Macroeconomics
CDAE253
Final Essays-Open
book
Gary Flomenhoft
May 3, 2010
Survey only, not
for credit. No explanation needed,
but comments welcome.
Based on what you
learned in this course choose your macroeconomic philosophy. These theories are based mainly on the
perceived cause of the business cycle of depressions or recessions, and remedy.
A.
Classical-The economy is self-correcting if left alone. Goes
through periodic troughs and crests.
B.
Keynesian-Business cycle caused by lack of aggregate
demand. Government spending needed
to restart aggregate demand.
C.
Monetarist- Business cycle caused by contractionary monetary
policy. Banks need to increase
money supply and credit during downturn, and maintain a steady increase in
money supply during growth.
D.
Georgist-Real estate (land) bubbles driven by speculation
causes business cycle. Take profit
out of land speculation through land value taxation or other means.
E.
Other? Describe.
2 Short Essay
Questions. 1 typed page each
minimum. Extra credit for longer. 1.5 spaced max, 12 font max, 1Ó margins.
1.
In the film and in this course we have studied numerous
alternatives to GDP (growth). Many
consider GDP (growth) to be an intermediate goal, a means to the end, but not a
final goal or end in itself. We
need a new paradigm. What final
goal would you propose to replace GDP (growth), and what index would you use to
measure it? Create an index and
describe your index in detail.
Creativity rewarded.
Choose One:
2a. Herman Daly
suggests the following 10 policies for a sustainable Òsteady-stateÓ
economy. Choose one or more and
explain why you support or oppose and explain your macroeconomic reasons. List is here:
http://www.uvm.edu/~gflomenh/CDAE253/readings/Daly-steady-state.htm
2b. Since Iraq was
not involved in 9/11 and had no weapons of mass destruction, many people are
speculating about the true reasons for the invasion. Some say oil, some say petrodollars, some say US control of
the middle east, or other reasons.
Background:
1. In 2000 Saddam Hussein demanded payment for oil in
Euros. See: http://www.time.com/time/magazine/article/0,9171,998512,00.html
2. Dick CheneyÕs Energy Task Force which met between January
and April, 2001 was classified top secret and the only documents released under
Freedom of Information Act included maps of Iraqi oil fields.
3. US oil extraction peaked in 1970. In 2008 the United States consumed 23 percent of the worldÕs
petroleum, 57 percent of which was imported. Yet the United States holds less
than 2 percent of the worldÕs oil reserves.
4. After the March 20, 2003 invasion and occupation, Paul
Bremer, head of the US Provisional Authority, issued his famous Ò100 ordersÓ
including the following:
"Order No. 17 grants foreign contractors, including
private security firms, full immunity from IraqÕs laws. Even if they, say, kill
someone or cause an environmental disaster, the injured party cannot turn to
the Iraqi legal system. Rather, the charges must be brought to U.S.
courts".
Order No. 39 allows for: (1) privatization of IraqÕs 200
state-owned enterprises; (2) 100% foreign ownership of Iraqi businesses; (3)
'national treatmentÕ - which means no preferences for local over foreign
businesses; (4) unrestricted, tax-free remittance of all profits and other
funds; and (5) 40-year ownership licenses",
Orders No. 57 and No. 77 ensure the implementation of the
orders by placing U.S.-appointed auditors and inspector generals in every
government ministry, with five-year terms and with sweeping authority over
contracts, programs, employees and regulations.
Order 81 (April 26, 2004) - "Amendments to the
Patents, Industrial, Undisclosed Information, Integrated Circuits and Plant
Variety LawÓ crippled traditional farming by protecting developer rights of new
and improved plant varieties (GMO seeds), forcing farmers to plant them,
prohibiting traditional seed saving, and instituting Technology User
Agreements, requiring annual royalties to companies like Monsanto.
In 1933 Marine Corps
General Smedley Butler explained this phenomenon in the following essay on
Intervention:
http://www.fas.org/man/smedley.htm
The examples Butler gave profited individual companies, so
are in the realm of microeconomics.
In order to explore the possibility of an economic motivation for the
Iraq invasion, regardless of whether you believe it or not, please provide a
macroeconomic explanation, ie: balance of trade, value of currency, aggregate
demand (C+G+II+NX), aggregate supply response, oil peak, etc.
Thank you for your interest and engagement in this course.
GFlo