Questions about Econ - Assignment Example

First Last Name Instructor’s name Course Date EXERCISE 1 1.”The requirement of economic austerity mean that the National Health Service must reduce the services that are available free at point of use.” Therefore, what areas of current health provision ought to be removed from the NHS or privatized to ensure that limited resources are used in the most efficient manner? The National Health Service is a system in the United Kingdom that allows the offering of free medical care to the citizens. This service is usually made possible through general taxes. They finance the service. Very few British citizens have private medical coverage. Every citizen ought to have registered with a private practitioner that then gives access to the specialist. A citizen cannot go directly to a specialist (NHS England, 2014). The NHS service has made medical care completely free for the citizen that goes against some of the economic austerities (NHS England, 2014). With this system, the medical body brings in very little income. This service also facilitates the internal market form of arrangement for medical services. This is such that, hospitals get contracts with district health authorities that buy the services for their population. How then do the authorities make income from this? It would be better if a fee was paid to the general practitioners while the specialist treatment was completely free. A partial fee could be paid for the general practitioner so that income can be generated for the service(NHS England, 2014). The completely free aspect of the delivery of medical services goes against economic doctrines. If the patients paid at least half of the general practitioner fee and then the specialist fee was completely paid, the district health authorities would gain some revenue since the general practitioners would still be covered in the capitation basis (NHS England, 2014). This way the limited resources would be used in an efficient manner such that more money is made from less. 2. Why should higher education be paid for out of general taxation rather than funded by those individuals who are the recipients of the education and the benefit that it bestows? Higher education is a key step of every child’s life. Year after year, children and young adults have been unable to further their education. Why? Because of the strain it puts on their parents or respective guardians financially (Gruber and Levitt 2002). Higher education, form study that has been done all over Britain, has been proven to be quite expensive for the average citizen. For this reason, many have forfeited the chance to advance in their education. The question of how higher education can be made cheaper, or rather, easier to afford for citizens in Britain has been a major issue of discussion over the years (Gruber and Levitt 2002). The key step in ensuring that higher education is affordable to the average citizen is by having it being paid out of general taxation. This is much easier than if the individual were funding the service. General taxation allows the payment of this service over a range of time as opposed to the rigid time frames that are in place to ensure that school fees is paid (Gruber and Levitt 2002). In addition to this, general taxation is friendlier and fairer since it is based on the general amount that the individual earns in their livelihood. This way, citizens of all classes are able to fund this service at their own pace regardless of how slowly they do it. Being a key attribute for development in Britain, education is quite important. By allowing general taxation as a mode of funding higher education will ensure further development of the country (Gruber and Levitt 2002). Moreover, more individuals would benefit from this change resulting in more elite citizens. Education is one of the factors that help countries to fight some of the rampant misdeeds in a country such as racism. From this we see that higher education being paid for out of general taxation rather than funded by those individuals who are the recipients of the education will be of great benefit to the country (Gruber and Levitt 2002). 3. Some schools of economic thought that it is not the role of economists to make ethical or moral judgments. Is this a justifiable position to take in terms of the social and economic policy that could arise? Ethical and moral judgments are the foundations that hold society together. Without these, society would be full of chaos, crime and destruction. Moral and ethical judgments should be practiced and made by any and every individual in the society to maintain the equilibrium that is life. For this reason, claiming that it is not the position of economists to make ethical and moral judgments is a wrong position to stand by (Graafland, 2007). Economists have as much right as anyone else in society to make moral and ethical judgments; not only for the benefit of the economic policy but also for the benefit of the social policy. Economists face decisions every day regarding the economic state of companies, a country, and other financial oriented aspects of development (Graafland, 2007). These decisions are crucial to the growth of businesses or even a whole country. Without moral and ethical judgments, economists would make illegal or corrupt choices that would result in absolute chaos. An example of this could be a corruption scandal for a business that would result in bankruptcy or tarnishing of a company’s name. In extreme situations, an entire country could face charges of irregular behavior thus losing critical international relations thus leading to economic failure (Graafland, 2007). For this reason, economists, more than anyone else, should observe ethical and moral conduct in their choices. Lack of this would lead to severe damage in a country or the economist’s area of influence. 4. To what extent are rising levels of income and wealth during early process of economic development a necessary prerequisite for successful development? Early levels of income and wealth during the early process of economic development are a great boost to the overall economic development. Once, say, a company, starts its early days with rising levels of income and wealth it is able to forge forward to further development easier than if it had started with a downward trend (Rodrik, 2007). Once a new institution starts its running by success it is able to attract more benefits. These could be in form of investors and market. These are both very crucial for further development of such an institution. For this reason, an institution like this would find it very easy to continue with the trend thus resulting in future growth (Rodrik, 2007). However, it is not a prerequisite that a company starts with rising levels of wealth. Most companies begin by difficulty with the marketing strategies and the attraction of investors. However, with time and exposure it has been seen that companies are able to familiarize with the corporate environment and the requisites for success such that regardless of the beginning, they end in success (Rodrik, 2007). A company can easily start at a low source of income than expected and lower market network. However, this can easily be managed and result in future growth. The growth of economic institutions all depends on strategy and skill. With these two, any company can get to its desired heights of economic development. Rising levels of income and wealth during early process of economic development are thus not a prerequisite for future successful economic development of institutions (Rodrik, 2007). 5. “In order to reduce the level of wealth inequality in the British economy it must be necessary to make wealth taxes much more progressive.” Discuss the validity of this statement. The gap between the rich and the poor in Britain is quite large. This has been attributed to many facts, underpayment in jobs, and lack of concentration on the development of the poor but the betterment of the rich, unfair taxing among others (Holahan and Garrett 2009). The rich continue to amass resources while the poor continue to be poor. It has been noted that money comes from the poor to the rich. This has to stop. One of the ways that this can be cumbered is by fair taxing. The rich place their wealth outside the country to avoid taxation. They continue to evade taxes while the poor face taxes such that a large percentage of the taxes are seen to come from the poor than the rich(Holahan and Garrett 2009). If the wealth tax is made progressive, the gap could be minimized. These taxes can then be used for the uplifting of the poor such as the creation of jobs among other projects. If the government were to ask the rich to pay more money in taxes they would gain quite an amount of revenue while still leaving them with majority of their income. The top 1% if taxed a little higher would generate enough income to raise those at the bottom of the earning pyramid by a large percentage (Holahan and Garrett 2009). These taxes could also reduce the extent to which the country borrows. The wealthy, while taxed a little extra could get the government out of some of the current issues facing it. One of these would be reducing the gap between the rich and the poor in Britain. 6. Given the introduction of legislation to ensure a lack of discrimination in the labor market, why do women, on average, earn so much less than men? Lack of discrimination in the labor department has been successfully implemented in most of the institutions all over the country. The initial gender bias has been seen to decrease over the years thus women can now have as much opportunities as men have in the acquiring of jobs. However, in spite of this scenario, women still earn much less than men in the labor market (Babcock and Sarah 2003). The main explanation given for the discrimination that comes during the paying of laborers is that women are less likely to bargain as compared to men (Babcock and Sarah 2003). Women are less competitive than men thus they do not argue much concerning pay rates at work places. For this reason, women tend to settle for whatever they are paid as opposed to men who are likely to ask for more and have more will to bargain. In addition to this, women miss promotion advantages because they are more likely to leave the job as opposed to men. This is attributed to the fact that women are more family oriented in comparison to men. This way, men rarely leave their job for time reasons while women do this often. Thus, with the same capabilities, a man is picked over a woman (Babcock and Sarah 2003). Moreover, the early belief of men having more capabilities than women still exists in the sub conscience hence some women are not treated as men are just by virtue of being women (Babcock and Sarah 2003). They are considered weaker and less able to handle some of the difficult tasks that men are able to handle. This is a mentality that has been fought over the years but still sadly continues to dominate the sub conscience of most employers. From all the above reasons, women find themselves not being paid the same way men are. EXERCISE 2 1. What does economic theory have to say about the introduction of a system of auctioning of usable body parts by the able bodied and by relatives of the deceased in order to increase the supply of organs for transplant? What objections could be made to such a policy? Auctioning of body parts according to the economic policy of Britain is a great way to generate revenue. Able bodied people that are willing to auction their body parts are now able to as long as they do it legally. This way the necessary taxes are paid to this effect. Body parts are bought at very high prices by those that are willing to buy, mostly because they are usually desperate. It raises a lot of money in revenue especially because body parts are quite expensive . The next of kin of deceased also have the authority to auction the body parts of the deceased. This is also okay if done in the correct legal forms (Atkinson, 1971). This policy increases the number of organs that are available for transplant due to the legalization. Moreover, auctioning provides a larger ground for the organ to be sold at a higher price. This attracts more donors to put up organs for auction thus saving more lives in hospitals (Atkinson, 1971). This policy is however very controversial. This is because body parts are quite the sensitive good to sell and auction. Most people argue that selling of a deceased body parts is lack of respect to the deceased. The quality of the body parts being auctioned is also a concern for many of those that are involved in the buying. In addition to this, auctioning of body parts is considered morally wrong. This is because many feel that t would be better to donate than to auction, to save a life. Many would auction for sale while the body part is needed by a patient urgently. 2. University tuition fees rightly recognize that the major beneficiary of higher education is the student. Any other system of funding would force non-beneficiaries to contribute to higher education provision to the detriment of their living standards. Discuss the validity of this statement. A university tuition fee is a program in the United Kingdom that recognizes the difficulty in paying for higher education thus provides loans for students. The university Tuition fee is used for the complete benefit of the student (Universities UK, 2007). This is because it does not require the payment of fees upfront. This way, a student is able to pay their fees as they continue to study to avoid unnecessary delays. In addition to this, it can give a complete or partial loan to a student to pay their fees. Students can then repay this loan later on, when they are working. This program is solely meant to benefit the student. In case any other form of funding was used to facilitate higher education then it would cause some strain on the individual responsible for the funding (Universities UK, 2007). However, this is not the case for all individuals since there are those that can comfortably afford to pay for higher education without the aid of the university tuition fee loan. For a non-beneficiary who is not quite comfortable with paying for higher education, another system of funding would definitely result in a detriment in their living standards. However, for a person who has a great income, any other system of funding would not affect them as much (Universities UK, 2007). All in all, University tuition fee is a funding system that is working for many in the UK. Thus, non-beneficiaries do not face problems trying to cover the expense. 3. Positive economists argue that value judgment has no place in the “science” of economics. Is this a credible position to take in the light of your understanding of the role of the academic subject of economics? Economic is generally the study of the way in which society usually produces and then distributes scarce resources. Based in this decision it is clearly very important that economist make value based judgments. It is a wrong position to stand by thinking that value judgment has no place in the science of economics (Hausman et. al 2006). Economists usually emphasize on separating normative economics and positive economics. The decision to choose normative or positive economics is itself a value judgment. This is because a value judgment can generally be defined as the criteria of whether something is desirable or not. For this reason value judgment is incorporated in the study of economics (Hausman et. al 2006). In economics efficiency is a major aspect of decision making. Each economist strives to achieve efficiency in their decisions (Hausman et. al 2006). This in itself is a core value judgment. Moreover, the utility of resources and staff related to resource allocation in society is also a value judgment. The entire criterion that is used to judge opportunities, for example market, is value judgment (Hausman et. al 2006). Economics cannot be studied without value judgments. In spite of this, economist should always be open about the values that are not explicit in their field. In addition to this, economist should study how the values that are not necessarily implicit in their day to day activities have an effect on their analysis and the conclusions that they make on policies (Hausman et. al 2006). 4. Is there sufficient evidence of a beneficial “trickle-down” effect during the industrial revolution in Britain that whilst increasing income inequality, ensured rising living standards for the urban proletariat? The “trickle down” effect defines the way in which the higher classes affect the subsequent classes in terms of fashion and development. During the Industrial revolution in Britain which started in 1760 a lot of development was seen. The first industrial revolution between 1760 and 1850 was mainly of machines that used steam and water while from 1850 to 1910 better machines were created due to technological advancements and they now used electricity and combustion engines. Industrial revolution is the main reason why Europe became rich (Appleyard and Rowlingson 2010). The “trickle down” effect worked very efficiently during the industrial revolution such that with the development of new machines, the higher class got them first while the subsequent classes got them and adapted them later. This way, in the end, the old machines were thrown completely out of existence. In addition to this the proletariat’s living standards changed over the years due to an increase in job opportunities with the increase in industrial development (Appleyard and Rowlingson 2010). With further revolution, technology was invented. This led to increase in the productivity of the labor force thus the wages increased. As a result, the living standards of the proletariat improved. However, the “trickle down” effect facilitated the increase in inequality of the income among the people in Britain. While this effect facilitates the development of the high class individuals the lower class individuals thus lag behind (Appleyard and Rowlingson 2010). This way, there exists a gap between the rich and the poor. This affected the whole country as a whole. In as much as the “trickle down” effect had its advantages, it had its disadvantages. 5. Why could Cost-Benefit Analysis be advantageous in the appraisal of large-scale public sector projects and what are the problems associated with such an approach? Cost Benefits Analysis is an approach that is used to identify the strengths and the weaknesses of alternatives that are being considered for a business transaction. It is usually used to measure the value of projects so that it is known whether the projects are worth pursuing or not. Cost benefit analysis is very important in the appraisal of a large scale project (Dinwiddy and Teal 1996). One of the advantages is that it is able to give the management an overview of the costs that are required to start up or maintain a large scale project. Overestimations or underestimations could be made in the determination of the costs for such a project thus cost benefit analysis plays a major role in this. With it, management is able to know what to have in order to pull of a successful large scale project (Dinwiddy and Teal 1996). In addition to this, cost benefit analysis is able to determine the benefits that would be acquired from a certain project. Most projects are created for their profits (benefits). For this reason, it is important to carry out cost benefit analysis in order to determine whether a project is viable or not especially because it is a large scale project(Dinwiddy and Teal 1996). Large scale projects would cause a lot of damage especially in the event of loss. For this reason, cost benefit analysis should be carried out. Furthermore, cost benefit analysis enables managers to identify the risks that are involved with the development of a large scale project. With knowledge of the risks that the project might face, it is easier to create mitigation strategies. Also, it is easier to know whether it would be wise to go on with the project or to drop it (Dinwiddy and Teal 1996). Cost benefit analysis, may however not be accurate thus can result in a viable project not being carried forward due to miscalculations. It is important that correct estimations are made during the cist benefit analysis to avoid such problems (Dinwiddy and Teal 1996). 6. Why are 50%+ of the population apparently excluded from the higher elections of the Law and Business professions in contemporary Britain? Does this constitute a cause for concern? The major reason why very few people are considered for higher elections of the Law and Business professions in contemporary Britain is elitism (Hausma et. Al 2006). From way back, it is noted that majority of the individuals that have high ranks in the British government and business world are those that went to high level schools. Most of these schools, as seen, are private schools (Hausma et. Al 2006). Elitism in Britain is rampant such that if one does not have an exemplary education then the chances for them to be considered for election for such professions (Law and Business) are very slim. From study, it has been seen a large percentage of the members of parliament, the judges and the newspaper columnists all attended private schools. Most doctors are seen to have degrees too. Trust in these areas of administration is only for those that prove to be above others in terms of their education. In addition to this, majority of the population in Britain, about 51% is women while only 23% of women are representatives in law. It also shows that women do not quite get as many sits in the government as opposed to men (Hausma et. Al 2006). This could result in the high percentage of the population that is excluded from the higher elections of the Law and Business professions in contemporary Britain. This is a major cause for concern because most of the British population is that which did not attend primary schools, and as seen, are women,. This means that those in these positions do not necessarily speak for the people. However, it builds more trust seeing as those that are chosen for these positions are the best in their fields. References NHS England, (2014) Understanding The New NHS. London: Health and Social Care Act 2012 Babcock, L. and Sara L. (2003). Women Don’t Ask: Negotiation and the Gender Divide. Princeton University Press. Bertrand M., Claudia G., and Lawrence, F. (2010). Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors. American Economic Journal: Applied Economics, 2: 228255. Gruber, J. and Levitt, L. (2002). Rising Unemployment and the Uninsured, Publication #6011, Kaiser Family Foundation. Holahan, J. and Garrett, A. (2009). Rising Unemployment, Medicaid and the Uninsured, Publication #7850, Kaiser Commission on Medicaid and the Uninsured, Henry J. Kaiser Family Foundation. Dinwiddy, C. and Teal, F. (1996). Principles of cost-benefits analysis for developing countries, Cambridge: Cambridge University Press. Graafland, J. (2007). Economics, ethics, and the market: introduction and applications. New York: Routledge. Hausman K., Daniel M., and Michael S. (2006). Economic analysis, moral philosophy, and public policy. Cambridge: Cambridge University Press. Rodrik, D. (2007). One economics, many recipes: globalization, institutions, and economic growth. Princeton: Princeton University Press. Appleyard, L. and Rowlingson, K. (2010) Home ownership and the distribution of personal wealth, New York: Joseph Rowntree Foundation. Atkinson, A. (1971) The distribution of wealth and the individual lifecycle, Oxford Economic Papers, vol 23, Oxford: Oxford University Press. Department for Business, Innovation and Skills (2010) Over-indebtedness in Britain: second follow-up report, London: HMSO Universities UK (2007) The economic impact of UK higher education institutions London: Universities UK [authors: Kelly U, McLellan D and McNicoll I], available at: www.universitiesuk. ac.uk/highereducation/Documents/2006/ EconomicImpact3.pdf Read More