Applying Economic Rationale for Eradication of Diseases and Global Warming - Assignment Example

Section/# Question Although from a moral standpoint, one would be quick to say that it should be a preeminent concern of the medical community as well as individual governments to allocate their resources to seek to eradicate disease from the face of the planet, a more careful examination of the issue from an economic point of view states that this may not be the best approach to the effective allocation of limited resources. Without dealing with the level of pain and suffering that diseases bring to their respective sufferers, this analysis will consider disease eradication as a function of what economic repercussions such a policy would necessarily have. Firstly, this brief analysis will consider the economic effect of overall demand for prevention. Secondly, disease prevalence will be considered as a factor with which one must understand prior to attempting to seek to answer such a question. Thirdly, the elasticity of the demand as well as the overall benefits and costs of the vaccine will be considered. Naturally, the first economic consideration that one must weigh regards the overall demand for prevention. A topic of analysis which will be used extensively within this analysis is that of “diminishing returns”. As such, it should be noted that the demand for a prevention will necessarily decrease as the overall supply of the disease (read: disease prevalence) necessarily decreases. This direct and dependent relationship means that for each case that is cured and/or treated, the supply of new cases therefore decreases and thus makes the demand for prevention that much less (Molyneux et al 2005). Similarly, disease prevalence is integrally linked to the concept which has just been mentioned. If the disease is highly prevalent or highly infectious/contagious and has a likelihood of spreading and causing harm to a wide swath of the population, then the dynamics of the supply and demand curves that help to define preventative measures will be altered. Similarly, the benefits that the vaccine will bring also incrementally decreases as prevalence are reduced. In this way, the law of diminishing returns yet again rears its head. As such, this realization leads the economist to question what the overall costs and benefits of the eradication of the disease will bring as a function to justify the high expense that such a program will necessarily entail. Naturally, it is in the best interests of the general population as well as world leaders to seek to minimize the prevalence of key diseases within the world; however, once a disease has been reduced to very low levels it becomes extraordinarily expensive and time consuming to seek to completely eliminate the disease entirely. As the preceding analysis explains from an economic standpoint, it is therefore within the best interests of the responsible individuals and organizations to seek to minimize the effect of most infectious diseases rather than inappropriately allocating vast amounts of resources to achieve but a little gain. Question 2: Part 1 With respect to identifying the unique economic assumptions and rationale behind Robert Frank’s Carbon Tax, the reader can quickly understand that his ideas, although seemingly new on the surface, are in fact very old indeed. What Frank promotes is turning the economy in a direction of further taxation in order to reduce human carbon pollution which supposedly leads to further warming of the planet. Naturally, there are a host of issues that can be argued with relation to this claim (not the least of which is the fact that the earth’s oceans, bovines, and volcanic eruptions release many more times the CO2 content that human beings do in any given year. However, notwithstanding these facts, it should be noted that a taxation of carbon emissions would have the effect of reducing the overall level of consumption of fossil fuels and consumption in general that would take place within our society. Yet, this tax would also have the effect of strangling the rest of the economy. Like with any economic policy implementation, there are upsides and down sides; losses and gains which must be analyzed in order to more fully and completely understand the given sitaution. The gain would of course be a less wasteful society; whereas the loss would be decreased efficiency that is realized as a result of yet another tax that only serves to decrease efficiency and increase deadweight loss (i.e. the Lauffer curve). As an analysis of the current economic troubles that define our modern world, imposing additional taxation (even if the goal is to tackle global warming) is not the way in which to rescue the economy from what is most certainly the brink of collapse such as has not been seen since the Great Depression. Similarly, the most powerful economic assumption that Frank makes is with regards to his inherent belief that taxation is one of the best ways to correct problems that may exhibited within the free market economy. This approach certainly has its place; however, there is a litany of studies and economists who have demonstrably proven that the deadweight loss that is attributed to taxation always outweighs the benefits that it was intended to portend. Question 2: Part 2 With regards to the efficiency and equity that such a policy implementation would employ, one cannot merely approach such a question from the standpoint of what it could mean for the environment. The fact of the matter is that such a change would mean that millions of American who currently live on the very edge of poverty – struggling to pay their current bills and provide adequate transportation to and from work – would effectively be doubling the bills that they would be responsible for each month with respect to fuel alone (Cleetus 2011). Similarly, as the author noted, the changes that such a tax would portend would not only relate to fuel. Rather, if such a policy was implemented by the federal government, it would have far reaching consequences on the price of each and every consumer good that the economy currently consumes. Although it is perhaps noble to imagine a situation in which wasteful consumption is ended, the effects on the most at-risk and vulnerable within society would be detrimental. In order to appreciate this, one need only to imagine a situation of a single mother who works two or even three jobs as a means to pay rent, provide clothing and food for her family, as well as perhaps pay for tuition and books for a local community college she might attend for night classes. Such a tax would mean that her fuel bill would double. As a percentage of income this increase would likely be a key determinant between paying the electricity bill or choosing to discontinue her higher educational pursuits. When such a policy implementation is broken down to such a level, it is easy for one to quickly assume that although well intentioned, the plan itself is foolish and short-sighted as it does not take into account such factors in its formulation/implementation. Question 2: Part 3 With regards to whether Frank’s “fairly simple and cheap technical solution” will be successful, this is a question that can only be determined based on the way that one interprets such a question (Frank 2012). For instance, from an economic standpoint, the vastly increased fees for goods and services that consumers will experience as a result of Frank’s plan will necessarily mean that people will be forced to consume less as the money supply will remain static and prices will exponentially increase. In this way, Frank’s plan will achieve its desired result to constrain the consumption habits of the typical American citizen. However, if one approaches Frank’s “Fairly simple and cheap technical solution” from an economic utility standpoint, it can be rapidly determined that the costs associated with such a plan will likely have a supremely constricting effect on the economy as a whole. Rather than merely helping consumers to reduce their spending habits, such a policy implementation will have disastrous effects on the entire economy (Chi et al 2012). It does not take a great deal of economic expertise to know that each and every facet of the goods and services exchange is based on our transportation system. Therefore, doubling fuel costs as a way to decrease consumption and increase environmental consciousness will serve to cripple the very framework upon which the rest of the economy operates. Rather than correcting the issue of global warming by merely tweaking the economy, what Frank’s plan would entail would necessarily cripple the economic structure entirely; at which point, environmental concerns would truly be the least of the issues at hand. References Chi, C., Ma, T., & Zhu, B. (2012). Towards a low-carbon economy: Coping with technological bifurcations with a carbon tax. Energy Economics, 34(6), 2081-2088. doi:10.1016/j.eneco.2012.02.011 Cleetus, R. (2011). Finding common ground in the debate between carbon tax and cap-and-trade policies. Bulletin Of The Atomic Scientists, 67(1), 19-27. doi:10.1177/0096340210393705 Frank, R. (2012, August 25). Carbon Tax Would Have Many Benefits - Economic View - NYTimes.com. The New York Times - Breaking News, World News & Multimedia. Retrieved November 15, 2012, from http://www.nytimes.com/2012/08/26/business/carbon-tax-would-have-many-benefits-economic-view.html Molyneux, D. H., Hotez, P. J., & Fenwick, A. (2005). "Rapid-Impact Interventions": How a Policy of Integrated Control for Africas Neglected Tropical Diseases Could Benefit the Poor. Plos Medicine, 2(11), 1064-1070. doi:10.1371/journal.pmed.0020336 Read More