Category: Economics

Introduction

Mention the word bourgeois and thousands of heads will turn with scorn and disdain as if this is an evil name. People have developed a misconstrued perception of wealth to warrant discriminating against rich people. There have been continued efforts to unify the world by developing strategies aimed at promoting social and economic equality.

However, these efforts bear no fruits since divisions are created as hatred between the rich and poor intensifies (McCloskey 23). There is no doubt that people must appreciate the advantages of capitalism in advancing the society. This essay is a response to Rodrigo Manticas paper Reviewing the Bourgeois Virtues.

There is no doubt that wealth is one of the coveted aspects of human life. People will use all means possible to acquire and keep wealth. However, before discussing wealth it is necessary to mention that all human activities are motivated by the desire to seek happiness.

He presents the path to happiness as filled with various social and economic factors. These factors may be moral or immoral depending on an individuals perceptions of their appropriateness since wealth in itself is not an end but a means to happiness (Smith 11). Richness is not a crime as depicted by many people provided the path followed is right.

According to Mantica, business activities offer individuals equal opportunities to explore their talents and skills; therefore, people with extra ordinary skills stand high chances of ruling markets (McCloskey 32). Monopoly is one of the ways of demonstrating individuals use of their skills. When people work hard to acquire wealth they seek to make themselves happy by having everything at their disposal.

In addition, Mantica proposes that reason should be a moral driving force in acquiring wealth. According to him, McCloskey is right in advocating for solidarity in advancing peoples collective desires. Therefore, reason becomes an inevitable aspect in acquiring wealth. People should strive to acquire wealth and justify their means using moral aspects like prudence and trust.

Even though, prudence in itself has weak moral connotations it is vital to consider weighty sides of prudence that guide human activities (McCloskey 56). People interpret self interest as an evil way of acquiring wealth.

However, Mantica confirms that self interest brings people of similar interest together and thus becomes an effective tool of advancing their dreams. When people with similar self interests come together, they form formidable forces that will promote their interests. Solidarity enables them identify strategies that will promote these interests. Within these groups, there must be competitions to ensure the best person outruns others.

The article identifies the significance of economic and social differences in society. The differences in knowledge, interests, skills and efforts determine how effective individuals use their resources (Smith 21). This explains the differences in wealth of people earning equal salaries and living in same societies. Some people will remain poor due to their experiences, efforts and interests in wealth. Therefore, the bourgeois have a right to own wealth despite the high rate of poverty in the society.

The article further notes the need to identify the actual meaning of words like prudence, greed and prudence. Greed is an endless desire to have wealth (physical and emotional) for self interest. Prudence is the process of considering the results of an activity before doing it; therefore, a foundation for other virtues. Mantica considers these definitions as contradictory to claims against the appropriateness of wealth acquisition.

There is a close link between other human virtues and self interest. While greed and prudence seem to work in opposite directions, they are nonetheless related to each other. When an individual wants to offer donations to humanitarian organizations, the person is motivated by self interests of fulfilling their social responsibilities and not helping the less fortunate in society.

Therefore, philanthropists are not justified to be moral by giving their wealth to the poor (Smith 48). Prudence will subject the society to extreme poverty, jealousy and social evils due to the presence of weak morals.

Individuals are justified to be greedy and acquire wealth provided they respect other aspects like trust. Mantica confirms Hobbes thoughts of social agreements as essential tools for advancing human virtues and promoting wealth acquisition (Smith 49). He argues that love in itself is not a virtue since it is based on reciprocity. People love others to get social or economic security and not just to express their feelings.

He concludes that all human activities are not selfless since thy have strings attached to them (McCloskey 78). Therefore, it is necessary to allow natural forces like greed to shape social, economic and political lives. People must be in their right positions until they identify ways of improving their social and economic status. Governments must not push people to live lives they have not fought for since this will waste resources and time.

Conclusion

Mantica supports greed as an essential tool that governs human behavior. It motivates people to work hard to acquire wealth. At the same time, others follow suit and evolve towards a rush for a noble society.

Works Cited

McCloskey, Deirdre N. The Bourgeois Virtues: Ethics for an Age of Commerce. Chicago: University of Chicago, 2006. Print.

Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: Encyclopedia Britannica, 1955. Print.

Overview of the political economy of Germany

According to Organization for Economic Cooperation and Development, Germany is one of the strongest economies among the countries that form the European Union (16). During the last quarter of the year 2011, the real gross domestic product of Germany stood at $ 3.479 trillion (Global Finance 1).

This denotes positive economic development. The country was affected by the global financial crisis (Janning 1), which resulted in a fall of GDP growth of the country by 5.1%. The fall in the GDP of Germany during the crisis was attributed to the position that it occupied in EU trade.

Being an exporter of numerous technological goods and machineries across the European Union, the country had a low return from trade. The trading environment in Europe shrank because of the decreased financial sector in most of the European countries. The economic strength of Germany has been enhanced by the reunification of East and West Germany. Germany has an active political landscape (Lange 2).

The political landscape of Germany is marked by rational politics. The country has a federal government which is led by a Chancellor. The country is subdivided into different regions. The current head of the federal government is Chancellor Angela Merkel. Germany is headed by a coalition government which is composed of three parties; they include the Christian Democratic Union, Christian Social Union and the Free Democratic Party (Schwarzer 3).

Economic policy areas of Germany in relation to the European Union

Germany is amongst the strongest supporters of the European Union. The country has exhibited support for economic integration of Europe through the European Union. To that effect, the country has pursued many policies in regard to its incorporation into the European Union. Germany highly advocates for economic integration of the European Union because of the benefits that accrue to the functioning of the union.

The economy of Germany is highly supported by exports. A third of the national output of Germany emanates from exports. The EU presents many export opportunities to Germany. Current policies of Germany on European Union integration began in the early years of the 1990s. This is the time when the country began seeking for real economic identity in Europe. The European Union was uncovered as the main tool that would help Germany to keep pursuing its economic goals (Janning 2).

The fiscal policy in relation to the global economic crisis

The current government of Germany is pursuing numerous economic policies. The fist economic policy that is being pursued concerns the elimination the budgetary deficit in the coming years. Deficits in the budget of a country are argued to have been aggravated by the financial problems in the European Union (Schettkat and Langkau 10).

The government has focused on bringing together all the public finances so as to raise enough capital to bail the country from the crisis in order to improve the trading environment in the country, and the attainment of favorable figures in the balance of payments. The balance of payments is often depended on the rate at which a country participates and gains from exportation of products. As the country focuses on raising revenue generation, it must also assess the performance of the European Union.

The reason for this is that the EU forms the immediate foreign market that comes with many economic benefits to Germany. The benefits accrue to the level of integration that has been attained in the EU. Internal economic policies in highly economically integrated regions are often affected by forces from the Union (Schwarzer 2).

The common agriculture policy of the European Union  impacts on the economy of Germany

The European Union has what is known as a Common Agricultural Policy. The policy seeks to protect farmers in all countries forming the union. Farmers in Germany and other European Union countries are efficient. However, there are a number of factors that limit the farmers. They hinder them from competing effectively in the international market.

These factors include input, land and cost of fuel. Through CAP, extra funds are provided to farmers in order to help them subsidize the high costs of production. Tariffs and quotas are imposed on agriculture products that are imported into the union. According to the policy, Germany and other EU countries are barred from offering any other support to their agricultural sectors. Being a beneficiary of the CAP, the responsibility of the Germany government is to ensure that funds that offered by CAP are managed effectively.

Germany is one of the strong advocates of the policy. It was among the first signatories of the treaty that officiated this policy. With improvements in the framework on which CAP is administered, Germany and other EU counterparts are deemed to remain competitive in the international market (European Commission 1).

Positive and negative aspects of EU membership on Germany

Belonging to a regional economic body has both positive and negative effects to countries. Germany has derived a lot of economic benefits from its membership in the European Union. Germany is an active exporter of different commodities.

Its presence and membership in the European Union has enhanced its exportation capacity. A lot of cross border trade barriers have been eliminated from the EU giving Germany the opportunity to thrive in the EU market (Schwarzer 2). On the other hand, participation in regional trading blocs results in negative effects for participant countries.

Inasmuch as the country benefits from the reduced trade restrictions, it also faces increased importations from other countries. As a strong economy, Germany has managed to use its economic power to export more, thence, offsetting the deficit that is brought about by imports.

Foreign investment in Germany by countries which do not belong to the EU

Germany has a large economy. The economy of Germany is argued to be decentralized in the sense that internal economic policies are pursued regionally (Organization for Economic Cooperation and Development 16). The country possesses a favorable investment climate for foreign investors.

The country has a stable political environment which has been witnessed since the reunification that took place in the last decade of the 20th century. Germany has a stable government which oversees economic development. It has cultivated a strong economic environment that is supportive of continued investment. As of today, there are a substantive number of foreign firms that control their production in Germany.

The high rate of economic development of Germany is backed by investment in technological development. According to Legler, Licht, and Spielkamp (5), technological development backs industry in the country hence encouraging productivity. Nearly all industries in Germany utilize high technological production methods helping in positioning the country not only in Europe, but also in the entire world.

All these factors denote the presence of an active economic base in Germany. The wider economy and a relatively high population denote the present of a market and labor force for foreign investors (Adekola and Sergi 258). Foreign investors need to assess the role and benefits of Germany in the European Union. This presents an indirect but beneficial aspect. By investing in Germany, non- EU countries can get an opportunity to market their products in Europe without incurring excessive expenses.

Political stability in Germany is a positive factor of influence on economic development. Any foreign investor in the country would find a conflict free zone in which to establish a business. Good governance is also a positive feature in Germany (Lange 3). It Presents a favorable business climate by eliminating business vices like corruption. Investors are required to go through the stipulated procedures. The complexity of the procedures is reduced by the favorable business landscape.

The other supportive factor, which is an advantage to foreign investment, is the presence of numerous foreign companies in the country, some of which come from outside the European Union. Foreign investors can adopt to business entry practices that have been used by benchmark foreign firms operating in Germany.

Viitala (38) observed that the main disadvantage of foreign investment in Germany is the presence of a highly competitive economic environment. The competitive pressure resonates from goods and services from other EU countries that trade with Germany. The EU countries have a competitive edge over other countries or firms from other countries.

The advantage comes from the fact that EU based firms are exempted from numerous trade procedures and costs. The argument here is that irrespective of the presence of internal incentives for investment in Germany, firms originating from outside the EU are often disadvantaged. The disadvantage is seen in cases of access to the EU market.

Works Cited

Adekola, Abel and Bruno S. Sergi. Global Business Management: A Cross-Cultural Perspective. Burlington, VT: Ashgate, 2007. Print.

European Commission. Common Agricultural Policy (CAP). 2012. Web.

Global Finance. Germany Country Report: GDP data and GDP forecasts; economic, financial and trade information; the best banks in Germany; country and population overview. 2012. Web.

Janning, Josef. Europe: Germanys Dilemma. European Policy Center. 2011. Web.

Lange, Thomas. The Political Economy of German Unification. Providence u.a.: Berghahn Books, 1998. Print.

Legler, Harald, Georg Licht, and Alfred Spielkamp. Germanys Technological Performance: A Study on Behalf of the German Federal Ministry of Education and Research; with 28 Tables. Heidelberg: Physica-Verl, 2000. Print.

Organization for Economic Cooperation and Development. Oecd Economic Surveys: Germany. Paris: OECD, 2012. Print.

Schettkat, Ronald and Jochem Langkau. Economic Policy Proposals for Germany and Europe. New York: Routledge, 2012. Print.

Schwarzer, Daniela. The Political Economy of Germany in the Sovereign Debt Crisis. Bruegel: Petterson Institute for International Economics. 2011. Web.

Viitala, Tomi. Taxation of Investment Funds in the European Union. Amsterdam: International Bureau of Fiscal Documentation, 2005. Print.

Does redistribution of income, business income, or risk levels enhance the level of efficiency, profitability, cost effectiveness and overall success of business strategies? Regardless of the circumstances in question, it can be argued that wealth redistribution should be undertaken in an objective, open and realistic manner so as to ensure that the growth and development of an organization is enhanced.

Book analysis

Detection of faulty logic is a critical aspect of money management that demands special attention (Landsburg 3-9). In view of this statement, it can be said that faulty logic is a very risky aspect of money management and allocation of scarce resources. Effective money management can only be best practiced through reinforcement of quality of service, reliability of a given business strategy and enforcement of stringent quality management procedures.

Through his informative and instructive writing strategy, the author, Landsburg (1997) explains that the mysteries of money management are many and dynamic. To enhance the success of financial management in an economically and politically healthy society, the book Fair Play explains the manner in which tolerance, fairness, justice, and moral values among people are vital attributes of effective money management in the modern business environment.

The wisdom of money management is an important aspect of cost effective money management in the modern business environment and societal setting. This fact is evident in the unique yet very strategic manner in which the author of the book explains the concept of addressing taxes that in turn redistribute income.

This concept emerges as a vital issue in the business environment as well as in the strategic utilization of scarce resources. Through the use of real life parenting skills, family interactions and examples of relationship among siblings in the family environment and real life situations, the author manages to clearly articulate vital cultural principles that can help enforce trust and the need to adhere to modernized business and strategic money management strategies (Yunker 7-32; Landsburg 27-41).

The book, Fair Play has a lot of merit with regards to its positive contribution on the power of prices and market economy. Immigration and free trade are issues that have also been discussed in detail. Different market pricing mechanisms do exist (Wenz 38-51).

According to Landsburg (23-43) who effectively equates parent-children relationships and money management strategies, the economics of free trade, immigration, minimum wages, racial discrimination, the role and value of money and racial discrimination demand in-depth understanding of money allocation and other risk related money management strategies.

As revealed from the emphasized wisdom of the playground, children are a good thing and deserve to be accorded due attention when determining the value and significance of money and monetary engagements (Landsburg 18-20).

In line with this argument, the implication of free trade and immigration comes into play in a number of ways. The book plays a critical role in explaining the meaning and application of free trade principles and strategies which if applied would enhance the reliability and accountability of money management mechanisms.

The book, Fair Play, is definitely of good quality as it manages to effectively articulate the meaning and application of free trade and immigration economic concepts. The book uses an artistic approach in elaborating on critical economic issues in an easy to understand manner. On the issue of minimum wage, the book successfully gives a detailed evaluation of the estimations and approximations of minimum market wages and the significance of streamlining business operations and money management techniques.

As a result, the main benefits of free trade such as its ability to increase efficiency and productivity levels, enhancement of consumer satisfaction, fostering of employment and constant economic growth, reduced poverty levels, minimization of price and political wars and tension and reduced export charges (Yunker 5-17). The book has a lot of merit as it encourages the strengthening of family values and in-depth understanding of vital financial management strategies.

The book is timely and significant to the political class as it fosters national and international cooperation as well as political stability through fair, friendly and reliable business engagement (Landsburg 61-73). The trickiest issue in the book that deserves detailed attention and which could otherwise hinder proper planning and execution of business strategies relates to the moral dilemma of spying and the degree to which business processes and social-political relationships are destroyed.

The management of authority in any economic situation is imperative and should never be misused. In the view of Landsburg (46-51) this implies that all business management decisions should be geared towards reinforcing the importance of quality, effective customer experience, strategic business management and strict adherence to the laid down policies that would in turn reduce operational costs (Wenz 25-34).

Through the readership of poetry in young children, the author makes the book to be very significant by explaining that pricing mechanisms should always be aimed at achieving market leadership. It is therefore evident that in the use of money, effective planning and investment strategies should be employed to reduce various risk levels.

Progressive taxation

Increment of tax levels based on the upsurge of taxable income is an issue that deserves proper planning and in-depth analysis of all related internal and external factors. Progressive taxation often has social, economic, cultural and ethical implications that pertain to the manner in which the taxes affect peoples daily chores.

In a money-based economy, progressive taxation as suggested in the book Fair Play has the risk of creating rifts and dividing people along financial and socio-cultural boundaries. In essence, people who are taxed more could end up feeling discriminated against while those being under-taxed due to their low income bracket may be perceived to be poor and helpless members of the society.

The author of the book Fair Play explains the concept of progressive taxation. The author manages to reinforce the significance of progressive taxation if well implemented. The book facilitates better understanding of the fact that progressive tax helps to enhance economic development by attracting more investors due to the fair taxation options offered in new business start-ups. Revitalization of the economy which employs the progressive taxation strategy is made easier and practical.

The said option can leave a window of possible misconstruction and misapplication of progressive taxation principles. Redistribution of state and national resources is often made possible when progressive taxation is put into practice. The book Fair Play is very effective in its approach in the distribution of resources as its core principles are to improve income distribution and thus ensure that more people or countries acquire an increased purchasing power (Landsburg 4-213).

However, the book fails to give a clear and detailed explanation of what progressive taxation means with reference to the manner in which family and societal money management needs are. It also fails to elaborate on the degree to which progressive taxation benefits the very rich in the society.

Nonetheless, the book clearly articulates the relationship between the adoption of progressive taxation strategy and the need to foster reliable, cost effective and accountable means of creating wealth. As an effective pricing mechanism in business operation, progressive taxation is a market pricing mechanism that has the potential to advance social coordination, cultural wellbeing, political wellness and social economic cooperation.

Prices play a major role in the market. Determination of commodity prices and the use of minimum wage in the business environment should always be undertaken in an objective manner. Like other associated benefits of free trade in the modern business environment, the book uses a unique communication style (Graf 19-27).

Through the explanation of the concept of discrimination, it can be said that discriminatory strategies are important as they help foster unity, cooperation and contextualization of money management practices. They also help to ensure that people spend money based on the priorities. The books usefulness therefore emerges from the fact that it encourages proper planning, allocation of resources, avoidance of risks and successfully utilization of various pricing methodologies in promoting social coordination and business cooperation.

Implications

The book has a lot of positive implications to the society in which its core concepts are applied. Ethically, the book encourages fair determination of the cost of goods and services offered at the market place. It then helps to strengthen the cultural aspects of family values as its approach is based on ensuring that faulty logic and marketing strategies applied do not contradict the known social, political and economic norms of the society.

It also makes understanding of both positive and negative implications of a free trade and immigration conceptualized and customized to a specific market. The comparison and contradiction of parental and economic wisdom is effectively explained thus successfully bringing out the fact that economic justice should always be understood to provide fair treatment and just allocation of resources.

The meaning of the different scenes where a daughter and her parents are featured in the book is that failure to foster economic justice could result in a lot of political tension and loss of social, political, religious and technological efficiency and total lack of efficiency and cost effectiveness (Landsburg 168-176).

Cultural and political biasness is effectively linked to the concept of authority and the need for people to respect authority which stipulates pricing of goods and services both in a controlled and in a free market economy (Graf 11-13).

The content of the book is full of wisdom and many meaningful lessons that encourage constant cooperation and utilization of scarce resources among people. This fact is evident in the manner in which the author keenly explains the value of redistributing wealth in reference to the habit of children sharing their toys with their peers.

Conclusion

As described above, it is evident that pricing strategies are important means of enhancing economic justice. Redistribution of income, business income, or risk levels improves efficiency, profitability, cost effectiveness and overall success of business strategies. The concept also clarifies that wealth redistribution should be undertaken in an objective, open and ethical manner.

The book has a lot of economic value, unique writing approach and a clear flow of economic concepts. The said attributes make it easy for the reader to understand and possibly apply its content.

Works Cited

Graf, Mitche. Power Marketing, Selling, and Pricing: A business Guide for Wedding and Portrait Photographers, New York, USA: Amherst Media Inc., 2009.Print.

Landsburg, Steven. Fair Play: What Your Child Can Teach You About Economics, Values and the Meaning of Life, New York, USA: Free Press, 1997.Print.

Wenz, Peter. Take Back the Center: Progressive Taxation for a New Progressive Agenda, Massachusetts, USA: Massachusetts Institute of Technology, 2012.Print.

Yunker, James. Economic Justice: The Market Socialist Vision, United States of America: Rowman & Littlefield, Inc, 1997.Print.

The corresponding principles of the utilitarian benefits of Caltex plant creation was reckoned to be a violation of rights of some particular layers of the society of the past century. Racial prejudices became the greatest obstacle not only in interpersonal relations but also in the rapid developments of the building of the plant.

The management of Texaco and SoCal companies that jointly owned Caltex Petroleum Company thought that benefits should be expanded and remained in the country for the population. It highlighted improvement of the economic working conditions of blacks working for the company.

They also committed to the implementation of the Sullivan principles drafted by an American reverend Deon Sullivan. The Investments in South Africa played an essential part in the development of certain benefits accrued to the major population in South Africa.

The Sullivan principles basically stated that there would be no racial segregation within the work premises, equal opportunities for employment for people of all races and equal pay for equal jobs regardless of race. The code also suggested increase majority holders of supervisory positions and welfare facilities for the non-white workers outside the work set up.

The management of these companies was not ignorant to the fact that some of the principles would go against the law of segregation in the country. They pledged to use the required channels for any modifications required. All these good intentions for the majority groups were noble and good on paper but it was evident that their implementation would be impeded by the law of segregation in the country.

Regardless of these new policies, the majority groups are still faced violation of rights and justice. The white government would still implement its laws barring Africans from becoming apprentices. Oppression in regard to job opportunities and payment of wages was not going to end seeing as how blacks and whites cold not hold equal positions.

The principles were out to slightly improve conditions for the minority groups at the workplaces only. This would not greatly impact their lives since their basic rights had been denied in all aspects of their lives and from all the points of view.

They had no claim to the land they were born in, they could not vote for their leaders or hold mass action. The management of Texaco and SoCal would therefore not help improve the condition for majority groups in South Africa. Several resolutions were proposed by human rights activists.

The first proposal was for Caltex to terminate its activities on South African soil. As a shareholder, I would have voted for this proposed resolution. The white government had been inflicting a tremendous amount of suffering on the majority groups. The rest of the world just watched seemingly helpless. The liberation of South Africa would have been achieved by collective responsibility of corporate organizations and the world at large.

I believe a vote for this resolution would have ideally been a vote for the majority groups in the county. Though, it would probably have been criticized as a drastic measure, it would have certainly been called for given the extreme nature of the situation. It would have been a selfless and humane move that would have transformed South Africa.

The second resolution asked Caltex not to sell the military or police of South Africa. I would have voted against. It was naive of the activists to imagine that the white government would have allowed that.

The country was not in anarchy, and any corporation operating on South African land had to obey its laws. It would not also have prompted the government to liberate the majority but only achieved hostility given that it targeted government forces.

The third proposal was asking the company to implement the Tutu principles. This proposal to me would have been more practical than the first and I would have voted for it.

This is because it addressed the lives of the majority as a whole and not only their work related issues. It would ensure that the black people lived with their families, recognition of black labor unions, fair labor practices and investment in education. This would have made positive change in the lives of the majority.

The managers of Texaco and SoCal, I believe, would have responded differently to the proposed resolution. The management should have endorsed the proposal to terminate its activities in South Africa. They should have made the decision to leave the country within a specified period of time. Within this period, they should have planned on where to relocate their business to.

By doing so, they would have fulfilled their moral obligation to end oppression. By making the alternative business plan, they would have fulfilled their primary business objective which is to make profits for their stockholders.

Management should also have considered the second proposal by issuing an ultimatum to the white government. This might be considered arm- twisting, but it would have enabled them fulfill their obligation to society.

This could result in a situation whereby the need for negotiation and dialogue would have been inevitable. They would have gained a forum to address the plight of the majority in the country. This would have brought them a step closer to liberation

Tutus conditions should have been a primary objective to management more so because it involved different aspects of the lives of the black people. Texaco and SoCal should have led by example and adopted these conditions.

This would probably have been an incentive to other corporations in South Africa to do the same. It would have been a milestone in the liberation of the country. They would have gone down in history as having initiated positive change in South Africa.

The entire management of the Caltex Company has a wide range of duties that lie in the basis of ensuring the impacts of and for stockholders. It has a responsibility to its consumers and society at large.

It has a duty to its consumers to ensure high quality goods and services, provide after-sale services and adequate product information. To the society, management has the responsibility to support development projects and help in environmental conservation efforts. There is also provision of recreational facilities.

Management should think twice before making the corresponding decisions as for the development of the company and do not pay much attention to the investments but act according to the most possibly successful criteria. It should therefore also seek to act responsibly to its society.

It should abide to the business code of ethics and seek the good of everyone in its environs. Management should not turn a blind eye to issues such as political instability and oppression. By doing so, it will gain the goodwill of people that in turn may contribute to the success of the business enterprise.

Two Opinions

There are two different opinions in the modern world about the priority in the commanding heights. There is no one firm point of view shared by all the scholars, as some of them are sure that the state controls the commanding heights while others believe that the companies are the rule setters in the modern economics.

Each of the opinions has the right to exist. Moreover, there is no correct answer as both states and corporations have the control over commanding heights in different situations. Having conducted a research in the sphere, the following arguments in favor of each of the points of view have been gathered.

Supporting State

Looking at many Asian countries, such as China, India, South Korea, Taiwan or Indonesia, it should be stated that these country are controlled by the states. All economic processes are based on the idea of the government commanding heights and no one tries to contradict this opinion. The level of development in these countries is different, therefore, there is no need to dwell upon it as about the one which is the reason for differences in the control influence.

Turning to the facts, most of the social and economic programs are completed because of the states desire. Thus, Indonesia financially supports the places which are unable to govern themselves. Such economic support is really important for those parts of the country where the level of poverty is too great (Asian welfare states). Being a capitalistic country, China is one of the main supporters of the state commanding height believing that only state is able to do something that can affect world economy (Universal banking).

Looking at the changes in the banking sphere and the way how government affects it (Special report), it is possible to predict that most of the changes in the economies of the countries in the future are going to be conducted under the strict supervision of the state. Moreover, the directions in changes and other particular aspects are going to be given by the government. The future of the world economy is the hands of states as they have the power of legislation and other leverages aimed at controlling world business.

Supporting Corporations

However, there is another point of view, according to which corporations are considered as the main guides for the modern economics. The supporters of such opinion have another vision of the problem. The arguments in favor of this point of view are as follows, there are a lot of world known brands that control the specific markets. China, for example, has managed to capture international market of the telecoms-equipment-maker.

There are also many other markets where China managed to occupy leading positions (Chinese multinationals). These leaders at the world market set their rules in the world economics. Having the power to regulate prices (making them cheaper) and the power to add more and more items by means of controlling the stock, the giants of the marketing relations control the world economics (State capitalisms global reach).

The collapse or another situation which may lead to bankruptcy of such a corporation will lead to the shake of the economics in the whole world as the stock will be changed, the prices will be reconsidered and a new leader will enter the market with personal rules. The government of state is in the past, the corporations commanding heights scheme is a new way of the world economy development.

Works Cited

Asian welfare states: New cradles to graves. The Economist 2012. Web.

Chinese multinationals: Whos afraid of Huawei? 2012. Web.

Special report: State capitalism  The visible hand. 2012. Web.

State capitalisms global reach: New masters of the universe. 2012. Web.

Universal banking: Together, forever? 2012. Web.

Introduction

Latin America has moved from export-led growth to import substitution policies and then back to export-led growth, which is regarded to have enabled many countries to sustain economic growth and development. There has been widespread adoption of development policies in the Latin America, in an effort to precipitate economic development.

Export-led growth and import substitution policies have been put in place interchangeably to stimulate economic growth where one policy has failed. Moreover, Latin America has been able to sustain its economic growth through export-led growth policies after adoption of import substitution policies failed to realize or sustain economic growth.

Export Led Growth Policies

Export-led growth has been facilitated by a number of countries such as Chile, although its overdependence has resulted in low economic growth rates in a number of countries. Chile undertook radical liberalization since the year 1973 where import substitution policies were abandoned for implementation of export-led growth¹.

The adoption of export-led growth strategies has put Chile far much ahead of other Latin American countries, despite having common economic weaknesses².

A number of countries have lost confidence with regards to the advantages of export-led growth strategies even in countries where export-led growth policies have been successful. This is because there have been financial constraints and recession in countries that have adopted export-led growth policies, considering the global economic crisis.

Export-led growth policies have been widely pursued be Latin American countries since1980s, which has facilitated economic growth successfully. Expanding export goods out of the Latin American region has not generated the huge increases in growth of output. Global financial crisis has in the past affected global trade and it has further led to the downfall of growth potential.

This is because price variations of export commodities in the international and foreign markets lead to negative impacts on economic growth.

Global financial crisis in trade and capital markets has facilitated foreign direct investment and remittance, leading to a decreased economic growth of countries that are dependent on export cash flows. Chile, being an export-led growth country, has undertaken strategies for implementation of fiscal policies such as cyclic counter policy in an effort to prevent economic downfall.

The theory of export expansion to stimulate economic growth is based on the openness of trade where economic goods and services are shifted to sectors of economy where there is efficiency and comparative advantage. Sectors where there is comparative advantage and economic efficiency are expanded to accommodate skilled, semi skilled, and unskilled labor.

The sectors also facilitate technology transfer and foreign direct investment for economic growth through trade liberalization. There is empirical evidence that exports tend to stimulate economic growth, as they increase although this stimulation trends vary among different countries irrespective of export rate similarity.

Different countries achieve different results, since overdependence on exports by a country leads to price volatility of particular commodities in the country while skilled labor in this economy leads to inequality³

Import Substitution Policies

Before radical liberalization of economic policies in Chile, its economy was characterized by import substitution policy for development, although it was proved as a failed strategy. The failures of the import substitution policy have emerged over time with regards to the reactions of the international financial crisis alongside local political and socio-economic crisis.

In addition, the domestic and global socio-economic and political crisis has been as a result of governments attempts to restructure and restore order in politics and economic growth. However, import substitution policies had previously led to significant economic growth and political order for decades.

The situation of Latin American countries such as Chile, which had significantly high dependence on imports from the international markets, was impacted by the world war economic crisis. Capitalist economies that emerged after the financial crisis and before World War II had significant effect on the emergence of import substitution policies.

However, considerable differences in the sequence and the period with which capitalist economies have impacted import substitution policies exist. Differences in sequence and periods of import substitution policies arose due to political party and social systems differences⁴

Economic policies of Chile between the periods of the year 1950 and 1973 had focused on the import substitution policies. Import substitution policy that was used in the Chilean economy is based on two assumptions of the closed economy and the role of the government.

The closed economy assumption is described with strict tariff barriers, trade controls and the quota system, while the governments role is based on more state-owned companies, the government expenditure with regards to huge gross domestic products share and regulations.

The Chilean government at that time was able to sustain the import substitution strategy and later on enacted political measures to liberalize its economy. The Chilean government had the mandate of enacting and leading the nation towards endogenous reforms to restore political order and economic growth, which had been severely affected by the endogenous policy.

Many factors are considerable with regards to the success of liberalization reforms strategies in stimulating economic growth and political order. The liberalization strategy involves the announcement of a variety of incentives to key players in the political and socio-economic arenas.

The incentives go a long way in boosting a countrys gross domestic product in cases where both foreign and domestic investors believe in the liberalization reforms and undertake to invest in the economic sectors with comparative advantage and potential. Incentives may, however, fail to achieve the expected results in case investors do not commit themselves to invest in the market.

Chile and other Latin countries have similar labor and market structure, which was characterized by the copper mines under the non-liberal governance. Owing to the liberalization of Chilean economy, the copper mines were nationalized in a bid to encourage participation of capital market as a free market.

The government undertook to nationalize factories, farms and factories to stimulate export-led growth and abandon import substitution policy. Economic liberalization in Latin America led to economic growth and the development of a free-market economy, where there was free creation of wealth and free enterprise operation⁵.

Chilean liberalization shifted the economy from price-fixing, market interventions, and macroeconomic instability to free capital flows and trade where cross-boarder markets and prices are liberal. Before liberalization, the economy experienced closed trade to international markets and financial flows.

The liberalization policies were enacted to reduce government intervention, promote factor market competition, and promote privatization. Previously, Chile was characterized by low economic and employment growth rates, inadequate investment, public sector inefficiency, industry protective policies, and macroeconomic imbalances.

Since liberalization of the Chilean economy, there have been tremendous developments, both politically and economically⁶

The investors financial incentives play a significant role in the process of liberalization reforms, but the government needs to put into consideration the amounts of loans offered to investors; indeed, the conditions levels and regulations are important for successful and credible liberalization process.

In case the amounts of loans offered to investors are not enough or the conditions are not enough, then the government takes the blame of acquiring investments from both local and domestic investors with full market liberalization.

Investors who have experience with this moral hazard challenge the government to undertake minimum investment than intended and expected by the government to avoid government investor conflict.

Moreover, the aspect of assurance and creation of commitment is important to stimulate and instill confidence for investment.

Investor financial incentives can be positively used to solve variations in time with regards to government inconsistency in inadequate economic investment, although if the institution offering loans are not reliable in ensuring it upholds the necessary conditions, it may result to the government strategies losing credibility and thus low growth rates despite liberalization.

Conclusion

The Chilean economy has moved from export-led growth to import substitution industrialization strategies and then back to export-led growth. This strategy has enabled Chile to sustain economic growth and development. Chile undertook to adopt development policies in a bid to stimulate economic growth and stabilize political structures governing the country.

Moreover, export-led growth and import substitution industrialization strategies were adopted interchangeably by the Chilean government to facilitate development where there was development stagnation. However, Chile has been able to sustain rapid industrialization since it abandoned the import substitution strategy for the export-led growth policy.

Bibliography

Allende, Isabelle. My Invented Country: A Memoir. New York: Harper Collins, 2003.

Buitelaar, Ruud and Dijck, Pitou. Latin Americas New Insertions in the world economy: Towards systematic competitiveness in small Economy. New Delhi: Palgrave Macmillan, 1996.

Dabir-Alai, Parviz and Odekon, Mehmet. Economic Liberalization and Labor Markets. CT: Greenwood Publishing Group, 1998.

Green, Steven. Faces of Latin America. CA: Monthly Review Press, 2006.

Thomas, Victor. The Political Economy of Central America since 1920. NY: CUP Archive, 1987.

Winn, Peter. Victims of the Chilean Miracle: Workers and Neoliberalism of Pinochet era 1973-2002. NY: Duke University Press, 2004

Footnotes

¹ Isabelle Allende, My Invented Country: A Memoir, (New York: Harper Collins, 2003).

² Ruud Buitelaar and Pitou Dijck, Latin Americas New Insertions in the world economy: Towards systematic competitiveness in small Economy, (New Delhi: Palgrave Macmillan, 1996), p151

³ Victor Thomas, The Political Economy of Central America since 1920, (NY: CUP Archive, 1987), p275

⁴ Peter Winn, Victims of the Chilean Miracle: Workers and Neoliberalism of Pinochet era 1973-2002, (NY: Duke University Press, 2004), p.2-3

⁵ Steven Green, Faces of Latin America, (CA: Monthly Review Press, 2006)

⁶ Parviz Dabir-Alai and Mehmet Odekon, Economic Liberalization and Labor Markets, (CT: Greenwood Publishing Group, 1998), p,127

There are a number of strategies that were applied by Spain to revive its economy. A number of literatures provide these strategies.

The integration of Spain into world economy is one of the key strategies that made its economy grow. Similarly, the development of standardized exchange rates systems resulted in the economic growth of the country in 1950s. The preferential agreement that was made by Spain with European Economic Community in 1970s also contributed to its economic growth (Aguado 6).

From the year 1977 up to 1980, political equality in Spain contributed to its economic growth. Similarly, since 1986 until now, the country has gained entry into the European Economic Community. This made it to adopt the Euro. Spain has got a number of economic benefits from adopting the Euro.

The advantages include minimized chances of depreciation of currency, as well as having inflation and interest rates consistent with other nations among several other benefits (Aguado 5).

Similarly, Spanish firms now compete internationally with companies operating in other European nations. A number of Spanish firms like telecommunications providers and banks are some of the largest firms globally. All of them have economic benefits to the country.

The international image of Spain as well as its foreign policy has also contributed enormously to its economic growth. Similarly, the increment in the number of multinational firms made the economy of Spain grow (Aguado 4).

Little farm production and war made Spain be a poor nation during the 1950s. The economy, however, improved after the United States military bases were established within the country in the year 1953.

The economy improved due to the fact that there was improved domestic production as well as the arrival of tourists. The incorporation of Spain into the UN in the year 1955 made the country to attract investors from other countries thereby reviving the economy of the nation.

Royo also explored the strategies that were employed by Spain so as to revive its economy. He stated that economic growth was attained by the country by means of buying private and government enterprises, as well as financial investments in several economic sectors.

He stated that telecommunication and the banking sectors of the nation led to its economic growth. He also stated that Spanish politics influenced its economic globalization (25).

Globalization as well as the opening of the markets of Spain contributed to its economic growth. Similarly, the privatization of the enterprises which were owned by the government as well as the reforms that were made in Spains labor markets resulted into its economic growth.

These factors contributed to several benefits such as unemployment rates reduction, lower rates of interest rates and low prices of goods and services. The reforms that were made in the sector of electricity also steered the country to attain economic growth.

Economic globalization is the major factor that resulted into the growth of Spains economy (Royo 24). Spains organizations also played key roles in reviving its economic growth. Similarly, Spanish banks revived the economy of the nation. For instance, they developed strategies that countered disagreements among interdependence within the economy as well as the states affairs.

Conclusion

In conclusion, there are numerous strategies that were employed by Spain to revive its economy since 1950s.

Such strategies include the development of standardized exchange rates systems, gaining entry into the European Economic Community, adoption of the Euro, competition of Spanish firms with other multinational firms, increment in the number of multinational firms in Spain, the establishment of United States military base in the country, governments purchase of several private entities, financial investments in numerous sectors, as well as globalization. All these strategies made the economy of Spain to grow.

Works Cited

Aguado, Saturnino. Spain in the Globalization Process. 2001: 4-7. Web.

Royo, Sebastian. Still Two Models of Capitalism? Economic Adjustment in Spain. (2011):20-34. Web.

Summary of the main points of the Buy American Requirements

The Buy American Requirements is a provision within the American Recovery and Reinvestment Act (ARRA). The provision prohibits the use of stimulus funds to repair, maintain or construct public building or public works if the iron, steel land other manufactured goods utilized in the project are not made in the United States (Krucks, 2011). However the provision provides three circumstances that are exempted from the above mentioned prohibition. First, exemption is granted if the available quantity and quality of good produced in the United States is insufficient to meet the project standards. The second ground for exemption is when use of American goods would cause more than 25% rise in contract cost. Lastly, exemption is applicable if the use of domestic goods would antagonize the public interest. The provision further requires agencies that must publish detailed justification, of all accepted proposals that have exemptions, with the federal register. This is meant to prevent fraudulent exemption through collusion between contractors and corrupt public servants, hence enhancing the enforcement of the provision.

According to ZirkelBach (2009), the regulation within the Buy American requirements may not be applied to construction material produced in certain designated countries, known as Recovery Act Designated Countries (RADC). These are mainly less developed countries which are signatory to trade agreement with the United States. It is important to note that under the Buy American requirements, a good is defined to be made domestically if final processing in done in the United States. This implies that commodity is transformed into a particular form or shape in the United States or combination of raw materials to create the commodity which has differing properties with the original ingredients takes place in the United States.

Appropriateness of the Buy American Requirements

The high rate of unemployment been experienced in the United States and the increasing deficit in the balance of payment with major trading partners requires protective economic legislations to reverse the situation. Therefore, the Buy American Requirements are an excellent provision. This provision seeks to promote spending of economic stimulus funds on domestic goods with an aim of promoting growth in the construction sector (Johnson, 2010). The stimulus fund is financed by taxes and it is important that it be utilized in a manner that benefits the tax them. The individual tax payer would benefit from employment opportunities created while corporate tax payers would benefit from increased economic growth and development. It would be unfair to the tax payers if the stimulus funds are used in a manner that promotes the economic welfare of citizens of foreign nations at their expense. Allowing use of imported goods in government funded infrastructure project is tantamount exporting much needed jobs and investment opportunities from the United States.

Competitively priced imported construction goods shrink job opportunities for domestic workers in this subsector. This is attributable to low cost of raw materials as well as labor in foreign countries. It is thus expected that without the Buy American Requirements contractors are likely to source products abroad to optimize profit margin (Sinclair, 2009). Thus, the provision deters profit minded contractors from using public funds to only enrich themselves while at the same time encouraging distribution of wealth through domestic sourcing of goods. The provision promotes increase in demand for domestic construction goods which translates into demand for direct and indirect labor. Working citizens implies consumers have money to spend which is an important driver of economic growth.

Does Buy American Requirements Contradict Capitalist Ideals?

The Buy American Requirements are contradictory to the United States government claim that it promotes competition and a free market economy. It is in fact a protectionist strategy. It dictates how constructions firms wishing to participate in the government fund project source materials locally which effectively puts restriction on imports. This is a regulatory barrier to market entry which characterizes protectionist economy policy rather than capitalist economy (Hawkins, 2012). Such protectionist strategies have the potential retarding economic growth due to inefficient allocation of resources. The United States is a leading advocate of free market economy and it has persistently pressured emerging economies such as China and India to abandon protectionist policies (Johnson, 2010). Therefore, the Buy American Requirements antagonize ideals of a capitalist society that the United States government purports to promote.

According to Fristch and Boles (2009), even American companies based in other nations are finding it difficult to bid for contracts in the U.S because of the stringent requirements. For example, Trojan Technology Inc. of Ontario Canada and a subsidiary of the Danaher Corporation (a Washington based U.S conglomerate) has been negatively affected by the requirements. It has been forced to relocate to the United States in order to meet the requirements of this provision. These requirements prevent the buyers and sellers construction goods market, from making purchasing decisions based on forces of demand and supply which are the factors that coordinate free market. Thus it is contradictory to government commitment to promote capitalism.

Are the Exemptions fair and Advantageous to the Economy?

The exemption for goods which are not produced in adequate quantity and quality are fair or advantageous to the United States economy. This is because; it allows acquisition of such commodities at competitive prices abroad without restrictions which may delay timely completion of projects. In addition, it promotes efficiency in allocation of scarce resources which is critical for economic growth (Chang, 2012). It encourages the local producers and manufactures of such commodities to minimize wastage of resources through adoption of innovative technologies in order to remain in business. This demands investment in research and development which is a key aspect of economic development.

The exemption for goods that may lead to of the contract cost by 25% is advantageous to the economy. It promotes efficient us of financial resources by preventing purchase of goods at unreasonably high prices. It thus saves tax payers money which could be allocated to other projects that promote economic growth. It promotes prudent utilization of public funds thus and reduces government spending which reduces the external debt burden.

The exemption based on conforming to public interest may not be fair to the economy. This is because public opinion is largely based on partisan interest which may not necessarily be in the best interest of economy. Public sentiment may lead to inefficient allocation of resources due to superficial benefits which mask the underlying economic implication of project procurement decisions (Krucks, 2011).

The exemption provides to less developing countries is beneficial to the economy since it encourages them to adopt free market economy. This provide greater opportunity for export by domestic industries which by large surpass what is imported. It expands export market thus increasing demand for America made goods which provide new job opportunities as well as new stream of government revenue in form of profit taxes.

References

Chang, H. (2012). New Breathing Space. Web.

Fristch, P & Boles, C (2009). How Buy American Can Hurt U.S. Firms. Web.

Hawkins, J. (2012). The Real Problem with Buy American. Web.

Johsons, R. (2010). Implication of Buy American Act. Web.

Krucks, N, W. (2011). The Stimulus Acts Buy American Clause Presents a Challenge to Manufacturers and Suppliers. Web.

Sinclair, S. (2009). Buy America Sell-out: Giving Away the Canadian Procurement Sovereignty. Canadian Center for Policy Alternatives. Web.

Zirkelbach, G. D. (2009). Anti-Fraud Regulatory Scheme Imposed on Stimulus Fund Contracts. Web.

The ongoing financial meltdown in Europe has influenced negatively the lives of Greeks. Many people have closed business due to inability to sustain them financially. The government on its part is facing many challenges ranging from internal economic instability to sustaining inter-governmental projects within Europe and in other parts of the world.

Above all, pressure is mounting on government to step up and intervene in order to restore normalcy as well as constancy in the financial system. In real sense, the government does not have enough funds to assist all crippling businesses within the state. A number of reasons are always considered before the state interferes with the economy. Greece is a great proponent of free market economy, popularly referred to as lazier faire.

The state is weighing options before it takes corrective measures. A big problem is how and who to bail out because not all businesses are undergoing financial turmoil. In fact, some are doing very well since they are taking the advantage of high prices. Such businesses usually have low production costs; they are local firms that do not specialize in certain products.

The government is really struggling to get into the matter; this is evidenced by its move to invite EU officials to assess the extent of the disaster. There is high possibility that the government will act after the EU officials are through with their mission.

The EU on the other hand has noted that the Greek financial problems are not restricted to their local markets alone but a matter that affects the whole union. World Bank and other monetary regimes such as the International monetary fund are expected in Athens very soon to evaluate the current situation and advice relevant authorities on the way forward.

The Greek government however is trying hard to restore its financial grip by borrowing locally as it awaits foreign assistance. The government cannot sit back and watch the economy deteriorate even if it believes in the policy that the market is self-correcting and regulating. In case the economy collapses, the government stands to lose much because people will be laid off and many will evade payment of taxes.

The government fears that in case the tragedy goes on, crime rates will definitely go up and more funds will be spent in containing crime and other effects of crime. Although the government is in need, its relations with other states cannot be compromised in any way. For instance, the state cannot bend low to other states by giving in to their demands and wishes in order to receive foreign aid.

This is one reason why Greece is depending on the union since EU is a body that represents the interests of all members uniformly. No member within the union is powerful than the other even though in real terms some members are more influential.

Conversely, regional blocs, such as the EU are known to contribute little to the welfare of states since they have little resources and inadequate work force to deal with problems. The EU operates as directed by the member states implying that there is no way it can function without approval from all states.

Greek scholars are accusing unnecessary politics as solely responsible for delays in solving economic problems. The crisis has generated a new class of people in Europe. Many people go without some basic needs because their pockets cannot sustain them anymore. The scholars observe that the government needs to restructure to come up with an efficient bureaucracy.

The citizens are taxed beyond their limits in order to cater for government services. Scholars observe that this is interfering with the social structure because some members of the society are forced to take up or perform roles that are not theirs.

The government is forced to tax citizens heavily and drop important development projects to sustain a bloated government. Indeed, this are some of the demands the world monetary regimes will demand before cooperating in restoring the economy. The case of Kenya serves a living example. The Moi regime was forced to open up by adopting western capitalist model and drop some socialist policies.

This demanded a lean and clean cabinet as well as giving freedoms to people. The ruling socialist party in Greece can be requested to adopt modern economic aspects and drop socialist ideas, especially the spirit of collectivism.

Greek problems seem to be unending because the political climate at home is hostile such that the ruling party cannot come up with sound policies for solving the crisis. Local politicians are opposing the presidents move to formulate and implement long-term policies that can provide lasting solutions to financial problems.

The ruling party is divided over the presidents idea, which has complicated the whole issue of bailout. Without state intervention, the costs of living can sky-scrap to a level that no citizens can withstand. The EU therefore should come to the rescue to Greek government to avoid more problems.

Works Cited

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Dwyer, Gerald. The financial crisis of 2008 in fixed-income markets. Journal of International Money, and Finance 28, 2008:1-5.

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Observing the price of gas over the last couple of years, many Americans are now crying for help from the federal government. It is expected that by summer gas will be around $4 a gallon. Currently in the city of Columbus, the average cost of gallon of gas is approximately $3.45 while a barrel of oil is over $100 a barrel. That is only a $.55 difference as estimated by summer of 2011. One may ask what steps could be taken by Congress, Senate, or the President to reduce the inflammation in gas prices.

With gas prices at an all-time high and steadily rising, many Americans are being forced to sell, trade, or buy a smaller vehicle. Many individuals will need to sell their current vehicle just to be able to afford gas for it. With gas currently at $3.45 a gallon, its no wonder many people are using public transportation, car-pooling to jobs, and riding bicycles to work. A person who has a family to support, making fairly decent money, and owns a truck or a vehicle with a large tank will soon have to make changes as to their way of commuting daily. Everyone is being affected by the rising cost of gas.

Many suggestions have been brought to the Congress, Senate, and President for help. Although many people are crying out for help, the actions from the federal government have been limited or unseen.

Many suggestions have been offered to the President in regards of what he can do to reduce the price of gas. A research by Mark Clayton reveals that the President proposed to cut back or stop the spending of oil. It was also proposed to the government to end the Big Oils tax break. A tax break may not necessary be the answer to lowering the gas price, altogether if a tax break is implemented; at some point the American people will have to deal with an increases in their taxes.

Inflation has been on the rise with some commodities increasing their prices by over fifty percent. Economists have argued that the energy policies in place have resulted in the high prices in gasoline. They have also described the need for the US to put more effort in offshore drilling of oil, instead of fighting to control the oil in the Middle East. In addition to the disorder in the Middle East and increased demand for oil, the switch to EPA summer blends in May will lead to further rise in crude prices. One of the suggestions is that the federal gasoline tax be suspended until the prices drop. The local tax should also be suspended, since these taxes collectively amount to about 50 cents, at the pump.

The number of Americans who still think that the economy conditions in the United States are good has dropped from 25% to 15%, in the last two years. The high gas prices are a result of the supply and demand chain, and have little to do with corporate greed or poor planning. As such, the government should not intervene, and the market should solve the issues by itself. There has been increased demand for oil in china and India, which has been observed to be one of the reasons for the high gas prices. The high cost of gas has also been attributed to high gas taxes, war in the Middle East and lack of adequate refineries in the US.

The high demand for oil is partly due to vehicles with low fuel economy. Most of these vehicles are more comfortable and safer, and anyone who can afford to maintain them does not mind the fuel economy of the car. The shortage in supply can be attributed to the environmental regulations that are opposed to new refineries as well as the political influence that is against the exploration of oil in Alaska and other parts.

The high cost of gas in the cities has been attributed to the variety of gas blends, and the specific requirements for various parts of the country. High prices have also resulted from the increased number of people driving to their holiday destinations in order to avoid the airport hustle.

A decrease in the demand for gas should cause a significant decrease in its price. One way to accomplish this is by using technological advancements to increase fuel economy of the average cars. If the fuel economy of vehicles can be improved from 24mg to 40 mpg, then the consumers can save up to $40 billion, within a span of ten years, of its implementation. When all the trucks and vehicles have been replaced, consumers can save over $65 billion in fuel consumption. If policy makers can implement the strategy that requires all vehicles to increase fuel economy to 40mpg, then the consumers can be protected from gas price spikes in the future.

Economic analysts have estimated that the economic growth of the united states would reduce by approximately 25% if the price of oil got to $100 a barrel. This would lead to increased cases of unemployment. The difference between the current gas spike and the gas spike in 2008 is that there are fewer jobs now, and the values for real estate are lower. In a span of three months since the rise in gasoline, drivers have spent over $13 billion. The tax cut resulted in increased incomes, though it did not lead to increased consumption, as was expected with the improvement of the economy. With the increased energy prices and food prices, people have responded by spending less on entertainment and travelling. This was observed in about 70% of the population.