A Level Economics 11: Objectives of Economic Agents

Explain the objectives of economic agents.

Economic agents are individuals, groups, or entities that participate in economic activities and have an impact on the economy. They play various roles and functions within the economic system. Let's explore the different types of economic agents and their objectives:

1. Individuals/Consumers: Individuals are economic agents who act as consumers, seeking to fulfill their needs and wants through the consumption of goods and services. Their objectives include maximizing utility or satisfaction by allocating their limited resources, such as income and savings, to obtain goods and services that provide the highest level of satisfaction.

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3. Firms/Producers: Firms are economic agents engaged in the production of goods and services. Their primary objective is to maximize profits. Firms aim to optimize production, manage resources efficiently, and make strategic decisions that yield the highest financial returns. Profit maximization involves increasing revenue by selling goods or services at the highest possible price while minimizing costs.

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5. Workers/Laborers: Workers are economic agents who provide their labor in exchange for wages or salaries. Their primary objective is to maximize their income or earnings. Workers seek employment opportunities that offer competitive wages, good working conditions, job security, and opportunities for career growth. They may also pursue personal development and job satisfaction in addition to maximizing their income.

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7. Government: The government is an economic agent that influences the economy through policy-making and implementation. Its objectives can vary depending on the economic and social context. Common government objectives include:

   • Economic Stability: Governments aim to maintain stable economic conditions, such as low inflation, low unemployment rates, and steady economic growth, to ensure the well-being and stability of the overall economy.

   • Redistribution of Income and Wealth: Governments often seek to reduce income inequality by implementing policies that redistribute wealth and provide social welfare programs to support disadvantaged groups and ensure social equity.

   • Provision of Public Goods and Services: Governments are responsible for providing public goods and services, such as infrastructure, healthcare, education, defense, and environmental protection, to meet the collective needs of society.

   • Promotion of Economic Development: Governments often strive to promote economic development by attracting investments, fostering entrepreneurship, implementing supportive policies, and encouraging innovation and research and development.

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9. Financial Institutions: Financial institutions, such as banks and investment firms, are economic agents operating in the financial sector. Their objectives typically include:

   • Profitability: Financial institutions aim to generate profits by providing various financial services, including lending, investments, and fee-based services, while managing risks effectively.

   • Risk Management: Financial institutions focus on managing risks associated with lending, investments, liquidity, and market fluctuations to safeguard their stability and protect the interests of depositors and shareholders.

   • Intermediation: Financial institutions facilitate the flow of funds between savers and borrowers, supporting economic activities and capital allocation.

These are general objectives associated with different economic agents. It's important to note that individual economic agents may have additional goals or objectives that align with their specific circumstances, values, and external factors. Economic agents' objectives are influenced by factors such as individual preferences, market dynamics, regulatory frameworks, and societal needs.

Cricket: The problem with the Australian Line of Control

Sharda Ugra in Cricinfo


Don't mean to be intemperate or rude or politically incorrect, but why is it that whenever there is an epic-proportion bust-up in international cricket, Australians are almost always involved?

Let's not think Dennis Lillee-Javed Miandad 1981. A rough 21st century brawl-recall will do.

Going backwards from the 2018 Warner-De Kock stairwell skirmish, you meet Josh Hazlewood giving umpire Ranmore Martinesz and New Zealand batsman Corey Anderson a mouthful in Christchurch, 2016.

In 2015, there's Warner and Rohit Sharma having a verbal stoush over an overthrow in a tri-series.

In 2014, Mitchell Starc and Kieron Pollard are involved in a ghastly altercation during the IPL.

In 2013, Warner and South African keeper Thami Tsolekile are ticked off over an incident in an A Test in Pretoria.

Only a few months later, Australian captain Michael Clarke is heard telling James Anderson on air, "Get ready for a broken f**** arm."

In 2010, Mitchell Johnson gets stuck into Scott Styris during an ODI in Napier.

The 2017 Ashes was marked by umpire Aleem Dar standing between James Anderson and Steven Smith in Adelaide, if only to stop the first punch from landing. There were debates over whether stump mikes should be turned down to prevent exchanges between adult men reaching the ears of children. We are not referring to the haw-haw "not even the best cricketer in your family, mate" banter, which has many genuine moments of mirth and forms part of the game's folklore. These are cricket's dramas on the other side of ugly, imprinted into the brains of kids as "normal" on-field behaviour, and last for weeks, full of whisper campaigns, leakages, ICC hearings and sentences.

Bored yet? Annoyed even? Then don't bother going back to Lehmann v Sri Lanka 2002, or McGrath v Sarwan 2003. Yes, let's set aside the Warner v Root walkabout, Harbhajan v Symonds, and even Virat Kohli's last two episodes: the 2014-15 send-offs, and the dramatics over Smith's 2017 "brain fade".


----- Also read


Smith and Lehmann culpable in Warner incident - Ian Chappell

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Stand back from the institutional defence that "David Warner has not been pulled up for any ICC code violation for the last three years and the demerits points scorecard reads South Africa six, Australia two." No need to go into a stats breakdown of how many times out of ten Australian cricketers get involved in cricketing boilovers or reducing to the "the other guys started it" argument. What cricket must deal with is the fact that the Australian cricket team may have turned what used to be spontaneous sporting combustion into their version of Tactic 2.0. Pre-meditated toxic confrontation, a drama scripted between balls.

Other countries manage to play tense, competitive cricket without lapsing into uber-nastiness. Those contests have their heated moments (James Anderson and Ravindra Jadeja, go stand in the corner), but they are not the template for every series between the sides. The cricket still dominates public memory, not the arguments and the controversy. Put Australia on one side of the contest and it's not quite the same.

Throughout its colourful and rich history, Australian cricket has offered us some of the game's most magnificent qualities: competitiveness, daring, energy, positivity. For the better part of the last two decades, they were the gold standard for the game. Yet, slowly, during the same period, so many major series featuring the Aussies has begun to produce an overheated, eventually absurd subplot. In which they usually claim to be the victims, while often being deliberate, and even skillful agent provocateurs.

Unseemly and juvenile conduct is then gift-wrapped into convenient catchphrases: "playing hard but fair" and "not crossing the Line". And what a shapeshifter of a Line it is: imaginary, planted into quicksand, travelling where and when it suits those who claim to own it. To be fair, every cricket team claims ownership of the Line too - usually when they have committed a transgression. On Wednesday, Ottis Gibson described the situation quite poetically: "They are saying they didn't cross the line, but where is the line, who sets the line, where did the line come from? When you are saying you didn't cross the line but we didn't cross the line, you went very close to the line whose line is it?" Now that Sledging is trademarked Australian, no surprise that the team considers themselves rightful rulers of the Line and chooses to dictate what lies on either side.Green and gold are the hottest colours: if verbals are flying, Aussies might be in the vicinity Getty Images

Not so long ago, race and culture were safely on this side of the Line and could be tapped into to mentally "disintegrate" opposition. The players, it is hoped, have moved on from calling each other "curry-munchers", "terrorist", "monkeys". But the Warner-de Kock incident now informs us that "personal" is out of the question and that "family" aka wives or significant others, are on the far side of the Line, off limits. It is not certain if that means only Australian families, or does it apply to the other cricketers' families too? What happens to "your wife, my kids"? And what is the exact definition of personal? Surely, private parts are personal? But male or female? Or both? Or do only Australian cricketers know? Such righteousness from the prime offender can only invite ridicule. England captain Nasser Hussain once called this Australian cricket's habit of "preaching". Except no one is interested in following this gospel.

In other sports around the world, Australian athletes are admired for their titanium-strength fighting qualities. Barring a few, recent tennis brats, generations between Rod Laver and Pat Rafter showed us skill with grace. Whatever their personal issues, Australian swimmers don't expend energy dissing their rivals. There are more than a few Aussie rugby players who demonstrate what playing hard and fair really means. Then how and why does its cricket team unfailingly produce such habitual, perpetual, collective bad conduct? Of the kind they wouldn't want anyone's children indulging in on a playground?

Cricket "verbals" are said to form a part of the Australian game, even at club level. Gideon Haigh called it "just sound effects almost like the sound of bat on ball."

During a 2013 research study around multiculturalism in Australian cricket, some newly arrived Asian immigrants told me they were staggered by the level of sledging in grade cricket. "Even umpires get sledged," one said. The use of fruity language in local cricket is common, but sledging umpires is not. Why, even Australia's own Usman Khawaja told the Player's Voice website in October 2017 that as a junior, "Getting sledged by opposition players and their parents was the norm when I watched the Aussie team, I saw men who were hard-nosed, confident, almost brutish. The same type of men who would sledge me about my heritage growing up." He then went on to say that the situation had improved on the ground and that Australian cricket was changing, becoming more inclusive.

Who knows how long meaningful change in player behaviour will take to get to the top in Australia? Never mind fixing what is an endemic problem, even accepting that it exists is going to be tough - because Australian cricket has turned the profane into their sacred creed. 

Failing the Tebbit test - Difficulties in supporting the England cricket team

by Girish Menon





The article by second generation British writer Kishan Koria applying the 'cricket test' to examine the behaviour of Britons of Asian origin was interesting and revelatory but it may be a case of blaming the victim and not the perpetrator. So, I am going to raise some issues which are never raised in the politics of Tebbit's followers. 

Firstly, why should it be a natural assumption that if you have resided in England for years you must support the English cricket team? If England's home advantage against India is reduced to fixing the pitch to suit its bowlers then so be it. The English cricket team must earn the support of the ticket buyers with its acts on and off the pitch.

The spectator in a cricket match has paid a high price to be there. That s/he should cheer for the England cricket team was never a condition of the contract. She is a free agent and can support whoever she pleases. 

The manner in which the English cricket establishment has treated players like Pietersen and Panesar gives the outsider an impression that they don't care about the views of their followers in any case. I'm sure even Bopara may be surprised at the number of times he has been in and out of the England team. 

The cricket blog The Full Toss has often highlighted the uncaring way the ECB deals with the supporters of the English cricket team. So, will it not be natural for cricket lovers to express their disgust in manifold ways? 

As far as citizenship in a land goes so long as residents pay taxes and obey the laws of the land then they are free to do what they like with the rest of their lives. This is usually the argument of free marketers like Tebbit, so why then do they wish to deny choice to these consumers of cricketainment with the nanny state telling them who to support in a cricket match? 

So, the likes of the ECB should be happy that it is the English citizens of Indian origin who are putting the bums on stadia seats and the brown pounds in their coffers. Many English bums (pun unintended) stay away from cricket stadia for a variety of reasons  including ticket prices, poor team selection policies etc. Hence the ECB should not further risk their luck by telling these high fare paying spectators who to support. Instead they should earn their support by fair minded policies and listening to the voices of their dwindling support base.

Personally, I fail the Tebbit test every time England play India and I have been unable to understand why. This is funny because in my growing years I supported the Mumbai team against other Indian teams even though my parents were immigrants from the state of Kerala (far away from Mumbai), and despite there always existing  a violent campaign against immigrants in Mumbai. 

It maybe out of alienation in a land where me and my family's future fortune lies. It maybe the jingoism in the highly conservative media. It maybe the 'institutional racism' referred to in the Macpherson report. It may be the 'barging of Gavaskar by Snow'; the negative lines bowled by Giles; the Zaheer Khan jelly beans incident; the failure to criticise Anderson for his foul mouthed pronouncements in the quest for victory; the failure to understand the invalidity of the predicted path in a DRS while castigating the non believer as a Luddite; or invoking the spirit of cricket argument selectively.  As for the booing of Moeen Ali, a fine prospect, to my mind this appears to be a continuation of the Indo-Pak rivalry which has been carried forward by the diaspora. 

However, I have also noticed periods when I begin to like the English team but then something happens and the old English superiority biases surface in the commentariat and I am driven once again to dislike the team, probably wrongly, probably not due to the players' actions. But, most importantly, the overriding reason is the brand of cricket the team plays. I have for long been a fan of the Pietersen, Botham and Gower brand of English cricket. But, so long as the clones of Boycott and Tavare dominate the approach to batting it is a trifle difficult to stay awake let alone support the England team. 

Chit Funds, Ponzi Schemes -Different schemes built on different structures

 

VINOD KOTHARI

  

Anguished at the collapse of the unregistered Saradha Group, collection agents and depositors took to Kolkata's streets in protest. Photo: Ashoke Chakrabarty

 

Even as thousands come to terms with the loss of life savings in the West Bengal “chit funds,” it is interesting to find politicians promising new stern laws against such funds. Absence of laws is the least of the reasons for such schemes flourishing in the State. We are not short of such laws — in fact, we have plenty of laws that prohibit such schemes and provide for the sternest penalties for the perpetrators.

The current scam is an almost identical rerun of one from 25 years ago and the machinery has allowed the same thing to happen. But if a Rs.22,000 crore scheme questions the very institutions that define the system — be it the Supreme Court or SEBI, and the implementation of their orders — there is little surprise that the only succour we can pretend to find is in law-making.

The West Bengal ‘chit funds’ are not chit funds at all, since these have a different structure. Chit funds are mutual credit groups where money circulates among the group members, and the monthly contributions of the chit members are received in rotation by one of the members who bids for it — much like a ‘kitty’. Chit funds are perfectly legal (if they are registered under the Chit Funds Act 1982).

The several names that keep popping up in West Bengal are Collective Investment Schemes or Public Deposit Schemes, which on the face of it do not come under any law. They are structured so as to be neither a ‘public deposit’ nor a ‘collective investment scheme.’ However, this restructuring is purely superficial and takes advantage of apparent legal loopholes. Even the most basic regulation should detect this.

The evolution of regulatory structure in India is a rare case of human learning and we have burnt our fingers every time. Every scam brought in a law; the law is the edifice built on scams and not on intuition.

Money circulation schemes were banned by law in 1978, after Sanchayita Investments went down with money pooled from a few lakh investors in West Bengal. Soon after, chit funds became a hot political issue, leading to a chit fund law in 1982.

So how do scamsters still end up raising several thousand crores? Obviously, so much money is neither raised overnight, nor silently, as there is a massive machinery of agents who do it from the very bottom of the population pyramid. Each scamster innovates a device to sell to unsuspecting depositors — ranging from debentures, preference shares and land deals to advance payment for goods.

The mechanism of these schemes is so simplistic that it is hard not to see that these schemes must go bust.

The promoters who float this fund sign on agents by selling either shares or a stake in a real estate investment fund. They are to get a commission for signing on new people. Suppose an agent signs on 4 people, when each of them signs on another 4, the original agent receives commission for 16 people.

Thus, people at the top make money rapidly, often becoming rich overnight. The people lower down the pyramid see these examples and it is this which makes them greedy, attracting them to sign on as depositors hoping to make easy money.

No matter what the device used, the common thread in these schemes is that the flow of new ‘depositors’ must keep coming in — the only source from which existing depositors can continue to be paid is by inflows from new depositors. Money is initially raised at hefty interest rates, and with attractive periodic prizes, gifts, gala parties, and so on. The agents are given hefty commissions, because the design relies on a highly incentivised structure of brokers or agents.

The cost of interest, plus the agency commissions, the luxurious spending on so-called depositor prizes and the lavish remuneration of the promoters builds up a huge working cost. The company must then make profits at over 25 per cent, a rate which no business can sustain. It is not that these promoters are blue-eyed investors, and they end up sinking funds in illiquid properties, resorts or hotels and often end up making losses.

More often than not, they have dubious intentions and the money from the fund is siphoned off into personal accounts. This is what Ponzi schemes are all about.

The massive money raised surely shows somewhere on the balance sheet of the company, which is filed regularly with the Ministry of Corporate Affairs (MCA). Surprisingly, it is the MCA which is the least proactive in the entire process of bringing the perpetrators to regulatory focus.

(The author, a specialist in financial law and visiting faculty at prominent universities, can be contacted at vinod@vinodkothari.com)