Economics and Our Life - Essay Example

Economics and Our Life Economics is defined as the social science that studies the production, distribution, and consumption of goods and services. (wikipedia.org/wiki/Economics). Economics basically studies money. It closely observes even the very minute fluctuations in money market. Of course, different aspects come under its purview. Markets, monetary policy, inflation, deflation etc, are a few. No doubt, money has key role in quality of life and development in all spheres of life. And hence, Economics gets an all-important slot everywhere. Nation wise or even internationally all important policies and decisions anchor upon Economics. Whether it's war policy or food policy, Economics plays a role in it. It's the duty of Economists to study the economic viability and impacts of major policies and policy changes. Fortunately, Economists are getting their due importance in policy making. It's economists who shout both in praise and against all policy decisions of different countries. And at least in a few cases, they themselves get divided in ideas and concepts. Regarding certain policies a group of economists come up with words and swords against another group of economists. Each group depends upon different theories at different times. Basically they keep in mind their own basic view and proceed. For giving stress to their views, depend on theories according to their convenience, that's all. Economics is supposed to act in such a way to wipe out tear from all the human eyes in the world. It should address the issues of poverty, famine and basic needs. All the theories may be different in ways of action but aim the same target: bring prosperity to human race. From theories to application - here starts the real game. Economists have made so many jargons familiar to the common man. But what's the end result Did it take us anywhere they planned or predicted This question stands as a very big unanswered question before mankind, especially these days. In the initial years of the new millennium what the Economic World has been experiencing was boom, boom and boom. The IT boom, banking boom, insurance boom, etc. could be cited as shining examples. Predictions also were aplenty. It was pointed out that the IT boom will stand for many more years. According to economists, banking and insurance were also going to record a trajectory of growth. Many reasons were given numbered one by one to substantiate their point of view. Banking habit is not developed among a large number of people. And an attempt was started by governments of various countries to bring more citizens of theirs to banks. Different packages were announced including zero balance accounts and any time money withdrawal facility. Similarly, it was observed that major chunk of the population remain outside insurance net. Studies were conducted which revealed that there are countries which have only upto a mere 10% of their population keeping insurance policies. Based on these sorts of observations and statistics, so many new economic concepts were introduced by economists. Since the economists were having crucial role in policy making, their views and beliefs turned out to be policies. Political leaderships were depending much on economists in planning future. Since they themselves were ignorant of economic concepts, believed blindly what was advised. There are cases where enough studies were not conducted or even common sense was applied before reaching in far reaching policy decisions. And such policies affected the concerned economy very badly also. Offshoring of jobs is a typical example. Kathy Sanborn writes: In an article by Paul Craig Roberts ("How the Economy Was Lost"), he explains how the offshoring of jobs helped to create a lower tax base for American communities. Because US workers could no longer keep their IT and software engineering jobs due to 1) offshoring and 2) foreign workers coming in on H-1b work visas, our highly trained technical workers' salaries plunged. In addition, corporations began a mass exodus of manufacturing jobs to foreign lands, thus creating a new wave of unemployment among skilled American laborers as well. Business pundits such as Microsoft's Bill Gates jumped on the bandwagon to decry the lack of skilled Americans, thus opening the floodgates for large numbers of foreign workers to take over the jobs of competent Americans. Roberts says, "Chasing after shareholder return and 'performance bonuses,' US corporations deserted their American workforce. The consequences can be seen everywhere." He adds, "Doing a good job, providing a good service, is no longer the corporation's function. Instead, the goal is to minimize labor costs at all cost." (The Lazy Man's Guide to the Economic Crisis) From this example it's evident that economists were guiding governments and even corporate groups into a tragedy. And it led either to the closure or huge loss of firms including those in banking insurance and IT sector. No economist who suggested enough growth trends and possibilities to increase profit thought of a recession. None among them were ready to hear feeble voices like that of the Nobel Prize winner in Economis Paul Krugman. He is a self described liberal economist. And his line of thought was not at all acceptable for that group of economists who basically keep entirely opposite views. All warnings in the other way were ignored either unknowingly or purposefully by them. But things took a different turn very fast. No economists or administration could stop the bad fate of ours. At first the most stable and strong economy of U.S. itself was affected. In the words of Former U.S. Federal Reserve Chairman Alan Greenspan: Former U.S. Federal Reserve Chairman Alan Greenspan said on Tuesday the current global recession will "surely be the longest and deepest" since the 1930s and more government rescue funds are needed to stabilize the U.S. financial system. "To stabilize the American banking system and restore normal lending, additional TARP funds will be required," Greenspan said in a speech to the Economic Club of New York. The U.S. Treasury's Troubled Asset Relief Program designed to help bail out banks has been partially successful, he said. (Worse Recession Since 1930's) Just like all other subjects or sometimes more fast the concepts of Economics was spreading across national barriers. Whatever decisions were taken by economists in developed countries, mainly U.S. was carbon copied by economists of developing countries. They were all the time keeping a 'west looking' attitude in studies and policies. The fearful state of economies of poor countries is evident from the words of the IMF chief itself. "After first striking the advanced economies and then emerging markets, a third wave of the global financial crisis has begun to hit the world's poorest and most vulnerable countries, threatening to undermine recent economic gains and to create a humanitarian crisis, IMF Managing Director Dominique Strauss-Kahn said in Washington. Most low-income countries escaped the early phases of the global crisis, which began in the financial sectors of advanced economies. But it is now starting to hit them hard, mainly through trade, as financial problems in advanced countries trigger recessions that dampen demand for imports from low-income countries. Of 71 countries classified as eligible for concessional IMF lending, many will at best see per capita incomes stagnate this year. And in some cases, per capita incomes could shrink. Commodity exporters will be hit hard, facing both lower export volumes and lower prices, Strauss-Kahn said" (Economic Crisis Starts to Hit World's Poorest Countries IMF Survey online). All along the above observations and examples one can feel the real problem which took us to a steep fall. Economists who are supposed to play a creative role in the development of society were playing a destructive role. Only one thing is to be studied: whether it was a conscious move with hidden agenda or failure from their side to be good in foreseeing a better tomorrow. It's also to be studied whether the fault was that of Economics or Economists. References Economic Crisis Starts to Hit World's Poorest Countries IMF Survey online March 3, 2009 http://www.imf.org/external/pubs/ft/survey/so/2009/NEW030309A.html March 3 2009 Economics http://en.wikipedia.org/wiki/Economics March 3 2009 KATHY SANBORN The Lazy Man's Guide to the Economic Crisis http://www.counterpunch.org/sanborn03032009.html March 3 2009 Prospects for the Global Economy http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/EXTGBLPROSPECTS/0,,menuPK:615470pagePK:64218926piPK:64218953theSitePK:612501,00.html March 3 2009 Worse Recession Since 1930's Wednesday, February 18th 2009http://recession.org/news/worst-recession-since-1930s March 3 2009 Read More