Rural Scotland facing ‘astonishing poverty’, youth unemployment expert warns

This article reveals the high levels of poverty and youth unemployment in rural Scotland.  There are very few job opportunities in the area, and as a result, official figures in March revealed that 103,000 people aged between 16 and 24 are out of work in Scotland. Due to the high levels of unemployment, the rural areas are in severe poverty. 

Unemployment and poverty are two economic issues that are very telling of a nation’s current economic state.The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force. Unemployment is a gauge of joblessness and thus representative of the economy’s growth rate. Poverty, moreover, is defined as the lack of basic capacity to participate effectively in society. This includes not having enough to clothe or feed a family, not having proper education or medical attention, etc. Some of the economic costs of poverty include a reduced productivity and economic output, increased costs of crime and increased health expenditures.

The resolution I suggest, which they briefly touch upon in the article, is to bring more economic activity to the rural areas. The article states that job opportunities really only exist in the inner cities, especially with the large focus on the upcoming Commonwealth Games in Glasgow. Therefore, as the article states, the government needs to steer companies into those areas. There are already existing rural colleges, including Queen Margaret University and Highlands and Islands University. Therefore, these two universities should be better advertised/promoted to bring more students to the universities, and in turn create more of an incentive for companies to build up the area. Due to the significant number of young people unemployed, the companies that are geared toward the rural areas need to be aimed at employing the younger population. I think that building up these rural areas into university towns will be very beneficial to youth employment. This in turn will create more jobs and help improve the means to surpass poverty. 

http://news.stv.tv/scotland/301855-rural-scotland-facing-astonishing-poverty-youth-unemployment-expert-warns/

Social Responsibility

The major themes and objectives of Milton Friedman’s “The Social Responsibility of Business is to Increase its Profits” is pretty self evident given the title. Milton does not believe that a business has a social responsibility for only individuals can have responsibilities. He makes the distinction between the corporate executive acting on principal and the corporate executive acting on agency. The very simple distinction comes down to whose money he/she is spending. For instance, a corporate executive may devote part of his income to charities or organizations he supports. In this case, he is acting as principal and spending his own time and money. However, when a corporate executive refrains from following his employer’s directions/interests in justification of a “greater social good” then the corporate executive is acting as agent. It is this particular agency that Friedman is opposed to. In his opinion, the exact meaning of a corporate executive who has a social responsibility is a corporate executive who fails to act in the best interest of his employer; the corporate executive who acts more like a public servant than a well-paid executive. 

Friedman further goes on to highlight the behavior of some corporations to use “social responsibility” as way to rationalize results that benefit their company. In other words, Friedman does not see “social responsibility” to belong in business. He states: “the doctrine of ‘social responsibility’ taken seriously would extend the scope of the political mechanism to every human activity.” Thus, in order to safeguard the personal liberties, one can revert back to the title: the social responsibility of business is to increase its profits in a manner that does not involve fraud or deception.

Individualism - Friedman believes that businesses acting in their own best interest, to make profits, will be ultimately beneficial for all. He argues against collectivism and sees  “social responsibility” as a subversive doctrine because it seems to imply that “collectivist ends can be attained without collectivist means” which he doesn’t find to be true.  A business “looking out for the needs of society” will not necessarily lead to benefiting this society. Moreover, he says that in taking this theory seriously, it will cause  the government to be so actively controlled that political mechanism will monitor every human activity. 

Monochronic Time: Friedman sees time as a precious commodity, at least time in regard to business. He acknowledges that what a corporate does on his/her own time is his/her prerogative. However, while under the pay the clock, their attention should be focused on working in the best interest of their employer, not “society.’ 

Directness: Friedman detests businesses who communicate their business aims in cloaked truth. For example, those businesses that try to restore faith in corporate America by crediting social responsibility for their business motives when in all actuality it’s for their profitability. Clearly, Friedman believes direct communication with the public is best.

I think there is a conflict between business and social responsibility; however, I do not think it is as black and white as Friedman makes it out to be. I lean toward Adam Smith’s philosophy that company’s acting in their own self interest will end up being better for the economy and the consumer, as one can expect more competition and as a result higher quality and innovation. Yet there are obvious holes in this theory. Businesses, feeling the pressure to compete with other companies, may find ways to save money by not properly disposing of their waste, which is not beneficial for society. 

Clearly, my thought process is rather scattered in trying to form an opinion. I suppose I’m torn. I do believe that businesses need to act in their own self interest and maximize profits; these factors are dependent on their own survival and do have greater benefit on society as a whole. However, I also think that businesses have a social responsibility to give back to the community and instill public change. I look to corporations like Pepsi who take on projects to help communities/causes around the country. I think that when a company is so public and successful, it has a duty to do something positive. I suppose this goes back to Friedman’s concept that this “good” that the company does is only because it will positively reflect their company, and in return their profit margins potentially. While this may be true, it is certainly not always true.

Shweder's Lecture

In his lecture, Shweder presented three prophesies about the shape of the emerging world order. The first prophecy consists of the notion that "West is best," or the Washington Consensus. In other words, the superiority of Western capitalism and society will lead to the universalization of liberal democracy as the unifying factor of political order. The second prophecy suggests a world of robust cultural pluralism. Meaning that there will be a return of an ideologically divided world in which ethno-national states will compete. While they will compete with one another in the process of globalization, they will remain their own separateness and uniqueness. The final prophecy is what Shweder himself believes to be the most plausible. He suggests that we will have a return of global empire like that of the better feature of the Ottoman Empire: weak central state that only controls political/economic necessities like taxes, more local control, no standard family life, unique cultures and multiple groups/races/religions of people.

I think the most important indicator that would help predict the direction of global change is the variance in American or Western assumed superiority. Clearly, the Washington Consensus is still very much alive and is thriving, given his examples of speeches given at World Bank meetings. Moreover, he shared an experience of his in India that credits British colonial efforts, for without them, the man said "India would still be a land of barbarians." It is for this reason that I find the idea of the third prophecy to be very unlikely. I cannot see American society conforming to such a way of life in which American control and dominance cannot be exerted. Other indicators of global change include technology, trade relations and warfare. 

Culture is incredibly important in shaping economic outcomes. Shweder talked about a trade-off between inequality and diversity and used the ethnically cleansed European countries of Belgium and Switzerland as an example. He spoke of a rush toward income equality will lead to a decrease in diversity and that it is utopian to think that a country can have both at high qualities. This concept is very interesting to consider. It seems as though the universalization or watering down of culture could lead to more beneficial outcomes like income equality as seen in such European countries. Culture ultimately effects one's thought processes and thus how one views the world and participates in the economy. In regard to conducting international business, for instance, one's culture can be very limiting when trying to expand in to international markets of different cultures if you cannot incorporate other cultures/adapt to cultural changes. For instance, American expansion into Japanese markets can be very difficult simply because the cultures differ so greatly. Japan values collectivism over American individualism which will affect marketing techniques. Different personal/relationship values will also affect how the American market interacts with the Japanese consumers/investors. I think that this is the direction Shweder's lecture was going in. Culture should not be placed on a hierarchy: American way of life and their economic practices are not inherently superior. 

UK: Resources, International Trade and National Income Accounts

• Resources - Natural resources, labor and capital reflects what a nation can produce, or its potential productive capacity.  This is reflected in national income; however, a nation is not always functioning at its potential, which is why the actual number of national income is also measured.

Natural resources of the UK include coal, oil, natural gas, petroleum and iron ore, which form the backbone of the country’s industry of auto production, steel manufacturing and ship building. Other resources include: zinc, lead, gold, tin, limestone, salt, clay, chalk, gypsum and silica. The climate of the UK is mild with rainfall throughout the year. Winters are mild and wet and the summers are the warmest in the south. The Gulf Stream crosses the Atlantic Ocean and warms the country, making the winters milder than other European countries. Fishing is profitable along the shores of the UK and nearly 25% of the country has arable land. 

Natural resources are being used up and industry is changing to cleaner forms of energy. Therefore, many people who once had jobs in mining and manufacturing are being restrained for jobs in service industries. Of the approximately 31 million workers in the UK (2011 est.) 80% of the people work in service industries (tourism, health care, education, banking & insurance), 18% in industry and 1% in agriculture. Gross fixed capital formation 44,696 euros.

• International Trade - The UK’s location makes it ideal for trade as France is across the English Channel, the Republic of Ireland is to the west and the Scandinavian Peninsula. Moreover, its location on the Atlantic Ocean helps its trade with the U.S.

In 2011, the UK exported $495.4 billion in goods. Export commodities include manufactured goods, fuels, chemicals, food, beverages and tobacco. It’s export partners include the U.S. (11.4%), Germany (11.2%), Netherlands (8.5%), France (7.7%), Ireland (6.8%) and Belgium (5.4%). In the same year, the UK imported $694.9 of goods. The import commodities include manufactured goods, machinery, fuels and foodstuffs. The import partners are: Germany (13.1%); China (9.1%); Netherlands (7.5%); France (6.1%); US (5.8%); Norway (5.5%); and Belgium (4.9%). The exchange rate, British pounds per US dollar, is .6176. 

• National Income Accounts - The income, expenditure and output measures of GDP are produced as part of the UK National Accounts. They measure the total income of all economic agents in the UK along with their expenditure and values and volumes of output (or production). 

The four quarter sum of consumer spending for 2011 is $11.7 trillion. The gross fixed investment in 2011 was estimated to be 14.4% of GDP. Investment reflects total business spending on fixed assets, like factories, machinery, equipment, dwellings, and inventories of raw materials, which provide the basis for future production. Thus, the UK’s investment spending ranks it at 167 in comparison to other world nations and the percentage of investment spending compared to the nation’s overall GDP. The 2011 government spending is estimated at $921.7 billion. This includes money for pensions, health care, education, defense, welfare, protection, transport, and general/other spending, as well as interest. 

Sources: 

http://www.ukpublicspending.co.uk/uk_year2011_0.html

http://www.state.gov/r/pa/ei/bgn/3846.htm

http://www.statistics.gov.uk/hub/economy/national-accounts/national-income--expenditure-and-output

https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html

United Kingdom/Scotland Statistics

The text in white represents statistics of the United Kingdom, referenced from The CIA World Factbook (https://www.cia.gov/library/publications/the-world-factbook/)
The statistics that represent only Scotland, not the entirety of the UK, are in blue. I was unable to find all of the required information for Scotland due to a lack of published/timely records. However, the statistics that I was able to find are referenced from The Scottish Government (http://home.scotland.gov.uk/home).


GDP
Purchasing Power Parity: $2.25 trillion (2011)
Official Exchange Rate: $2.481 trillion (2011)
Real Growth Rate: 1.1% (2011)
Real Growth Rate: 0.9% (2011)


GDP per capita
$35,900 (2011)


Life expectancy
Total Population: 80.17 years
Male: 78.05 years
Female: 82.4 years (2012)
Male: 75.3 years 
Female: 80.1 years (2010)

Poverty rate
14% (2006)
17% (2010)

Literacy rate
Definition: age 15 and over has completed five of more years of schooling
Total Population: 99%
Male: 99%
Female: 99% (2003)
Total Population: 73.3%(2010)


Unemployment rate
7.9% (2011)
8% (2012)

Inflation
4.5% (2011)

Diamond: "Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?"

Jared Diamond’s “Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years” explores continental evolution, providing insight as to how European domination of Native Americans, Sub-Saharan Africans and the Aborigines of Australia was able to occur. 

The ultimate goal and critical theme of his writing is to convey a new theory of evolution that disbands and disproves commonly accepted and believed racist views of biological superiority. Therefore, Diamond presents the following key points:

1. The availability of domestic animals and plants was far more prevalent in Eurasia.

Because most epidemic diseases evolved from domesticated animals, Europeans had developed genetic and immune resistance to these diseases that the Native Americans, for instance, were biologically unexposed to prior to European settlement and domination. Therefore, exposure to disease resulted in rapid and critical population decline which made it easier for Europeans to exert greater control. Furthermore, riding on horses in battle strategically benefitted the Europeans against the natives as they had no such domestic animals to ride on. They were thus much more vulnerable to harm. 

        2.  The global positioning of Eurasia enabled domestic plants and animals to flourish throughout the
             continent.

As Eurasia is situated on an east/west axis, species were able to spread because they experienced the same climate and day length which they had already adapted to. However, the Americas are situated on a north/south axis, therefore resulting in far less and much slower expansion as species were unable to survive the new climates and day-cycles as they increased or decreased in longitude.

      3.  The greater availability of domestic species, as well as the opportunity to continentally expand
            because of global positioning, led Eurasia to develop stable communities.

Domestic animals, like horses, and domestic plants made herding and farming possible, thus leaving the stone age of hunting and gathering behind. Therefore, sedentary communities were able to form because of the utilization of farming, which enabled a collection of surplus food; settlements of people no longer had to continually migrate because there was a stable and centralized food source. 

     4.  The existence of centralized communities led Eurasia to advancements which made future European
           colonization possible.

      When in a stable environment, with a surplus of food, it enabled the people to explore other areas outside of immanent survival. Thus, steal weaponry and guns were able to be developed and played a crucial role in European superiority. Natives did not have the time for such technological developments and were thus unable to defend themselves with their bone weapons. This is why only a few hundred Spaniards were able to defeat the thousands of natives of the Inca and Aztec armies. Not only did sedentary communities lead to accelerated technological growth (steal, guns, ships) but it also propelled political organization which united the people under certain leaders, regulations, etc., and led to the creation of well-trained armies which overpowered the untrained native armies that they fought against.

     5.   Finally, the isolation of Australia and Sub-Saharan Africa resulted in a lack of technological innovation
           which made them susceptible to domination and hindered their own social advancement.

       Technology has been proven to most commonly be introduced by an outside force. Therefore, without the ability to connect and communicate with the outside world, technology cannot be introduced or adapted. Therefore, isolated communities like that of Tasmania, were socially far behind that of European communities, situated in the stone age of hunting and gathering. Furthermore, isolation seems to connect to smaller congregations of people, like in the case of Australia. When areas are less densely populated human invention is slower and the community is more prone to rapid cultural loss.

Ultimately, Europeans became dominating world powers because their communities possessed, according to Diamond, important determinants of societal success. The following are the most important determinants:

Centralized and densely populated communities, an existing political structure, and the utilization and development of technology. All of these determinants were made possible by global positioning and the domestication of plants and animals. As revealed above, these determinants are very closely linked; they work off one another to propel advancement. The implementation of political structures can only occur in a centralized environment. A centralized environment with a surplus food supply provides circumstances to support a dense population of people. This population and free time as a result of not having to worry about inherent survival, is in turn able to lead to technological innovation to surpass other congregations of people.

These ideas can be applied to today’s global economy in many ways. In class, we talked about population density, and according to Diamond, population density can be incredibly beneficial, and in fact, is a major component of societal success. Thus, we are able to partially understand why highly populated areas like New York and Tokyo have been recognized for technological advancement and growth, and are home to important global industries. Population density also can result in higher competition as there are more people to potentially compete with. The increase in higher competition will thus lead to the need for better and more creative and efficient product development. In addition, higher competition will force companies with similar products to rationally price their products for sale which will benefit consumers and their wallets. While population density can result in incredible wealth and an extremely high standard of living for the wealthy population, it is also important to note that it can result in poverty and exploitation. 

Nevertheless, Diamond also discusses how Eurasia’s global positioning resulted in crop development and the domestication of animals, which in turn led to a number of resulting benefits. Thus, applied to global economics, it is clear that wise and effective resource utilization is crucial. For instance, if a certain nation’s climate makes a unique resource available to them, it is important that they are able to correctly develop and market their resource. For instance, they could rely on its exclusivity, not having to worry about competition, and set higher prices as they have market control. This country and their pricing of their resource will hence tremendously effect the global market. It may result in pressure to lower prices because of the lack of consumer participation or possibly the motivation of other nations to search for alternatives to this resource (like the search for alternative sources of fuel as oil prices sky rocket).