Inequalities

A common feature of all economies in the world whether developing or developed is the presence of inequalities, not only in money terms but also mainly in real terms. Till now I believe inequalities have never been quantified but rather it is measured as a discrepancy between incomes.
Inequalities will never cease to exist. It can be narrowed but only to a limited extent through redistribution of incomes and wealth. Again this is against the notion of Pareto optimality as it brings down the welfare of the rich and redistribution does not seem to hold good in most economies.
The only remedy is growth-both economically and socially so that the welfare of the rich and the poor are improved; but concentrating more on the less rich by giving the poor more opportunities to work and develop. Government intervention is not the only remedy. The government has to oversee that a moderate level of competition should prevail for the provision of such opportunities. Provision of facilities in the rural areas should be given high priority and those enterprises that provide such facilities must be given incentives.

Joy of reading

I have been busy lately, though not with economics. I entered into my world just two days back. My internals are going on now. I have to start preparing for my entrance exam to get into a good masters program in Jawaharlal Nehru University(JNU) or Delhi School of Economics(DSE) as their standard of questions is very good.
I have been interested in Economic history and Economic thought lately. So explains my previous post and so will my future posts!
I am currently reading 'The end of poverty' by Jeffrey Sachs, which is a good book. Those who have finished reading it, please post your views on it.

Mercantilism

The forerunner of Mecantilism was Thomas Mun, a 17th century British merchant-economist. He proposed the following theories.

For Britain to prosper economically, it has to run trade surpluses.

Nations become wealthy for the same reasons that families become wealthy i.e when the income is more than the expenditure.

Importation of necessities was good, while luxuries were considered as bad, unless these luxuries could be re-exported and profits could be earned. Rich metals is an example of re-exportation.

Only international trade would bring about trade surplus and not domestic trade.

The money which Britain earned should not be spent for unproductive purposes. Nor should it go to the hands of individuals, because it would lead to an increase in the aggregate demand, leading to a price rise. In order to avoid that, it should be reinvested in the economy. Thus he stressed the importance of capital investment in an economy.

These are some of the principles he talked about. I feel, as students of economics, it is highly necessary for us to know about the works of the great economists.

Public good

A public good is good which can be used by all without paying a price. In most of the countries, the public goods are being produced by the respective governments by incurring high costs. For its usage an individual or a company does not pay a price. A typical example is that of a public road, where a fee is not collected for its usage. The burden of producing public goods falls on the shoulders of the government. Some costs are paid off using the government taxes such as road tax, sales tax etc.
I believe that it is the duty of the private in a developing country to offer such services owing to the already high burden on the goverment. The government can give the private entrepreneur high rates of subsidies on undertaking this kind of work as it requires a very high rate of capital investment.
Another type of good where a price is paid for the public good is known as a Merit good. Charging a small amount for building infrastructure can be justified as it accelerates development. Thus i am of the opinion of converting most public goods to merit goods.

Final year

I have only got a year left for my graduation. This semester we are being taught the following papers
1) Mathematical economics
2) Managerial economics
3) International economics
4) Fiscal economics
5) Monetary economics
6) Indian economics
At last i am so glad because i will have to study economics only. Lately there have been no posts owing to my lack of time to visit the web. I had been very busy as i was house hunting. I will get a house only on the first of the coming month.
I will do some economics posting only after i move into my new flat. I am planning to post on Behavioral economics and, the mobility of labour.