going to take a blow. Their main location, Atlanta (the busiest airport in the world), is in the path of Irma. The category four hurricane will not only impact the airports; it will be impacting foreign business in the south. Traveling from the south to overseas clients (or vice versa) has become very difficult. The United States will be without significant income sources for several weeks. Although airlines only contribute roughly 5% to the U.S. GDP, I expect the nation's GDP to be negatively effected in upcoming months. I expect this because our airlines bring great business to our nation (and also to our countries).
http://money.cnn.com/2017/09/06/news/hurrican-irma-florida-airlines-prepare/index.html?iid=SF_LN
https://www.faa.gov/air_traffic/publications/media/2016-economic-impact-report_FINAL.pdf
Wednesday, September 6, 2017
Cruise stocks dive ahead of Hurricane Irma
Hurricanes Harvey and Irma will unquestionably be affecting North and Central America's economies for months, even years to come. Last class, we discussed how oil refineries in Houston have been impacted and will impact the gasoline market as a whole. The hurricanes also will affect industries such as housing and construction as those hit by the hurricane try to rebuild their homes. However, most of what we've been talking about is the hurricane's impact once it hits land, rather than what happens while the hurricane is still over the Atlantic.
The dangerously strong winds of both hurricanes (Irma is supposed to reach 185 mph winds) make being out on the water impossible and unsafe. This has impacted cruise ship's stocks so heavily that earnings for the year are expected to decline, as cruise ships return to port and reimburse customers that had booked vacations for the upcoming week. The dip in cruise company's stocks can be seen immediately, but it will be interesting to see how the hurricane impacts tourism in cities like Houston and Miami as the effects of the storm are cleaned up.
https://www.bloomberg.com/news/articles/2017-09-05/cruise-line-stocks-plunge-as-hurricane-irma-threatens-caribbean?cmpid=BBD090617_MKT&utm_medium=email&utm_source=newsletter&utm_term=170906&utm_campaign=markets
The dangerously strong winds of both hurricanes (Irma is supposed to reach 185 mph winds) make being out on the water impossible and unsafe. This has impacted cruise ship's stocks so heavily that earnings for the year are expected to decline, as cruise ships return to port and reimburse customers that had booked vacations for the upcoming week. The dip in cruise company's stocks can be seen immediately, but it will be interesting to see how the hurricane impacts tourism in cities like Houston and Miami as the effects of the storm are cleaned up.
https://www.bloomberg.com/news/articles/2017-09-05/cruise-line-stocks-plunge-as-hurricane-irma-threatens-caribbean?cmpid=BBD090617_MKT&utm_medium=email&utm_source=newsletter&utm_term=170906&utm_campaign=markets
Do Technological Advancements Hurt or Help the Economy?
Many people are afraid that machines will take over the jobs of many workers, thus making unemployment soar. I tend to disagree with this sentiment, just look at how the creation of the computer affected NASA and other such organizations with their hiring of human calculators. They hired less of them, but hired more people to run the computer eventually evening it out.
Recently the Wall Street Journal posted an article about the Robot Apocalypse in the retail industry, specifically Amazon. Amazon has been a pioneer in the artificial intelligence and robotics industry, thus needing less labor from people, or so you would think. They have grown their distribution centers with each advancement, because it allows them to produce more goods, allowing them to lower prices and accommodate higher demand, they then need to hire many more workers to deal with this increased demand. People seem to think that technology could spell out the end of human labor, but firms know that to make any money their consumers have to have money, so they will always keep hiring as long as that is apparent. There are great examples throughout history of new technology being released that had an initial drop in labor, but over time the growth in operations from said technology allowed for the hiring of even more people. I think most folks overlook the fact to grow firms have to find a cheaper way of doing business and once they really start to grow they have to have more labor to meet their new demand. So overall I think that technological advancements, especially in the artificial intelligence and robotics industries could really help grow the economy and create even more jobs for people in the long run.
https://www.wsj.com/articles/workers-fear-not-the-robot-apocalypse-1504631505
Recently the Wall Street Journal posted an article about the Robot Apocalypse in the retail industry, specifically Amazon. Amazon has been a pioneer in the artificial intelligence and robotics industry, thus needing less labor from people, or so you would think. They have grown their distribution centers with each advancement, because it allows them to produce more goods, allowing them to lower prices and accommodate higher demand, they then need to hire many more workers to deal with this increased demand. People seem to think that technology could spell out the end of human labor, but firms know that to make any money their consumers have to have money, so they will always keep hiring as long as that is apparent. There are great examples throughout history of new technology being released that had an initial drop in labor, but over time the growth in operations from said technology allowed for the hiring of even more people. I think most folks overlook the fact to grow firms have to find a cheaper way of doing business and once they really start to grow they have to have more labor to meet their new demand. So overall I think that technological advancements, especially in the artificial intelligence and robotics industries could really help grow the economy and create even more jobs for people in the long run.
https://www.wsj.com/articles/workers-fear-not-the-robot-apocalypse-1504631505
Tuesday, September 5, 2017
Recent Developments in the World of Cryptocurrency
The increasingly popular cryptocurrency known as Bitcoin has doubled in value over the past month. More recently, China banned individuals and organizations from raising funds through initial coin offerings (ICO) on the grounds that it constituted illegal fundraising. ICOs, by definition, are a method of crowdfunding cryptocurrencies for ownership of various projects. Although ICO’s do not directly affect the value of Bitcoin or other cryptocurrencies, this decision has still resulted in a small loss of confidence to the tune of an 8% decrease in value from $4,584 to $4,350. While most Bitcoin investors expect this downtrend to be relatively short-lived, the nature of digital currencies remains mostly volatile due to its unregulated structure. Despite this, many Bitcoin investors are holding fast that the best has yet to come in terms of long term growth.
Additionally, the Internal Revenue Service (IRS) has recently implemented monitoring mechanisms in an attempt to track who is avoiding taxation on their digital currency investments. Given that Bitcoin is not an officially recognized currency by any government, the IRS is currently classifying the currency as property (though it may easily be changed to income in the near future). The irony of the matter is that Bitcoins are recorded on a public ledger, a “blockchain,” and is easily accessible to anyone who looks for it. However, this ledger only records digital addresses, transactions, and amounts. Since the IP addresses of transactions can be tracked, many Bitcoin users already have workarounds in place to ensure their anonymity. Despite this, the IRS claims to be able to track 50% of all transactions and hopes to further increase that number and subsequently decrease the projected number of tax evaders in this $76 billion industry.
Monday, September 4, 2017
Hurricane Harvey Shifts Political Winds in Washington
Before Hurricane Harvey hit it seemed like a government shutdown was inevitable. The hurricane was devastating; lives were lost, homes were destroyed, and Texas is in shambles. The unexpected storm did so much damage it is estimated that recovery efforts for Harvey will cost more than it did to rebuild after Katrina and Sandy combined. The recovery efforts will be extremely costly and in order to finance the cleanup law makers, and politicians will have to compromise in order to ensure that financial aid is available in a timely manner. However, Texas is in a delicate location and many believe that Trump will hold off on federal funding towards recovery efforts in attempt to follow through with his plans to combat illegal immigration. However, it is Trump's first time dealing with a natural disaster and it is likely that he will respond by giving Texas the support they need. As the possibility of a government shutdown grew, lawmakers and politicians were expected to vote on a a new bill that would reallocate $876 million from the Federal Emergency Management Agencies budget elsewhere. Obviously, this bill wont pass given the events that have occurred in Texas last week.
Unfortunately, dealing with natural disasters like Hurricane Harvey are often very political. The idea of Trump using a disaster like this to gain political leverage is outrageous in my opinion. If I were in his shoes I would give everything that I could to help Texas recover from a once in a lifetime storm. Im interested to hear some of your opinions in regards to how you might help with the recovery efforts in Texas.
Unfortunately, dealing with natural disasters like Hurricane Harvey are often very political. The idea of Trump using a disaster like this to gain political leverage is outrageous in my opinion. If I were in his shoes I would give everything that I could to help Texas recover from a once in a lifetime storm. Im interested to hear some of your opinions in regards to how you might help with the recovery efforts in Texas.
Sunday, September 3, 2017
When is war the answer to boost growth?
In a Financial Times article by John Authers ( https://www.ft.com/content/3731ac78-88ec-11e7-8bb1-5ba57d47eff7),
he asks readers to think about whether war
could be good for their wealth—and boost the economy. He links this
question to the current situation involving North Korea and the U.S and the
consequences that could arise from this situation.
He focuses much of his discussion on the question of whether war could
benefits stocks, especially those of U.S. firms, and whether this would then
increase wealth. He implies there is a link here to economic growth (GDP).
Growth of GDP can be defined as growth of the total income earned
by domestically-located factors of production in an economy (sourced from class
notes). Yet through most of his article, the author refers to stock market
performance as a way to determine whether wars boost an economy or slow it
down. As our class textbook states (Mankiw, Eighth edition, page 18), “GDP is often considered
the best measure of how well the economy is performing.” In fact, the textbook
lists three macroeconomic variables that are “especially important” in measuring the
performance of economy and the stock market’s performance is not one of them: real GDP, the
inflation rate, and the unemployment rate. When an economy is growing, the
stock market is not always growing (and vice versa). This is one flaw in making
the connection between war, stock prices, and economic growth.
He does mention a study by a consulting firm, Oxford Economics,
that collected data on GDP growth in order to look at this question. Oxford
Economics collected data showing that short wars lasting a year or less with
few lives lost can boost economic growth. But long wars with lots of lives lost
can decrease economic growth. I think this is too simplified because in reality
it can be impossible to “control” a war’s length and a war that everyone thinks will be short in the
beginning (World War I, our war in Afghanistan) can become long. So it’s a dangerous thing to
hope that a war will be short and help boost economic growth.
Authers then goes on to argue that most of the wars the U.S has
been involved in historically have led to growth in the economy. One example he
uses was how World War II actually took the U.S. out of the Great Depression.
He then goes on to say that wars at first bring strong economic loss but then
rebound to growth. This is important to take into account because if your
country is in a precarious situation or in an economic depression then maybe
the population may become so desperate that they begin to believe war could be
the only way out (such as in Germany during the 1930s). This of course is not
taking into account, however, the casualties caused by war as mentioned in the
article, as well as the devastating destruction and chaos caused by World War
II. How can the value of even one life lost be measured in the field of
economics?
The other point I’d like to make is that a war with North Korea could lead to such a
terrible escalation involving nuclear weapons (of mass destruction) that it
could destroy much or part of one or both countries and their economies. In this case, war is obviously a terrible way
to try to grow the economy and could more likely lead to destruction of the
economy.
People may point to World War II as a war that actually boosted
the US economy. Much of the economy was put to work during World War II – through US factories
manufacturing planes, ammunition, and other goods needed to fight the war. We
know from the model for calculating GDP that an increase in national defense
spending increases GDP. But real life does not always fit a model and we’d have to take into
account what a war would do to the other components of GDP like exports and
personal consumption. Typically, This is because wars can cause consumers to be
more uncertain about the future and wary of buying goods and services, thus
leading to less consumption and lowering GDP growth. If things deteriorate to a point where there
are shortages of goods (as in World War II), consumption can decline
rapidly. And countries at war often
export less because the factories are needed to produce for the war.
Above all there was a huge cost to the US and many other countries
around the world brought about by this war – through large numbers of lives lost and
factories and other buildings in countries in Europe and Asia (Japan)
destroyed.
Authers nears the end of his article by leaving us with a controversial
quote, ‘’Wars
are dangerous gambits. If they are swift and not too damaging, they can boost
growth.”
I think the most sensible line of the entire news article is the
last statement. There are much better ways to try to grow an economy than to go
to war—that
don’t
carry the terrible risks and losses that always come with war. These could
include government incentives for people to invent and innovate and so develop
new products and more efficient ways to make existing products.
All in all, there may be wars that have caused growth of the
economy, but could even one casualty and the pain caused ever be an acceptable
way to stimulate economic growth?
Was Dallas' Gas Panic Preventable?
Article: http://money.cnn.com/2017/08/31/news/hurricane-harvey-gas-dallas/index.html
Hurricane Harvey undoubtedly caused a lot of issues for Texas, and it will take quite some time until those issues are resolved. However, could the gas crisis that people are facing in Dallas been prevented? This answer appears to be complicated.
According to the article, petroleum analysts believe this problem could have been avoided if people conserved the gas they had and waited to get more gas until they actually needed it. When Texans heard that gas production had been disrupted, they immediately went to fill their tanks in fears of running out of fuel. Though this fear seems rational, it didn't have to become a reality. It is argued that if people waited until they needed gas to refuel their tanks, then there wouldn't have been a sudden spike in demand that would drain most local supplies. Additionally, this unexpected demand caused businesses to increase their prices for gasoline due to their limited on-hand supply.
During a disaster, the idea of conserving rather than bulk-buying seems easier said than done. With the threat of such a devastating hurricane, people are naturally going to be scared of running out of things they need the most to survive. So the question becomes, how do you keep people from panicking about their limited stockpile of resources during an emergency? Two possible remedies for this question are: regulated rations by the government, and temporary living communities with shared resources. However, are these two concepts realistic to prevent a panic? If so, how would they be implemented? Are there other ideas that would be more realistic? Or is attempting to prevent a panic on this scale an improbable task? I am interested to see what you guys think of this issue.
Duncan Copeland
Hurricane Harvey undoubtedly caused a lot of issues for Texas, and it will take quite some time until those issues are resolved. However, could the gas crisis that people are facing in Dallas been prevented? This answer appears to be complicated.
According to the article, petroleum analysts believe this problem could have been avoided if people conserved the gas they had and waited to get more gas until they actually needed it. When Texans heard that gas production had been disrupted, they immediately went to fill their tanks in fears of running out of fuel. Though this fear seems rational, it didn't have to become a reality. It is argued that if people waited until they needed gas to refuel their tanks, then there wouldn't have been a sudden spike in demand that would drain most local supplies. Additionally, this unexpected demand caused businesses to increase their prices for gasoline due to their limited on-hand supply.
During a disaster, the idea of conserving rather than bulk-buying seems easier said than done. With the threat of such a devastating hurricane, people are naturally going to be scared of running out of things they need the most to survive. So the question becomes, how do you keep people from panicking about their limited stockpile of resources during an emergency? Two possible remedies for this question are: regulated rations by the government, and temporary living communities with shared resources. However, are these two concepts realistic to prevent a panic? If so, how would they be implemented? Are there other ideas that would be more realistic? Or is attempting to prevent a panic on this scale an improbable task? I am interested to see what you guys think of this issue.
Duncan Copeland
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