Economic Articles: Summary and Response

Economic Articles: Summary and Response

Economic Articles: Summary and Response

Protectionism and Trade Disputes Threaten World Growth

In her article “Protectionism and Trade Disputes Threaten World Growth, Says OECD,” Allen cites the statement delivered by the Organization for Economic Co-operation and Development. The institution is concerned with the adverse effects of trade disputes and protectionist policy on the world economic growth. Leading Western experts fear that anti-globalist rhetoric of the newly elected U.S. President, including the promotion of protectionism and the cancellation of trade agreements, will negatively impact employment, growth, inflation, and living standards. Allen mentions the reputable Organization for Economic Co-operation and Development, which is optimistic in regard to tax cuts and spending measures of the U.S. new administration. This initiative will ensure the economic growth not only in the USA but also other countries. However, the OECD is concerned with the fact that weak global trade growth and the promotion of trade liberalization might negatively affect jobs and the entire employment rate.

 

Allen’s article is quite interesting and instructive, as it reflects the predictions of leading experts and organizations in regard to the trade growth, global economy, and monetary and fiscal policy. In my opinion, anti-globalist rhetoric and trade protectionism should be reviewed, as dozens of long-term agreements have been already signed, and they cannot be repealed immediately at the request of one side. While policymakers, lawmakers, and politicians make loud statements on anti-globalism and protections, they have to think first about small and middle businesses as well as consumers that will be affected the most. Therefore, policymakers, which have signed trade agreements, have to review their domestic policy to prove that the interstate economic cooperation ensures gains to small and middle businesses as well as consumers. The article’s subjects such as protectionism and trade are directly related to the economic concepts covered in the class. There is evident interrelation of such aspects as supply and demand, cost and benefits, and the scarcity of resources, and all of them are directly dependent on trade, fiscal, and monetary policy developed by the competent authorities.

China Will Defend Trade Rights in Face of Donald Trump's 'Trade War'

In her article “China Will Defend Trade Rights in Face of Donald Trump’s ‘Trade War’, Official Says,” Bulman quotes the statement released by the Chinese officials. They have announced that the Asian country will adopt certain measures if Trump begins the trade war and executes threats he made during his presidential campaign. The Chinese will defend rights, resist new harsh tariffs, abolish punitive tariffs, and fulfill their duties as members of the WTO. The newly elected president Trump considers the trade policy to be inadequate and claims that China has been using the USA pursuing own financial interests for many years. Moreover, Trump accuses the Chinese of currency manipulations. For instance, he mentions the currency devaluation, which undermines the entire trading process. Trump also thinks that the Chinese export becomes cheaper due to currency manipulations. As a result, the U.S. businesses, employees, and the global economy have significantly suffered.

Bulman’s article is useful for those, who are interested in the specifics of trade between various countries. I think that if Trump supports his claims by providing the accurate statistical data, the Chinese authorities should bear the responsibility for own actions. The main issue is to keep this trend alive and make signed agreements beneficial to both parties. In case currency manipulation is proved, the relationship would be undermined, and both countries will incur significant expenses. In my opinion, the primary task should be the maintenance of steady growth, reduction of the trade deficit and promotion of the fair play among the manufacturers. The main subject of the article is the trade, and its relation to the content of the class material is direct. Therefore, if China does not want to lose the reputation on a global arena as a fair player, it has to review its trade, monetary, and fiscal policy to avoid further claims from the partners.

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Inflation is Going to Rise

Unlike other authors, who simply discuss economic concepts in the context of recent events, Constable in his article “Inflation Is Going to Rise; Here’s How to Protect Yourself” urges consumers to be attentive and protect themselves, as inflation will increase in the nearest future. As the consumers suffer from this process the most, they have to be prepared that price increase will be delayed for years. The presidential elections in the USA have significantly increased bond yields and commodity prices. As the period of historically low prices has come to an end, Constable provides an overview of events affected by inflation. Commodity prices increase, but it does not mean that consumers will immediately feel it. It is supposed that the sale of government bonds will ensure the consequent growth.

The article is quite instructive for those who want to escape adverse effects of inflation. In general, investors interested in gold are quite optimistic in their predictions, but it is still not known how the economy will grow under the inflation. I consider the best way to protect oneself against inflation is to invest in business. Entrepreneurs benefit from inflation, as they personally create it by setting the prices on manufactured goods. Under certain assumptions, the real estate can be considered as one of the business versions. By becoming a business owner, an entrepreneur transforms into the owner of the mechanism creating inflation and, thus, can protect own savings from the devastating effects of inflation. The economic concepts covered in the article are directly related to the content of the class material, as inflation is an important economic indicator characterizing changes in the overall level of prices that first of all affect consumers and the entire functioning of the economic system.

U.S. Economy Posts Best Growth in 2 Years

In his article “U.S. Economy Posts Best Growth in 2 Years,” Gillespie highlights the fastest economic growth that the USA has ever experienced in the last two years. From July through September, the economy expanded at a 2.9% annual rate. The newly elected president of the USA Donald Trump has expressed his view on this growth, considering it quite modest. He has promised to reach 4%, but most of the economists do not consider it a realistic indicator. Trade, as a central issue raised by Trump during his presidential campaign, also ensures the stable growth. Gillespie also mentions that the new U.S. leader threatens to impose tariffs against China and Mexico and even repeal most of the bilateral agreements signed by the countries. However, the U.S. overall export increased by 10%, while export of the U.S. agricultural production to China has increased by 200%. Experts believe that this is a temporary boost. In the article, the author pays particular attention to the businesses that decreased spending on the new equipment. In fact, some experts have predicted this event due to the uncertainty of elections. The slow growth of the economy and the strong national currency also affect the entrepreneurs’ decision to cut expenses on equipment.   

The article is valuable due to the fact that despite positive prospects and economic growth, there is still room for improvement. I believe that after the first few months of Trump’s presidency, businesses will review their expenditure policy and focus more on innovations in their professional activity. I also believe that Trump will not leave an idea to impose tariffs on those countries who are unfair players in the commercial activity. Evidently, he regularly accuses the Chinese of currency manipulations. They have to be proved, otherwise many bilateral agreements will be repealed and relations between the countries will be deteriorated. In my opinion, the interaction between the USA and China should not be tense, as both countries benefit from trade and other commercial activities. Therefore, the Chinese authorities should review their currency policy. The issues discussed in the article are directly related to the class material, as tariffs, growth, and trade are crucial aspects that determine the way the modern economic system functions.

U.S. Adds 156,000 Jobs in September

In his article “U.S. Adds 156,000 Jobs in September; Unemployment Rate Rises to 5 Percent,” Harlan discusses unemployment as one of the most important macroeconomic concepts. The author mentions that despite providing thousands of jobs to needy people, unemployment rate has increased by 5% in recent months. In November, 4.6% of Americans were unemployed, although the U.S. companies have steadily hired workers. Due to the fact that the labor market promotes the national economy, the rate of layoffs is low and salaries increase. The consumers, by buying goods, return their earned money to the economy. However, one of the most significant challenges the USA faces is the minor business investment. Therefore, the nation’s economy will increase by only 1.6% in 2016 according to the predictions of the International Monetary Fund. Americans are concerned with the health of their economy, but they continue working, as the country has almost overcome challenges caused by the financial crisis of 2008. 

In my opinion, Harlan has raised one of the most important socio-economic issues the nation is facing in recent decades. Unemployment can be properly addressed if the government and policymakers jointly work on programs promoting public self-employment that will encourage individuals to independently search for a job. Moreover, the development of small and middle businesses, adequate investment program, housing construction, public works, individualization of consumer demand, and organization of training and retraining will be also valuable. I believe that even the market has expected a slow pace of job creation in recent months; however, after Trump’s inauguration, the situation can be changed. The level of wages will be dependent on market’s workload and economic conditions. The concepts the article discusses are connected with the content of the class material, as unemployment is one of the most important macroeconomic indicators that affect every person and functioning of the entire economic system.

UK Fiscal Policy Take over from the Printing Press

In his article “UK Fiscal Policy Should Take over from the Printing Press,” Munro discusses challenges the UK financial system faces and highlights that current issues require distinct approaches and responses. After the decision to leave the EU, the rate was cut by 0.25 percent. By acting in such manner, the Bank of England sought to buy corporate bonds and gilts. The author questions the effectiveness of replicating actions and responses of 2008, as at that time, the United Kingdom faced other economic issues in addition to financial crisis. The current problems differ from past ones; therefore, they require distinct responses and approaches. Munro thinks that the policy can be effective only in case it targets the specific problem. It is also not clear whether the decline of interest rate can be good for the economy and boost investment in the key sectors.

In my opinion, the main goal pursued by the author while writing an article was to prevent policymakers from making hasty decisions and using the same approaches towards the problem resolution as it was in previous years. I agree that the strategy of cutting rates and printing money to buy debts is not an option, as the real economy may suffer from this decision. The monetary policy should be reviewed as well. Low rates do not necessarily bring positive effect; thus, instead of printing money to buy bonds, the authorities should finance projects that will ensure the economic growth. The issues the article covers are related to the class material, as fiscal policy, debts, corporate bonds, and gilts are important economic aspects that determine the way the economy and its individual sectors work. 

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