Explain how economic growth and the operation of a market economy impact on the global environment, and suggest ways in which action could be taken to limit this impact. √
Christopher Neill Y312545X
TMA 02 (part b)
Explain how economic growth and the operation of a market economy impact on the global environment, and suggest ways in which action could be taken to limit this impact. v
This essay is divided in two parts. In the first I will explain how economic growth and the operation of a market economy impact on the global environment. I will explain, using the main key theme of block 2 that nature and society are intertwined, that economic growth and economic markets interact with the environment, often unintentionally, and can lead to destruction of landscapes, pollution and exhaustion of common resources. To do this we need first to define economic growth and market economy. Economic growth is measured by GDP (gross domestic product) which measures the amount of goods or services produced by a person or country. The product of one year is compared to that of another so the growth of an economy may be measured. It can be measured as a country as a whole or per person and can go down as well[S1] as up. v
A market economy is one in which resources (common or not) are distributed through exchange in markets. Also[S2] known as free market or free enterprise markets, the free being that business and consumers are free to decide what to produce or consume and what prices to set or to pay without intervention from the government. Indeed, OKv
Adam Smith, an economist from the 18th century, introduced the idea of an 'invisible hand` as a metaphor to describe how markets work. He suggested that there are invisible forces (known as market forces) which bring together a buyer and a seller based on how much it costs to produce something and how much people are prepared to pay[S3]. If a business is not competitive in the pricing of goods consumers will go elsewhere to buy (the natural and the social: uncertainty, risk, change. Hinchcliffe, S. Woodward, K. Open University 2004). v Followers of Adam Smith, known as modern neoclassical economists, argue that the market will efficiently allocate existing resources and satisfy all wants and that economic agents working for their own interests will produce a good service at a competitive price, thus allowing choice to the consumer.
Market economy and the 'invisible hand` are very good at bringing together buyers and sellers and meeting consumption needs, but can all needs be met by consumption? When an economic agent produces he focuses, primarily on his own needs and secondly on the needs of the consumers. But it could be that other people apart from the producer and consumer are affected by the consequences of the actions. For example[S4] deforestation in the Amazon, local Indian tribes are affected as they watch their habitat diminish. In the case of fishing, future generations will be affected by the lack of fish stocks in the future. These consequences are known as 'externalities` and[S5] are usually unintentional. If I look after my garden because it brings me pleasure, it also has externalities. It can be appreciated by my neighbours. This is the unintentional consequence of my action, in this case positive, but many externalities are negative.
Environmentalist Michael Jacobs (Jacobs, 1991. p.25) referred to externalities as an 'invisible elbow` in[S6] that as the 'invisible hand` reaches out, the 'invisible elbow` can clumsily knock something over quite unintentionally. This happens because the structures that rule the market economy make it impossible for a producer to include the full private and social costs in his price.[True!] Me as a consumer I also have my part of the
Christopher Neill Y312545X
responsibility for externalities, if I want cheap fish then the person who fishes has to cut costs to meet my needs. By ...
This is a preview of the whole essay
Environmentalist Michael Jacobs (Jacobs, 1991. p.25) referred to externalities as an 'invisible elbow` in[S6] that as the 'invisible hand` reaches out, the 'invisible elbow` can clumsily knock something over quite unintentionally. This happens because the structures that rule the market economy make it impossible for a producer to include the full private and social costs in his price.[True!] Me as a consumer I also have my part of the
Christopher Neill Y312545X
responsibility for externalities, if I want cheap fish then the person who fishes has to cut costs to meet my needs. By buying cheap fish I pay only the private costs and the social costs are paid by someone else, society as a whole or future generations (the natural and the social: uncertainty, risk, change. Hinchcliffe, S. Woodward, K. 2004. Open University.) v
In a market economy the people with buying power are those who have most influence, in a market economy like Britain this is good as consumers can protest with their money and sometimes change consumer trends. But in poor countries such as South America the people's needs are not important to the market economy and so they are often overlooked. The interesting point about externalities is that their effect is usually felt by others than those who cause them so[S7] when Hurricane Mitch struck South America (the natural and the social: uncertainty, risk, change. Hinchcliffe, S. Woodward, K. 2004. Open University) .v It had a devastating effect on the local population, but as the companies were insured and prepared it had very little effect on the market economies like the USA or Britain. As it was considered a 'natural` disaster there was very little international aid, and the locals were left to pick up the social costsv.
In a high consuming market economy like UK we export the burden of our lifestyle around the world. In fact if everyone on earth wanted to have the same lifestyle as we have in the UK we would need 3.1 planets to maintain us. (Extract 1.Assignment booklet 2 (TMA 02) Open University[S8]) This has increased steadily from 1961 when we would have needed just 1 planet. v So we can see that the market economy and our consumption needs are [S9]having an effect on our environment, whilst these effects were in the periphery like other countries or continents we could continue to blame the 'natural`. Slowly but surely externalities are beginning to effect the core of market economies like UK and USA and we can no longer do nothing and hope that the 'invisible hand` can somehow save us. OKv
There are many possibilities to intervene and stop or reduce externalities and the invisible elbow[S10]. Private ownership of common exhaustible resources is one, the theory being that if fishing stocks or forests are privately owned, it is in the owners' interest to assure that stocks are replenished, they also charge a fee to fish or to cut down trees thus covering the social costs of replenishing the stocks. The problem I see with the privatization is who allocates what to whom? And[S11] as is suggested in Chapter 3 section 5.1.1.(the natural and the social: risk, uncertainty, change, Hinchcliffe, S. Woodward, K. Open University).v It might turn out to be in their interests to flatten forest land and build on it. Also some common resources like air are impractical to privatize. This is where 'Green Tax` or 'Green Subvention` are interesting as they encourage producers who despoil little and tax those who despoil a lot. A problem that occurs to me is how do you put a value on the environment? How much to tax[S12]? And maybe I'm being sceptical when[S13] I suggest that a big international company will have ready any number of lawyers and 'experts` who are prepared to demonstrate that the company is the most environmentally friendly company that has ever existed. Me personally I would like to see some type of shaming strategy, where companies are obliged to put on the package of a product, where and how it was produced and some sort of environmentally friendly star rating. OK v
Christopher Neill Y312545X
In this essay I have looked briefly at how a market economy works and what is economic growth, we have seen that externalities of a market economy are the unintentional consequences and that economic agents in market economy are very
limited to prevent these externalities due to market pressure. I have also looked at how externalities affect people in the periphery of a market economy and while they do not affect the core, how externalities are often blamed on the 'natural` which helps some economic agents wriggle out of their responsibility. I have looked at the UK`s ecological footprint and possible ways to slow down environmental degradation. vA clear conclusion -very good!
Word count: 1276 v
References
DD100 Block 2 Audio 4. A & B v
DD100 Assignment booklet 2 (TMA 02) v
Jacobs, 1991, p. 25. [What is this source? Be sure to provide the complete bibliographical details (see the relevant sections on referenced in the TMA booklets)] v
The natural and the social: uncertainty, risk, change. Hinchcliffe, S. Woodward, K. London, Routledge/ Open University. v
TMA 02 (part a)
Summarize what the information in Table 1 tells us about the relationship between environmental impacts and the level of national income in different countries.
Table 1 presents us with 10 countries, their Gross National Income (GNI) per head, represented in US dollars, the amount of electrical power they consume in kWh per capita, the CO2 emissions given in metric tonnes per capita and what is supposedly the number of planets needed to sustain the whole world at each country's level of consumption. v
The table is ordered according to GNI per head, with the richest countries at the top and the poorest at the bottom. The richest, the US has a GNI 250 times greater than that of the poorest country Malawi. The four poorest countries double each others income from the poorest Malawi until Brazil where the increase in GNI levels off a bit. Brazil, Russia and Mauritius only differ by $1,600. Suddenly there is an enormous jump to the four richest countries, France, Germany, UK and US, with France being the poorest of the four rich having a GNI 6 times that of Mauritius, the richest of the poor countries. v
The consumption of electrical power tends to follow the same pattern as the GNI per capita. The higher the GNI the higher the consumption of electrical power, apart from one exception France, which consumes more electrical power than Germany and UK which both have higher GNI per capita than France[S14]. The US is by far the leader in consumption of electrical power with double that of France. There are sets of data missing, that of Malawi and Mauritius, either they consume no electricity or the data is unavailable. v
CO2 emissions are measured in metric tonnes per capita, which continue the same pattern with the wealthiest countries contaminating more. The top three contaminators are US, UK and Germany, which are coincidentally the three richest countries. With the US again doubling the CO2 emissions of the next big contaminator. The big exception to the rule is Russia which although is the fifth poorest country, is the second biggest contaminator of CO2 gasses behind the US and only equalled by Germany. v
TMA 02 PART A Feedback for Christopher Neill
Some key points from Table 1
The list is not definitive but your responses should reflect the important issues that arise from the analysis of the data. Grading also reflects the level of coherence, comprehensiveness and structure.
* Overall there is a broad and generally clear pattern that the higher the Gross National Income per head in a country, the greater its environmental impact in using all three of the measures given in the Table.
* Examples: By quite some way the United States has the highest level of GNI per head and also by quite some way has the highest level of CO2 emissions per capita and the highest level of electricity consumption per capita. It also has the 'highest number of planets' that would be needed if everyone were to adopt the USA's consumption habits.
* Examples: Similarly, Malawi has the lowest levels of GNI per head, has the lowest impact in terms of the number of planets that would be needed if everyone was to consume at the rate of its citizens. It also has zero CO2 emissions per capita (the lowest on the table). The figure for electricity consumption per capita in Malawi is not available in the Table.
* The main pattern seems to hold fairly clearly for each of the three environmental variables.
However, a number of other specific points and exceptions arise from Table 1:
* In terms of the 'number of planets', Germany seems to be an exception to the broad pattern with a slightly lower number than might have been anticipated. The converse is apparent for Russia, which seems to have a higher number than might be expected.
* For CO2 emissions per capita, Germany has a slightly higher amount than might be expected. Russia has a similar amount of CO2 emissions per capita as Germany but a GNI per head, which is approximately a tenth of that of Germany (a reversal of the main pattern).
* In terms of electricity consumption, the only slight anomaly is France with a higher value than might be expected from its GNI per head and compared with both UK and Germany.
* Overall, in terms of countries the main exceptions appear to be Russia with higher environmental impacts than suggested by its GNI per head and Mauritius, with lower environmental impacts than suggested by its GNI per head.
Comments
In what you write you do identify several patterns that also appear in this page and summarise them in a thoughtful way. I think that you are certainly on the right track and that you would have done even better had focused even more on the relationship between
environmental impacts and the level of national income in different countries.
In general it is worth keeping in mind that when we comment on the data presented in a table what is of interest is to delineate any discernible pattern (since patterns may imply the existence of linkages or relationships). Thereafter, we are usually interested in the various "peaks"; they imply deviations from the norm that might merit some explanation. You also need to consider the reason behind the observed pattern (or deviation) and why not write these down even if your thought about them are tentative.
[S1]Introduction-clear and to the point-good!
[S2]Define what a market economy is - good!
[S3]A clear expose' - good!
[S4]An example given for purposes of illustration - OK!
[S5]So, you know do kno what is an externality -fine!
[S6]Use of anothe key notion-good!
[S7]So true!
[S8]Use /refer to the material presented - good!
[S9]My emphasis! Good
[S10]So it is p[ossible to control the "invisible elbow"
[S11]A sensible reservation I would say!
[S12]It is better to avoid rhetorical questions. Whehever you pose a question you need for presentation purposes o provide an answer.
[S13]Itr is much better to be speptical.
[S14]Indeed this is so. Should you also show the relationship, if an, between this patterns and environmental impacts?
