few questions, due 3 hours, easy I supply other student answers
nyc promo
assignment_2_-_student_answer.docxStudent answer
(1) The article suggests that the decrease in global productivity growth could be the result from different factors such as societies reaching a comfort level where there is no more drive to work harder to reach a better life style, as well as a decrease of investments. Technological innovations could also be a time management obstacle. However, Olson would suggest that the decrease in productivity growth stems from an increase of interest-group organizations, for which different outcomes are present among nations, the ones with the relative highest productivity growth correspond to those with the least presence of interest-group organizations.
(a) The Fed could magnify the redistribution by creating policies that favor interest-groups that in time elect leaders that complete a cycle of inequality on societies.
(b) One clear example to explain the decrease in global productivity growth is Sweden. Public spending is directed to more bureaucracy instead of education and welfare. As it has proven in Sweden, the outcome is an increase in taxation, decrease in incentive to work, and in turn, lower productivity growth.
(c) More control of government over economies have resulted in inequalities among societies that benefit "the one percent", whom are in control of economies. The decrease in real wage means and increase in benefits for special interest groups that are favored by government policies such as the recent bail outs to the banking system ant stock market.
(d) The need for more government organized groups can be minimized, public spending can be directed to welfare and education more than bureaucracy, creating a higher level of education and productivity. If the existence of interest groups is relatively low, so is the preassure over monetary policy.
(e) It is true that coordinated capitalist economies tend to be smaller, however, the productivity growth is based on the distribution of public spending. In favor of walfare and education can increase the productivity growth, or create the opposite reaction as seen in Sweden when is concentrated in government centralization. The level of central coordination is more likely to create an increase in productivity growth, only when public spending is minimized or distributed in favor of welfare and education, which in turn creates more productive workers. However, Olson suggest the opposite, less coordination leads to a greater productivy growth. I believe policy making in favor of iqueality among societies is the key to productivity growth which leads to greater economic growth.
Student answer
1) The article gives an explanation about why productivity has slowed saying declines in productivity could be seen as a consequence of developed societies hitting their comfort zones, with workers no longer having the desperate drive to work their ways out of poverty, as can often be seen in countries developing their economies, with huge potential for growth. Olson would argue that organizations struggle over distributions of income/ wealth and not production. Encompassing organizations have some incentive to make the society in which they operate more prosperous. These organizations will often consider increasing society’s production, as long as the burden does not exceed the expected reward, and are encouraged to bargain with other substantial groups in an effort to increase the productivity of society.
2A) The Feds can build rules for collective action to overcome conflict of interest to magnify the redistributive process.
2B) By banks printing money and distributing it to the banking system it cheapens the dollar slowing down the productivity growth rates.
2C) According to your blog, "How Limousine Liberals Support the Rich," "The way that interest rates are kept low is by the Fed's and the banking system's increasing the amount of money. The increasing amount of money leads to higher prices (inflation). Higher prices mean the average American becomes poorer. Thus, the inflation adjusted wages of workers are reduced while stock prices are increased and the wealthy become wealthier." If this continues it shows how it will result in a declining standard of living over my lifetime.
2D) The larger the number of groups, the smaller the individual gains. The share of gains are minute in larger groups. Large groups that are made up of rational individuals, will not act in their group interest in this case affecting the country's control over their money supply.
2E) Members of small groups have disproportionate organizational power for collective action, and this disproportion diminishes but does not disappear over time in stable societies, ex) small groups thrive quickly, but weaken over time or through stability.
Student answer
(a) http://www.worldfinance.com/strategy/corporate-governance-strategy/a-global-productivity-slump
(b) http://www.mitchell-langbert.blogspot.com/2013/11/the-problem-is-government-not-income.html
(c) http://mitchell-langbert.blogspot.com/2011/06/review-of-ron-pauls-end-fed.html
(d) http://mitchell-langbert.blogspot.com/2010/02/how-limousine-liberals-support-rich.html
(1) According to the first article, (a), productivity growth rates have slowed to historically low levels around the world. Compare the explanations offered by the reporters to those that William Lewis give and those that Mancur Olson would give.
a. The reporters offer an explanation that economic comfort, as well as technological advances have created the slower productivity rates. Olson, however, would probably argue that the rise of big labor—and governments’ compliance with big labor’s demands—have allowed workers to get away with doing less for more money.
(2) According to my blogs, (b), (c), and (d), the Federal Reserve Bank and other monetary authorities serve as redistribution vehicles by which freshly printed money is diverted to special interests, resulting in lower real hourly wages to workers excluded from the recipient group, special interests that bankers favor.
a. How might the Fed magnify the redistributive processes that Olson describes?
i. The Fed has created another avenue for government policy to divert more public money toward special interests, even (or especially) when such redirection is detrimental to the larger economy.
b. Since World War II, central banks have been given increasing power to allocate credit (print money) and distribute it to interests deemed acceptable to the banking system. This has been true in countries around the world. How might this explain the slowdown in world productivity growth rates?
i. In general, giving more money to interests is a way of discouraging productivity in the members of that interest group. Because this is now happening around the world, this would explain the global slowdown in productivity.
c. All sustainable real-wage increases depend on productivity growth. If productivity doesn't grow, no wealth is available to raise real wages. (Real wages are wages adjusted for inflation. They have not grown in the US since 1970, although they grew from 1800 to 1970.) How might the interaction of special interest lobbying and central banks' creation of credit and money magnify the effects that Olson describes, reducing real wage growth over time and resulting in a stagnant or possibly declining standard of living over your lifetime?
d. How might country size modify the way that monetary policy interacts with special interest pressure?
i. In smaller countries, it would become more difficult for monetary policy to bend to special interest pressure, because it will have a more measurable effect on citizens not part of the interest group. In a larger country, like the United States, it is easy for policy tailored for special interest to slip under people’s radar.
e. After controlling for size (since successful coordinated capitalist economies tend to be smaller), do these effects depend on whether an economic system has a greater degree of central coordination (Sweden and Japan) or a greater degree of decentralization (the US and Britain)?
ii. These effects would depend on a large degree of decentralization because such decentralization is necessary to keep such tailored policy quiet. In a centralized system, more people are affected by a policy, and are more likely to know about it (and have objections to special interests).
Student answer
1)
a) This article explains the decrease in productivity growth and how the urgency to work as hard before to leave the state of poverty. Workers feel as if they are no longer working to make a better life for themselves or their families, they have reached a comfort zone that slowed down production. Also, their jobs have been made easier to handle due to the technological advances. However Olson would argue that since the government always complied with workers demands for more benefits, more pay, they feel as if they don’t have to work hard for their earnings anymore. Since you have to work for your incentive, the workers already received their earnings from already just working not working hard.
2) a) The feds can magnify the redistributive process by setting guidelines that focus on special interest groups to balance the inequalities in the society.
b) By allowing banks to print money with such ease it lowers the value of money. Money is valuable when it is rare and it is not easily accessible to print. By printing out money and distributing it to banks on a regular basis it results to decrease in productivity growth.
c) The interaction of special interest lobbying, and central banks creation with wealth and money reduces the value of wages and the worth of money. Once the value of money is reduced the prices of living becomes harder to obtain. This is why accessibility to conveniently printing money and credit and distributing it is crucial to ones living condition. Once real wages are harder to obtain, workers see a reason to work crucially harder for it which would lead to wage growth.
d) Country size plays a major impact on the way monetary policy interacts with special interest pressure depending on the size of the country. When a country is large it is easier for monetary policy not to be noticed and may be able to be ignored or looked past from. However, if the size of the country is fairly small every little thing gets inspected such as monetary policy and special interest pressure is more likely to enforce since the concentration (the country size) is so small.
e) These effects would only depend on smaller groups where collective action fails as well as central coordination. It would only be successful for larger formed groups where the stability is easier to obtain. Smaller groups would eventually lead to a weaker, imbalanced economy.
