Discuss the relationship between institutions and growth Essay Example for Free

Discuss the relationship between institutions and growth Essay North’s definition of institutions implies that the institutions could be formal (for example a legal code, a constitutions, or a regulatory body) and they could also have less formal constraints (for example social norms, or traditions, that help to determine outcomes). It will be difficult to mention institutions without mentioning government and the role it has to play in establishing the rules of the game. Government intervention in the economy is justified by the existence of market failures – the case where the unfettered operation of the market fails to produce the best possible outcome. Market failures include externalities like pollution and the inability of private firms to provide public goods, such as roads. Another form of market failure that can motivate government economic policy is the existence of monopolies, single firms that are the sole suppliers of a particular commodity. And industry such as electricity transmission is often viewed as a natural monopoly because it would be impractical for several companies to string electric wire to every house. In this case, there is a role of government regulation to prevent the monopolist from charging an inefficiently high price. The market failure can also occur in cases requiring the coordination of activities by many firms or many people. Some potential coordination failures and the need for the government to correct them are obvious. It useful for everyone to drive on the same side of the road, and even the most diehard free marketer would have little objection to letting the government announce which side it should be. However, a market failure is not the only reason that governments become involved in the economy. Another motivation for the government to get involved in economic matters is the income redistribution – the transfer of income from rich to poor, from working-age adults to the elderly, or from the general population to members of some favored groups – as one of their proper roles. On the other hand, only few economists argue that there should be no government intervention in the economy. It is rather a question of in which degree the government should intervene. The case against government intervention starts with the observation that, although proper government policy can theoretically fix any market failure, in practice it often fails to achieve its goals. When government tries to take the place of private firms, the resulting enterprises tend to operate inefficiently because they lack the incentives, specifically profit, that motivate private firms. In cases where industries are regulated as natural monopolies, often such regulation effectively preserves the absence of competition In the case of public goods, the debate centers on the question of whether some of the goods that governments supply could have been supplied privately if government had not taken over their provision. In different countries, privatized activities have included the building of roads and telephone networks and the operation of jails. A parallel trend has been the deregulation of industries – removing them from government supervision. The issue of income redistribution presents some of the most difficult questions regarding the proper role of government. In this case, the benefits of such a policy (a greater degree of equality) are of a different nature than the costs of the policy (a lower degree of efficiency). However, critics of big government point out that much of the income that governments redistribute does not flow from rich to poor. Rather, it is redistributed among people in the same income groups, who are at different stages of their life cycles, as when taxes are taken from working-age adults and transfers are paid to elderly. Critics argue that these redistributions have a large effect on the efficiency with which the economy operates but do little or nothing to improve equity. In general, the success of any government intervention depends crucially on the ability and the honesty of the officials entrusted to carry it out. When these qualities are lacking, the resulting government failure can be worse than any market failure that government policy was designed to correct. By looking at different cases of government intervention and the cases against government intervention, I will focus on explaining the tools that governments use to influence the economy. These tools include: the provision of the rule of law, regulation of how firms behave, planning (direction of resources to certain targeted industries), trade policies such as tariffs and quotas, and outright ownership of the means of production. One of the most important public goods that governments provide is the rule of law. In an environment where the rule of law is weak, the factors of production would not be accumulated and the economic activity would be plagued by inefficiency. For both these reasons, the output would decline. In the absence of a legal infrastructure, many of the investments made in a modern economy would not take place because investors would be unable to earn a reasonable return on their money. The rule of law cannot be taken for granted in most of the world. In many countries the judicial systems are weak, and legal cases are as likely to be settled on the basis of who has better political connections as on legitimate legal claims. According to Douglass North, who won the Nobel Prize in economics in 1993, â€Å"The inability of societies to develop effective, low-cost enforcement of contracts is the most important source of both historical stagnation and contemporary underdevelopment in the Third World†. One of the best examples that illustrates the importance of the rule of law is the former Soviet Union case. With the breakup of the communism, the legal structure surrounding basic economic activity became highly uncertain. The line between legitimate business and organized crime blurred, as assets formerly owned by the government in trust for the citizenry as a whole rapidly found their way into the hands of a well-connected few. In this legally unstable environment, income per capita in the Russian Federation fell by 12% in the decade following the 1991 breakup of the Soviet Union. Another important way in which the government affects the state of the economy is by its sheer size. Government that spends a lot of money requires big government revenue and vice versa. Governments raise funds by taxing the citizens and businesses. A few countries, such as Saudi Arabia, make the exception where the natural resource is the primary source of revenue. According to the social scientist Adolph Wagner â€Å"the size of the government would inevitably increase as countries became wealthier, because a more developed economy requires more complex regulation and because many public goods provided by the government are of the type where desired spending rises more than proportionally with income†. Taxes are relevant for economic growth because they directly affect the efficiency with which output is produced. The larger the tax is imposed in a given market the smaller will be the number of transactions that will take place. This means that raising the tax rate will lower the tax base. When taxes are high, some of the potential transactions between buyers and sellers will not take place, and these transactions would have made both groups better off. No tax will be collected on these forgone transactions, but by discouraging transactions, the tax made the potential buyers and sellers worse off. The size of this inefficiency grows with the size of the tax. Because higher taxes shrink the tax base, increases in revenue collected when tax rates rise are not proportional to increases in tax rates. The fact that taxes cause inefficiency in the economy does not mean that there should be no taxes. Government provides public goods without which the economy could not function at all. These public goods are paid for taxation. Thus, even if the government were solely concerned with maximizing GDP per capita, the optimal choice of public goods and taxation involves a trade-off between the costs and benefits. However, not all of the money that governments collect as tax revenues goes toward supplying public goods. One of the major functions of government is to make transfers of income to people. The largest transfers are old-age pensions; other transfers include unemployment benefits and welfare payments to the poor. Government planning and the protection of infant industries with tariffs have failed, in almost most of the cases. The economic planning occurred in the decades after WWII, when governments in newly independent countries in the developing world experimented with various policies to improve their backward conditions. State enterprises, for example, were totally inefficient. The managers of these enterprises, facing neither competition from other firms nor pressure from shareholders to produce profits, had little incentive to strive for efficiency in production. Marketing boards, which were initially supposed to raise farmers’ income, ended up doing just the opposite as government officials could not resist the temptation of the revenues that passed through their hands. Trade restrictions were also counterproductive. In theory, infant industry protection should have been offered only to industries where a country had a chance of being a competitive producer. In practice, governments protected any industry which enough political power – and often all industries indiscriminately. Furthermore, most of the â€Å"infant† industries that were protected never managed to grow up. Facing no pressure from foreign competition, they remained inefficient. As one can notice, institutions determine incentives and constraints and shape outcomes. Different groups and individuals will benefit from different institutions. Therefore, the institutional choices will depend on who has the political power.

Othello Essay -- essays research papers

One of the most interesting and exotic characters in the tragic play "Othello," by William Shakespeare, is "Honest" Iago. At first glance, Iago seems to be the essence of "motiveless malignity." However, despite Iago's unquestionable malignancy, the motivation behind his actions lie more in Iago's quest for personal gain, as opposed to just being evil for evil's sake. Iago's rapacity can be validated by examining his manipulation of Roderigo, Cassio and, most importantly, Othello. Iago's main interest is the destruction of Othello. The reason being that Othello has chosen another man, Cassio, as his second-in-command, preferring him to Iago. This resentment, accompanied by Iago's fabricated accusations of adultery and his blatant racism, cause Iago to despise the kindly moor, and shortly thereafter, begin to conspire against him. Because Iago is much too smart to immediately kill Othello, he proceeds with the arduous process of dismantling him emotionally. Iago also knows that he must distance himself from any of the harrowing occurrences that transpire, so he cleverly gets other people to do his dirty work. The first to fall victim to Iago's illiberal manipulation, is the half-witted Roderigo. Iago knows Roderigo is consumed by lust for Desdemona, and would do anything to make her his own. Iago tells Roderigo that the only way to win Desdemona's love, is to make money to procure gifts for her. "...put money in thy purse.." (Act 1,...

Cognitive component Essay

The cognitive component of SWB involves making judgments of one’s life: either satisfaction with life as a whole, or satisfaction with life domains such as work, family, leisure, health, and finances (Prince, & Prince 2001; Diener et al. , 1999). It can be viewed as how you think about your life (in contrast to the affective component: how you feel about your life). In this study, the cognitive component means the way the elderly perceive, think and assess their life and their beliefs and attitude toward life, world and God. Campbell (1976) suggested that individuals judge their objective situation in each of various life domains according to standards of comparison based on aspiration, expectations, feelings of what would be just, reference group comparisons, personal needs, and personal values. Domain-satisfaction provides useful information about with which aspects of life an individual may be happy or unhappy, but cannot be summed to give an overall impression of life satisfaction. This would mean that it is necessary to assess overall satisfaction with life, as well as life domains (Susan Hird, 2003). An idea that has long captivated writers is that how we perceive and think about the world determines our SWB. In the area of SWB, researchers find that one can dampen or amplify one’s emotions by what one thinks, and thereby experience more or less intense emotions (Larsen, Diener, & Croponzano, 1987). This approach relies on the standards of the individual to determine what is the good life and the personal choices the person make at the moment (Diener, 1984). People might increase their SWB by control of their thoughts. For example, perhaps SWB can be increased by believing in a larger meaning or force in the universe. Support for this proposition comes from findings showing that on average religious people are happier than nonreligious people (e. g. , Ellison, 1983; Myers, 1992, cited in Diener et al. , 1997). The study explored how the elderly think about their life or what thought processes, beliefs and attitudes predominantly helped the elderly to experience a sense of well-being at this point of their lives. Affective Components (Affect Balance) It is the second component or construct of SWB, which corresponds to what we generally understand as happiness. According to (Prince, & Prince 2001) affect is thought of as how happy or unhappy you are. It results from a balance between positive affect and negative affect (Christopher, 1999). As it has been already indicated, when we appraise how much we appreciate the life we live, we estimate our typical affective experience to assess how well we feel generally, which is referred to here in the study as affective component. In summary, the affective component can be thought of as how you feel about your life (Susan Hird, 2003). Suh & Diener (1997) observed that feeling pleasant emotions most of the time and infrequently experiencing unpleasant emotions, even if the pleasant emotions are only mild, is sufficient for high reports of happiness. Although people report being above neutral in mood the majority of the time (Diener & Diener, 1995), intense positive moments are rare even among the happiest individuals. Instead happy people report mild-to-moderate pleasant emotions most of the time when alone or with others and when working or at leisure. One thing is clear, that people need to understand that intense experiences are not the corer stone of a happy life (Diener, 2000). Mood and emotions are called ‘affect’, and there is contradictory evidence as to whether ‘pleasant affect’ and ‘unpleasant affect’ form two independent factors and should be measured separately, or whether they are interdependent (Diener et al. , 1999). The amount of difference between momentary pleasant and unpleasant affect is still debated, but the separability of long-term affective dimensions is less controversial. Diener and Emmons (1984) found that unpleasant and pleasant affect become increasingly separate as the time frame is increased (Diener et al. , 1999). In the case of the institutionalized elderly, the study examined the affective component in general, mainly how they felt generally about their lives that helped them experiencing a sense of well-being in their lives. As indicated by Christopher (1999), it is this second aspect of SWB that corresponds to what we generally understand as happiness and it results from a balance between positive affect and negative affect.

hamlet metaphor Essay - 1073 Words

Iterative use of vivid and detailed imagery in a piece of literature is often a way of expressing a theme or concept in a literary work. This is the case in William Shakespearequot;quot;s Hamlet, a revenge tragedy that continually depicts the vibrant metaphors of manifesting corruption and festering disease in order to auger the impending calamities in the state of Denmark. Throughout Shakespearequot;quot;s play, there are successive images of deterioration, decay and death. These images are skilfully accomplished through the use of metaphors of rotting and dead gardens. Shakespeare wonderfully creates these metaphors that add great dimension to the play of Hamlet. The garden metaphor is all throughout the play of Hamlet. This†¦show more content†¦His rule will lead to the fall of Denmark. Another important point in this quote is that through the metaphor Hamlet sees Denmark as being completely taken over by things that are rank and gross like the corruption of characters like Polonius and Claudius. This passage is very important in Hamlet because it is the first reference to a garden in dismay and more importantly, it references to the horrible condition that Denmark is in. Another instance where Shakespeare creates a metaphor between the state of Denmark and a garden is when Marcellus says to Horatio quot;Something is rotten in the state of Denmarkquot; (1.4.67). This passage is very important in the play because it shows that Hamlet is not the only person concerned with the position that Denmark is in. This metaphor is hinting that Denmark is being left untended by the protector King Claudius. As the king, Claudius should be tending to Denmark to make it flourish and grow instead, Claudius neglects it and Denmark begins to wither away and eventually dies under his rule. This disregard of his quot;gardenquot; shows that Claudius is the wrong person on the throne of Denmark. This excerpt also creates a sense of sickness and infection, exactly how an unattended garden would be. This is not a good image for Claudius and Denmark because people do not want to be in a country that is rotting fromShow MoreRelatedEssay on Hamlet Metaphor1089 Words   |  5 P agesShakespeares Hamlet, a revenge tragedy that continually depicts the vibrant metaphors of manifesting corruption and festering disease in order to auger the impending calamities in the state of Denmark. Throughout Shakespeares play, there are successive images of deterioration, decay and death. These images are skilfully accomplished through the use of metaphors of rotting and dead gardens. 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