November 4, 2011
Crisis on the Coast
The U.S. is the biggest economy in the world but it is sick. The interaction with a crisis in 2008 make the society vulnerable of what could cause a crisis on their economy, but because of this fear their economical growth have not being what where expected to be. The poor growth of the U.S. economyand their fiscal policies leads them to an imminent crisis. The subtopics to be addressed will the causes of a crisis, the use of fiscal policies to activate the economical flow, and the society because without a society there is no economy.
The different causes for a crisis are the economical swamping, low rate of growth and a high rate of inflation. In the U.S. in the pass years the rate ofgrowth have decrees immensely since the crisis in 2008, on this year was round the 2.6% and was expected that for this year where around of 3.8% when is 2.9%, according World Bank Group.
Jennifer Kiel on her work of “Regenerative Mall” said that the mayor cause of an economical crisis is the afraid of buying, because an American spends 2/3 of their income in things that make US economic activityflow, also she established that since 1929 to 2006 the market of the US is based in mass production that could makes an overproduction making the cost of the products goes down generating loss.
Whoever according to Robert Heilbroner in his book “The Making of Economic Society” he said that the mayor cause of a crisis is the speculation in shares of stock, because in 1929 this make a recession becomea crisis and finally a depression because the dollar inflates around a 30% of his actually value, also he claims that the maldistribution of income was a big factor because in 1929 was distributed in some ways that make it vulnerable to a shock. That does not mean that US do not have the purchasing power, but it was not in the people who really buy the products.
The causes of a crisis arespecific to each country that suffers of it, but with we could see now that the US is going again to a crisis because of his slow recuperation, and according to Jennifer Kiel and Robert Heilbroner a crisis is imminent if there is too much product and no one want to buy it.
Fiscal policies are regulations of the state, US in this case, to promote economical flow decreasing or increasing the expenses ofthe state in public services or in their budget. The US has not made Fiscal policies approved by the government in the past 4 months to promote this flow according to the web site of the US senate website.
Aleksandr Gevorkyan in his paper “Innovative Fiscal Policy and Economic Development in the Transition Economies” a way to promote economical growth in time of a crisis is making the statehave a debt by public works to create direct jobs, also said that in socialism in the Soviet state his problem was that they stop making effective fiscal policies, overcoming the debt of the state over the income based on his own production.
Also Robert Heilbroner in his book1 also mentions that an important factor to make a stable economy is the globalization. Understand that the capital movesaround the world and is important have Foreign Direct Investment to produce more employment that will help the economy star flowing. Also emphasizes that in the year 2000 there was a boom in these subject but after two years decrease immensely and start again increase slowly in 2004.
Knowing now this it could be said that after the crisis in 2008 in the US their direct investment decreases but withthe efforts of the government to make new jobs goes forward. But because of their low growth rate could happen to US what happened with the URSS that spend more than they can produce and become insufficient with their economic flow.
To have an economy it is need two parts, the producer and the consumer, without any of these will not be a market. The society is really important in the economical...