Category: American government

Does consensus democracy improve the quality of government?

The first matter I will address are the variables in the question. This will allow for a more thorough discussion about whether consensus democracy increases the quality of government, because I will refer to the elements in each variable, in my causal analysis.

Lijphart distinguishes between two forms of democratic government systems: consensus democracies and majoritarian democracies. These differ in two ways: the executive-parties dimension and the federal-unitary dimension. The executive-parties dimension is “the arrangement of executive power, the party and electoral systems, and interest groups”. The federal-unitary dimension are the features of democracies which are “commonly associated with the contrast between federalism and unitary government”. The former definition differs between unicameralism and bicameralism. However, Lijphart notes that “the federalist institutions of consensus democracy have little effect on the performance” of a country. I will restrict the scope of this essay to the executive-parties dimension, as a result.

I will define consensus democracy using the criteria outlined by Lijphart. Consensus democracy, according to Lijphart, seeks to maximise the size of ‘decision-making majorities’. The ‘majority rule’ touted by majoritarian democracy is only a ‘minimum requirement’ for consensus democracy, which aims to represent ‘as many people as possible’.

Lijphart says that government ‘for the people’ is government ‘in accordance with the people’s preferences’. Therefore, the ‘quality’ of government can be understood as how effectively a government can represent the ‘preferences’ of its citizens. I have split my analysis of ‘quality of government’ into three sub-sections in order to better represent the broad spread of interests that may relate to the effectiveness of government. These three sub-sections are as follows: a) the relative quality of democracy, b) relative inequality and representation and c) macroeconomic performance of any given democracy.

I will first explain why the quality of democracy is a variable in the quality of government. Dahl’s (1971, pp. 4) definition of democracy includes elections with high levels of ‘public contestation’. Dahl is alluding to the ability to hold competitive elections with several competing parties. In addition, the second feature Dahl alludes to is ‘inclusiveness’. This is the proportion of the population with suffrage. In application to real-world contexts, we can use the EIU Democracy Index. It includes variables which assesses the proportion with which the population politically participates in a democracy, the sufficiency of electoral process and civil liberties. Secondly, the other major measure used in this subsection is the World Bank’s Worldwide Governance measure. It measures the ‘governance’ of nations. This is defined by the World Bank as the ‘traditions and institutions by which authority in a country is exercised’. Both measures can yield more reliable results to determine whether our correlation analysis results in there being a positive, causal relationship between a consensus democracy and the quality of government.

I will now explain why relative inequality and a lack of representation in a democracy is a key component of the quality of government. If a government is institutionally equipped to represent the interests of a section of its citizens, but the percentage of this section is relatively lower compared to percentage size of the rest of the population, this results in a lower score on Dahl’s scale of inclusiveness. Consequently, the quality of government would be considered poor. I will look at a lack of representation from the perspectives of gender (an indicator of social inequality) and economic inequality. To gain some semblance of the effects of gender inequality, I am using the representation of women in parliament and cabinet, between 1990 and 2010, and between 1995 and 2008 respectively. Furthermore, I have included the United Nations Development Programme’s Gender Inequality Index, to further strengthen my claim. In order to summarise economic inequality, I will use the GINI index of inequality and the 90:10, and 80:20 ratios. This indicator takes into account the extremes ends of inequality. The latter indicators are an alternative to a summary statistic which formalises income inequality, as a parameter of central tendency.

I will now explain why I have used ‘macroeconomic variables’ in assessing the quality of government. Economics is the organisation of the resources in the economy. Much of the government’s role is to make decisions on the allocation of resources in the economy, in order to maximise social welfare. Since achieving macroeconomic objectives, such as sustainable economic growth, is in their interest, it should be concerned in the quality of government. When applying this conceptual analysis to data in real-world contexts, I will be using Lijphart’s macroeconomic variables, from the World Bank (2011) dataset, for GDP per capita growth, CPI inflation, the GDP deflator, unemployment and the budget balance.

Using multivariate regression analysis, I will show that there is a statistically significant positive correlation between consensus democracy and the quality of government of the consensus democracy. I follow Lijphart’s method of analysis, using the executive-parties dimension between 1981 and 2010, as the dependent variable. I with control the variable for economic development, by using the HDI of 2010 and the population size. The general line of best fit reveals a statistically less significant correlation compared to Lijphart’s results. The process by which I have yielded these results are seen below. I will now explain the data in more depth.

Unlike Lijphart, I found no statistically significant correlation between consensus democracy and the Worldwide Governance indicator for the quality of government. For example, the p-value seen by the Rule of Law between 1996 and 2009, is 0.05679. The other results have a result that is not in the region to reject the null hypothesis, that is if we were to average the result of the p-values (which come from variables in the quality of government). To average the results, we would merely calculate the mean of the p-values. Even though we used the same method by calculating the correlation coefficients, I have yielded different results compared to Lijphart. There may be issues with the datasets we use, which I will now discuss.

The only country missing from my analysis is Barbados. It is not included in the EIU Democracy Index and the Bahamas. Barbados is not measured in either the Corruption Perception Index or the EIU Democracy Index. There is no statistically significant correlation between consensus democracy and the Corruption Perception Index or Civil Liberties. However, Lijphart claimed that there was a statistically significant positive relationship between consensus democracies and civil liberties, for example.

Furthermore, Lijphart considers the Product Moment Corellation Coefficient from the EIU Democracy Index variables as significant at the 1% level, whereas I viewed them as significantly significant within a 5% level. All the same, my analysis does indicate a statistically significant correlation between consensus democracy and the EIU Democracy Index, which may suggest a correlation between consensus democracy and quality of democracy. In this situation, our results match. I increased the region of rejection of the null hypothesis, because I could account for other democracies which were close to being considered as having a sufficiently strong relationship between consensus democracy and the quality of government, but could not, within a 1% significance level.

The only country not included in the Gender Inequality Index is the Bahamas. For the 90/10 and 80/20 ratios, Mauritius is not included along with Barbados, Iceland, Luxembourg, Malta and the Bahamas. These democracies have populations below 500,000. They are considered to be outliers in the data set, because small changes in the population are more likely to create biases in the results. Furthermore, I have removed Botswana as an extreme outlier for its ‘extremely high inequality’. When analysing the data, using the Gini measure of income inequality, the democracies, referred to as outliers, are not included, except Botswana. This is to ensure that my results are the same as Lijphart’s.

Another point of contention in my analysis is that Lijphart records a statistically significant correlation at the 5% level for the variable: Women’s Cabinet Representation in both 1995 and 2008, whereas my analysis does not find a statistically significant correlation. Lijphart finds a statistically significant correlation at the 1% level for the 90/10 and 80/20 ratios, whereas my analysis only records it at the 5% level. Yet, as synonymous to Lijphart, my results largely map a strong statistically significant correlation for consensus democracy with my representation and inequality indicators.

For the data which analysis the quality of government based on their macroeconomic performance, I will now evince the outliers they contain. In the GDP, inflation and unemployment measures, the countries considered to be outliers are excluded. Additionally, Argentina, South Korea and Uruguay are excluded from the 1981-2009 performance variables because they only democratised in the 1980s. Having experienced inflation above 100%, Israel and Uruguay have also been removed from the CPI Inflation and GDP Deflator as extreme outliers for the dates between 1981 and 2009, 1991 and 2009. Unemployment between 1981 and 2009 suffers severely from missing data, whereas for the unemployment variable, between 1991 and 2009, we have data for all countries except for the outlier countries (from previous paragraphs only), Botswana and India. The budget control includes the outlier countries, because the data produced were not affected by biases. Norway is excluded as an outlier for both measurements, because they had large budget surpluses, in the given period.

The inferences one can draw from Lijphart’s analysis match mostly mine, except for two results. Firstly, Lijphart finds a statistically significant correlation at the 5% level for unemployment, which is contrary to my regression analysis. Secondly, for both the CPI and GDP Deflator between 1991 and 2009, there is a statistically significant correlation at the 5% level, compared to Lijphart’s analysis, at the 1% level. As such, I would argue that my analysis proves a weak correlation between consensus democracy and macroeconomic performance.

A further issue with my analysis is the use of HDI as a control for the level of economic development. The HDI is a measure of life expectancy, education and per capita income in the economy. There are other, more holistic, measures of economic development and well-being in the economy. HDI, for example, does not include environmental sustainability. Since the government’s role may be to maximise social welfare, ignoring environmental sustainability could greatly disable them from their purpose. If the environment is in ruins, then people’s quality of lives will be affected in several ways. More people will even die, as a result. It may even be better to use other macroeconomic variables, which reveal a different aspect of the economy, such as the unemployment levels in the economy. However, I chose to use HDI, because it synthesis different economic variables, which contain variables that influences people’s quality of lives.

In conclusion, I have argued that consensus democracy does improve the quality of government. While the correlation may not be as statistically significant, when comparing our results to Lijphart’s, there is a statistically significant correlation between consensus democracy and quality of government in the three subsections of quality of government. Due to limitations in the practicalities of writing this essay, I have not considered the much wider debate of what else may be included in the quality of government. Even of the indicators I had chosen, I could have analysed, more closely, which aspects of social inequality was related to the quality of government, or which macroeconomic variables should have been used (there is economic debate on whether inflation matters over unemployment as an indicator of good macroeconomic performance).

Introduction

Inflation and unemployment are two macroeconomic components that affect a country’s economy or global economy. This paper addresses these two macroeconomic factors (Inflation and unemployment) and describes a current event related to actions taken by the U.S. Federal Government Reserve Board. The purpose of assessing these two macroeconomic factors is to analyze critically, visualize, and recommend the impacts of these factors on various sectors of the economy. Inflation in the economy shows how prices of products and services are changing within a given period. It also shows the currency’s purchasing power, as the U.S. dollar, over some time (Pettinger, 2021).

On the other hand, unemployment is the state of not finding a job while you are looking for one. Unemployment in the United States is clearly defined through the changes in unemployment rates in a given period. High inflation in an economy can lead to unemployment as the uncertainty of high inflation leads to a low number of investments and economic growth. The Federal Government Reserve Board has issued solutions for raising the interest rates to curb rising inflation rates in the United States of America (Cox, 2021). The US National Reserve Board also took action. It ended the unemployment benefits program in September 2021, which was put in place in March 2020 to caution against the effects of the COVID-19 pandemic (Iacurci, 2021).

Critical Analysis

The current rise of inflation in the United States of America is an economic issue that the Federal Reserve Board has looked into and various actions to prevent further rise. The Federal Government Reserve is taking steps to increase the interest rates to control the money supply in the economy. There is a general tendency in economics: interest rates and inflation are inversely related. The US Federal Reserve is responsible for the monetary policies that influence the rate at which the interest on the loan is applied. When there are low interest rates on loans, most people acquire these loans, increasing the amount of money in circulation (Pettinger, 2019).

Similarly, when the interest rates are high, economic growth slows down, and inflation decreases. In the current situation in the US, inflation reflects the rise in the prices of goods and services. This is due to the high demand for few products and limited services. A moderate increase in inflation does not necessarily hurt the economy but the consumers of the products with inflated prices. The current rise of inflation is controlled by increasing the interest rates, which would reduce economic activity and investments, thus decreasing the inflation rate. The best indicator of inflation is the Consumer Price Index (CPI), which measures the price change of a basket of services and goods used by households (Pettinger, 2019).

Unemployment benefits are crucial during a recession such as COVID-19. The US Federal Reserve Board removed the unemployment benefits program that started in March 2020 to caution against the rising unemployment rates during the pandemic period. The COVID pandemic brought business closure, lockdowns, and work-from-home policies that triggered a dire economic recession. The Federal Reserve took monetary policies to deal with unemployment rates and uncertainty. Unemployment benefits provide temporary help during the recession and partly replace the lost earnings for a while. When economic growth resumes removing the unemployment benefit is crucial since the unemployment rate has been reduced. Another example of a temporary unemployment benefits program funded by the federal government is the Emergency Unemployment Compensation (EUC) which started in 2008 and halted in December 2013. One advantage of unemployment insurance is that it acts as a wage supplement and prevents further consumer spending. Although the benefits are less than monthly income or earnings, it is crucial in maintaining consumption and money supply in the economy. The Federal Reserve Board took action to end the COVID unemployment benefits in September 2021 and was informed through the resumption of business and the economic recovery that is still ongoing. With the growth of the US economy going up in 2021 compared to 2020, the unemployment rate also increased compared to 2020 when various restrictions hindered business operations (Iacurci, 2021).

Visualization

The inflation rate in the United has been on the rise in the recent past. CPI is a known indicator of inflation. It is the most used method by statisticians and economists to check inflation and deflation (Esther Pak, 2011). CPI measures the percentage change in the price of certain services and products consumed by households. It measures price changes of services and products such as food, transportation, and medical care. It also covers the difference in workers’ incomes, including retirement income. The U.S. Federal Reserve Board works towards maintaining 2% inflation annually. However, the Federal Reserve is considering raising the interest rates to lower rising inflation (‘U.S. unemployment rate: adjusted, 2021 | Statista’, 2021). The prices of various categories exceed 2% inflation, and some have dramatic changes, as shown below.apparel 4.3%

Unemployment benefits to help with rising unemployment rates in the US due to the COVID-19 re cession were scrapped in September 2021 as the unemployment rates reduced and the economic recovery started. The graph below shows how the unemployment rates have decreased from Dec 2020 to Dec 2021 (‘U.S. unemployment rate: adjusted, 2021 | Statista’, 2021).

Recommendations

Rising inflation and unemployment are key issues that the national and global economies try to control. In periods of inflation, the Federal Reserve has the primary policy of reducing inflation through monetary policies. The basic monetary policy increases the cost of borrowing which discourages spending, thus reducing inflation and economic growth. The Federal Reserve should also have a tight fiscal policy of lowering government spending and higher income tax. This fiscal policy will reduce aggregate demand leading to slow growth and less demand-pull inflation. There are also various recommended policies to reduce unemployment. Fiscal policies such as increasing government spending and cutting taxes help improve aggregate demand and economic growth, hence more jobs. Lowering the taxes raises disposable income, thereby increasing consumption and aggregate demand. An increase in Aggregate demand leads to higher GDP (Pettinger, 2019).

When economic growth is high, firms can produce more, requiring more workers. The Federal government should also fund public construction projects to create employment. This includes building bridges, roads, and other infrastructure to reduce unemployment by hiring workers, engineers, and contractors. Inflation and unemployment tend to be inversely related since the increase in interest rates reduces inflation but causes slow economic growth and a rise in unemployment (Pettinger, 2019). Therefore, in implementing the recommendations, it is crucial to look at other factors that may affect inflation and unemployment. It is essential to solve both inflation and unemployment since uncertainty in inflation leads to lower investments, thus decreasing growth rate and job creation.

Conclusion

High inflation can cause unemployment. For instance, in the case of hyperinflation or uncontrolled rates of inflation, there is a decline in competitiveness and lower export demand, causing unemployment in the export industry. Hyperinflation can even cause businesses and companies to shut down since they can’t pay workers, thus spiking unemployment rates. Therefore, these two economic indicators are crucial, and various monetary and fiscal policies are required to keep them sustainable. When a country’s inflation rate is high, it loses its purchasing power; thereby, the currency declines its value. Although inflation hurts economic growth, falling prices or deflation is also not desirable as consumers delay purchasing products and services, expecting the prices to fall further. This leads to less income and also less economic growth. When the unemployment level is high, the standard of living is also high, leading to less economic growth.

References

1. Cox, J. (2022). Fed members ready to raise interest rates if inflation continues to run high, meeting minutes show. Retrieved 9 February 2022, from https:www.cnbc.com20211124federal-reserve-releases-minutes-from-its- november-meeting.html.
2. Esther Pak, M. (2011). Is CPI an Effective Measure of Inflation? [online] Morningstar UK. Available at: [Accessed 9 February 2022].
3. Iacurci, G. (2021). Retrieved 9 February 2022, from https:www.cnbc.com20210607states-will-be-ending-federal- unemployment-benefits-this-week.html.
4. Pettinger, T., (2019). Policies for reducing unemployment – Economics Help. [online] Economics Help. Available at: [Accessed 8 February 2021].
5. Pettinger, T., (2019). Policies to reduce inflation – Economics Help. [online] Economics Help. Available at: [Accessed 7 February 2021].
6. U. S. unemployment rate: adjusted, 2021 | Statista. Statista. (2021). Retrieved 9 February 2022, from https:www.statista.comstatistics273909seasonally-adjusted-monthly- unemployment- rate-in-the-us.
7. United States – monthly inflation rate December 202021 | Statista. Statista. (2022). Retrieved 9 February 2022, from https:www.statista.comstatistics273418unadjusted-monthly

The government’s job in the American economy changed drastically from the 1870s through the 1920s due to the rise of big businesses.

First, we must examine any events that occurred during this time and the effects it had on the community. The Gilded Age took place during the 19th century and is “ the golden age of technological innovation” (Nygren lecture, “Gilded Age, pt. 1”). Society shifted away from agriculture and towards industrialization, which is something not everyone was prepared for. American industrial capitalism developed significantly as well as manufacturing and mass production. Machines used to make steel went from 13,000 tons to 10 million tons (Nygren lecture, “Gilded Age, pt. 1”). The invention of railroads helped promote growth and expansion in many different industries by making transportation faster and bringing many city’s wealth. Goods could be transported from one country to another more efficiently. Urban population increased from 31 million to 76 million (Nygren lecture, “Gilded Age, pt. 1”). People that have lived in poverty in Southern and Eastern Europe emigrated to the Northern and Western States because they saw this as an opportunity for prosperity. Economic growth increased as well as the distance between the rich and poor.

Before the Gilded Age workers were mainly farmers who had the opportunity to work at the speed they desired. Due to technological advancement there were now more factory workers. Andrew Carnegie played a role in big businesses and was dominant for being “self made” (Nygren lecture, “Gilded Age, pt. 1). He was able to financially gain due to him founding the Carnegie Steel along with many other things. Big businesses were expanding and being acknowledged as a great source of power. There was lots of competition and companies began coming up with strategies that promoted organization and financial gain. It was becoming difficult for some companies to compete in the market place so they confided in the government for grants and subsidies. The government did not want any intervention during this period.

The rise of industrial capitalism revolutionized American socioeconomic life in the late 19th century by affecting the way people lived. The Gilded Age promoted economic growth, but caused problems in society. Living conditions have become more expensive. The amount of workers that were skilled and unskilled enlarged. Many of the people emigrating to the United States were unskilled. They were willing to work in dangerous environments for a long period of time with little pay. Poor Americans were not being treated fairly, so they didn’t have alot of liberty. Trade unions in industrial cities were established and grew rapidly. The workers wanted to have control over their working conditions. Carnegie was against labor unions as well as government interference. Carnegie felt that he solved the problem between the rich and the poor by offering more jobs and, “Those who accumulated money had an obligation to use it to promote the advancement of society” (Document 103, p.32). He used his wealth to benefit society through railroads, coal mines, factories, and many more. Other politicians were seen as helpless and dishonest. They were greedy and did things to their benefit. William Graham Sumner was a social darwinist that believed in the government not interfering and he gave credence to inequality. He felt that government interference threatened the liberty of people.It does not solve the problems that arise within the economy. He felt that social classes owed one another and that the working class was not gaining from the prosperity of wealth. This caused people to feel as if their liberty was being overlooked. The increase in Social Darwinism promoted “a negative definition of freedom as limited government and an unrestrained free market. It also helped to persuade courts, in the name of liberty of contract to overturn state laws regulating behavior of corporations”(Document 104, p.36).

Americans of different classes and backgrounds responded to the problems of the industrial age differently. Big businesses supported no government interference because they didn’t have to pay taxes, so they were able to stay rich. African Americans and famers did not like the fact that the government was not helping because it allowed them to stay poor. Coming from a wealthy background kept alive a rich status. If you came from a not so wealthy background then it was said that that status would be maintained. Certain people were able to make more money than others due to lack of government interference which caused social classes to divide ((Nygren lecture, “Gilded Age, pt. 2).

It’s time we at long last take a gander at the cons of the conflict rather than the pros. Numerous individuals need a decent paying job yet aren’t able to due to not being able to go to college, so they turn to food chains and restaurants for pay employment. In our reality, you need to work for something to succeed at anything in everyday life, so the legislature shouldn’t need to raise the minimum wage. A few people get the opportunity to flourish and have a future and head off to college or a specialized school yet decide not to. Individuals who head off to college buckle down and acquire their instruction since they need to be fruitful throughout everyday life.

Raising the minimum wage would hurt laborers significantly, particularly low-gifted specialists. It would bring about employment loses “nearly 1.3 million jobs will be lost if the federal minimum wage is increased to $9.50 per hour”, as mentioned by Joseph Sabia and Richard Burkhauser (2010). Considering that, raising it would hurt the economy and the unemployment rate.

Raising the minimum wage will cause for teens to think working at a fast-food restaurant will be easy and a sustainable way of living instead of going off to college to get a real job benefiting society. Teens need jobs to encounter the workforce and increase significant abilities for future business.

Raising minimum wage has some different downsides like making school less appealing to student because they think they can settle and make a living off McDonald’s rather than striving for higher education. Corporate-law scholar, Stephen Bainbridge says: “When faced with the choice of earning an immediate income or the potential of a better income after four or more years of additional schooling, young people tend to lean towards the former”. Teens would prefer to get money at the earliest opportunity so they can go hang out with friends and do as they please instead of waiting till after college.

Raising the minimum wage would also force businesses to raise prices to compensate for what they must pay their employees now. “If businesses are forced to pay more to employ workers, budgets are affected accordingly. To help with the bottom line, prices may go up as a way of retaining money spent on providing extra compensation to minimum wage workers” (‘Reasons Why the Minimum Wage Should Not Be Raised’). At the point when costs go up that means you need to pay more for things you wish to buy, causing you to spend more of your paycheck. The issue would keep flying back up about compensation.

Although, despite all opposing arguments, people still think minimum wage should be raised. “Congress to raise the minimum wage to $10.10 it will put more money into the pockets of hard-working Americans” (Cap Action War Room/ Think Progress: ‘10 Reasons to Raise the Minimum Wage’).

This is true that people would make more money and carrying it to their home. Therefore, minimum wage should be kept at what it is now, and the government shouldn’t be allowed to raise it in fear of negatively affecting our economy.

Does consensus democracy improve the quality of government?

The first matter I will address are the variables in the question. This will allow for a more thorough discussion about whether consensus democracy increases the quality of government, because I will refer to the elements in each variable, in my causal analysis.

Lijphart distinguishes between two forms of democratic government systems: consensus democracies and majoritarian democracies. These differ in two ways: the executive-parties dimension and the federal-unitary dimension. The executive-parties dimension is “the arrangement of executive power, the party and electoral systems, and interest groups”. The federal-unitary dimension are the features of democracies which are “commonly associated with the contrast between federalism and unitary government”. The former definition differs between unicameralism and bicameralism. However, Lijphart notes that “the federalist institutions of consensus democracy have little effect on the performance” of a country. I will restrict the scope of this essay to the executive-parties dimension, as a result.

I will define consensus democracy using the criteria outlined by Lijphart. Consensus democracy, according to Lijphart, seeks to maximise the size of ‘decision-making majorities’. The ‘majority rule’ touted by majoritarian democracy is only a ‘minimum requirement’ for consensus democracy, which aims to represent ‘as many people as possible’.

Lijphart says that government ‘for the people’ is government ‘in accordance with the people’s preferences’. Therefore, the ‘quality’ of government can be understood as how effectively a government can represent the ‘preferences’ of its citizens. I have split my analysis of ‘quality of government’ into three sub-sections in order to better represent the broad spread of interests that may relate to the effectiveness of government. These three sub-sections are as follows: a) the relative quality of democracy, b) relative inequality and representation and c) macroeconomic performance of any given democracy.

I will first explain why the quality of democracy is a variable in the quality of government. Dahl’s (1971, pp. 4) definition of democracy includes elections with high levels of ‘public contestation’. Dahl is alluding to the ability to hold competitive elections with several competing parties. In addition, the second feature Dahl alludes to is ‘inclusiveness’. This is the proportion of the population with suffrage. In application to real-world contexts, we can use the EIU Democracy Index. It includes variables which assesses the proportion with which the population politically participates in a democracy, the sufficiency of electoral process and civil liberties. Secondly, the other major measure used in this subsection is the World Bank’s Worldwide Governance measure. It measures the ‘governance’ of nations. This is defined by the World Bank as the ‘traditions and institutions by which authority in a country is exercised’. Both measures can yield more reliable results to determine whether our correlation analysis results in there being a positive, causal relationship between a consensus democracy and the quality of government.

I will now explain why relative inequality and a lack of representation in a democracy is a key component of the quality of government. If a government is institutionally equipped to represent the interests of a section of its citizens, but the percentage of this section is relatively lower compared to percentage size of the rest of the population, this results in a lower score on Dahl’s scale of inclusiveness. Consequently, the quality of government would be considered poor. I will look at a lack of representation from the perspectives of gender (an indicator of social inequality) and economic inequality. To gain some semblance of the effects of gender inequality, I am using the representation of women in parliament and cabinet, between 1990 and 2010, and between 1995 and 2008 respectively. Furthermore, I have included the United Nations Development Programme’s Gender Inequality Index, to further strengthen my claim. In order to summarise economic inequality, I will use the GINI index of inequality and the 90:10, and 80:20 ratios. This indicator takes into account the extremes ends of inequality. The latter indicators are an alternative to a summary statistic which formalises income inequality, as a parameter of central tendency.

I will now explain why I have used ‘macroeconomic variables’ in assessing the quality of government. Economics is the organisation of the resources in the economy. Much of the government’s role is to make decisions on the allocation of resources in the economy, in order to maximise social welfare. Since achieving macroeconomic objectives, such as sustainable economic growth, is in their interest, it should be concerned in the quality of government. When applying this conceptual analysis to data in real-world contexts, I will be using Lijphart’s macroeconomic variables, from the World Bank (2011) dataset, for GDP per capita growth, CPI inflation, the GDP deflator, unemployment and the budget balance.

Using multivariate regression analysis, I will show that there is a statistically significant positive correlation between consensus democracy and the quality of government of the consensus democracy. I follow Lijphart’s method of analysis, using the executive-parties dimension between 1981 and 2010, as the dependent variable. I with control the variable for economic development, by using the HDI of 2010 and the population size. The general line of best fit reveals a statistically less significant correlation compared to Lijphart’s results. The process by which I have yielded these results are seen below. I will now explain the data in more depth.

Unlike Lijphart, I found no statistically significant correlation between consensus democracy and the Worldwide Governance indicator for the quality of government. For example, the p-value seen by the Rule of Law between 1996 and 2009, is 0.05679. The other results have a result that is not in the region to reject the null hypothesis, that is if we were to average the result of the p-values (which come from variables in the quality of government). To average the results, we would merely calculate the mean of the p-values. Even though we used the same method by calculating the correlation coefficients, I have yielded different results compared to Lijphart. There may be issues with the datasets we use, which I will now discuss.

The only country missing from my analysis is Barbados. It is not included in the EIU Democracy Index and the Bahamas. Barbados is not measured in either the Corruption Perception Index or the EIU Democracy Index. There is no statistically significant correlation between consensus democracy and the Corruption Perception Index or Civil Liberties. However, Lijphart claimed that there was a statistically significant positive relationship between consensus democracies and civil liberties, for example.

Furthermore, Lijphart considers the Product Moment Corellation Coefficient from the EIU Democracy Index variables as significant at the 1% level, whereas I viewed them as significantly significant within a 5% level. All the same, my analysis does indicate a statistically significant correlation between consensus democracy and the EIU Democracy Index, which may suggest a correlation between consensus democracy and quality of democracy. In this situation, our results match. I increased the region of rejection of the null hypothesis, because I could account for other democracies which were close to being considered as having a sufficiently strong relationship between consensus democracy and the quality of government, but could not, within a 1% significance level.

The only country not included in the Gender Inequality Index is the Bahamas. For the 90/10 and 80/20 ratios, Mauritius is not included along with Barbados, Iceland, Luxembourg, Malta and the Bahamas. These democracies have populations below 500,000. They are considered to be outliers in the data set, because small changes in the population are more likely to create biases in the results. Furthermore, I have removed Botswana as an extreme outlier for its ‘extremely high inequality’. When analysing the data, using the Gini measure of income inequality, the democracies, referred to as outliers, are not included, except Botswana. This is to ensure that my results are the same as Lijphart’s.

Another point of contention in my analysis is that Lijphart records a statistically significant correlation at the 5% level for the variable: Women’s Cabinet Representation in both 1995 and 2008, whereas my analysis does not find a statistically significant correlation. Lijphart finds a statistically significant correlation at the 1% level for the 90/10 and 80/20 ratios, whereas my analysis only records it at the 5% level. Yet, as synonymous to Lijphart, my results largely map a strong statistically significant correlation for consensus democracy with my representation and inequality indicators.

For the data which analysis the quality of government based on their macroeconomic performance, I will now evince the outliers they contain. In the GDP, inflation and unemployment measures, the countries considered to be outliers are excluded. Additionally, Argentina, South Korea and Uruguay are excluded from the 1981-2009 performance variables because they only democratised in the 1980s. Having experienced inflation above 100%, Israel and Uruguay have also been removed from the CPI Inflation and GDP Deflator as extreme outliers for the dates between 1981 and 2009, 1991 and 2009. Unemployment between 1981 and 2009 suffers severely from missing data, whereas for the unemployment variable, between 1991 and 2009, we have data for all countries except for the outlier countries (from previous paragraphs only), Botswana and India. The budget control includes the outlier countries, because the data produced were not affected by biases. Norway is excluded as an outlier for both measurements, because they had large budget surpluses, in the given period.

The inferences one can draw from Lijphart’s analysis match mostly mine, except for two results. Firstly, Lijphart finds a statistically significant correlation at the 5% level for unemployment, which is contrary to my regression analysis. Secondly, for both the CPI and GDP Deflator between 1991 and 2009, there is a statistically significant correlation at the 5% level, compared to Lijphart’s analysis, at the 1% level. As such, I would argue that my analysis proves a weak correlation between consensus democracy and macroeconomic performance.

A further issue with my analysis is the use of HDI as a control for the level of economic development. The HDI is a measure of life expectancy, education and per capita income in the economy. There are other, more holistic, measures of economic development and well-being in the economy. HDI, for example, does not include environmental sustainability. Since the government’s role may be to maximise social welfare, ignoring environmental sustainability could greatly disable them from their purpose. If the environment is in ruins, then people’s quality of lives will be affected in several ways. More people will even die, as a result. It may even be better to use other macroeconomic variables, which reveal a different aspect of the economy, such as the unemployment levels in the economy. However, I chose to use HDI, because it synthesis different economic variables, which contain variables that influences people’s quality of lives.

In conclusion, I have argued that consensus democracy does improve the quality of government. While the correlation may not be as statistically significant, when comparing our results to Lijphart’s, there is a statistically significant correlation between consensus democracy and quality of government in the three subsections of quality of government. Due to limitations in the practicalities of writing this essay, I have not considered the much wider debate of what else may be included in the quality of government. Even of the indicators I had chosen, I could have analysed, more closely, which aspects of social inequality was related to the quality of government, or which macroeconomic variables should have been used (there is economic debate on whether inflation matters over unemployment as an indicator of good macroeconomic performance).

Introduction

Inflation and unemployment are two macroeconomic components that affect a country’s economy or global economy. This paper addresses these two macroeconomic factors (Inflation and unemployment) and describes a current event related to actions taken by the U.S. Federal Government Reserve Board. The purpose of assessing these two macroeconomic factors is to analyze critically, visualize, and recommend the impacts of these factors on various sectors of the economy. Inflation in the economy shows how prices of products and services are changing within a given period. It also shows the currency’s purchasing power, as the U.S. dollar, over some time (Pettinger, 2021).

On the other hand, unemployment is the state of not finding a job while you are looking for one. Unemployment in the United States is clearly defined through the changes in unemployment rates in a given period. High inflation in an economy can lead to unemployment as the uncertainty of high inflation leads to a low number of investments and economic growth. The Federal Government Reserve Board has issued solutions for raising the interest rates to curb rising inflation rates in the United States of America (Cox, 2021). The US National Reserve Board also took action. It ended the unemployment benefits program in September 2021, which was put in place in March 2020 to caution against the effects of the COVID-19 pandemic (Iacurci, 2021).

Critical Analysis

The current rise of inflation in the United States of America is an economic issue that the Federal Reserve Board has looked into and various actions to prevent further rise. The Federal Government Reserve is taking steps to increase the interest rates to control the money supply in the economy. There is a general tendency in economics: interest rates and inflation are inversely related. The US Federal Reserve is responsible for the monetary policies that influence the rate at which the interest on the loan is applied. When there are low interest rates on loans, most people acquire these loans, increasing the amount of money in circulation (Pettinger, 2019).

Similarly, when the interest rates are high, economic growth slows down, and inflation decreases. In the current situation in the US, inflation reflects the rise in the prices of goods and services. This is due to the high demand for few products and limited services. A moderate increase in inflation does not necessarily hurt the economy but the consumers of the products with inflated prices. The current rise of inflation is controlled by increasing the interest rates, which would reduce economic activity and investments, thus decreasing the inflation rate. The best indicator of inflation is the Consumer Price Index (CPI), which measures the price change of a basket of services and goods used by households (Pettinger, 2019).

Unemployment benefits are crucial during a recession such as COVID-19. The US Federal Reserve Board removed the unemployment benefits program that started in March 2020 to caution against the rising unemployment rates during the pandemic period. The COVID pandemic brought business closure, lockdowns, and work-from-home policies that triggered a dire economic recession. The Federal Reserve took monetary policies to deal with unemployment rates and uncertainty. Unemployment benefits provide temporary help during the recession and partly replace the lost earnings for a while. When economic growth resumes removing the unemployment benefit is crucial since the unemployment rate has been reduced. Another example of a temporary unemployment benefits program funded by the federal government is the Emergency Unemployment Compensation (EUC) which started in 2008 and halted in December 2013. One advantage of unemployment insurance is that it acts as a wage supplement and prevents further consumer spending. Although the benefits are less than monthly income or earnings, it is crucial in maintaining consumption and money supply in the economy. The Federal Reserve Board took action to end the COVID unemployment benefits in September 2021 and was informed through the resumption of business and the economic recovery that is still ongoing. With the growth of the US economy going up in 2021 compared to 2020, the unemployment rate also increased compared to 2020 when various restrictions hindered business operations (Iacurci, 2021).

Visualization

The inflation rate in the United has been on the rise in the recent past. CPI is a known indicator of inflation. It is the most used method by statisticians and economists to check inflation and deflation (Esther Pak, 2011). CPI measures the percentage change in the price of certain services and products consumed by households. It measures price changes of services and products such as food, transportation, and medical care. It also covers the difference in workers’ incomes, including retirement income. The U.S. Federal Reserve Board works towards maintaining 2% inflation annually. However, the Federal Reserve is considering raising the interest rates to lower rising inflation (‘U.S. unemployment rate: adjusted, 2021 | Statista’, 2021). The prices of various categories exceed 2% inflation, and some have dramatic changes, as shown below.apparel 4.3%

Unemployment benefits to help with rising unemployment rates in the US due to the COVID-19 re cession were scrapped in September 2021 as the unemployment rates reduced and the economic recovery started. The graph below shows how the unemployment rates have decreased from Dec 2020 to Dec 2021 (‘U.S. unemployment rate: adjusted, 2021 | Statista’, 2021).

Recommendations

Rising inflation and unemployment are key issues that the national and global economies try to control. In periods of inflation, the Federal Reserve has the primary policy of reducing inflation through monetary policies. The basic monetary policy increases the cost of borrowing which discourages spending, thus reducing inflation and economic growth. The Federal Reserve should also have a tight fiscal policy of lowering government spending and higher income tax. This fiscal policy will reduce aggregate demand leading to slow growth and less demand-pull inflation. There are also various recommended policies to reduce unemployment. Fiscal policies such as increasing government spending and cutting taxes help improve aggregate demand and economic growth, hence more jobs. Lowering the taxes raises disposable income, thereby increasing consumption and aggregate demand. An increase in Aggregate demand leads to higher GDP (Pettinger, 2019).

When economic growth is high, firms can produce more, requiring more workers. The Federal government should also fund public construction projects to create employment. This includes building bridges, roads, and other infrastructure to reduce unemployment by hiring workers, engineers, and contractors. Inflation and unemployment tend to be inversely related since the increase in interest rates reduces inflation but causes slow economic growth and a rise in unemployment (Pettinger, 2019). Therefore, in implementing the recommendations, it is crucial to look at other factors that may affect inflation and unemployment. It is essential to solve both inflation and unemployment since uncertainty in inflation leads to lower investments, thus decreasing growth rate and job creation.

Conclusion

High inflation can cause unemployment. For instance, in the case of hyperinflation or uncontrolled rates of inflation, there is a decline in competitiveness and lower export demand, causing unemployment in the export industry. Hyperinflation can even cause businesses and companies to shut down since they can’t pay workers, thus spiking unemployment rates. Therefore, these two economic indicators are crucial, and various monetary and fiscal policies are required to keep them sustainable. When a country’s inflation rate is high, it loses its purchasing power; thereby, the currency declines its value. Although inflation hurts economic growth, falling prices or deflation is also not desirable as consumers delay purchasing products and services, expecting the prices to fall further. This leads to less income and also less economic growth. When the unemployment level is high, the standard of living is also high, leading to less economic growth.

References

1. Cox, J. (2022). Fed members ready to raise interest rates if inflation continues to run high, meeting minutes show. Retrieved 9 February 2022, from https:www.cnbc.com20211124federal-reserve-releases-minutes-from-its- november-meeting.html.
2. Esther Pak, M. (2011). Is CPI an Effective Measure of Inflation? [online] Morningstar UK. Available at: [Accessed 9 February 2022].
3. Iacurci, G. (2021). Retrieved 9 February 2022, from https:www.cnbc.com20210607states-will-be-ending-federal- unemployment-benefits-this-week.html.
4. Pettinger, T., (2019). Policies for reducing unemployment – Economics Help. [online] Economics Help. Available at: [Accessed 8 February 2021].
5. Pettinger, T., (2019). Policies to reduce inflation – Economics Help. [online] Economics Help. Available at: [Accessed 7 February 2021].
6. U. S. unemployment rate: adjusted, 2021 | Statista. Statista. (2021). Retrieved 9 February 2022, from https:www.statista.comstatistics273909seasonally-adjusted-monthly- unemployment- rate-in-the-us.
7. United States – monthly inflation rate December 202021 | Statista. Statista. (2022). Retrieved 9 February 2022, from https:www.statista.comstatistics273418unadjusted-monthly

A problem in our society today that has been a problem throughout history is corruption in politics. In the television series, House of Cards, the main actor Kevin Spacey plays the role of Francis Underwood. His character makes his way through politics as House Majority Whip up to the President of the United States. Underwood’s character is merciless and craves power and will do anything to get what he wants like any other politician. His character is relentlessly cruel, and in the first two minutes of the first episode of the first season he says, “I have no patience for useless things.” As he says this, he kills a dog and puts it out of its misery since it was just hit by a car. The point is, that Francis Underwood is similar to past and current politicians who will do anything to make a name for themselves or obtain more power. The show House of Cards first aired in 2013 and relates very closely to American politics and previous office holders. In all, this series links with real issues in society that focus on corruption in our political systems.

The show House of Cards in total has a similar problem that society has in just about every episode. Ranging from corruption in politics, blackmail, and affairs, to illegal activities like murder or paying people off, almost everything is in it. The show tries to show a realistic perspective on what working as a journalist or at Capitol Hill is like. Starting as the House Majority Whip, Francis is denied the Secretary of State seat even after he is promised to have it. This is the event that drives Francis to do everything he can to get his revenge and more power in the process. Immediately after this, the corruption starts. Francis uses his subordinates to do dirty work such as paying people off for knowing things, but also handles things himself like having an affair with a journalist/reporter for personal gain in exchange for secret information. Above all, he has murders carried out so that nothing stands in his way of getting to the top. Although this might be a little exaggerated compared to real life because it is television, it is still very similar and linked through corruption and what comes along with that. In Chapter 8, Francis involves himself in an affair with Zoe Barnes, the journalist from The Washington Herald, a newspaper in the show. However, he is smarter than everyone believes him to be and he has a very meticulous plan to get to the top. By engaging in the affair with Zoe Barnes from the newspaper, he uses her to leak stories early which allows him to get what he wants. By telling Zoe information, she leaks it to the public before the government has even released the information to the people. By doing this, Francis can tell her to leak something and when she does, the government is forced to do it. For example, in Chapter 1, when Francis is denied the Secretary of State office, he leaks the information to Zoe that Catherine Durant will be given the Secretary of State spot. He tells her this because Durant has sworn her loyalty to Francis in his revenge path to the top. Of course, since it has been leaked, the government complies and gives her the spot. Now that Francis has received what he wanted from Zoe, he feels that he does not need her anymore. Again, Francis has clearly stated he has no patience for useless things, and because of this, when Francis and Zoe are on the train tracks, Francis pushes her in front of a moving train and kills her instantly, committing murder. Francis Underwood is so corrupt that he has no feelings toward anyone and does whatever it takes, including killing someone, to get the revenge and power he seeks.

In addition to seeing this character on set, we also see plenty of examples of Francis’s character in real-life politics. At the beginning of the series, Francis Underwood is said to have reminded the audience of “notorious Republican Majority Whip Tom Delay, an ultra-conservative Southerner who was involved in massive corruption.” Both of these Majority Whips were involved in some way with things they should not be involved in and it corrupted them. However, later in the show when Francis finally moves up the chain of command and becomes president, he has a striking resemblance to another religious Southern Democrat who also had an “unstoppable lust”, which was Bill Clinton. The show continues and Francis is still corrupt but he has gained the power that he wanted and got his revenge. In the first season, Francis meets with one of the lobbyists who is also corrupt and they work together but when he leaves Francis has an aside and faces the camera and says, “Such a waste of talent. He chose money over power, in this town a mistake nearly everyone makes. Money is the McMansion in Sarasota that starts falling apart after ten years, power is the old stone building that stands for centuries. I cannot respect someone who does not see the difference.” It is obvious to us that Francis is all about getting power, and that money doesn’t matter when you have power. In addition to having the same viewpoints as Clinton, they are also similar in the way that they both had affairs and were impeached from the presidential office. “While Bill Clinton promised to run the ‘most ethical administration in history,’ he has instead presided over an era as sleazy as those of his predecessors. Scandals forced out HUD Secretary Henry Cisneros and Agriculture Secretary Mike Espy. There were charges that foreigners made large illegal donations to the Democratic National Committee during the 1996 election. The most explosive charges surrounded Clinton himself. Allegations of corrupt real estate deals by Clinton when he was governor of Arkansas led to an independent counsel investigation that began in 1993 and continues as of this writing. This investigation eventually produced the charge that Clinton had perjured himself and had obstructed an inquiry into his affair with a White House intern. Clinton was questioned about this affair as part of a sexual harassment lawsuit. Clinton was eventually impeached, but the Senate failed to convict him.” Plainly stated, there is political corruption all over in the government, it is just the United States is good at hiding it. (House of Cards aired in 2013) “By 2013 the United States was rated as one of the more honest countries in the world by Transparency International, a research organization that presents annual ratings of the relative corruption of countries…Many European countries rank ahead of the United States, but most other nations have more perceived corruption.” This shows that the United States is ranked higher but because it is a high-profile country, the corruption in other countries is more recognized. This shows that although there is corruption it is not dealt with because of what country it is.

Furthermore, Bill and Frank both have wives who follow unsympathetic strategies to accomplish their own goals or visions.