The Cycle of Power

In a quaint village nestled beneath the shadow of a towering mountain, the villagers' lives were ruled by the fear of a menacing dragon. Their lands were scorched, their crops destroyed, and their hearts gripped by terror. But hope wasn't lost; a group of courageous young heroes emerged from their midst.

Guided by legends of old and fueled by a desire to liberate their people, these brave souls set out on a treacherous journey. Armed with inherited wisdom, enchanted weapons, and unwavering determination, they scaled the mountain's heights and confronted the dragon in its fiery lair. After a fierce and harrowing battle, they emerged victorious, driving the beast away and restoring peace to the land.

The villagers rejoiced, celebrating their newfound freedom. The young heroes were hailed as saviors, their bravery inspiring songs and stories that echoed through the village square.

After some time, however, a new dragon soon emerged and started terrorising the village again.

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Interpretation:

"The Cycle of Power" is a story that delves into the themes of leadership, the corrupting influence of power, and the nuanced dynamics between the oppressed and the oppressors. The narrative explores the gradual transformation of the young heroes from liberators to tyrants, demonstrating how the quest for survival and control can twist even the best intentions.

At its core, the story cautions against the dangerous allure of power. The initial triumph over the dragon represents the heroes' commitment to justice and their ability to challenge oppression. However, as leaders, they face a new set of challenges, and their journey illustrates the complexities of maintaining a just rule while navigating the harsh realities of resource scarcity and societal pressures.

The metaphor of the dragon's return as a manifestation of their own oppressive behavior is a poignant reminder of the cyclical nature of power dynamics. It emphasizes the potential for even well-intentioned leaders to become tyrannical when faced with difficult decisions and the burden of ensuring their community's survival.

The story's conclusion serves as a cautionary tale, highlighting the delicate balance that leaders must strike between maintaining authority and safeguarding the well-being of those they lead. It encourages self-awareness, humility, and a recognition of the potential for one's own actions to perpetuate the very injustices they sought to eradicate. Ultimately, "The Cycle of Power" invites reflection on the ethical challenges of leadership and the responsibility that comes with wielding authority.

Economics Essay 84: Economic Instability

 Assess policies which can be used to reduce cyclical instability in the UK.

Key terms:

1. Cyclical instability: Cyclical instability refers to the fluctuations in economic activity that occur over the business cycle. It is characterized by periods of expansion (economic growth) and contraction (recession) in response to changes in aggregate demand and supply conditions.

2. Policies: Policies refer to deliberate actions or measures implemented by governments or central banks to achieve specific economic objectives and address issues within the economy.

Assessing policies to reduce cyclical instability in the UK:

1. Fiscal policy: Fiscal policy involves the use of government spending and taxation to influence aggregate demand and stabilize the economy. During economic downturns, expansionary fiscal policies, such as increased government spending and/or tax cuts, can stimulate aggregate demand and boost economic activity. Conversely, during periods of overheating or inflationary pressures, contractionary fiscal policies, such as reduced government spending and/or tax increases, can cool down the economy.

2. Monetary policy: Monetary policy refers to the actions taken by the central bank to manage the money supply and interest rates to achieve price stability and promote sustainable economic growth. In response to cyclical instability, the central bank can implement expansionary monetary policies, such as lowering interest rates and providing liquidity to banks, to encourage borrowing and investment. Conversely, during periods of inflationary pressures, contractionary monetary policies, such as raising interest rates and reducing liquidity, can curb excessive spending and inflation.

3. Automatic stabilizers: Automatic stabilizers are built-in features of the fiscal system that help stabilize the economy without the need for discretionary policy actions. Examples include progressive income taxes and unemployment benefits. During economic downturns, tax revenues automatically decrease due to lower incomes, and government spending on unemployment benefits automatically increases, providing support to individuals and stimulating aggregate demand.

4. Countercyclical investment: Governments can undertake countercyclical investment projects during economic downturns to stimulate economic activity. These projects, such as infrastructure development or public works programs, create jobs, boost demand for goods and services, and support long-term growth.

5. Financial sector regulation: Strengthening regulations and oversight of the financial sector can help prevent excessive risk-taking, speculative behavior, and the buildup of financial imbalances that contribute to economic instability. By ensuring the stability and soundness of the financial system, the risks of financial crises and their adverse impacts on the economy can be reduced.

6. Coordination with international partners: As the UK economy is interconnected with the global economy, international cooperation and coordination with other countries and institutions are important to mitigate the impact of external shocks and stabilize the economy. Collaborative efforts can involve coordinating monetary and fiscal policies, addressing trade imbalances, and sharing best practices in managing cyclical instability.

It is important to note that the effectiveness of these policies in reducing cyclical instability can vary depending on the specific economic conditions, timing, and implementation. Additionally, the interaction of various factors such as political considerations, structural constraints, and global economic conditions can influence the outcomes of these policies. Continuous evaluation, monitoring, and adjustment of policies based on changing economic circumstances are crucial for effectively managing cyclical instability in the UK economy.

Economics Essay 32: Benefits of Economic Growth

To what extent is economic growth beneficial to an economy?

Economic growth refers to an increase in the overall production and output of goods and services in an economy over a specific period. It is commonly measured by changes in a country's Gross Domestic Product (GDP) or Gross National Product (GNP). Economic growth is often expressed as a percentage, reflecting the rate at which an economy is expanding.

Growth occurs when there is an increase in the quantity or quality of inputs used in production, such as labor, capital, technology, or natural resources. It is driven by various factors, including investments in infrastructure, innovation, entrepreneurship, and favorable government policies.

Economic growth is generally considered beneficial to an economy due to several reasons, although the extent of its benefits can vary depending on various factors. Here are some key points to consider:

1. Increased Standard of Living: Economic growth leads to higher levels of income and wealth in an economy, which, in turn, can improve the standard of living for individuals. As the economy grows, people have more resources to fulfill their needs and desires, such as better housing, healthcare, education, and access to goods and services.

2. Job Creation: Economic growth often goes hand in hand with increased employment opportunities. Growing industries and expanding businesses create new jobs, reducing unemployment rates and providing individuals with income-generating opportunities. This helps alleviate poverty, boost consumer spending, and contribute to overall economic well-being.

3. Improved Government Finances: Economic growth typically leads to higher tax revenues for governments. This additional revenue can be used to fund public services, infrastructure development, social programs, and investments in areas such as education, healthcare, and public safety. It strengthens the government's capacity to address societal needs and promote economic and social progress.

4. Technological Advancements: Economic growth often spurs innovation and technological advancements. As an economy expands, firms have more resources to invest in research and development, leading to the creation of new technologies, products, and processes. Technological progress can drive productivity improvements, enhance competitiveness, and open up new economic opportunities.

5. Enhanced Trade and Global Influence: Economic growth can boost international trade as countries produce and export more goods and services. Increased trade can lead to higher export earnings, foreign investment, and job creation. It also improves a country's standing in the global arena, enhances diplomatic relations, and facilitates the transfer of knowledge and expertise.

However, it's important to acknowledge that the benefits of economic growth are not evenly distributed and can have some drawbacks:

1. Income Inequality: Economic growth can exacerbate income inequality if the gains disproportionately favor certain segments of society. This can lead to social tensions and disparities in access to opportunities, resources, and basic services.

2. Environmental Impact: Rapid economic growth can strain natural resources and contribute to environmental degradation, such as pollution, deforestation, and climate change. Balancing economic growth with sustainability is crucial to ensure long-term well-being.

3. Social Challenges: Economic growth does not automatically guarantee improvements in social indicators such as education, healthcare, and social equality. It requires complementary policies and investments in human capital development, social safety nets, and inclusive institutions to ensure that the benefits reach all segments of society.

4. Volatility and Business Cycles: Economic growth is subject to business cycles, including periods of expansion and contraction. Downturns and recessions can result in job losses, reduced investment, and economic instability. Effective economic policies are necessary to mitigate the negative impacts and ensure sustainable growth over the long term.

In conclusion, economic growth has the potential to bring numerous benefits to an economy, including higher standards of living, job creation, improved government finances, technological progress, and enhanced global influence. However, it is crucial to address the challenges associated with income inequality, environmental sustainability, social development, and economic volatility to ensure that the benefits of growth are shared widely and that it leads to sustainable and inclusive development.

Pakistan - Caught in the Debt Trap

Sultan Ali Allana in The Dawn

THE 22nd IMF programme, circular debt, G2G loans and an imminent 23rd programme lurking around the corner. It reminds one of Jaws the movie, where danger creeps unseen and dread is prevalent amongst all. ‘Borrow more to borrow even more’ versus ‘earn more to borrow less’. Two very different courses, yet interchangeably deployed, admittedly intermittently, in varying blends, over the past 40 to 50 years, have shackled the nation to the debt trap.

Omnipresent in this murky blend, not unlike other debt-laden markets, are what the West terms as ‘economic hitmen’, who pursue self-interests, ostensibly for the greater good. These interests are then propagated scientifically, justified, and then, with the clever manipulation of economic data, communicated to every handheld device.

While economists and financial experts take turns at solving what has now become a complex equation, perhaps it’s time to go back to the basics, which may be termed as Solution 101 — ‘earn more and borrow less’ — a solution which is admittedly easier to state than actualise. It is a course which may well require our urgent attention and, most importantly, political convergence that entails all major political parties, irrespective of their manifestos, unanimously agreeing to sign off on a ‘charter of economy’ that marks milestones at five-year intervals — starting with ‘earn more and borrow less’ to ‘earn more and not borrow at all’ to, ultimately, ‘earn more and build reserves’.

Simply put, this charter may be a 15-year plan for this nation’s way forward and a performance measure to determine the economic achievements of each successive government. Politics and the economy must at all costs be separated in the interest of the nation.

Pakistan’s debt story is interwoven with the country’s 75-year journey. We entered the first IMF programme in 1958 and, since then, it has been one programme after another, while institutional and G2G debts have continued to grow simultaneously. As of Dec 31, 2021, combined foreign currency loans are more than $90.5 billion. The story of Pakistan’s debt is incomplete without taking into account domestic debt, which by the end of December 2021 had crossed Rs26.7 trillion (roughly $151.5bn based on the Dec 31, 2021, closing rate), resulting in total debt in excess of $242bn or around 77 per cent of GDP. There is also the circular debt, which grew from Rs161bn in 2008 to over Rs2.46tr by March 2022. It continues to grow, putting, oil, gas and power supply at risk.

A consolidated picture of Pakistani debt on a per person basis depicts the debt journey. Each Pakistani, irrespective of age and gender, carries upon their shoulders a debt burden of nearly Rs190,000, while devaluation and interest adds to this figure by the day. Pakistan must borrow to pay back its borrowings and borrow to pay back the interest on its borrowings. Bluntly put, we are no longer borrowing for growth, but to service and repay borrowings.

The government may be able to service local currency debt by raising taxes, at the cost of stunting growth; however, foreign currency earnings will have to be significantly enhanced through exports, remittances, privatisation and foreign investments, and imports will have to be managed to make the equation work. Without a balancing act, the debt cycle will grow to untenable levels.

Tough decisions and belt-tightening are essential. The country’s policy framework, which has relied on imports, belies the requirements of a paradigm shift in thinking. The emphasis needs to shift to the development of a robust agro economy, making Pakistan not just self-sufficient in food, thus ensuring future food security, but also a country that can be a global supplier of food. If oil can be extracted (at a cost) and countries can rise to heights unthinkable in the 1960s, surely, agro extraction (at a cost, undoubtedly) can become a source for sustaining growth, which in due course can accelerate industrial growth for a balanced economic model.

The cycle of boom-and-bust can only be broken if there is a meaningful shift in the policy framework. Granting subsidies without assessing the long-term consequences, or imposing heavy taxation regimes, which impair growth, must be examined and thought through. To quote Winston Churchill: “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up with the handles.” While building a strong SME and labour-intensive industrial base, with the aim of capitalising on the shifting industrial trend in China, is equally important, a focused approach, which entails start-to-finish government support — some call this the ‘ease of doing business’ — must be given top priority.

Competitive markets drive global agendas where Pakistan will have to situate itself and measure its competitiveness. What has not worked before will certainly not work going forward. It is imperative that we plan for future generations to provision for a fulfilling and debt-free life of progress, prosperity and security. We have heard the endless discussions of experts and also novices who have little understanding but who use economic jargon to impress with ‘solutions’. But why has nothing, or very little, worked? Framing policies, ensuring competency and challenging dogma require political consensus and hard work.

Freedom comes at a price and it’s a price we must pay someday. Climate change is upon us, where food security and water management will remain on top of the global agenda for decades to come. Gainful employment for our ever-growing and young population will be challenging. With over 366 million mouths to feed by 2050, surely this must be our primary concern. Debt and more debt are certainly not a solution. It is the problem!

Met Office says wait until 2023 for a hot summer

Britain's spell of awful summers is set to continue

Forecast that UK could be in middle of 10-20 year 'cycle' of wet summers delivered following gathering at Met Office

• 
• • Leo Hickman
  • The Guardian, Tuesday 18 June 2013 20.31 BST

Rain delays the start of the match between England and New Zealand on 16 June. Photograph: Andrew Yates/AFP/Getty Images

Don't worry, summer is on its way – but you might have to wait until 2023.

As the prospect of another gloomy Glastonbury and wet Wimbledon looms, leading climate scientists have warned that the UK could be set for a further five to 10 years of washout summers.

The grim conclusion was delivered after an unprecedented gathering of scientists and meteorologists at the Met Office in Exeter to debate the range of possible causes for Europe's "unusual seasonal weather" over recent years, a sequence that has lasted since 2007.

Many will have hoped for news of sunnier times ahead. But after experts brainstormed through the day they delivered the shock finding that the UK could be in the middle of a 10-20 year "cycle" of wet summers. The last six out of seven summers in the UK have seen below-average temperatures and sunshine, and above-average rainfall.

Stephen Belcher, head of the Met Office Hadley Centre and professor of meteorology at the University of Reading, stressed that the finding was not an official long-term forecast and does not automatically mean the UK will now have a further decade of wet summers. But, he said, the scientists' conclusion was that the chances of this occurring are now higher than they first thought.

"Predicting when this cycle will end is hard," said Belcher, who led the meeting of 25 scientists. "We have seen similar patterns before – in the 1950s and the 1880s – and we have hints that we are coming towards the end of this current cycle. However, it might continue for the next five to 10 years. There is a higher probability of wet summers continuing. But it's very early days in trying to understand why this is happening."

The scientists must now address what "dynamical drivers" are causing this cycle, Belcher said. The meeting debated a range of possible interconnected reasons for the unusual weather of recent years, including this year's cold spring and the freezing winter of 2010/11. The most likely cause for the wet summers, he said, was the Atlantic multi-decadal oscillation, or AMO, a natural pattern of long-term changes to ocean currents.

Other candidate causes that could be "loading the dice", as Belcher described it, include a shift in the jet stream, solar variability and fast-retreating Arctic sea ice. Aggravating all of these factors could be the influence of anthropogenic greenhouse gases entering the atmosphere.

Dr James Screen, who studies how melting sea ice impacts on the jet stream at the University of Exeter, said: "There has been a lot of talk about declining Arctic sea ice playing a role in our weather patterns, but really that's just one aspect of changes in the Arctic climate – which has seen rapid warming compared to other parts of the world. Those changes mean there is less of a difference in temperature between the Arctic and tropics, which could impact the position of the jet stream."

The scientists also debated how melting sea ice should be better incorporated into climate models, as well as how observational data – for example, deep-ocean temperatures – could be improved to help their understanding of the potential relationship between climate change and the recent run of inclement weather and record-breaking extremes.

Len Shaffrey, a climate modeller based at the University of Reading who is also currently investigating possible links between Arctic sea ice retreat and European weather, said: "There are some fascinating science questions emerging about the influences on our weather, for example, from natural variations in ocean temperature. There is also some evidence that the record low amounts of Arctic sea ice have influenced patterns of European and British weather, but this evidence is not yet conclusive either way."

The scientific debate about the role of the jet stream – the fast "river" of meandering, 10km-high air which greatly determines UK weather - is intensifying. This week researchers from the University of Sheffield published a study in the International Journal of Climatology showing how "unusual changes" to the jet stream caused the "exceptional" melting of the Greenland ice sheet during the summer of 2012. Scientists say they must now determine what is causing these "displacements", as they are known, in the jet stream.

Tourist bosses were trying to find silver linings. David Leslie, a spokesman for the tourism agency Visit Britain, said people did not come to the UK for the weather alone. "The weather here is as unpredictable as anywhere else," he added.

"The days of the UK being seen as a foggy, wet destination have passed. Hot, cold or mildly pleasant, the weather is not a deterrent for overseas visitors coming here to enjoy Britain's tourism offering, which remains the best in the world."