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Macroeconomics is a field of economic theory concerned with the conduct of the whole economy. Many economic problems continue to plague America today. The United States is an economic behemoth and one of the most prosperous economies in contrast to most other nations. The evidence for this comparison is founded on the low cost of living, low unemployment rates, and low levels of inflation. As long as this situation persists, offering everlasting prosperity, the truth remains that America occasionally suffers from periods of depression with disastrous consequences. This paper would examine emerging developments that will cause economic harm to the region. Many economic changes are bound to occur in the wake of a new President, Donald Trump. His promises of a better America and economy are admirable though some of the means in which he seeks to achieve his promises are questionable. Donald has pledged an economic growth, which aims to revive the boom experienced in the 1980’s. Tax cuts and deregulations are his most evident strategies of ensuring the achievement of the plans. These two strategies expect to push back the economy to 3.5% which is a significant stride. The only disadvantage is that Trump’s political advisors and backers dismiss economists as skeptics and defeatists thereby insisting that no law of economics can prevent the revival of the boom. This view is a disastrous school of thought.
The economic growth is attributable to the market forces of demand and supply. As such, it is a disputable fact that a country can grow faster than the economic forces without triggering a volatile boom-bust cycle. Population and productivity potentially determine the growth of an economy. The increase of the workers and output generated by every worker is thus the surest way of ensuring a steady economic growth.
The population growth in America has decreased significantly since the 1980’s. With many people adopting the strategy of bearing one or two children at most, the population growth which was attributable to the success of the boost in the 1980’s is no longer available. It is thus impossible to achieve such an economic success, and in the event, more attempts are put forth to try to push it, the ultimate repercussion is inflation and higher deficits.
Donald Trump also insists on deporting many immigrants back to their original countries. There are thousands of foreigners, both illegal and unlawful in the country. That notwithstanding, it is evident that the main reason as to why they are in the United States is to “seek for greener pastures” ultimately resulting to seeking for employment opportunities. The immigrants are thus a primary source of labor. Deporting them, as threatened, will further jeopardize Trump’s dream of achieving a high boom due to the reduction of cheap labor thus lower output. The excessive ambition is thus bound to hurt the economic status of the country, and as can be seen, the United States is already recording the largest deficit ever in the bid for economic expansion.
The Hayek model comes into practice at this stage. The economic forces will always balance themselves out, and as such, there should be absolutely no interference.
Unemployment Rates in African Countries
One of the ongoing Macro Economic concepts currently experienced beyond the United States is the high level of unemployment in Africa. The number of skilled people without jobs measures the speed of unemployment in a particular country. This rate is also measurable by considering the number of people looking for jobs yet unable to secure them despite their vast skills. This essay will analyze the rate of unemployment effect in African countries and the Macroeconomic effect it encompasses.
Unemployment is among one of the major issues experienced in Africa. Being a third world continent, it is evident that some privileges such as increased employment opportunities are a rare opportunity. These unemployment levels affect everyone, from the well learned to the uneducated and thus remain to be one of the greatest concerns regarding the economic development of the continent.
Africa is made up of many independent countries with different levels of economic growth and development. That notwithstanding, the problem of unemployment persists in most countries. This issue is partially attributable to the low rates of employment creation in relation to the number of people graduating from higher sources of education. Currently, the number of students furthering their education continues to grow. In a country like Kenya, the growth is because of the introduction of systems that encourage attendance of schools such as the free primary education. This development of knowledge does not grow proportionately to the development of new businesses requiring more personnel. The ultimate effect is the crowding of knowledgeable graduates seeking for unavailable employment opportunities. These people end up frustrated, joining the informal employment sector or ultimately migrate to other countries in a bid to look for job opportunities.
There are three main types of unemployment in the macroeconomic sense. These types of unemployment are prevalent and play a significant role in the increase of unemployment. Cyclic unemployment is a major example, and it occurs when there is the existence of economic downturns such as a recession. The recession is caused by a variety of factors such as political and social instability. An example of this uncertainty is the ongoing war in Sudan and Somalia, which have significantly affected their economy. Investments in those areas are close to none, and the existing businesses close down and move to stable countries. Unemployment levels therefore ultimately rise which is a significant loss to the economy
Frictional unemployment refers to the time it takes a person to get a new job after being relieved of duties in the previous workplace. This type of unemployment is prevalent in Africa and is attributable to increased cases of anomalies such as corruption. When corruption and greed of money increases, deserving people end up not awarded certain jobs. This fact is because the said posts end up with the relatives of the officials or other individuals who pay their way in.
Structural unemployment, which occurs due to the lack of skills to conduct a particular job is also one of the primary reasons for unemployment. This form of unemployment occurs in instances where a person loses a job due to his or her old skills. The lack of appropriate skills, therefore, deems the said people useless to the company. The education system in most African countries is also to blame since it mostly inclines towards performance other than skill development. As such, the graduates usually are half baked and have to undergo further training to enable them to fit certain roles in organizations and companies. Some companies that may not be willing to waste further resources training the employees end up not hiring them at all thus the increase in unemployment.
Unemployment continues to be a major challenge in most African countries. It is only through the devising of ways to overcome the problem that economic growth and prosperity will occur.
Commanding Heights; the Battle of Ideas
Commanding height is a documentary that dates back to the history of the world’s economy. The film also shows the trends such as globalization that developed and what humanity needs to prepare for in the coming years. As such, there is the portrayal of the Second World War regarding the events that led to it, repercussions and their probable prevention. This essay will analyze the macroeconomic effects caused by the depression after the war and their eventual stabilization.
John Maynard Keynes and Friedrich von Hayek are two economists who played a significant role in the shaping of the Macroeconomic theory, as known today. This film portrays their different viewpoints about the role of the government in economic development. Keynes assisted the government in planning their economies during the wartime while Hayek believed that government interference was a disadvantage since it would be a threat to freedom. These intellectual rivals played a significant role in the shaping of ideas as their theories still apply to date.
The theory of supply and demand as viewed by both Keynes and Hayek is evident in this film. Hayek believed that these two market forces would eventually balance and result in maximum benefits without any government interference. He thought that nature would determine the supply and consumption of various commodities. Many people were in support of the Keynes ideology since government intervention meant that they could control and regulate the market to the people’s advantage. The end of the Second World War saw the government adopt more of the Keynes ideology and it became actively involved in the regulation of the main economic factors. This regulation occurred through constant spending and intervention, and it worked well in the short run. The long-term effects soon took place while levels of inflation and unemployment increased drastically. There was economic stagnation in every sector of the economy, which resulted in massive distress. The stagnation had not been expected although Hayek had predicted it when he opposed the Keynes Ideology.
The inflation and the rise in the unemployment rate increase due to government interference are explainable using the Keynesian theory. According to Keynes, the results of the short run period are not the predictions of the long-term scenario and expectations. Keynes believes that the increased input of money into the economy causes more harm than benefit. This effect is because there is no corresponding growth in production in the same country. The increased demand due to the increase in purchasing power of commodities by members in the state causes the overall supply to decrease considerably. The result is the increase in prices to control the acquisition. This increase in prices ultimately leads to inflation, which is a significant disadvantage to the people
When the Keynes ideologies did not work, the government and people decided to adopt the Hayek ideas, which advocated for the allowance of the natural forces fix themselves without spending from the government. In his opinion, the increase in unemployment was attributable to increase in money supply from the government. He argued that such increases artificially drove down the interest rates thereby making credit artificially cheap. Businesspersons later invested more in the projects without the knowledge that it was only temporary. The ultimate result was the loss of large amounts of money when the system stabilized. The only way through which these disadvantages were avoidable was if the government did not interfere with the system.
The government realized and let the market forces stabilize themselves. They reduced the spending and stopped interfering with the market. The ultimate result was that, after a while, the system had balanced itself and reduced the rate of unemployment significantly.
As per the film, the futility of government interference to regulate the market forces is evident. Government spending ended up making the situation worse and is thus not advisable. According to Hayek, it is prudent to leave these forces to balance themselves out, and as per the film, it is clear that the strategy worked after the depression and the stagnation period.
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