Sunday, April 22, 2012

Final Paper

Wenting Cai
ENGL191
Final Paper
04/22/2012

Economics and Economy of China


Introduction
So, what are the economics? I think the first impression in people's mind will be the study of money, income, or anything about money. Actually it is a social science which analyzes the production, distribution and consumption of goods and services [1]. Since Adam Smith gave birth to the modern economics as a separate discipline through his famous publication of The Wealth of Nations to nowadays, modern economics already had over 200 years history. During that period of time, many great economists like Alfred Marshall who created the Neoclassical economics, John Maynard Keynes who created the Keynesian economics and many others, they all made great contributions to integrating the theory of economics. Also, I would like to talk about the Microeconomics and Macroeconomics--the main two parts of economics. Finally, I would like to discuss the economy of China which is the world's second major economy and also the world's fastest-growing economy.

The Definitions of Economics
Since each great economist has his own views about the definition of economics, or the evolution of this subject, there are maybe some differences in each definition during the different times. In the dictionary, the definition of economics which is, it is a social science which analyzes the production, distribution and consumption of goods and services [2]. Some famous economists also gave the definitions. For instance, the philosopher Adam Smith defined economics which was called political economy at that time in his book The Inquiry into the Nature and Causes of the Wealth of Nations as:
“A branch of the science of a statesman or legislator with the twofold objectives of providing a plentiful revenue or subsistence for the people ... and to supply the state or commonwealth with a revenue for the public services.” [3]
Another great economist named Alfred Marshall extended the analysis of economics beyond wealth and brought it to the microeconomic level. He gave a more specific definition in his work Principles of Economics:
“Economics is a study of man in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man.” [4]
The subject keeps evolving so maybe more specific definitions will come out.

The General History of Modern Economics
People start to care about economic activities since thousands years ago. The writings about economics could date back to ancient Greek, Roman, China and India, etc. The famous scholars such as Aristotle, Xenophon and many other scholars, their writings about economy had profound effects on the creation of the theory of modern economics. There are a lot of schools of economics; the main four are Classical, Marxian, Neoclassical and Post-Keynesian economics.
In 1776, a great Scottish economist and moral philosopher named Adam Smith who was cited as the father of the modern economics and capitalism published one of the world’s most important economic works – The Inquiry into the Nature and Causes of the Wealth of Nations, which laid the foundation of the theory of modern economics. It was this great work, gave birth to the modern economics as a separate discipline. This book mainly discussed three factors of production – labor, land and capital which are the main contributors to the wealth of nations and the free market. What’s more, he used the metaphor Invisible Hand in the Wealth of Nations first and that is a very important term in economics. Adam Smith’s the Wealth of Nations is usually recognized the beginning of classical economics.
Marxian economics was founded by Karl Marx which inherited the main theory founded by Adam Smith. Of course, he did not follow the classical theory completely. He created new theory based on the classical theory which was more suitable for the time he lived. His famous work was Capital: Critique of Political Economy which is a critical analysis of capitalism and it was published in 1876.
After Classical and Marxian economics, the Neoclassical and Keynesian economics era came. Today’s mainstream economics were dominated by these two schools of economics. Mainstream economics is a term used to refer to widely-accepted economics as taught across prominent universities [6]. The most influential economist during the time of Neoclassical economics was Alfred Marshall. He was the founder of the Neoclassical economics which dominates microeconomics and influenced the latter neoclassical economists as well as John Maynard Keynes – The founder of the Keynesian economics. His famous work – The Principles of Economics, published in 1890, was the most important economic textbook in England for many years. He brought us into the world of the Microeconomics and he wanted to apply mathematical methods into economics in order to make the economics more accurate and more scientific. So in his book, he brought the ideas such as demand and supply, elasticity and marginal utility which were the analysis of microeconomics and he used some mathematic methods to interpret economics. What’s more, Alfred Marshall popularized the term ‘economics’ as a synonym for 'economic science' and a substitute for the ‘political economics’ which was created by Adam Smith. Neoclassical economics was not really followed Adam Smith’s classical economics. To some extent, the theory of Classical economics is an important reference to economics and it influenced the Neoclassical economics. The school of Neoclassical economics created a new world of economics which was more accurate and scientific than classical economics.
Under the influence of the Alfred Marshall’s economics theory, the next great economist John Maynard Keynes found the world of Keynesian economics which had a great impact on the economics. John Maynard Keynes is one of the most important economists of the Western economics. His ideas had a profound effect on the theory of modern macroeconomics and the economic policies of governments. He started a revolution which was known as ‘Keynesian Revolution’ in economics thinking with his great work -- The General Theory of Employment, Interest and Money, which was published in 1936. He overturned the established Neoclassical and classical economics. In this book, Keynes created the terminology and shape of modern macroeconomics. Keynes thought:
“If the microeconomic-level actions taken collectively by a large proportion of individuals and firms, could lead to inefficient aggregate macroeconomic outcomes, wherein the economy operates below its potential output and growth rate [7].”
So he focused on the macroeconomic-level actions in his great book. Keynes brought ideas such as the consumption function, the multiplier effects, the marginal efficiency of capital, the principle of effective demand and liquidity preference which were the most important theory to teach in the Macroeconomics classes today. Keynes's ideas about economic policy were accepted by Western economists and governments during the World War II. By the time in 1950s and 1960s, Keynes’s economic policies were successfully adapted by almost all the Western capitalist governments.  Keynesian economics has three main principal schools; Post-Keynesian economics, Neo-Keynesian economics and New Keynesian economics. Post Keynesian started in 1936 which was the year of Keynes's great work was published and it remained the closet spirit of Keynesian economics. And it was also the most important school of Keynesian economics. Neo-Keynesian economics which was orthodox in the 1950s and 60s and by New Keynesian economics, which together with various strands of neoclassical economics has been dominant in mainstream macroeconomics since the 1980s. All three schools made great contributions to integrate the theory of Keynesian economics.

Microeconomics and Macroeconomics
       Generally speaking, Microeconomics and Macroeconomics are two main branches of economics. Both of them are the basis of the economics. They discuss the economics from two different angles – Individuals and the entire economy.
       Here is the definition of Microeconomics:
“Microeconomics examines the behavior of basic elements in the economy, including individual agents (such as households and firms or as buyers and sellers) and markets, and their interactions [8].”
Microeconomics was mainly established by Alfred Marshall. Its theory mostly comes from Marshall’s great work The Principles of Economics which is an important book of microeconomics. Microeconomics discusses ideas such as supply and demand, elasticity, monopoly, perfect competition and imperfect competition, etc. which are all about the individual actions. There are many goals that microeconomists tend to achieve, here is one of the goals:
“One important goal of microeconomics is to analyze market mechanisms that establish relative prices amongst goods and services and allocation of limited resources amongst many alternative uses [9].”
Contrary to microeconomics, macroeconomics study the entire economy, here is the definition:
“Macroeconomics discusses the whole economy which involves the "sum total of economic activity, dealing with the issues of growth, inflation, and unemployment [10].”
The great economist whose theory had profound effects on modern macroeconomics is John Maynard Keynes. He thought the microeconomic-level actions had many shortcomings which could cause inefficient aggregate macroeconomic outcomes if these actions were taken collectively. So he focused on macroeconomic-level and he created new models to discuss the whole economy and also he gave monetary policies and fiscal policies to government in order to build a better economy. The subjects discussed in today’s macroeconomics textbook are almost all from his great work -- The General Theory of Employment, Interest and Money, including aggregate demand and aggregate supply, unemployment rates, GDP, inflation, recession and government policies which are all about the whole economy behaviors.


The economy of China
       China is an important part of the world’s economy which cannot be neglected. So far, China is the second economy of the world after the United States. Also, it is the world's fastest-growing major economy, with growth rates averaging 10% over the past 30 years [11]. What’s more, China is the largest exporter and second largest importer of goods around the world. The coastal provinces tend to be industrialized but the hinterland is still backward. Although China achieved the great success in its GDP, there are still some flaws behind its fast economic growth.
       China achieves its great success in economics growth, especially in GDP, over the past 30 years. After the World War II, although China was the winner, the war still caused a huge loss of economy. People suffered from the starvation, poor, short of health care and so on during the 1950s to 1970s. China influence the world economy began in 1980s. At that time, Chinese government said that the economic reform is the primary and the most important project that we need to do first. In 1978, Chinese government permitted foreign direct investment in some "special economic zones" along the coast in order to accelerate the economic growth in the coastal areas. Then, with the success of that decision, government expanded the number of that coastal area in order to accept more foreign investment. For the rural areas, Chinese leader made two steps to help people get rid off the poverty. Step one is ‘reform in the countryside’ and the next is ‘rural industrialization and enterprise reform. Until 1990s, the Chinese economy continued to grow rapidly, at about 9.5%. China started to influence the world economy. By the time in 2010, China's GDP was valued surpassed Japan's GDP value, and became the second largest economy after the U.S [12].
       It was amazing that the economy could grow so fast in China. But why the economy grows so fast in China over the past 30 years? There are tons of views and answers about this question. And the reasons were different because of the time was changing. There are many ideas such as the capital investment, the labor efficiency, the cheap labor, the natural sources and the huge exportation. According to a professor:
“China’s economic growth can be attributed to two main factors: large-scale investments financed by domestic savings and foreign investments; and a rapid growth in productivity [13].”
In other words, for simplicity, why its economy growth so fast that can be attributed to the cheap labor, the huge exportations and capital investment.
       Although China’s economy grows at an amazing rapid pace, there are still some flaws behind the huge GDP. One of the important problems, which affect people’s daily life, is inflation. Inflation means a rise of general price level in an economy during a period of time. If the Inflation rate keeps going to a high number, there will be some bad consequences such as unemployment, the depreciation of money and a decrease in aggregate demand. According to the database:
“During the winter of 2007–2008, China’s inflation ran about 7% on an annual basis, rising to 8.7% in statistics for February 2008, released in March 2008. Then, throughout the summer and fall, however, inflation fell again to a low of 6.6% in October 2008. By the time in 2010, the inflation rate rose up to 5.1%, driven by a 11.7% increase in food prices year on year [14][15][16].”
Under such high rate of inflation, for the poor people, they face the money depreciate and the increase in price level. For many Chinese government reasons, while their wages goes slowly.
Other problems such as the corruption, distributional inequities, damaging environment, rapid deletion of nonrenewable sources and so on, they are all big problem which need good solutions.
       Anyway, despite the fast-growing economy in China, there are a lot of problems behind this that need to be solved.
   
Conclusion:
         All in all, economics is an important social science. Under the help of its theory, we could build our world better and so live better. Nowadays, economics analyses were applied around the society such as in the business and government. The creation of economic theory cannot happen without many great economists' contributions. Also, as a Chinese student, I am proud of the fast economic development in my country. However, there are also many problems under the fast economic development that cannot be neglected. 


References
[3] The Inquiry into the Nature and Causes of the Wealth of Nations, Book IV, Adam Smith (1776)
[4] Marshall, Alfred (1890 [1920]). Principles of Political Economy, v. 1, pp. 1–2 [8th ed.]. London: Macmillan.
[5] Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 32.
[7] Wikipedia, Keynesian Economics http://en.wikipedia.org/wiki/Keynesian_economics
[9] Wikipedia, Microeconomics http://en.wikipedia.org/wiki/Microeconomics
[10] ‘ Economics Glossary’. Monroe County Women's Disability Network. Retrieved 2008-02-22. http://www.mcwdn.org/ECONOMICS/EcoGlossary.html
[11] "Report for Selected Countries and Subjects" 
[14] National Bureau of Statistics of China  
[15] "Stocks surge after China stimulus" BBC News. November 10, 2008. Retrieved May 1, 2010.
[16] Cara Anna (December 12, 2010). "China inflation rate at 5.1 percent".



Monday, April 16, 2012

Final Paper Topic

  According to professor's suggestion, I changed my final paper topic. And my new topic will be "The Economics and the economy of China".

Introduction:

    So, what is the economics? I think the first impression in people's mind will be the study of money, income, or anything about money. Actually it is a social science which analyze the production, distribution and consumption of goods and services. Since Adam Smith gave birth to the modern economics as a separate discipline through his famous publication of The Wealth of Nations to nowadays, modern economics already had over 200 years history. During that period of time, many great economists like Alfred Marshall who created the Neoclassical economics, John Maynard Keynes who created the Keynesian economics and many others, they all made great contributions to integrating the theory of economics. Also, I would like to talk about the Microeconomics and Macroeconomics--the main two parts of economics. Finally, I would like to discuss the economy of China which is the world's second major economy and also the world's fastest-growing economy.

Outline:

   1. The definition of economics.

   2. The general history of economics
      a).Adam Smith -- Classical economics
      b).Karl Marx -- Marxist economics
      c).Alfred Marshall -- Neoclassical economics
      d).John Maynard Keynes -- Keynesian and Post-Keynesian economics

   3. Two main parts of the economics
      a).Microeconomics
      b).Macroeconomics

   4. The economy of China
      a). The general economic contions in China
      b). The economic development history over the past 30 years
      c). The Macroecomonic Trends
      d). The reasons why ecomony develops so rapidly in China
      e). The problems under the fast economic development

Conclusion:

    All in all, economics is an important social science. Under the help of its theory, we could build our world better and so live better. Nowadays, economics analyses were applied around the society such as in the business and government. The creation of economic theory cannot happen without many great economists' contributions. Also, as a Chinese students, I am proud of the fast economic development in my country. However, there are also many problems under the fast economic development that cannot be neglected.
      






















          

Monday, April 9, 2012

Final Paper Topic: Economics and The Economy of the United States

   I would like to talk about economics and the economy of United States in my final paper. My major is finance but I have not get into my major yet so I am not quite know what finance exactly is. Instead, I took the Microeconomics class last semester and I am learning the Macroeconomics this semester. So, I think I could write something about economics in my final paper.
   I plan to talk about what economics is, the Microeconomics and Macroeconomics, the history of economy and the economy of the United States.
   And that would be:
  •  Introduction
  •  What economics is
  •  Microeconomics
  •  Macroeconomics
  •  The general history of economy
  •  The economy of the United States
  •  Conclusion                  

Using quotes correctly

This is the introduction to my country report:

     America is one of  largest multiculture nations in the world. American is the world’s third or forth largest country located in North America with about 300 million populations [1].  There are 48 contiguous states in America and the capital is Washington DC [1]. America is the financial center of the world and its economy is the world's largest national economy with over nighteen percent of global GDP. [1][2] Its per capita income is the seventh highest in the world with about 48,100 USD in 2011[1]. What's more,  America has the top quality of education and the highest reputation of its Universities. According to prominent international rankings, 13 or 15 American colleges and universities are ranked among the top 20 in the world like Harvard University, Stanford university and Columbia University [3].



Tuesday, April 3, 2012

Comparing interview three to interview two and one

     Compared to my first and second interview, my third interview was similar to the former two.My interview stuff such as record, pens, etc. of my three interviews are the same. I think the difference of three interviews is the place. The first interview took place in my interviewee's house, the second was in library and the third one is in my  dorm room. My third interviewee is an American student and she is also my roommate so probably we had more things to talk and I felt more relaxed than the former two interviews. So all of my three interviewees are American students and they shared the culture with me. I learned the general American things like education, religious holiday and transportation, etc. from my first interview.  In my second interview, I concentrated on religious in America such as the rituals and the religious holiday. And this time, I focused much on the education, especially elementary and middle school  in America. So I list some extra questions about the elementary school and middle school such as what kind of teaching methods that teachers usually uesd, how were your teachers in elementary and middle school and how many classes did you take a day. And I really learned something from this interview. 
  Actually I spent about 3 hours on my transcription because it was so long and I almost transcribed every single sentence from the record.
    I'm not really satisfied with my first interview and I think I did a really bad job about that one. But I think my second interview is better than the first so as my third one. Compared to other American students' second interviews, my interview is still not very good due to some mistakes about grammar. And also, sentences in my report are pretty simple compared to other American students.

The evaluation for the third interview

Evaluation: here

Top Three: Nicholas 19 points
                  TiffanyS  19 points
                  KelseyR  18 points