Commanding Heights – Battle for the World Economy Impressions

Recently in our IB HL Economics class we watched the video Commanding Heights – Battle for the World Economy. This video detailed the ideas of both Keynesian economists and the more recent development of Hayek’s ideas in the world economy. The video interestingly covered the ideas of market control vs the free market. Both the idea of a free market, supported by Keynes, and a controlled or planned economy, supported by Hayek, have their strengths and weaknesses. People generally disagree with the idea of a controlled government because it is associated with the idea of a government having complete control over economic effects and direction. However, having a government that plans the direction of the economy in order to stimulate development is something that has proved very effective in the more recent world economy  – specifically in the United States and Great Britain. However, a free market is associated with the idea that the market itself will eliminate and ‘cleanse’ itself of the weaker industries that are unable to function without government intervention. A good example of this was the coal industry in Britain in the 1980’s. The industry was huge, but relied on subsidies to operate, at one point exceeding $3 Billion annually to support the 180,000 jobs it provided. Now in Britain, due to the privatization of the coal sector, only 3,000 jobs remain, but the industry is completely free of government subsidies.

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Increase in Demand by Trading Partners Leads to an Increase in Aggregate Demand in Singapore

According to this Topnews article, an increase in demand by Singapore’s trading partners has resulted in an in increase in Singapore’s aggregate demand. The aggregate demand of a country is the entire demand for all firms and companies in the economy.This increase in aggregate demand is due to the increase demand by Singapore’s trading partners, as Singapore is now required to export more. In order to increase exports Singapore must increase total production. On a graph this can be represented as a shift along the production axis, as shown in Figure 1. As demand for Singaporean exports by foreign trade partners increases, Singapore undergoes an increase in production. Q1 represents production prior to the increase in foreign demand. Q2 represents the final production in Singapore following the increase in foreign demand. Here we can see that there is an increase in production from Q1 to Q2 due to the increase in aggregate demand. This increase in aggregate demand, or AD is represented by the shift from AD1 to AD2 in the diagram. AD1 represents the aggregate demand in Singapore prior to the increase in foreign demand for exports. AD2 represents the final aggregate demand in Singapore following the increase in foreign demand for exports. Here we can see there is a clear shift right along the production axis, resulting in the shift from Q1 to Q2. Along the Cost axis however, price for the exports remains constant at P1.

Our Best Countries Reflection

Recently I was given the opportunity to work in a group with three of my classmates in our IB HL I Economics class. In this group we had to discern major difference between the world’s top countries both economically and socially in order to determine which country we thought was the top country in the world for living in. In making this decision, we were able to narrow our choice down to four countries: Switzerland, Singapore, Qatar and Norway. From these four countries we devised a set of four criteria in order to determine the countries international ranking. These included Environment rating, Economic Performance, Education, and Disparity. From here we assembled a series of graphs into a powerpoint presentation which we shared with the rest of our class. I was very proud of this presentation, as I did most of the work on it visually. In doing this I believe I was able to make a powerpoint that was easy to present and understand and that was very effective in aiding our groups presentation.

 

 

In gathering and presenting this information I was able to gain an interesting perspective when looking at the work of one of the other groups presenting. As they determined that Australia was the world’s best country, I was interested in how they ranked and judged their countries. Basing their decision around different criteria than ours, I was very interested in seeing how Health, Education and Economics determined their judgement in viewing Australia as the world’s top country. Additionally, I found that they determined Australia was the world’s top country in a way that was more socially implicative than economically reliant. While this is of course and acceptable and interesting view, I found that it ultimately strayed from the idea of this being an economica presentation.