Current Micro Economics Issues - Essay Example

2021-07-15 03:28:08
7 pages
1772 words
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Vanderbilt University
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Essay
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Part 1

Individual well-being is the primary reason for a strong economic establishment for any country. Microeconomics is the study that deals with the individual's well-being; it tries to address the value of collectivity in the national values. Equalities among all other subjects dominate the element of microeconomics. America is a very dynamic country and one country that have expeditiously exhibited the power of devolution. The federal system of government in U.S.A as over the past showed the potential of inclusive government. Nonetheless, the country has been faced by numerous limitations of economic deflection. The monopoly in the United States of America is a buzz word and should be dealt with. The poor and the rich gap keep on widening each opening day. Most politicians have taken the agenda as a very potential matter to address in the belief that they would be recognized.

Monopoly is the act of market control where one party uses the possible advantages to suppress the other lesser party by either controlling the price, supply, and other services that are of importance to the users. Consolidation of resources and products has been the most impunity that most corporations have used against their buyers. As a liberal country American market operates very freely, and there are no restrictions on market entry and exit. However, individual firms with specific market advantages either operate in lone or merge the purchasing power of the client. Hillary Clinton's victory would have materialized if she carried forth the agenda to address the impunity that was evident by the looming monopoly that had taken better parts of the America. Donald Trump took advantage of Hillary's failure to address the matter in totality as she gave room for digression. Ideally, monopoly is the best symbol of inequality in a country as the profits concentrate hands of the few. The poor continue to be poor while the rich maintain up on the ladder, the heartland cities fade away like the Memphis and the Minneapolis as corporate giants in the coastal cities. There is a drop in the real wages as mergers have deflected from the need to for employers to compete and retain work

Such extreme concentration of power was contrary to Democratic Party which worked hard to prevent it in most of the 20th century, the tradition that found expression in anti- monopoly policies designed to protect Americans as consumers and also as producers from domination by the powerful. Today, many Republicans oppose the formation of monopolies, but the Democrats, in particular, would benefit from making it a centerpiece of their platform in the coming years. Since 2008, there have been more numbers of up coming mergers about $10 trillion and its growing rapidly in numbers in following years with 2015 setting a record for most mergers in a year. In the year 2016, "the Economist" published three cover stories of America's monopoly problem. The cover stories reported that two-third of all corporate sector has become more concentrated since the 1990s, and that they are more profitable now than any time since the 1920s and that the larger amount goes eminently to the few investment funds such as Black Rock and State Street. The federal council of economic advisers reached the same conclusion and called for a reaction to market power abuses.

Populist movements like the tea party, occupy and the Sounders campaign have all focused to verifying degrees on their threats. It's evident that most Americans now believe that big corporation is too powerful something that the Democrats never acknowledge that would affect how citizens vote. Party leaders are for instance right that millions of American citizens today are grateful for the Obamacare even though the travails of Obamacare also reinforced for millions of other Americans those hospitals, insurance, and pharmaceutical monopolists are driving up cost and cutting back on care and that the administration didn't stop them. Party leaders were also right that the American economy had been in the right direction since President Barack Obama took power but looking at the other sectors of American`s life, there were issues raised. For instance, the internet providers blocking them from faster service, cable companies charging too much for their services in entertainment, giant food companies reducing qualities of their milk and chicken, agriculture corporations dominating the sale of home mortgages, groceries, office supplies and restaurant meals, and gauging consumers when they buy their items.

Part 11

Government subsidies are significant in alleviating the high cost of living in a country. Malaysia is a country with a population of about 39.2 million. The Asian country is a very industrious country located next to beaches with a lot of European influence. Well, back to the uses of subsidies. Like mentioned above, subsidies are tools used by the government to intervene when the price of a commodity or services are high beyond the limits of the domestic consumers. It is the duty of the government to regulate the purchasing power of the citizens within a country as for this the consumption of particular goods are kept in check a case of Malaysia is typical to the course. Also, the subsidy can be used to increase the investment vigor of both the foreign investor and the domestic investor. The government gets in to do this by regulating the taxes by reducing the rates of interest of a particular factor of production. In the current microeconomics of the country, sugar plays a very important role to most citizens of the country. There has been complaining by the citizens about the prices of sugar are imposed by the neighboring countries. The problem usually is, due to a high cost of production in the current, the domestic producers raise the prices of sugar, giving room for smuggling to take place by the dubious local investors. The condition worsens the economic balance in a country.

The reduction of the subsidy by 20cent will help increase the price of sugar which is RM.2.50 in comparison to that of the neighboring country which is RM 3.30. The smuggling of this sugar would go up as the domestic investor would have their investment power reduced. The question, however, remains that, for how long will the government keep the situation in check. It is not only sugar that faces this kind of situation, but nearly all sorts of goods in a country also face this kind of difficulty. It is not always about the cost of the raw materials parse but also the cost of production of the commodities. In some circumstances, a particular country has the power to harmonize the production cost for the investors making them posse's market advantages over the rest.

Microeconomics deals entirely with the well-being of the citizen. The reduction of the subsidy would affect the small business as the investment price will go high. The country has the responsibility of taking care of the citizens. It is said that the reason behind the reduction of the subsidies is to help the Malaysian citizens to live a healthy life. If the prices go high, they will be a reduction of sugar usage by the general population; this miss a healthy life as the chances of sugar diseases will go down. It will also induce the practice of a healthy diet. However, another element of microeconomics that comes out clearly from the context is the implication of high prices of commodities. According to economic theory, the increase in prices leads to decrease in demands. In reality, this does not mean that the general sugar consumption of the public would reduce since sugar like any other good has its subsidy. The reduction of the sugar subsidy has apparently damaged the sugar companies as the support companies have started mushrooming all over the country. These sugar products include condensed milk, maple syrup, and honey. An impending situation is that the living cost will swing so high since the business that deals in the line of sugar commodities would prefer to maintain the production of sugar but increase the prices of the subsidies. This in return would increase the cost of living, and the common citizen would suffer.

Part 111

Communism system of economy was established in the quest to help avert the inequalities that existed in most parts of the world during and after the major world wars. A communist system is one that is anchored central form of government where the government takes custody of its citizens at all cost. The government believes in the good governance to its citizens and as such, it most efforts to device effective economic strategies, communism and capitalism has faced great opposition from the different economic theorist. The products are centrally collected then the equally distributed. However, the communism came with a lot of democratic limitations. The citizens lost their liberty, and this raced all a lot of suspicions about the intentions of the government. The film; the Agony of reforms brings clear episodes of how capitalism started gaining fame in the early 19th centuries. Capitalism came on the spur of the democratic demands. The agony of reforms is, therefore, a story that tries to tell how the economies failed and new leaders picked to embrace the conversion of free-market capitalism. The program focuses on how the countries such as; Russia, Poland, India, Bolivia, and Chile sailed through the conversion facing the upheavals and the changes and the implications of the freedoms.

Capitalism came into privatization, deregulation and freewheeling competition. Unlike the centrally based economy of communism capitalism is individual based and one man for himself. Ideally, the named country would have thrived in a communist system by the fact that the citizen would for sometimes get the services from the states directly since the major corporations would be privatized. The privatizations would deny the individuals to invest freely. In the quest for fairness and equality, the countries development would be deterred.

An open lesson learned from this episode is that a free economy is important that regulated economy. The donation of investment power to the private individuals would increase the GDP. Evidently, in a situation where everything comes from the central government induces laziness among people. The general population grows dependent, and this kills the development morale of the citizens. In the 20th century, people cast blamed on the free-market strategy, so it forced the governments to change to communists, it was only a matter of time to realize how the economy had been eaten away. According to Jeffrey Sachs the capitalism model that was despised then proved to be the only model that could help the economic stumbling in the whole world. Most economies above included worldwide have embraced free-market capitalism.

 

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