Child Labour- Global Problem

According to Unicef about 211 million children aged from five to 14 are at work around the world. The ILO estimates that between five and six million children are forced labourers (40-50% of the total). Some of them are born into bondage; some are sold by their parents or abducted working in agriculture, industry, domestic work.
There exists a dire need to join hands to abolish child slavery.
Source: BBC News
Richa Shukla
(Globsyn Business School)

What economics can?

• It creates awareness of your power to think like an economist
• You start behaving rationally…hey its not that you were irrational, but yes the subject can sharpen your rational edge
• You start analyzing the way you behave and the way others behave in a social environment
• Develops in you an art to visualize each area of life differently and analytically
• Gradually you try to simulate the outside world in the economic brain of yours for capturing its essence and developing new frameworks with new perspectives.

Richa Shukla

(Globsyn Business School)

“Economy is good only when the employment standard is good”

Can we go with the above dictum? What if employment standard is good but the economy is not resilient to internal and external shocks. Thus arises the question of sustainability. How can an economy sustain itself in the phase of good employment standard vis a vis shocks.

Richa Shukla
(Globsyn Business School)

From the neuroscience experiments: An add-in to the theory of Consumer Behaviour

Recent research has shown that when making decisions with immediate consequences, economic actors typically display a high degree of impatience. Consumers choose immediate pleasures instead of waiting a few days for much larger rewards. Consumers want "instant gratification."
However, people do not behave impatiently when they make decisions for the future. Few people plan to break their diets next week. Instead, people tend to splurge today and vow to exercise/diet/save tomorrow. From today's viewpoint, people prefer to act impatiently right now but to act patiently later.
Economists need to study its consequence on the savings behaviour and implications for optimal saving institutions.

Richa Shukla

(Globsyn Business School)

Blending fiscal policy & Monetary Policy Credibility:

Experience confirms that the best way to pursue price stability is through a credible monetary policy. This implies the public declaration of the objective and the implementation of policy measures whenever developments show a departure from it and not to renege on its earlier promises.
However can monetary policy alone sustain the objective of price stability? Presently the monetary authorities are increasing the CRR and manipulating interest rate to pull down prices but prices are tending towards double-digit rate.
Such policy practice can affect the investment scenario, as decision makers might find it difficult to get investment funds as cost of borrowing increases culminating into an offset in the supply front. This might accentuate demand supply imbalance spiralling prices upward.
Given the root cause of current price spiral to be both demand side and supply side factors; the need of the time demands a judicious blend of fiscal and monetary policy.

Richa Shukla

(Globsyn Business School)

Order: Spontaneous versus Hierarchical

Decision making occurs at two-levels, where one acts independent and autonomous of one another (as through the institution of market) and where one acts through directions from above and outside (as within a business organisation or state). Spontaneous order refers to the age old dictum and logic of Adam Smith’s invisible hand (this is the domain of market) while hierarchical order refers to command which could materialize at the level of state or business organisation (this is the domain of planning and policy, whether centralized or decentralized). In an economy, decision making (the study of microeconomics) occurs at both levels and students should have a crystal clear idea of the place and importance of both as also their relationship.

Contributed by:
Dr. Anjan Chakrabarti
Head, Department of Economics
University of Calcutta

....and thus we say "human wants are unlimited"

The four basic human wants move in tandem with human needs.
As each level starting at the base is achieved, the next higher level becomes more important.

Richa Shukla
(Globsyn Business School)

Are you loss averse? It may be an innate rather than learned attribute

New research out of Yale University argues that monkeys and humans exhibit similar economic biases, and that economic decision-making have much deeper roots than many economists suspect.

The study involved presenting the capuchin monkeys with "two payoff-identical gambles: one in which a good outcome was framed as a bonus, and the other in which bad outcomes were emphasized as losses. Like humans, the monkeys displayed a strong preference for the first option, and like humans, the monkeys seemed to weigh the losses more heavily than comparable gains."
"Given the capuchins' inexperience with trade and gambles, these results suggest that loss-aversion behaviour extends beyond humans, and may be innate rather than learned."

With this interesting finding there exists definitely a challenge to see "whether systematic economic biases such as risk-aversion are learned behaviors – and thus easily ameliorated through market incentives – or biologically based, arising in novel situations."

(Source: http://news.mongabay.com/)

Richa Shukla

(Globsyn Business School)

Concept of Opportunity Cost

Reading for an hour means giving up fishing

(Source: http://www.nvcc.edu)

Opportunity cost is the sacrifices made (in terms of pleasure sacrificed from doing next best alternative action) by taking up the first best choice.

Richa Shukla

(Globsyn Business School)

Weak Dollar vs Strong Dollar

The weak U.S. dollar is helping to push oil and gasoline prices higher, making imported goods more expensive for Americans and overseas vacations more costly. At the same time, it's helped U.S. exporters.

If the dollar gains against other currencies, it is said to be strengthening. Its buying power increases relative to the other currencies. If its exchange rate declines, it is said to be weakening.

A strong dollar lowers the price to U.S. consumers of foreign products and services. That helps to keep inflation in check. U.S. consumers also benefit when they travel to foreign countries. It's usually a sign of a strong economy that is firing on all cylinders.

Weak dollar is basically the mirror image of strong dollar. U.S. manufacturers and other exporters benefit as American products become relatively cheaper. More foreign tourists can afford to visit the United States.

• Exports are growing thanks to the weak dollar, which makes U.S.-made goods more affordable.
• Industries with a strong international presence are benefiting the most.
• Primary-product producers are seeing increased profits, since commodities are priced on the global market.

The dollar’s fall over the past several years is just cause for celebration by many domestic producers. Since its peak in 2002, the trade-weighted dollar has fallen by 25%, making U.S. goods much more competitive in an international market, while filling U.S. malls with Europeans on shopping sprees. The dollar has likely now finished its downward revaluation, and should stabilize going forward. This will allow the U.S. to enjoy the benefits of an affordable currency, while removing some of the risk in corporations’ long-term plans.
However if the dollar continues to sink, it could bring more inflation and even trigger a sell-off by foreigners of U.S. investments, making it harder to pay down the national debt and increasing risks of recession.
Source: MiamiHerald.com

Richa Shukla

(Globsyn Business School)