economic theory

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Can cash grants help reduce poverty?

1.2 billion people around the world, or roughly one in every six people, live in extreme poverty – defined as survival on less than $USD1.25 a day according to The World Bank. As a proportion of the global population, however, this number has fallen dramatically over the past few decades. The economic uprising of several key East Asian nations has resulted in over 700 million people, over the past twenty years, breaking free from extreme poverty. Organisations such as the UN have project further decreases in the years to come. Indeed, there are many political, economical, and environmental factors that contribute to the extreme impoverishment of individuals around the world and many argue that this is a deeply complex issue that we cannot afford to merely throw money at – or can we?

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Hosting the Olympics – a winning strategy?

On September 7th 2013, the International Olympic Committee (IOC) announced to the world that Tokyo would be the host for the 2020 Olympic Games, much to the sorrow of Madrid and Istanbul. It certainly wasn’t the most competitive candidate pool in recent years; Spain was in severe economic recession and boasted a 27% unemployment rate, while Istanbul’s reputation was tarnished somewhat due to a mixture of anti-government protests back in June, the bloody Syrian civil war, as well as a string of doping scandals among Turkish athletes.

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Out of their league

One of the things that struck me most while on exchange at the University of North Carolina (UNC) is that it really is like being in a movie. While there are no meticulous canteen table partitions according to social status, on the playing field, which is where college spirit bursts forth – in the same zeal as American patriotism – the image is exactly like those scenes in Remember the Titans, Rudy, The Blind Side, etc…

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Calling for change

The recent historic telephone call between the presidents of the USA and Iran the other week represents a huge step forward for both countries and the wider international community. This first contact between the two nations’ presidents for decades was a forceful step away from the ‘Great Satan’ vs. ‘Axis of Evil’ rhetoric that has dogged diplomatic relations. There are reasons to be optimistic over this symbolic phone call – a call for change, if you will.

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The economics behind China’s rare earths restriction

Rare earth metals are versatile elements which are central to the modern era and future technological advances.  We commonly recognize their existence through use in things such as iPads, plasma TVs and solar panels. Yet it also has a wide range of applications in other sectors such as industrial/manufacturing use as well as military component production and nuclear medicine, which have then given rise to things like fibre-optic technology, advanced batteries, high tech lasers and so forth. Given its importance in providing a new frontier of innovation in the modern economy, it is no wonder the world is concerned over China’s export quotas and production restrictions that have been in place from 2009 to now. This article will analyse the rationale behind the policy.

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USA: The United States of Africa – could and should it happen?

Two years ago, South Sudan became the newest independent nation in the world. It seceded from Sudan, after years of fiscal neglect and a lack of infrastructural development. Even today as a separate entity, the majority of the population is rural as well as poor and the economy is primarily reliant on agriculture. The South Sudanese government has had to relegate prosperity of their new country to the bottom of the priority list, as it fights a war with nomadic tribesmen in the Upper Nile and clashes with Sudanese troops in South Kordofan.

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The economics of happiness

The number of Americans who said, ‘yes, I am happy with my life’ peaked in 1956, but ever since then has fallen slowly but steadily. During this time our levels of world GDP per capita have increased dramatically, and according to the non-satiation principle of conventional microeconomics, our experience of higher utility means that should all be happier – yes?
We live in a finite world of perpetual economic growth. Levels of material wellbeing have never been so high. The walls between trading nations have been removed thanks to globalisation and technology. Why then does the economically paradoxical notion of ‘happy peasants and frustrated millionaires’ exist? Happiness economics takes a new approach to assessing welfare based on expansive notions of utility. Conventional economics has the aim of the efficient allocation of scarce resources to satisfy infinite needs. If increasing utility does not fundamentally achieve individual happiness, then what is the point of it all?

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Testing the means-testing debate

This article forms part of an ongoing series looking at economic issues as Australia heads into the Federal Election. More coverage can be found on the Election 2013 page of ESSA’s website.
One of the greatest accomplishments of the 20th century was undoubtedly the conceptualisation and implementation of what has become known as the ‘welfare state’. The term is generally not used in any exact way, rather in a vague and imprecise manner with an overarching theme of the government having a degree of responsibility for the health and social well-being of the population.
Broadly speaking, the two extremes of the potential function of the welfare state are universalism and selectivism. Universalism, as the name suggests, refers to universal access to welfare programs regardless of an individual’s wealth. Selectivism is the opposite, with welfare ‘means-tested’ and distributed based on an individual’s needs.

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The Rational Fare Evader

Fare evading, i.e. not paying for the use of public transport, is a fairly significant issue for public transport providers. The Victorian Transport Authority has been tracking the estimated number of commuters who regularly fare evade and as you can see there is a sizeable portion who do this on a regular basis, ranging from roughly 5% to 20% of Victorian commuters (fig 1). There are potentially many causes for fare evading: I had the misfortune of forgetting to touch on to a crowded tram the other day which resulted in a discussion about these causes. This eventually led to the quip “if you get caught – just fare evade until you break even!”

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