Economic Recession in the UK
Scotland is a country located in the UK at large. During the earlier 1990’s, a given system emerged in the UK whereby Scotland, in particular some of its constituencies, were given self-governance within themselves.
It has 59 members of parliament representing the Scottish constituencies at Westminster on various issues such as constitution, protection, security, pensions, economic issues monetary, and fiscal policies among others (Buchan J 2003). In the Northeast of England, there are urban oligarchies which operate on a number of ways. According to Joan Kent, she showed how the state of information reveals how difficulties arose on the conflicting pressures and demands. Steve Hindle concluded that the vital determinants of success in the social policy lay on the country’s benches with the council and, at the same time, preached for cooperation in the communities in which they stayed with. According to D.H Sacks (1630), the members of municipal corporations were representatives of the servants and the powerful agents of the state and community thereby reinforcing each other.
The financial crisis of 2008 in the UK started in the earlier quarters which resulted in the decline in output levels and hence unemployment. The real output fall was around 6.4%. This happened as a result of the government’s action of correcting long-term economic imbalances and the misperception of risk by all participants in the financial sector. Basically, as a result of these imbalances, the UK government has resorted to coming up with the policy to help alleviate inflation and lower unemployment levels. As highlighted by Goldman Sachs, Jim O’ Neil, since the US economies were growing at a slow rate, public assistants and officers in different authorities were losing jobs not to depend on the new private and public sectors as this would lead to housing problems in the North and South.
They resorted to building of the bank lending institutions which helped the small merchandise enterprises (SME’s) and the Office of Budget Responsibility (OBR). According to Friedman and Wise (1982) and Blanch flower and Freeman (2000), they discovered that the UK economical downturns came because of the young since it occurred when the youth cohort was large. The large lack of jobs has been reduced substantially by applications to university though there was a small number of places available for the same. They are now forecasting on the labor hoarding that has prevented unemployment as one of their forecasters, other than retrenching people; what firms do is cutting pays, reducing hours of work, and hiring moratoria. Adam Smith is called the father of modern economics.
His philosophical movements were held during the Scottish Enlightenment, and he came up with two theories. One was the theory of moral sentiments (1759) and another on was on the inquiry into the nature and causes of wealth of nations (1776). His theories explained the academic disciplines in economics and also gave a wide knowledge concerning capitalism and free trade. The wealth of nation’s theory talks about optimal organization of the pin factory and thus becomes the major explanatory theory of the division of labor. In this theory, he negatively agrees with the PhysiocraticSchool’s emphasis on the importance of land, but instead believes that division of labor was the best.
He provides an analogue saying that in the pin company, if a worker was making some given number of pins in a day, this work will be divided among many workers, and you can find that a lot of pins would be produced in the long run as a result of division of labor. At the same time, this would reduce the boredom of workers when one does the same work many times. Nations would become successful according to other scholars such as Thomas and David Ricardo who refined Adam’s theory. One of the features of the wealth, according to the nation’s theory, is that of free market. If, for example, some given product has a shortage in the market, its prices undoubtedly will raise thus creating excess demand; many suppliers will eventually enter the market to cure the shortage.
The increased competition among the manufacturers will increase supply and thereby lower price of the product. Smith, therefore, believed tha having a free market, society would benefit as a whole by keeping prices low and building several incentives for a wide variety of goods and services; he was against monopolies since they would exploit consumers. Smith was also against the government restrictions since he thought they were drawbacks to industrial expansion. He argued that tariffs create economic imbalances and high prices in the long run. During the 19th century, he advocated for the strengthening of the influence of government legislation but was not so influential.
Adam Smith advocated for the government that was active regarding the education of poor adults, institutional systems of which are not important for private industries. Smith supported four principles of taxation which include proportionality, transparency, convenience, and efficiency. There is also an additional support from people like David Hume and Baron Montesquieu; they suggest that Smith’s theories can be described as historical trends which have moved from mercantilism towards free trade hence becoming influential in the governmental policy. According to Brown and Pack, Smith’s position was very close to the current liberal democrat in the USA. He advocated for the government economic intervention with the government allocating a lot of economic functions. Mathew Watson is in favor of Smith especially if to speak about the phrase “invisible hand”.
(Watson, M. 2005, Foundations of International Political Economy, Basingtoke: Palgrave, pp.100-119) Michael Porter is also one of the prominent scholars who came up with the theory of absolute advantage of international trade. He introduces concepts which explain why different nations in the world are more competitive than others; thus, his theory of comparative advantage of nations became the diamond theory to achieve the global scale for building global competition. He, therefore, uses four determinants.
One is that of factor conditions whereby he suggests that in production of any country, there are important factors required such as the skilled labor force, infrastructure, qualification level, which are grouped generally as human resources, and, once they are incorporated, they are, therefore, bound to increase productivity of the economy. Secondly, we have the home demand conditions. It describes the demanding economy, and they have a direct influence on the shaping of a particular factor conditions. They have a direct influence on market mix of customer’s wants, and he postulates that a nation with clear signals of demand on trends on domestic suppliers have higher influence on an organization’s ability to know the foreign markets. Michael Porter says, “underlying principles of the strategy will endure, regardless of either technology or speed of change.
” Thirdly, related and supporting industries are equally important. For example, the success of a related industry will initiate the innovation and internationalization of the other hence bringing about coordination and value chain together. Examples include the leather industry in Italy. Cultural aspects of different nations determine how companies are organized and established. They can either provide advantages or disadvantages on how they operate.
Porter, therefore, argues that the use of rivalry and the competitive advantage in various nations will help firms to set up bases in achieving advantage on a more global scale. The Porter diamond model has so far been used in many ways, for instance, by organizations in building up the home-based advantage to compare it to others in the world. Governments can also foster a strong, competitive and national advantage to enable it develop a very strong expectation performance and safety and to encourage co-operation between suppliers and buyers at the domestic level. Through this, the efficiency performance will therefore be achieved. Considering what the Northeast region has done so far, it has embarked on different developments so as to encourage economic growth in the North.
To start with, it is worth to mention the economic history whereby the Middleborough transporter bridge that dominated the entire Sunderland has been reinvented as a centre of art and culture thereby making Sunderland an important area for the industry and also a popuular nightlife town with high technology. In May 2005, the passionate people launched a campaign to promote the Northeast England as a place to work and invest. Even the deputy prime minister John Presort admitted for the plans of regional devolution, and the spokesman of conservative regions, Bernard Jenkin, said that the North East assembly would end on the vote plans as the whole government was blown out of the water by his vote, he told BBC. Biodiversity is encouraged in the north as the region has the finest natural heritages, cliffs, the moorland containing many species of fauna and flora and the limestone grasslands of east Durham, which is the best habitat found nowhere in the world. We also have woodland features such as Kielder forest located within NorthumberlandNational park that contains valuable habitat for the endangered species. As per Porter, many get wasted on ineffective philanthropy.
Philanthropy is decades behind businesses when applying high thinking in the use of money. Demographics. This country has the least number of HIV infected people though most of the men suffer from heart attacks and other diseases such as lung cancer of women in England. It has the highest number of trade union membership for men; the education sector is high as over 72% of children gain university education while, in Scotland, it is up to 95% who make to university level through the government support. Teenage pregnancy is so pronounced in the Northeast of UK with the most rates being experienced in Hartpool. The social deprivation, which is extremely evident in England, is greatly being controlled by the government to ensure that it reduces significantly.
Such regions where it has reduced include the greater London. This was done through forming of the council since 2009 in the Northumberland followed by North Tyneside.On the other hand, Scotland’s government has organized itself in the form of the House of Commons where the boundary commissions were established and, in 2005, 72 MPs were elected to represent the entire component if the UK House of Lords is also considered allowing every Scottish peer to visit the House of Lords setting of the local government where councilors are paid part-time salary for undertaking their duties. Doing all this results in economic improvement and stabilization, and, as a result, the economy is at peace. Considering the two theories of Adam Smith and Porter, it is necessary to employ them together so as to bring about economic stability, to enhance working conditions and political intervention in order to promote people’s working conditions. Through this, the problems of economic recession and the high levels of unemployment would significantly be reduced.
The following are some of the critical issues that should be employed by the governments of the UK and Scotland to reduce economic recession problems and control the rate of unemployment. In conclusion, based on the theories so far discussed, the government should practice the industrial policy through subsidizing some particular industries which would help in promoting the economic growth, and, therefore, economic development in the United Kingdom; it will invest heavily in the education sector as in the North and Scotland where children are encouraged by the government to go to school so as to reduce illiteracy; invest in researches, sciences, and engineering as this is one of the sources of information concerning various performances in many sectors of the economy, finance; invest in many infrastructural projects such as roads, health centre, railway lines to ensure easy transportation of commodities which include the goods and services, and this will in turn attract large businesses from abroad to invest that is one of the determinants of economic growth reducing unemployment rates. The government should also fund the small and medium enterprises to grow as they also contribute immensely towards economic growth. They are the firms which create jobs to both skilled and non-skilled labor force which would otherwise be jobless. It can also advertise its development projects on the radios such as BBC radio programs, the world tonight through the Scottish enterprise office.