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A Noisy Return to a Post-Pandemic Normal

Introduction

As COVID-19 infections throughout the world rise, especially with the Delta variant — a mutated version of the virus — it brings into question, when will we get back to a new ‘normal’. While parts of the world are already returning to a pre-pandemic norm, countries in Africa still lag behind in securing vaccines for their healthcare workers. Until the world can ensure a safe and equitable distribution of vaccines, there will be no normal — for a while. 

The United Kingdom

Dubbed “Freedom Day,” the United Kingdom is returning to pre-pandemic normalcy. All restrictions have been lifted, and with 68.8% of the population having received a 2nd dose, all is going well, until you start to take into account the steady rise in infections — especially with the transmissible Delta variant, which killed thousands in India a few months ago. Like Shakespeare’s play on words, this is another gamble with the economy. For the past few months, the British economy has been stagnating, recent consumer trends show that household expenditures decreased by 11% when compared to Q3 2020-2021, and a loss in consumer spending hurts aggregate demand in the UK. This has a negative effect on the GDP and led to a loss in income, rise in unemployment, and consistent failures to meet monetary policies set forth by the Bank of England. 

Downing Street is now trying to get people back out: partying, eating, drinking, and working; and throughout the western world, governments have taken similar approaches. Across the pond, the United States is, for the most part, open, while Canada is coming out of lockdown. Lockdowns have hurt local business, people are frustrated and government debts and deficits have taken a toll on the state. However, in most of the Western world, we see that vaccines are readily available, but most countries still do not have enough vaccines to return to a ‘new’ normal. 

Georgia

Countries such as Georgia, Ukraine, or Belarus for example are not relatively poor states — in comparison to the rest of the world — but lag behind in vaccination rates. Vaccine hesitancy is rampant among the public and even with government encouragement, few people volunteer to take it, and in order to save their economies, prematurely opened up. This leaves them vulnerable to COVID-19, which delays the world’s return to normal, and raises a philosophical question: do the ends justify the means for some countries that are opening up prematurely due to vaccine shortages? For example, the IMF predicts Georgia will grow at 7.7% this year due to opening up prematurely, but amid rising delta infections, hospital beds filling up, and exhausted medical and financial resources, it is very possible many will die in the next wave. 

However, Georgia isn’t alone. There are a hundred other countries facing the same question. Do the ends justify the means? What to prioritize? Nonetheless, getting the jab is important — no matter where you live — as it means you are one less person to vaccinate and more vials can be donated to other, lesser developed countries. The faster vaccines can be secured for poorer, lesser developed nations, the faster we will return to a ‘new’ normal because a dozen nations don’t represent the world. The longer it takes to vaccinate any human, the longer this pandemic drags on, and the longer you’ll wear a mask. So, if you have the opportunity to do so, take your dose as it’ll help strengthen the world from a virus which churned the world to a halt.

Sources

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Analysis News

The Space Race — Is it worth it?

Introduction

On July 29th, 63 years ago, the US Congress passed the legislation, which established NASA, otherwise known as the National Aeronautics and Space Administration. NASA is a government established agency that is responsible for the technology and science related to space and air. As you may know, NASA’s purpose is not only to analyse and explore space, in case of Earth’s demise, providing alternative approaches to human survival beyond our atmosphere but also to protect the human race from the harms of space. An example of this would be detecting asteroids that could pose a threat to human existence if the trajectory proves to be heading towards Earth. However, it is questionable as to the necessity of space exploration. Annually, the US government provides NASA with a budget of $22.629 billion, and this number is ever-increasing. Although this only represents around 0.48% of the total of the US government spending, it is highly debated as to whether spending this amount of money is necessary, and could instead be directed to other means, e.g. building renewable energy sources to help reduce climate change. 

Applications of space research

However, it is important to recognise the necessity of space exploration for proving/disproving scientific theories that have previously been developed on Earth. These theories have brought us insights into gravity, the atmosphere, fluid dynamics, the geological evolution of other planets and most importantly it has shown us the connection between the sea, sun and moon. Thanks to Sir Isaac Newton’s discovery in 1687, we now know that tides are very long-period waves that move throughout the ocean in response to forces exerted by the moon and sun. Fishing, recreational boating, and surfing all rely on tidal data. Commercial and recreational fishermen alike rely on their understanding of tides and tidal currents to boost and improve their catch rates. According to the report published by Allied Market Research, the global fish farming market generated $271.61billion in 2018, and is projected to reach $376.48 billion by 2025, witnessing a CAGR of 4.7% from 2018 to 2025, and is therefore a staple part of our global economy. 

The Space Race and Jeff Bezos

Nevertheless, It could be argued that the race to space has become glorified, being used as an anchor for the economically elite to exhibit their wealth. The last century’s space race was a competition between the world’s great powers and a test of their ideologies. It would prove to be a synecdoche of the entire Cold War between the capitalist United States and the socialist Soviet Union. Has this desire to be deemed most rich and powerful continued into the 21st Century? On the 20th of July, Jeff Bezos, the richest man in the world, alongside three other passengers (his brother, Mark Bezos; Wally Funk, a storied aviator; and Oliver Daemen, an 18-year-old fresh out of high school), made the trip to space and back. Bezos stated that by going first, he wanted to prove that his technological advanced vehicle was safe, and that Blue Origin is finally ready to make its 11-minute suborbital trips, an experience people can buy. The $5.5bn journey raised the question as to whether this accessible technological advancement was a step in the right direction, or whether its consequence will lead to an even greater division between the top 1% and the remainder of the population.

Sources

  1. https://www.history.com/this-day-in-history
  2. https://oceanservice.noaa.gov/facts/moon-tide.html
  3. https://www.globenewswire.com/news-release/2021/01/13/2158043/0/en/Global-Fish-Farming-Market-to-Reach-376-48-billion-by-2025-AMR.html 
  4. https://news.sky.com/story/bezos-branson-musk-the-new-space-race-explained-as-virgin-galactic-prepares-to-launch-12347249
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Analysis

The Flaws of the Chinese Model

Historical Context

In the 1970s, Beijing liberalized the economy, opening it up to foreigners, and adopting policies that promoted free trade. These were similar to glasnost and perestroika, which were implemented in the USSR. The hope was that millions of Chinese could be lifted out of poverty and into prosperity. While Deng’s reforms started in agriculture, he slowly branched out to include industry as well. A perfect example is Shenzhen, now a bustling metropolis, back then it was a shanty-town. He decided that the Pearl River delta should spearhead the liberalization. The PRC created special economic zones with little oversight, where foreign firms could trade freely with minimal interference from Beijing. This was adopted throughout China as the try-outs were successful, accelerating China’s economic growth.

Analysis

China progressed and grew — to the shock of many economists as no country on earth had ever grown at the rates China did. This raised the net output of firms in the economy, therefore increasing the GDP. As the Chinese adopted friendlier policies, the GDP rose further as China became a lucrative investment destination ceteris paribus. Mathematically speaking, as GDP is Consumer Spending, Investment, Government Expenditure, and Net Exports (Total Exports – Total Imports) added together, as China grew its reputation on the world stage and investments from abroad grew raised the GDP, imports remained stagnant due to an uncompetitive Yuan. Meanwhile, exports also increased, raising Net Exports (Total Exports – Total Imports), having a ripple effect on the GDP too.

GDP of China [PPP] from the World Bank Database (CC BY-4.0)

 As China started to industrialize, the wages grew at rates never seen before. It looked like China had the perfect deck of cards to become an industrialized nation, which it did — as China is a newly industrialized country. However, this came with many downsides: externalities and inequality.

Externalities are a cost or benefit placed on a third party. They can be positive or — as in China’s case —  negative. The costs to produce outweigh the cost to society from the production in markets. Therefore, there is a welfare loss. As there is a welfare loss, society is worse off — this can be in the forms of pollution, increased health risks, lower life expectancies, or otherwise. The welfare loss exposes the public to harmful particles and extreme air pollution. Now, this leads us to question how well-off are the Chinese?
Even though rapid economic growth has increased wages and lifted many out of poverty, and the effect of increased GDP has had direct consequences on the Chinese, nonetheless, one result of rapid unchecked growth is inequality. As The Economist reported in 2015 and 2019, education is highly unequal. Access to education helps individuals earn more due to the development of skilled labor and allows firms larger access to a larger pool of individuals with specialized skills. However, as stated in both the articles, most Chinese schools are now jam-packed with elite, wealthy kids; and uneven wealth distribution, like in the United States, has led to the degradation of the quality of education received by rural Chinese. This can cause them to struggle in the gaokao, an all-important university exam, viewed by many rural Chinese as their only way out. However, the government has been attempting to fix this. Beijing has suggested that educational reforms are needed. There is also the big North-South divide. Farmers in the north cannot earn enough to live, so they migrate to the south to become laborers or factory workers. As they live in poor neighborhoods, this increases the chances of their children scoring poorly on the gaokao.

Conclusion

Nonetheless, China has had tremendous success in eliminating poverty. Its people — once some of the world’s poorest — are now living in a modern country. However, many challenges are facing the Chinese. The ones discussed here are scratching the surface; some others include depopulation, firms’ inefficiency, unemployment, and an overheating economy.

Sources