After spending five months studying abroad in Barcelona, Spain and traveling all over Europe, I am extremely happy to attend school and live in the United States. Spaniards between the ages of 18-25 have an unemployment rate of over 50%. So in a lecture of 80 people, less than 40 will have a job leaving college. Compare that to U.S. rate somewhere in the mid-teens, and no American student should complain. In addition to the college student age group, overall unemployment in Spain is about 25% while the U.S. is 8%. Most people wouldn't complain about an 8% unemployment rate, but everyone still sees the "American Dream" and expects perfection- a type of utopia. But as we have seen primarily over the past four years, this view of America is dwindling as jobs are lost rather than created.
With so many differences culturally, politically and geographically, it is difficult to accurately compare America and Europe. The point is: American citizens need to realize that their country is still in a much better position than most places in the world. This should not be taken for granted as people must continue to work hard and not expect the government to clean up the mess and fix everything all at once. Consumers must continue to consume and investors must continue to invest.
While
America's current economy is weaker compared to previous decades, the
government still has the ability to turn things around through "normal"
reforms. On the other hand, Europe, particularly Spain, has turned to some rather radical measures to turn around their economy. For example, in a recent post on the blog "ThinkFast ThinkNow" the idea of a EuroVegas is outlined and discussed. The basic idea involves constructing a Las Vegas-like area either in Madrid or Barcelona to create jobs and pump money back into the economy. Certain barriers such as smoking laws and tax issues must first be figured out, but the fact that the government is building casinos to jolt their economy is quite scary. In the end, while the situation in the U.S. may seem bad, it is nothing in comparison to what Spain and the rest of Europe is going through.
Monday, November 19, 2012
Thursday, November 15, 2012
Fertility Rates and Economic Change
What fifteen-year-old girl gets shot on the way to
school? Pakistani teen, Malala Yousafzai
recently was by Talibani militants as she attempted to attend school for the
first time. The Taliban share a common
fear: the more education a woman receives, the fewer children she will have-
going against customary practices.
Population growth is rising.
Gaps between the rich and poor are widening. Depletion of natural resources is rapid. Something has to give. In order to increase
education and development in poor, third world areas, fertility rates must
decline providing women with the time and money needed to improve their lives
as traditional rural families adapt to an urban lifestyle causing tremendous
economic change.
My academic career revolves around business and
economics. As an accounting major
numbers come easy to me as I naturally observe patterns and trends. Recent issues regarding fertility rates and
population growth provide an intriguing issue inline with my interests. My father does business in developing areas
known for these issues and I hear secondhand from him about their severity.
Looking specifically toward third world areas in India and
Africa, the population is growing out of control. India’s population is on pace to pass China’s
within the next forty to fifty years.
Living standards will drastically decrease as the poor face increased
economic hardships. That is, unless
something is done to reduce fertility rates.
In an article from the Economist, families have begun to move from the middle of nowhere,
farming lifestyles into a town or village with schools, markets and factories
nearby. This process is referred to as
“The Abandoned Hamlet.” In the old
lifestyle families were poor and could not afford to hire labor in the
fields. Children were born in order to
provide labor at low cost and provide social security for parents. Once their village changes or they move into
a more civilized area, the cost of children rises due to education and
taxes. The state may even provide a
pension, and families no longer need children as the primary form of social
security. In this scenario, the cost per
child may outweigh the benefits, thus reproduction will slow down.
Where will population rise most rapidly? In places that can’t handle the growth:
developing nations stricken with hunger, political instability and environmental
degradation. These places have no family
planning institutions in place and contraceptives are extremely rare. In America family planning programs pop up
everywhere at all times to prevent rapid population growth as seen in places
like India and Africa. According to Gopi Gopalakrishnan, the
President of World Health Partners, women in India “are desperate for family
planning services, to take control of their lives.” The demand is there, the supply is not.
Of course there are benefits to high fertility rates and
population growth. Many ethnicities and
religions call for large families and at least one son. Governments view high growth rates as a
positive due to an increase in labor force and a larger military recruiting
pool. As mentioned previously, more
children for extremely rural families provide social security as the parents
become older.
The economic benefits are much more promising and
imperative. With lower fertility and
growth rates women will enjoy more free time and the opportunity to enter the
workforce, earn an income and buy goods and services in the market. More income per family will equate to more
savings, which will turn into more investment to boost production and overall
GDP. Increased investment will also
allow for more capital expenditures such as schools, roads and hospitals. Overall if you want higher standards of living
then reduce fertility.
Driven by the desire to improve her life and future, Malala
was determined to attend school and escape the typical role of a Pakistani woman.
Why did these Talibani militants
attack? For the fear of altering the
status quo and dealing with the changes that educated females would bring. These changes need to happen in order to
preserve living standards in areas of high fertility rates. Malala may not realize this now but her
bravery might just spur activity leading to positive economic shocks in the
future.
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