Low Inflation in the UK

Since the Bank of England was given independence in 1997 UK inflation has been close to the government’s target of 2% +/-1. This is a remarkable improvement for the UK economy. Previously the UK economy suffered from consistently high inflation. Eg in 1979 inflation reached 25%. In 1992 inflation reached 11%. Reasons for low inflation are a matter of debate. The chancellor Gordon Brown likes to take credit for giving the Bank of England independence in 1992. However although this partly explains low inflation, it is only a small % of the reason.

Reasons for Low Inflation in the UK

1. Economic growth has been more stable and predictable. The MPC have avoided a boom and Bust economic cycle. At the first sign of inflationary pressures increasing they have increased interest rates to reduce inflation before it occurs (policy is known as preemptive monetary policy.) This has avoided a repeat of the late 80s inflationary boom.

2. Inflation expectations are lower. Partly as a result of the MPC’s greater credibility. People expect inflation to be low, therefore wage demands have been correspondingly lower. This has made it easier to keep inflation low.

3. The process of globalisation has helped to reduce costs and increase competitiveness in global markets. The UK has benefited from falling prices of manufactured goods that have been made in countries like China and Korea.

4. Improvements in technology. The internet and micro chip computers have helped to increase efficiency and lower costs.

5. Increase in the labour supply. Increased immigration has created a new supply of cheap labour which has helped keep wage pressures low.

6. Appreciation of £. This has helped reduce inflation, because imports are cheaper and quantity of exports lower

However inflation may increase in the future. The Governor of the Bank of England recently said there is no reason why the past period of stability and low real interest rates will continue. Several reasons may cause inflation to rise in the future including:

Why Inflation May Rise

1. Economic growth in China and India is causing high demand for commodities and therefore prices are rising. This will feed through into cost push inflation.

2. The UK has a large current account deficit. To reduce this deficit it will be necessary to have a devaluation in the value of £, at some point.

3. The supply of labour is unlikely to increase by too much in the future. Therefore wage inflation may become a problem as the labour market nears full employment.

4. UK House prices continue to rise. This creates additional consumer wealth and therefore increases consumer spending.

The effect of this is that in the future interest rates may have to rise in order to keep inflation low. This will have the effect of keeping mortgage payments high.

Population Migrations: A Boon or a Bane

Canada phone cards UK phone cards
There has always been a continuous trend of people migrating from rural dwellings to urban areas in search of an earning more money, a better education or maybe due to environmental degradation in rural areas. Even, political conflicts, wars, and income disparities among and within regions may also be a motivating factor which results in migration whether international or national. Whatever may be the reason, migration is a very common phenomenon nowadays in most of the cities.

Recent studies reveal that the urban population is increasing day by day. Roughly over 125 million people live outside their countries of origin and reside in developing countries. This data includes the 12 million refugees of 1997, permanent migrants and so called environmental migrants and undocumented migrants. As far as the studies in 2005 reveal, out of total population, about 73% in Europe, 74% in Latin America and Carribean, 75% in Australia and New Zealand comprises of urban population. In Africa and Asia population movements still conform to the old patterns . It is also analysed and found that by the turn of the century 261 cities in developing countries will have a population of over one million. There are about 14 so called mega-cities with 10 million people which are expected to double by 2015. The problem in China is even more grave. It is expected that the urban population will increase from 35%to 45% by 2010.

However, migration leads to urbanization which usually accompanies social and economic developments. In some developing countries like Africa the growth reflects rural crisis than urban based development. But conversely, migration to cities may affect the host place, place of origin and the population as a whole. No doubt people can easily find ample avenues of employment in cities, which have lots of industrial set-ups in contrast to the only avenue—agriculture in villages. But as the inflow of workers increased these avenues become scarce as it happened in Vietnam where waves of workers arrive from countryside and start ending up jobless. In trying to meet their needs they start to live in cramped apartments with lack of water supply and health services and engage themselves in low-wage jobs. Many a time, the host societies, countries or governments does not have proper laws or plannings to provide better standards of living to these peoples. As the cities become over populated, the living places become congested. Thus they start living in squatter settlements and slums. People start encroaching public properties. For example, millions of people cling to hills of Rio De Janeiro and even the tombs of Cairo are used as homes by these people. Thus very often the tombs which are occupied by the migrant population are referred as ‘city of dead’.

The lives of the people in the slums become increasingly pathetic day by day. These areas lack proper drainage and garbage disposal system that other way affects the environment and the health of the people. These places even lack proper health care facilities. Thus they lead a very unhygienic life.

Reversibly migration leads to crisis in manpower in the villages, which are the primary producers of raw materials. This affects the economy and the social life of the people. But sometimes international migration proves to be a good source of foreign exchange as the remittances from migrants are a significant source of foreign income. In some countries educated employees migrating to the developed places contributes to the economy of the place of origin. Their income used for consumer goods, building homes, education and health in general contributes to the standard of living to the remittance- dependent families. Moreover young educated migrants from developing countries fill the gaps in work forces of industrialized countries. In many countries the infrastructure built for industries are maintained by the migrant population. Thus migration has both merits and demerits that affect the host and migrant population together.

But is the city life able to give a real better living to all the migrants? The question is hard to answer in a one go. In trying to adapt to the conditions of the city environment the people engage in mean jobs which are sometimes unsocial and even fall victims of abuses. Recent studies in China reveals that now more population faces abuses, lack of health services, old age support and are also denied employment. As a consequence the criminal activities rose to 30% in Beijing, 70% in Sanghai and 80% in Gungdong.

Even though urbanization which is an outcome of migration indirectly, accompanies social and economic development but the rapid inflow of people to the cities today is straining the local and national governments. Most of the host governments facing problems as they does not have any strategic planning to provide the most basic needs like water, electricity and health service to this rapidly growing population. Many countries do not have any proper planning regarding the migrant population. Policy makers look these things as a negative force that creates necessities to be fulfilled and problems to be solved.

Thus in trying to adjust with the city life, the life of this people degrades and they end up in a pathetic living condition, which affects the humanity as a whole. Their dream for a better life shatters and life becomes more mechanical as necessities make people pay least attention to the basic human values. The environment degrade, health of the people deteriorates and indirectly affects the socio-economic state of the people. Though the problem of migration has not attained an epidemic state till now, if initiatives are not taken to check urban-rural migration, it would surely turn up to be a severe problem in the near future. outdoors

Chinese Immigration

Motives for Chinese population to immigrate to United States have been same as for most other immigrants. Many immigrants shifted to United States to for the gold rush, while others came to seek better economic opportunities. Many others were forced to leave China as either refugees or contract workers.

Chinese immigration began decades ago and was divided into three periods: 1849-1882, 1882-1965, and 1965 to the present. The first period started very shortly after the California Gold Rush and ended unexpectedly with Chinese Exclusion Act of 1882. Through this period, many young male peasants left their villages and became laborers in the western part of America.

These peasants were recruited to extract metals and minerals, retrieve swamplands, construct railway networks, develop the fishing industry, and work for extremely competitive manufacturing industries. Chinese population at the end of the first period was approximately 110,000 in United States.

Economic development and racial prohibition characterized the pattern of settlement for Chinese Americans. Manner of settlement was influenced by the pattern of economic development in the western states that took place before the Chinese Exclusion Act. Chinese immigrants resided in most parts of California while others settled in the states west of Rocky Mountains.

Though most Chinese immigrants faced many hardships in the late nineteenth century, they had an immense effect on America. Language, culture, social institutions, and customs came along with these Chinese immigrants. These immigrants tried to become a vibrant part of the population of United States and contributed a lot towards their adopted country.

Chinese workers have played an important role in supplying the labor force for the growing industry of America. They converted most of the land they lived in into rich green farmland. Chinese methods of cultivation were applied on most farms. Approximately eighty percent of Chinese population was found in Chinatowns, which were situated in all major cities in United States in the early twentieth century.

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Is Turkey Economically Ready to Join EU?

Turkey’s candidature for the European Union is maybe the most controversial and consequently well-analyzed of any in the history of the organization. The topics of the debate are familiar: human rights abuses, overly uppermost military, and the impact of Islam on the one hand, contrary to strategic partner, valid candidate, and the advantages of including a Muslim democracy on the other. The interaction among these factors will define Turkey’s progress toward membership over the next several years.

Notwithstanding, in theory the EU defines membership eligibility rested on a set of impartial criteria that do not take diplomatic issues into account. As Turkey has already been accepted as a part of Europe, it should be practicable to evaluate its performance as compared with these criteria and to the status of other EU candidates, past and actual, at major points in the accession process.

The economic aspects of the entry of Turkey to the European Union are of great significance and need special attention. The given paper aims to provide a short overview of Turkey’s economy and to highlight the major problems concerning GDP, agriculture, manufacturing, inflation and currency issues.

Turkey is regarded to have a less middle-income economy. Its per capita is correspondingly small contrasted to the EU. The GDP per capita in conditions of Purchasing Power (PPS) was in 2003 at 28.5% of the EU-25 medium, corresponding to the level of Bulgaria and Romania. Valued in current prices in 2003, the GDP of Turkey was comparable to about 2% of the GDP of EU-25 or just half of the ten Member States.

Turkey is distinguished by large provincial disparities which widely follow a West-East pattern. The richest areas are concentrated in the western part of the country while the poorest ones are at the eastern frontier. The richest province Kocaeli, an essential manufacturing location, has a GDP per capita of more than 90% above the national average (46% of the EU-25 average). At the other edge of the gradation, the poorest regions Agri and Van have only around one third of the national GDP per capita (8% of the EU-25 average).

These profits disparities are displayed in the sectoral structure of the areas. The richer areas have significant shares of production and occupation in manufacturing and assistance whereas in most of the other territories agriculture is the most essential derivation of income and employment.

In the late decades some macroeconomic and commercial crises took place in the country, more recently in 1994, end-1999 and early-2001. They have caused to high volatility in aggregate financial activity and interfered with the overall step of growth. Since 2001, more advances have been made in stabilizing the economy and addressing the main reasons of these crises in the last decades. This is especially visible in the resumed enlargement path and the sharply lessened inflation. Nevertheless, this stabilization process is not yet full and some imbalances, such as the broadening external shortage remain to be amended. Further accomplishment of structural reforms would not only help to escaping stabilization crisis, but also let Turkey to attain or even lift its growth potential.

Even though Turkey’s population is appropriately large, its GDP represents just over 2% of the EU-25 GDP. As a result, the favourable economic impacts of Turkey’s membership in the EU are likely to be disproportional, for instance small for the EU-25 as a whole and much bigger for Turkey. The results on the EU will very much depend on the manner the Turkish economy will be able to manage its arrangement for membership.

The admittance of Turkey would display economic defiance, and implicitly chances to all parties included. Overall, EU Member States’ economies would advance from the admittance of Turkey, albeit only minorly. An advance of growth in Turkey should present a positive influence to EU-25 exports

Turkey would advance considerably from its admittance to the EU. Admittance should boost Turkey’s development basically via enlarged trade, higher contribution due to higher FDI, inflows, and higher productivity development due to a change in the sectoral arrangement of output and the accomplishment of structural renovations in line with the more competitive EU internal market setting.

Agriculture is the basic significance to Turkey, both in social and economic conditions. About half of Turkey’s territory of some 79 million hectares is occupied with agriculture, which is hardly ever in line with the EU 27 average (48%). Turkish admittance would be therefore add about 39 million hectares to the EU’s agricultural territory. This would show 23% of the EU-25 agricultural area. In 2003 roughly one third of the labour force was occupied in agriculture, and in the same year the sector showed 12.2% of GDP.

The climatic and geographical conditions across the country allow a broad sphere of various farming activities, and Turkey is a main world producer of (in no especial order) cereals, cotton, tobacco, fruit and vegetables, nuts, sugar beet and sheep and goat meat. Roughly 50% of Turkey’s agricultural territory is given to arable crops (of which about 20% is fallow land and 20% irrigated), 25% to constant grasslands and pastures and 2.5% to constant crops (Cakmak E.H., 1998). There are important regional contrasts in production patterns.

The farm structure in Turkey demonstrates similarities with several of the new member countries and with Bulgaria and Romania. In relation to the 2001 census there are about 3 million agricultural investments in Turkey (contrasted to almost 13 million in the EU-25), most of which are family farms engaging family labour. This is down from about 4 million investments in 1991. Numbers for the average size of investments propose that investments are small by EU levels (6 hectares on midpoint contrasted to an EU-25 midpoint of 13 hectares). These figures are numbers of investments and medium size is however not in line with the whole territory. The reasons for this discrepancy are not comprehensible, but they may stem from the exclusion of collective or unused land or defects in the statistical terms.

Maintenance and semi-maintenance farming is an essential characteristic of Turkish agriculture, as is the case in certain areas of the current EU and in Bulgaria and Romania. These farms are typically marked by productivity being low and only a small part of production being marketed. They are hard to reach with usual market and price course, but are decisive for the income defense and life of the most of the country population in Turkey. Turkish admittance would add over 80 million supplemental consumers to the EU-25 total of 452 million, nevertheless with a per capita buying potency substantially power than the EU-25 average.

A compared to earlier acceding state Turkey is bigger, more inhabited and poorer. It is also more argued in market terms than most. The competition of its agriculture and agri-food forms is, in general, less on average than in the EU.

A correct assessment as to what degree the existent CAP system could manage with an accession by Turkey and its connection for financial reserves would need a deeper examination, at least as thorough as the one that made in the case of the new Member Countries.

source

The Real Economy

How many times have you seen negative headlines? They are the mantra we hear from the media virtually everyday. "High gas prices are expected to spark inflation and could drive this economy to a halt." "Consumers are doubting economic future." "The sky is falling." That last one was actually from Chicken Little, or Al Gore on the environment, or something like that. Any way, the news isn't good, but the economy keeps on chugging along at excellent levels.

The media may have an incentive for the economy to decline. According to most scholars who monitor journalists, the vast majority of those in media (approximately 80%) describe themselves as "liberal" or "very liberal." That percentage may be higher than the entire delegation to the Democratic National Convention from Massachusetts. If they keep saying it is bad long enough, and we believe it, people might vote their liberal friends to office. Stranger things have happened.

Also, when is the last time people bought a newspaper because of good news? "The Economy is Great" or "Everything is Fine" rarely catches a person's attention. Imagine the little kid with suspenders and cap running through the streets in an old black & white film with a newspaper, yelling "Extra, Extra, prosperity breaks out everywhere!" It should happen, but it rarely actually does, although we seem to celebrate the economy every day in the real world.

Speaking of the real world, the place most journalists don't appear to live in, but where I make a living, I find a very different economy.

I find more optimism about the future than any time in the last twenty years.

I find more employers hiring more employees than I have seen in years.

I am finding a record number of businesses expanding rather than laying people off.

In other words, I find a pretty solid economy. I prefer my economy and it seems more realistic than the one promoted by the media and I hope Americans don't drink the poisoned Kool-Aid the media is handing out. Let the media remain scared in an effort to sell newspapers or even change government. Let's you and I stay in the real world.

The inability of the media to stay in the real world has led to its massive decline. The heavily hierarchical media structure that drove information for decades (from the media down to the consumer) was overtaken by the surprising popularity of talk radio in the 80's and 90s (a forum where real people could express their views) and is being obliterated by the Internet which is now overwhelmingly being driven by the audience rather than the "media elite."

The next time you hear so-called "bad news" about the economy, take a positive step. Consider investing in something new, maybe contemplate the hiring of an employee, or see what you can do to add to this impressive economy noted for record growth. Let the journalists continue to live in their private little world, with its personal agendas, no matter how depressing it may be. But by all means, don't join them. Be real, like the economy.

Propane Gas Prices

So you thought the fuel in the white container attached to your barbecue grill is some cheap fuel? You were wrong! Propane is a versatile fuel and it does not come cheap. Today there is a rising demand for propane across many sectors, such as residential and commercial, petrochemicals, farming, transportation, and several other industries.

Propane is extracted from natural gas or refinery gas streams, and its prices vary according to the customer, the season and the region. Propane is produced as a by-product in oil refineries and from natural gas plants. Since propane is produced as a by-product, propane demands cannot be adjusted when there is a demand for propane. Propane can also be bought from the international energy market via pipeline or sea tankers. Propane imports account for about 10 percent of the propane used in the US.

There are several factors that effect propane prices. Some factors are common to petroleum products, while others are specifically related to propane. Propane prices are affected by crude and natural gas prices. However, crude oil seems to be a big determiner of propane costs, since propane primarily competes with crude-oil based fuels in the market. As with any other item, propane prices are influenced by the demand-supply balance. The proximity of supply also determines the price of propane, and customers placed farthest from the major supply are likely to pay more.

The markets are also another big determiner of propane prices. Propane serves different markets, from producing petrochemicals to crop drying in farms, each with its own characteristics and needs. Propane prices in these markets are usually influenced by factors such as the prices of competing fuels, the distance propane travels to reach the user, and the volume of use. Residential demand, for example, is dependent on the weather, and so propane prices usually peak during winters. Today the residential and the commercial sector accounts for about 45 percent of all propane used in the US.

The petrochemical industry uses about 38 percent of the propane in the US. Propane is used by the industry to make plastic, cosmetics, alcohol, fibers and other commodities. With a rise in the prices of propane, the petrochemicals industry can easily switch over to other raw materials. Such a wider choice of this industry is a major driver for propane prices. Moreover, even within the petrochemical industry the demand is regional, because of the high concentration of petrochemical plants in the Gulf Coast region.

And You Think Conservatives Are Intolerant?

Check out this doozie of a story on the hostility raised toward conservatives in a college graduate-level classroom in (you guessed it) Massachusetts. Now I thought it was supposed to be conservatives that squelched free expression and exchange of ideas? I thought it was supposed to be conservatives that acted like the Gestapo?

Care to guess the topic generating all the hypocrisy by the liberals in the classroom? Gay marriage. By the way, this guy's writing is hysterical....

Me vs. World - WillingtonWorld (hat tip: The Corner)

Born In Iraq, Raised In America

I just came upon this awesome story. The blogger is a US Army journalist who just got back from serving in Iraq. He wrote the story of a young Iraqi boy who came to America in the 1990s, then decides he has to give something back and signs up to go to war in his former homeland. A must read.

Born In Iraq, Raised In America -- InIraqFor365
http://desert-smink.blogspot.com/2005/02/homeless-vet.html

More on Barney Frank and Easongate

A week ago today, my post on Barney Frank challenging a ludicrous claim by CNN's Eason Jordan helped generate a lot of attention for this blog. Most of the big conservative blogs Instapundit, Roger Simon, Hugh Hewitt, Little Green Footballs and others linked us.

Well, now it's my turn to tip my hat to a number of great bloggers who have been doing a great job covering this story, including one of my favorites. Dirty Harry links to a Michelle Malkin who contacted Barney Frank about the incident. She writes

I asked Rep. Frank again if his recollection was that Jordan initially maintained that the military had a deliberate policy of targeting journalists. Rep. Frank affirmed that, noting that Jordan subsequently backed away orally and in e-mail that it was official policy, but "left open the question" of whether there were individual cases in which American troops targeted journalists.

After the panel was over and he returned to the U.S., Rep. Frank said he called Jordan and expressed willingness to pursue specific cases if there was any credible evidence that any American troops targeted journalists. "Give me specifics," Rep. Frank said he told Jordan.

Rep. Frank has not yet heard back from Jordan.

Dirty Harry has more on "Easongate" here, here, here and here, linking to another favorite blogger Roger Simon. Hugh Hewitt is also all over it: here, here, here and here.

Powerline (the only major conservative blog which has not yet linked us) weighs in here, here, here and here, that last post announcing he debut of the blog Easongate.

Hugh, Dirty Harry and Powerline all provide further links to a variety of thoughtful posts on the topic.