Topic1: Economic Growth
Therelationship between technology and economic progress is quitecomplex. This controversial issue is addressed in the article “TheHistory of Technological Anxiety and the Future of Economic Growth:Is This Time Different?” which was authored by Mokyr, Vickers, andZiebarth. It was published in the Journal of Economic Perspective in2015. This paper will provide the summary of two articles on economicgrowth and a personal opinion on the same issue.
Theauthors intended to determine the role that technology will play ineconomic development in the future. Based on the content of thearticle, it is evident that technology will always cause disruptionin the short-run, but contribute towards economic progress in thelong-run. The lessons learned from the industrial revolution indicatethat technology leads to unemployment in the short-run, since most ofthe semi-skilled members of staff were replaced by machines. However,the exponential increase in the rate at which technology was adoptedresulted in the creation of new opportunities and competitiveness oflocal companies, which provided more jobs.
Economicinstitutions are some of the key determinants of the economicprogress of a country. The article “The role of institutions ingrowth and development” provides a discussion of how political andeconomic dynamics influence the economic progress of a country. Thearticle was authored by Acemoglu and Robinson and published by theCommission on Growth and Development in 2008. The main argument thatis advanced in the article is that good institutions facilitateeconomic development, which enables countries to overcome poverty andjoin the path of long-term development. Stable institutions in acountry are indicated by successful political reforms and transition.Acemoglu and Robinson argue that governments in many countriesunderstand that good institutions are mandatory for any successfuleconomic development, but they face a lot of challenges while tryingto bring the necessary reforms. The difficulty of establishing stronginstitutions is attributed to the problem of finding politicalequilibrium (Acemoglu & Robinson, 2008). Each country has peoplewho have different interests and efforts to harmonize the needs of adiverse population reduce amount of time and resources used to buildstrong institutions.
Thelong-term and sustainable economic developed is determined by acombination of factors. The findings reported by Mokyr, Vickers, &Ziebarth (2015) lead to an argument that technology is among theleading factors that contribute towards economic development. Thecontent of the article authored by Acemoglu & Robinson (2008), onthe other hand, supports an idea that long-term economic developmentrequires the existence of strong institutions. The two arguments arereasonable and they are supported by real examples. However, theestablishment of good institutions is prerequisite because itfacilitates any other form of reform and development. For example,good political as well as economic institutions create an environmentin which technology can be used in productive ways.
Inconclusion, every country desires to achieve sustainable andlong-term economic growth, but they lack proper institutions.Although technology plays a key role in increasing thecompetitiveness of business and creating new opportunities in thecountry, its contribution towards economic development can only beachieved in the existence of strong economic and politicalinstitutions. The establishment of these institutions requires thegovernments to balance the needs of different stakeholders in orderto maintain stability that is required for long-term development.Additionally, the fear that disruption resulting from technology willlead to unemployment is unfounded since previous experiences haveshown that innovation opens new opportunities.
Acemoglu,D. & J. Robinson (2008). TheRole of Institutions in Growth and Development. Commission on Growthand Development Working Paper # 10.World Bank.
Mokyr,J., Vickers, C. & Ziebarth, L. (2015). The History ofTechnological Anxiety and the Future of Economic Growth: Is This TimeDifferent? Journalof Economic Perspectives,29 (3), 31-50.
Topic2: Population Aging
Theimpact that population aging had on economic development is among themost debated topics in the modern word. The article “Macroeconomicconsequences of population aging in the United States: Overview of anational academy report” addresses the implications that anincrease in the number of elderly citizens in relation to the totalpopulation has on national development. This paper will provide thesummary of two articles and a personal opinion on population aging.
Lee(2014) argues that an increase in the population of senior citizenshas negative impacts on the national economy. This populationincreases pressure on the public programs (such as health insuranceplans) that are supported using the taxpayers’ funds. In addition,the author advances an argument that older people are lessproductive, which implies that reliance on this population to fillgaps in the labor force will lead to a significant decline in therate at which the U.S. economy has been growing. However, theseimpacts can be minimized through the establishment of proper policyresponses.
Sheiner(2014) addresses the same issue of population aging in an article“The Determinants of the Macroeconomic Implications of Aging”.The author supports an idea that an increase in the population agingwill have significant effects on the U.S. macroeconomic reforms.Although there is a possibility of a decline in the supply of laboras a result of an increase in the population of elderly peoplecompared to young citizens, the development of effective strategiescan lead to a rise in return per capita. This is because the networth of different assets rises with the age of the head of ahousehold. In addition, there is a high probability that an increasein the aging of the U.S. population will enhance the privateownership of the houses. However, a few economic benefits associatedwith the aging of the population will be offset by pressure that itwill put on public programs, such as health care and pension.
Thereis no doubt that the population of aging of the U.S. population willcontinue to increase. Although most of the scholars have addressedthe impact of the aging of the population on the labor supply and thegrowth of the national economy in the future. However, this is acritical issue that has not been given adequate attention, which isthe possibility of an increase in the immigration of young peoplefrom developing countries to take up opportunities in the developednations (Lee, 2014). Alternatively, factories will move fromdeveloped states to developing nations, where labor supply will beadequate. One of the most effective measures that can be used tominimize the negative impacts of the aging of the population is thecreation of policies that will encourage the flow of energeticworkers into the affected nations.
Inconclusion, population aging is a critical issue that is mainlyaffected the developed nations, but there are effective policymeasures that can be taken in order to protect the economy of thesecountries. Aging of the population is associated with a decrease inthe labor supply. This issue can be addressed by effectively byestablished policies that will motivate young and productive peopleto join the workforce of the affected nations. This measure canminimize the risk of companies moving their operations to countrieswhere human labor is available. Therefore, population aging is amanageable issue.
Lee,R.D. 2014. Macroeconomic Consequences of Population Aging in theUnited States: Overview of a National Academy Report. AmericanEconomic Review: Papers & Proceedings,104 (5): 234-239.
Sheiner,L. (2014). The Determinants of the Macroeconomic Implications ofAging. AmericanEconomic Review: Papers & Proceedings,104 (5): 218-223.
Topic3: Return to Education and College Debt
Thevalue of investing in a university degree has been questioned by manyscholars in the past. The Economist (2014) wrote the article “Wealthby degrees”, which addressed the cost benefit of pursuing theuniversity education. This paper is the summary of the articlesauthored by Avery & Turner (2012) and The Economist (2014).
Theauthor of the article “Wealth by degrees” argues that the rapidincrease in the cost of pursuing a degree, coupled with a seriousdecline in the financial support from the government has motivatedmany students to question the importance of the program. Some ofthose who support the argument that the university degree is notworth support their ideas using the data indicating that wagepremiums are unpredictable. The wage premium refers to the differencebetween wages paid to degree holders and college graduates. For aninstant, the World War II was followed by the decrease in the wagepremium, which means that the wages paid to university graduatesreduced significantly. Moreover, the salaries paid to the universitygraduates influenced by demand and supply of the degree holders.Salaries reduce when universities release a large number of degreeholders.
Similarly,the article published by Avery & Turner (2012) focus on themonetary worth of the university or the college education. The authorargues that a critical analysis of the returns that students get fromthe higher education is less. This implies that the youths shouldengage in activities that are more productive than going to college.This argument is further supported by trends showing that tuition feehas been increasing with time while the salary for the entry jobs hasdeclined significantly. Therefore, students may not get the value forthe money as well as the time that they have invested in institutionsof higher learning. Avery & Turner (2012) argue that most of thestudents have overestimated the economic worth of the collegeeducation. This has motivated them to continue taking huge loans inorder to finance their education. These youths fail to determine theeconomic value of the degrees by weighing the option of going tocollege and engaging in alternative activities.
Theidea that college debt has been increasing exponentially, issupported by empirical data. However, it would be inappropriate toargue that the degree has lost their economic value in the modernworld. Conventional knowledge shows that people with a universitydegree are more likely to be recruited by employers compared to theircounterparts without a similar level of academic achievement.Therefore, the high probability of finding jobs should be taken intoaccount when determining the economic value of the degree (Avery &Turner, 2012). In addition, wage premium has remained relatively highfor a long time in certain fields, including engineering.
Inconclusion, the cost of attaining a higher education has beenincreasing over time, but this does not mean that degrees have losttheir economic value. Although the wage premium keeps on reducing,college education increases the competitiveness of the graduates inthe labor market. The increase in competitiveness is attributed tothe fact that college education equips learners with skills that theycannot get by engaging in alternative activities, instead of pursuingthe degree. Moreover, the increase in the cost of financing thiseducation does not exceed the economic benefits that graduates get byutilizing the skills that they have gained in their entire lives.
Avery,C. & Turner, S. (2012). Student Loans: Do College Students BorrowToo Much Earn Not Enough? Journalof Economic Perspectives,26, 165-192.
TheEconomist (2014, June 28). Wealth by degrees. TheEconomist.Retrieved March, 32, 2017, fromhttp://www.economist.com/news/finance-and-economics/21605909-returns-investing-university-education-vary-enormously-wealth