US Election - Media, Nails and the Constitution

There are a few days to go until this election is over and thank god there isn't anymore. However, everyone is saying that all this will finish when we hear the results on the 9th November. It's as if no one realises what a vital decision this is for so many and why the 'two most hated candidates ever' will influence not only America for the next four years but possibly the world for the next thirty years.

That first paragraph may seem a bit over dramatic but that is how all of the media seem to be portraying it. The evil Trump vs the crooked Clinton and places such as The New York Times and Fox News are having a field day pitching these opposites of character against each other. Just like it seems that  many of their reporters have no idea where they're going with a specific post or article, neither do I on this blog post. But as a UK Citizen it is difficult to understand the anger, frustration and therefore decision that the American people will make, however, this is what I think.

Trump has said so many horrific things that the electorate are used to it. He could literally say anything that he wanted and people would stand up for it. A Presidential candidate saying something bad is like them standing on a nail, it's going to cut straight through their campaign (the foot) and most definitely will hurt them. If you take this analogy then you can see that Trump is lying on a bed of nails. Each nail represents something that should hurt his campaign but as he has said so many of these this he is just able to sit on top of them and adding another nail will not make the slightest of difference.

You can see Hillary's 'nails' so clearly and how badly they have impacted her campaign. The 'bag of deplorables' comment and her emails. From an outsiders point of view it is difficult to see why these have enraged the American people so much but Trump has managed to latch onto these and paint her as a sour and out of touch woman. 

Three paragraphs down and it's easy to see another advantage that he has in the race for the White House. I have already mentioned Trump's name twice as much as I have mentioned hers. Now this post won't just be a rant about the US political system with hints of sarcasm, reports have shown that even when Hillary makes a campaign speech or seemingly wins a debate Trump is able to get more airtime and far more social media mentions. If the electorate see you more even if it's just on TV they are more likely to vote for you.

Although the media will always influence it's important to see where America stands as a whole. The US system is so far to the right of our own government that Jeremy Corbyn makes Bernie Sanders look like George W Bush. I know that's a gross exaggeration due to the fact that Sanders can put a sentence together but it vital, none the less, to think about how the world views the US and this race. Although the UK is an extremely strange mix of a left-wing healthcare and pension system with a usually right-wing macroeconomic and immigration policy even our current Conservative government is slightly to the left of the US 'liberal' candidate in Clinton. This shows that the difference between Trump and Clinton may be much less than you think in terms of policy. 

However, no one knows the policy that they truly stand for. There has been so little policy talk and so many insults flying between the candidates it is difficult to really get to what each of them think about the main issues. Polls suggest that the Democrats will regain the Senate and the House is harder to predict but will Trump just create his own policy and not listen to his party that are increasingly trying to distance himself from him? Trump in 2004 stated that he 'identifies as a Democrat'.This is amazing how he has moved back and forth not only on things he has said, policies he wants to use but actually what party he supports.

Clinton did change party support when she was at college but has been a faithful Democrat since. Though she always tries too hard to adapt her 'personal views' to modern times. An example of this is gay marriage where she has both said that 'marriage is a sacred bond between solely man and woman' and that 'every sexuality has the right to love' within a 5 year period. She has also both been for and against NAFTA over the previous 10 years. 

From an outsiders point this is what I plainly don't understand about this election. How are you supposed to vote for someone that you have no idea what they truly believe in or stand for.

There was a ridiculous idea flying round twitter not to long ago with the '#RepealThe19th' being used by some people. For those who don't know this is to do with the 19th amendment which states that a US citizen would not be denied their right to vote on 'accounts of sex'. This then allowed women to vote for the first time. You can tell how brutal this campaign has got when some people were openly stating that they were against the right of everyone to have a equal vote. This is both confusing and harrowing how supposedly one of the most developed countries in the world has people that stand for ideas like this.

Having studied the US system it is incredible to see how sacred the constitution is. As the constitution is so important to everyday life you can see this is what is important about the election. The Supreme Court. No one will ever have enough time or blog space to explain how important the US Supreme Court is but please do look up the politicisation of this legislative body. Every important decision that has come out of that county is down to their legislative body  and with the final justice being appointed by the next President with a current 4-4 split, it's crucial. Abortion, gay marriage and segregation laws have all changed in the past century not by the President, who is supposedly the leader of the free world, but by the Supreme Court.

During our previous election the Conservative party was harassed in the press after spending a huge £16.7 million on their various campaign techniques. Now Obama alone, not the Democrats but Obama just in his 2012 bid for the White House, spent over $1 billion. The two parties have spent over $2 billion this time. The idea that people are able to buy elections has been round for a while as the general trend is that whoever spends the most money becomes President. 

It's difficult to see how the American people don't have a massive problem with all this going on and the influence wealthy individuals will have over the candidates due to large donations.

I apologise to anyone reading this for the rambling nature of my writing, the badly structured argument and occasional awful sentences. I just wanted to write about what I found strange about this election and not stop.

On the 9th November we will wake up to what will go down as one of the biggest decisions in American history, I'm sure of it There are positives and negatives to both sides. There will be anger after the next President is sworn in there is no doubt but I hope that over the next four years the US will get tired of this division. Instead of only standing up for your party, stand up for what you will believe in and try to make a difference.

How does an expansionary monetary policy impact the individual components of Aggregate Demand and therefore the rate of inflation in the UK?

In 1998 the Monetary Policy Committee (MPC) was set up to set interest rates in the UK. This was given as a job to the MPC as governments were abusing the power, changing the interest rates to make it seem like the economy was doing well and therefore having more of a chance to win elections. When the interest rates are decreased this is known as expansionary monetary policy and will more than likely have a positive effect on Aggregate Demand (AD). Aggregate Demand is defined as total amount of goods and services demanded in the economy at a given overall price level and in a given time period. It is represented by the aggregate-demand curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide [1].This is usually is usually shown with a graph that is showing the comparison between the Real National Output (RNO) and General Price Level (GPL) within a market.

AD is made up of five different components and they are; investment expenditure (I), consumption expenditure (C), government spending (G), exports (X) and imports (M). I will be showing in this report how a decrease in interest rates (which is known as expansionary monetary policy) will affect the overall positioning on the curve AD. Ad is calculated by the equation AD=C+I+G+(X-M).

Consumption Expenditure (C)

61% of Aggregate demand is made up of the component C [2] which refers to the purchase of goods and services for households. As the interest rates have lowered within this hypothetical economy, household’s marginal propensity to consume is increases. This means that people will spend more money rather than save it due to the fact that the interest rates of the banks are lower and households will therefore get less interest and money by putting their money into the banks. Due to the fact that people are spending more and C is a positive component of AD, this causes a shift to the right of the curve as shown in Fig 1. The increase in AD therefore leads to an increase in the GPL and RNO. The increase in RNO can be seen as a decrease in unemployment and there increase in the GPL shows inflation. C is such a large component of AD that even only the slightest increase on C can cause a huge shift towards the right.

Investment Expenditure (I)

When the interest rates are lowered by the MPC it is less attractive for investors to leave their money in a UK bank so their money is taken out of the banks and put towards firms. I will cover the impact of the money being taken out later but this means the investors have got more of a chance of making money by putting it into firms. Because I is a positive component of AD it therefore shifts to the right as shown in Fig 1. The investment expenditure has increased as has employment and economic activity as you can see by the shift from Y1 to Y2 in Fig 1. This therefore causes inflation because AD has shifted to the right and there has been an expansion along Aggregate Supply.

Government Spending (G)

The expenditure that the government use is known as government spending. This is how much money the government are putting into firms and the economy in general. When interest rates are lowered by the MPC the treasury borrow more money as it is cheaper to at that time. Especially if the base rate which the Bank of England are as low as what they are using currently which is 0.5% [3] it encourages them to take money out and try and invest to get the economy going. AS there is more investment the economic activity of the country increases. This is again shown in Fig 1 by the shift from Y1 to Y2 and also the way that as G is a positive component of the equation AD increases and is shown by the shift to the right of the demand curve. There is also a drop in unemployment as shown by the shift.

Exports (X) and Imports (M)

When the MPC have employed an expansionary monetary policy the interest rates have therefore lowered. As I stated when talking about Investment Expenditure this defers anyone from having money into the UK Banks as they won’t get as much money from the interest rates. They therefore take their money out of the banks and make the pound less desirable. With a Weak Pound, Imports Dearer, Exports Cheaper (WPIDEC) the amount that we import and export changes. Other countries are able to get more product from the UK for a cheaper price due to the fact that the pound is much weaker. This is why Exports are cheaper and X rises causing the AD curve to again shift to the right (as shown in Fig 1) because X is a positive component. There is an opposite affect with imports due to the fact that the pound can get less for its value abroad. Imports then decrease and more is produced within the UK itself. But as M is a negative component of the equation (X-M) this again causes a shift rightward of the AD curve. All of this causes Inflation to rise.

Conclusion

The current UK Inflation rate is extremely low at 0.2% [4] where the government aim is to keep it at 2%. I have shown in this report how a good way to get the inflation rate higher is the expansionary monetary policy where they are able to lower interest rates to increase economic activity. As the base interest rate is already so low it is almost impossible to lower it anymore. Fiscal policy is another option that must be used in response to the fact that it’d be difficult to use monetary policy with the current state of the Economy. The forecast for the year ahead [5] is that inflation will rise to about 0.25% and stay there for most of the year due to fluctuating oil prices which can affect the rate of inflation massively.

The ability that AD has to change inflation is due to each individual component of Aggregate Demand and if one of them changes, ceteris parabus, the curve will shift to either the left or right. When interest rates fall AD will almost always shift to the right increasing economic activity, reducing unemployment and overall rising the interest rate.

References

[1] Aggregate Demand

 http://www.investopedia.com/terms/a/aggregatedemand.asp, Accessed 4^th February 2016

[2] Myers, M, Wales, P, Taylor, C, Luff, M, Chirambo, A, Brown, T. 

Economic Review, February 2016.          

Page 26 - Office for National Statistics

[3] UK Interest Rates held at 0.5% after 8-1 bank vote

http://www.bbc.co.uk/news/business-34473146  Accessed 8^th February 2016

[4] United Kingdom Inflation Rate

http://www.tradingeconomics.com/united-kingdom/inflation-cpi  Accessed 11^th February

[5] United Kingdom Inflation Rate

http://ieconomics.com/uk-inflation-rate-forecast  Accessed 11^th February

Appendices

Fig 1: A diagram to show the rightward shift of Aggregate Demand http://www.sanandres.esc.edu.ar/secondary/economics%20packs/macroeconomics/printview.htm Accessed 4th February 2016

Are Competitiors a Good thing when it comes to Selling?

Recently, my company which is part of the Young Enterprise scheme took part in their first sales event of the school year. This was at the Worcester Christmas Fayre at which we had a stall and were selling our own packages of a festive mug, Christmas flavoured spiced tea and some biscuits. This was all completed with cellophane gift wrapping to make it appeal to the buyer.


When setting up our stall we realised that there was another YE company doing a product which was very similar to ours for a cheaper price and this arose a question in my mind. Should we drop the price to try and compete on the same level with them? Do I rely on the sales ability of my team? or Should we pack up and go home because there was some competition? Obviously the last was not an option as in the business and economic world it is important to have competition to make sure that everyone is working to their best to bring our their natural competitiveness. Starbucks and Costa are examples of this, if they didn't have each other they would not be such large companies.


I decided to keep the price the same, rely on our sales technique and remain confident in the product and price which we had. This payed off when we managed to sell out of our product by the end of the day and  our oppositions stall being very quiet with little sales made. This, however, got me thinking what is the best thing to do when faced with the same problem that I have but on a larger scale?


marketingdonut.co.uk agreed with the plan that I had as he says that changing your original price can do more harm than good with the theory that it makes you look weak and you chose the price the reason so stick with what your went for and go for it. Due to the fact that at the stall we had 25 units to sell we were able to focus on the value rather than the volume.


In a market environment it is very easy to get carried away. To try and cut prices right there on the stand can takes seconds when before you have spent weeks deciding on the price of a certain item. I also spoke to our business advisor about the issue half way through the day and his reaction was that if we were managing to sell product at our original price, why change? What is the point of getting less profit for your good or service. That is a principle of Economics and one I will keep in mind. Companies will maximise profits, however they are able to.

Economics: Fundementally Simple or the Hardest A-Level?

Economics can be used in almost every job and is becoming more and more important within the modern world. Due to this and a general interest in the subject and the few career paths that excite me it was an obvious choice as one of my subjects at A-Level. Even though I was ready for the work I had no idea what to expect as from different people I had heard different opinions on the subject. A few friends said that it was by far their hardest subject but others told me it was applied maths with some writing. My first blog will be discussing this and how both of these opinions are in fact correct and how I have found this out in my first couple of months of Economics.

 Fundamentally Simple: Surely the Economics at school would just be applied Maths. Creating graphs and developing equations are fundamentally the ideas that the subject is based on with in the first few lessons having presentations on the supply graphs and learning and developing the equation Y = C + I + G + (X-M).

These were simple factors to understand as I enjoy the Mathematics side of the course and it works with my was of working. Others found other aspects of the course simple within the first couple of months but this is what I understood the best. It is also simple due to how much of the course involves common sense such as the idea that is the price of a good of service decreases people will want that good more.

A Difficult A-Level:

http://www.telegraph.co.uk/education/9948905/Are-some-A-level-subjects-better-than-others.html

This article in the telegraph shows that Universities are more willing to accept the 'harder' subjects which are offered in Sixth Forms throughout the country. After a small amount of time studying this subject I completely understand why Economics has been put in the highest bracket of intellect and recognition for universities. The main problems for me occurred when learning the foreign language that Economists are able to use to each other when describing what I see as a simple graph.

If my teacher had said to me at the start of this year 'A decrease in Consumption Expenditure causes a shift in aggregate demand to the left therefore lowering the general price level and then the real national output due to the decrease in the general price of goods and services' I wouldn't have understood the meanings of the words let along understand how the graph works because of this and how it works.

 This adaptation of language from words that are already familiar to us all  to is difficult to get your head round as suddenly words have multiple meanings. If I had been told fish could be described as land I would've thought they were mad but this change in language is what has to be learnt.

Overall, this new subject that I have taken up I am thoroughly enjoying even though its is difficult and always keeps your brain working. Taking Economics does need an ability to learn through many different way like graphs and maths but also English skills. Plenty of common sense to realise how almost everything is connected whether it is price, aggregate demand or government spending.