Chapter 6 Determination of National Income

News Article Title: Foreign investors face Indian barriers
http://news.bbc.co.uk/2/hi/business/6636241.stm


Summary of the News
A recent report from global consultancy firm McKinsey says that in the next two decades, India's consumption boom could overtake Germany's. Many foreign investors are trying to convince Indian economic gatekeepers they should be allowed in but it is not easy. Why is it still very difficult for foreign investors to come into Indian market when it's shown that their investment has a very positive impact on the growth of Indian economy? Some says it limits down the competitions from foreign countries. "If you don't know what your strategy is going to be, then it will be very difficult for you to stay here. “For foreign investors battling to get into India, it's these young consumers and their new buying power that are worth the fight. ”


Relation to the Chapter
Relatively to Chapter 6, we talk about the changes in Gross Domestic Product (GDP). Household savings & investment, the government & foreign-trade sectors and some other factors can make the changes in the level of GDP. Investment is the most volatile component of GDP. In this case, the powerful consuming ability of the young Indian generation attract many foreign investors come into Indian market. There are many elements can alter investment spending, such as the interest rate, innovation and changes in technology, government policy and taxes, expectations, replacements, cost of capital goods, and GDP. Investors' expectation toward Indian‘s booming economic and the change in government policy are the two major reasons why foreign investors are desperate to come to India; but still, it seems that Indian government selects the foreign investment carefully, and the local businesses are not very friendly to the competitors. 'We are looking for some concessions from the government." says Tim Hoelter.


Personal ideas
"India, being democratic, gives confidence to foreign investors". Gradually, a lot developing countries, like China, India attract investors' attention because of the changes in their political party's philosophy and the booming economy.Some foreign investments will certainly help the developing countries, meanwhile they also bring in competitions. Competitions are always beneficial for citizens but for local small business, there are more disadvantages. Since there are more money flow into the country's construction, government will have more spread money to spend on other fields. Sum it up, although there can be disadvantages for foreign investments, overall, there are more advantages. Developing countries like India, should open their doors and welcome more foreign investors.

What's the best & the worst type of unemployment

Mr. Wolf was once flipping burgers in Mcdonald. However, maybe because he is stupid, after a while he found himself not suitable for the job. Finally, he quit and looked for a new job. Within a few week, he found a job as a garbage collector. He has experienced a period of frictional unemployment during the few weeks. This is the best type of unemployment type, because it happens very often between two jobs as a worker looks for a new job.


Mr. Wolf is a new immigrant from a foreign country. He worked as a miner before he moved to vancouver. However, mining industry is not popular in Vancouver. As a result, he finds that there's not any suitable job which matches his skills. He is experiencing structural unemployment for a period of time. If he wants to get a job in other industries, he needs to pick up new skills. This is likely to be costly and may take a very long time in order to get him back to labour market. So, structural unemployment is the worst type of unemployment.

Unemployment stats don’t tell whole story

News article source: http://www.nashuatelegraph.com


New Hampshire’s unemployment rate is again lower than the national average but a deeper examination of the unemployment story would show that the statistics fail to disclose the untold number of people working in jobs beneath their skill sets. Bill, a Nashua resident will join the ranks of the underemployed if he doesn't land a high-tech job again soon; and he has little hope of of an IT job coming by then. He can also find a part-time job which he wouldn't have health benefits. To be considered unemployed, a jobless person have been actively looking for a job within the past month, Marshall said. “But someone, say an engineer working at McDonald’s, is still employed,” he said. Bill will have to consider a service industry job if he can't find a full-time position in his field. "He’ll be employed in the government’s eyes but not his."

Related to Chapter Five, this news article talks about how unemployment is defined by government and what is it stated about. In this article, it mentions that " New Hampshire had a 3.7 percent unemployment rate for February. And for the entire year of 2006, the state had a 3.4 percent jobless rate, far lower than the national average of 4.6 percent." The government considers two groups of people when determining a state’s labor force: those employed and those looking for a job. Those labeled as “looking for a job” are people filing for unemployment, as well as estimates of people entering the workforce after completing schooling or returning from being a stay-at-home parent. Adjustments are also made for those leaving the labor force because of retirement or child rearing. To be considered unemployed, a jobless person would have had to have been actively looking for a job within the past month. but the problem is that the unemployment rate do not consider the people who are working unmatched as their level of educations or abilities.
Just as the title of the news article "Unemployment Stats Don't Tell Whole Story", the unemployment rate only reflects partial of the labour market and it is not necessary to be the states of a social wealth. When we look at the level of a community activities, we should not only look at the unemployment. There are many highly educated people who are working unmatched as their level of educations or abilities. These can also be another concern beside the unemployment rate. This is a waste of human resources and we should try to eliminate this situation.



B.C. unveils tax-cut budget

http://www.canada.com/nationalpost/financialpost/story.html?id=55246e93-c30e-48e1-aaaa-52900496437d&rfp=dta


Summary
British Columbia unveiled a $36.2 billion budget on Tuesday that includes a 10% personal income tax cut, which the government said was aimed at easing housing problems caused partly by the western Canadian province's strong economy. Provincial officials said British Columbia had a real GDP growth of 3.9% in 2006, but forecast it to slow to 3.1% percent in 2007 and 3% in 2008. Total debt, including that of provincially owned corporations, is expected to be $36.8 billion, up from $34.3 billion last year. The tax supported debt-to-GDP ratio is projected to be 14.8%, down from the 15.8% projected in last year's budget. The right-of-center B.C.Liberal Party government of Premier Gordon Campbell has been accusing of cutting social programs in past years as it emphasized fiscal constraint and tax relief, which it said were needed to rebuild the province's economy -- which is now booming.


Relation to Chapter 4
After learning this chapter we knew that Canada has a federal government system. Different government levels collect taxes from citizens. We noticed that the largest component of government spending is social services, which including old age security, the child tax benefit program, employment insurance, social welfare assistance programs etc. The second largest expenditure for the federal government is debt charge. The personal income tax accounts for about 46 percent of federal-government revenue. The significance cut of persona l income is a really good thing for citizens or there is treat behind it? From a positive point of view, we can see clearly once when the personal income tax cut starts, every individual citizens will have 10 more percent of income every year. With this 10 percent on hand, they are free to do whatever they wanna for personal. Let's turn to a greater point of view, since government's revenue will decrease, so they tend to cut of budgets on some projects which limits our ability to invest in the social and economic infrastructure that has historically been the heart and soul of Canada, making ours one of the most desirable countries in the world in which to live.
So there are both views of the cuts of personal income tax.


Personal ideas
In my point of view, the cut of personal income tax is not a good strategy to generate the gap of income in Canada. Taxes in Canada have already been cut deeply compare to the other high-income OECD countries. Canada's tax revenue as a percentage of GDP is already well below the average. They show that high-tax countries have had greater success at achieving their social objectives--without economic penalty. And from many other countries' example, we learn that tax cut is not a good idea to helping the growing economic. So we should say "no more" to tax cuts that benefit wealthy Canadians at the expense of the economic security and well-being of all Canadians.

CHAPTER 3 The Role of Government in a Market Economy



http://www.thestar.com/News/article/167451


On the international scene, minimum wage legislation first appeared in New Zealand in 1894.The first provinces of Canada to enact minimum wage legislation were British Columbia and Manitoba, in 1918. By 1920, four other provinces-Nova Scotia, Ontario, Quebec and Saskatchewan-had followed their example.

More presently, starting February, Ontario's lowest paid workers are getting a 25% an hour raise starting February; Labour Minister Steve Peters announced the minimum wage in Ontario will increase from $7.75 an hour to $8.00. Activists have argued the minimum wage should rise to at least $10 an hour to keep the working poor above the poverty line, but the Liberal government claims that would cause undue hardship to businesses.

In contact to Chapter Three, The Role of Government in a Market Economy, we noticed the necessity of income distribution in a free-market. Today, one of its main purposes is to protect non-unionized workers in unskilled jobs, although it can also influence, directly or indirectly, the level of compensation of other employees as well. But the concern is that will increase minimum wages really help to reduce poverty? The answer is an increase in the provincial minimum wage may help those with higher earning potential, but reduces employment for the lowest wage and lowest skilled workers. Increasing the minimum wage “ratchets up” all wages in all industries and reduces job opportunities for entry-level workers. In most provinces there are certain groups of employees (such as some farm workers and domestic servants) who are exempt from minimum-wage coverage. For these workers, increases in the minimum wage are ireelevant and do not aid their financial situation.

In conclusion, it is important that government sets a minimum wage so that it helps to reduce the level of poverty among the working poor although it may not be very helpful to help all the people are away from poverty. Personally, I would like to see the government increase it because most of us are working at minimum wage which is very low.

NEW HOUSING SUPPLY OUTSTRIPPING DEMAND


On November 3rd, 2006 The Vancouver Sun business section, there is a major report about the present Vancouver housing market.

With a local research firm finding supply outstripping demand in some areas, it shows that new housing construction shows more signs of cooling in British Columbia. In a report, the Vancouver-based development-research firm MPC Intelligence said markets are still strong. And the number of “speculative investors” buying housing units drop. Meanwhile, “allowing a bit for air out of the housing balloon so that prices and sales slow down a bit is probably a good thing for the market,” Podmore said. The combination of rising prices and moderately higher interest rate will be the main factors that reduce housing starts.


Connection to Chapter 2
Since 2000, Vancouver housing prices are continuously growling crazily, but the quantity demand is still increasing. So what are the factors to cause the quantity demand to grow while the prices are growing? 1. Income-- an increasing in incomes allow people to purchase houses at a high price; 2. Taste and preferences—people’s taste for lifestyles are develop. 3. Expectations of future prices—it’s show that a lot of the houses are bought by “speculative investors” because they have a highly expectation of future prices; 4. Number and characteristics of buyers—Canada accepts more immigration, so the land resource is become more scarcity; 5. Expectations of future incomes—people tend to buy more or ignore the price growth if they know they are going to get a higher salary. Suppliers are definitely very happy to see the active market. As a response, they will build more houses to meet the need of the markets. Even “a slowing of sales in the resale market will leave less spillover of demand into the new housing market, which will lead to a dip in new housing starts.” Also, houses are defined as elastic. If the housing price continually to rise, less people will buy it and fewer families are able to afford it. Meanwhile, there are lots of substitutes they can choose, such as rent a house or buy an apartment etc.

The up coming of 2008 Vancouver Winter Olympic games is going to let more people know about Vancouver, this wonderful city for living. There is no debut that housing price will keep going up. So do you think it’s a good thing or a bad thing?

Activists Target Golf Courses for Wasting Water

Do you know that almost everything involves in our everyday lives is considered as scarcity? (Air and sunshine are the only exceptions for now). Do you know that water is becoming the scarcest resource because of the pollution and population increase? On April 8th, 2006, there is an article mentioned how golf courses can be a concern of wasting water.

Eco-warriors having successfully trashed GM crops are now turning their attentions to the profligate waste of natural resources by golf courses. Golf courses are being told to cut their use of water, return part of their courses to wildlife; else direct action will be taken. One golf course has already experienced direct action. Golf courses in the West Country around Bath have been warned: that if they don't cut their water usage and return 10% of their course to wildlife, direct action will be taken against them. The southeast is suffering its worst drought in a century. Everyone has been urged to conserve water, domestic users are subject to a hosepipe ban, effective from 1 April 2006, but some golf courses feel they can get away with continuing to waste water.


Relating to chapter 1, we know that everything has a limit amount. So does water. The number of us is growing fast so the demand for water clearly increases. Canada has 14 percent of the world’s lakes and 9 percent of the world’s river flow, serving less than one percent of the world’s population but water is a scarce resource even for Canadians. The fact of its scarcity is forcing us to make decisions regarding the use of this valuable resource. When companies open up golf courses, when we enjoy playing golf, when we look at the huge green beautiful plain, there is actually an opportunity cost. So now let’s have a close look at the opportunity cost of having golf courses.

Direct costs = $1000 for one year golf club membership + enjoy playing golf
Opportunity costs = facing the water crisis + 1.1 billion people lack access to clean water
+ 2.2 million People estimated to have died from water/sanitation associated diseases
Total cost = direct costs + opportunity costs

Now, we know every time we enjoy playing golf, there is actually something more we are paying. There is not only the golf course but also facing the scarce of water. Is that more necessary to have golf courses or use the finite resource to save more lives? Everything is scarcity. When we use the resources now, we should think of the opportunity cost and hopefully that can help us to make a better decision for us and the next generation.