The Effects of Government Intervention Essay What is the government? What is the role of the government? How does the government influence the economy? What can we say about the effects of the government influence in Romania? These are some of the questions that we will try to answer during our case of study. We are citizens of a society, and our society is based on proper rules enacted and enforced by the high powers of our states. We need to act responsibly and inform ourselves, as much as we can, regarding this problem. The people from the government, how did they get there? How is the government organized? How are they elected? By which criteria are these people elected? What are their attributes and what are their initiatives? We must know if they directly influence our lives, our economy! Taxes, import and export restrictions, tariffs, wholesale interest rates are only a part of the government’s duties to be established. Is the government’s money, in fact our money? And if they are our money, how do they spend it, on what, and why? These are some things that must concern us. And now, we should focus on our country, Romania, and, of course, on ourselves. Even though Romania is a country of considerable potential in most of the fields, its economy is very fragile. Our economy is strong related to the European economy, and some of these connections between our economy and the international economy are made by the government. Most of the people tend to blemish the president, the government, the parliament etc. for the fragility of our economy, and to us it might seem not to work, but we have to bear in mind that this is the effect of the whole nation’s actions and of the world’s as well. In the pages that follow we presented subjectively and objectively our ideas concerning the effects of the government’s influence on Romania’s economy, starting with explaining that is the government and which is the government’s role in the economy. The Government Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized. Government is the means by which state policy is enforced, as well as the mechanism for determining the policy of the state. A form of government, or form of state governance, refers to the set of political institutions by which a government of a state is organized. Synonyms include regime type and system of government. The word government is derived from the Latin verb gubernare, an infinitive meaning to govern or to manage. The Government is the public authority of executive power that functions on the basis of the vote of confidence granted by Parliament, ensures the achievement of the countrys domestic and foreign policy and that exercises the general leadership of public administration. The Government is appointed by the President of Romania on the basis of the vote of confidence granted to the Government by Parliament. Objectives The Government has the role of ensuring balanced functioning and development of national economic and social system, and its connection to the world economic system while promoting national interests. The Government is organized and operates in accordance with constitutional provisions, on the basis of the Government program approved by Parliament. Organization The Government consists of Prime Minister and Ministers. Prime Minister leads the Government and coordinates the activities of its members, in compliance with their legal duties. The working apparatus of the Government is composed of the working apparatus of the Prime Minister, Secretariat General of the Government, departments and other similar organizational structures with specific tasks set by Government Decision. Legislative process The Government adopts decisions and ordinances. Decisions are issued for law enforcement organization. Ordinances are issued under a special enabling law, within the limits and conditions specified by it. The decisions and ordinances adopted by the Government are signed by Prime Minister, countersigned by the Ministers who are duty bound to implement them and are published in the Official Gazette. The non publication entails the absence of a decision or ordinance. Decisions with military character shall be conveyed only to the institutions concerned. Legislative initiatives The following public authorities have the right to initiate draft public policy documents and draft legislative acts for adoption / approval by the Government, according to their tasks and activity field: Ministries and other specialized bodies of central public administration, subordinated to the Government, and autonomous administrative authorities; specialized bodies of central public administration subordinated or coordinated by Ministries, by the Ministries under whose subordination or coordination they are; Prefects, county councils, the General Council of Bucharest, according to the law, through the Ministry of Interior and Administrative Reform. Governments Role in the Economy While consumers and producers make most decisions that mold the economy, government activities have a powerful effect on the Romanian economy in at least five areas. Stabilization and Growth. Perhaps most importantly, the federal government guides the overall pace of economic activity, attempting to maintain steady growth, high levels of employment, and price stability. By adjusting spending and tax rates (fiscal policy) or managing the money supply and controlling the use of credit (monetary policy), it can slow down or speed up the economys rate of growth in the process, affecting the level of prices and employment. The government could affect the economy in multiple ways, but the most common changes that can be made to influence the economy are: (1) Taxes; (2) Import Restrictions; (3) Wholesale Interest Rates; and (4) Government Speeding. TAXES Taxation understandably affects the economy by redistributing money from consumers and producers to the government coffers. The higher the tax, the less people have to spend, the less aggregate demand [total demand] there is in the economy. IMPORT RESTRICTIONS When a country uses protectionism to shield domestic producers from their own inefficiency and inability to compete with foreign firms, they may enact quotas or tariffs. A quota is when there is a maximum amount of a good that can be imported into the country, where imports that exceed the limit have either the responsible parties prosecuted for breaking the law or the goods being turned away. Tariffs are when the price of imports is artificially inflated with a tax, in order to make them less attractive to consumers that are price sensitive. The higher the quotas and tariffs, the higher the prices of those penalised goods in the economy, which in turn will negatively affect aggregate demand. WHOLESALE INTEREST RATES Wholesale interest rates are the rates at which the central bank loans out money to retail banks, which in turn loan out their money to consumers and producers at a higher rate (the difference, in a very basic sense, is their profit margin, or revenue minus costs). If the wholesale interest rates are increased, then retail banks must also increase their rates, otherwise their business would become less profitable (or unprofitable). For large purchases, producers (e.g. investments) and consumers (e.g. buying a home) need loans, since they do not have sufficient cash on-hand. Interest rates are effectively the price of borrowing money and hence affects the Consumption and Investment components of GDP (Consumption + Investment + Govt. Spending + Net Exports). (A small caveat, however, that central banks are created by legislation but are not run by government their actions are independent of politicians agendas.) GOVERNMENT SPENDING Government Speeding (revenues taken from taxes, mentioned above) creates what is known as the Spending Multiplier. When the government consumes, called Government Spending, it is demanding goods and services in the economy. However, that demand in turn generates more demand than a single consume, because of not only the size of the demand (the government has a lot more money than you do) but also the type of demand (e.g. building infrastructure benefits everybody, as opposed to building a private mansion); government spending affects aggregate demand. The spending multiplier, or how much additional demand is generated from each dollar of government spending, is calculated as follows: Change in Equilibrium divided by Change in Investment. Case Study – Romania Romania is a country of considerable potential: rich agricultural lands, diverse energy sources (coal, oil, natural gas, hydro, and nuclear), a substantial industrial base encompassing almost the full range of manufacturing activities, an educated work force, and opportunities for expanded development in tourism on the Black Sea and in the Carpathian Mountains. The Romanian Government borrowed heavily from the West in the 1970s to build a substantial state-owned industrial base. Following the 1979 oil price shock and a debt rescheduling in 1981, Ceausescu decreed that Romania would no longer be subject to foreign creditors. By the end of 1989, Romania had paid off a foreign debt of about $10.5 billion through an unprecedented effort that wreaked havoc on the economy and living standards. Vital imports were slashed and food and fuel strictly rationed, while the government exported everything it could to earn hard currency. With investment slashed, Romanias infrastructure fell behind its historically poorer Balkan neighbours. Since the fall of the Ceausescu regime in 1989, successive governments sought to build a Western-style market economy. The pace of restructuring was slow, but by 1994 the legal basis for a market economy was largely in place. After the 1996 elections, the coalition government attempted to eliminate consumer subsidies, float prices, liberalize exchange rates, and put in place a tight monetary policy. The Parliament enacted laws permitting foreign entities incorporated in Romania to purchase land. Foreign capital investment in Romania had been increasing rapidly until 2008, although it remained less in per capita terms than in some other countries of East and Central Europe. Romania was the largest U.S. trading partner in Eastern Europe until Ceausescus 1988 renunciation of most favoured nation (MFN, or non-discriminatory) trading status resulted in high U.S. tariffs on Romanian products. Congress approved restoration of MFN status effective November 8, 1993, as part of a new bilateral trade agreement. Tariffs on most Romanian products dropped to zero in February 1994, with the inclusion of Romania in the Generalized System of Preferences (GSP). Major Romanian exports to the U.S. include shoes, clothing, steel, and chemicals. Romania signed an Association Agreement with the European Union (EU) in 1992 and a free trade agreement with the European Free Trade Association (EFTA) in 1993, codifying Romanias access to European markets and creating the basic framework for further economic integration. At its Helsinki Summit in December 1999, the European Union invited Romania to formally begin accession negotiations. In December 2004, the European Commission concluded pre-accession negotiations with Romania. In April 2005, the EU signed an accession treaty with Romania and its neighbour, Bulgaria, and in January 2007, they were both welcomed as new EU members. Romania suffered through a deep economic recession beginning with the 2008 global financial crisis, but should return to positive if very modest growth by the end of 2011. Due to rapidly deteriorating economic conditions, a ballooning budget deficit, and large external imbalances, the Romanian Government was forced to conclude a 2-year, $27 billion financial assistance package with the International Monetary Fund (IMF), the European Commission, and the World Bank in March 2009. Under the terms agreed with the IMF, the Romanian Government embarked on a difficult austerity program to reduce the budget deficit, cut public sector employment, and restructure local and national government agencies. Austerity measures included a 25% cut in public sector wages, a hike in the national value added tax (VAT) rate from 19% to 24%, and thousands of layoffs. GDP declined by 7.1% in 2009 and a further 1.3% in 2010, but the government succeeded in meeting IMF-agreed deficit targets despite strong opposition to the austerity measures from labour unions. In late 2010 and early 2011 the government also pushed several important pieces of reform legislation through Parliament, including pension reforms, an overhaul of public sector pay systems, and modernization of the labour code. The final IMF review under the 2009 agreement, conducted in February 2011, declared the agreement a “success†in stabilizing the economy and setting the stage for a return to growth. A new 2-year “precautionary†agreement between Romania and the IMF, effective March 2011, focuses on deepening structural reforms and restructuring or privatizing unprofitable state-owned enterprises. Privatization of industry was first pursued with the transfer in 1992 of 30% of the shares of some 6,000 state-owned enterprises to five private ownership funds, in which each adult citizen received certificates of ownership. The remaining 70% ownership of the enterprises was transferred to a state ownership fund. With the assistance of the World Bank, European Union, and IMF, Romania succeeded in privatizing most industrial state-owned enterprises, including some large state-owned energy companies. Romania completed the privatization of the largest commercial bank (BCR) in 2006. Two state-owned banks remain in Romania, Eximbank and the National Savings Bank (CEC), after an attempt to privatize CEC Bank was indefinitely postponed in 2006. Four of the countrys eight regional electricity distributors have now been privatized. Privatization of natural gas distribution companies also progressed with the sale of Romanias two regional gas distributors, Distrigaz Nord (to E.ON Ruhrgas of Germany) and Distrigaz Sud (to Gaz de France). Further progress in energy sector privatization has been delayed as the government is contemplating the creation of two integrated, state-owned energy producers. However, this “bundling†scheme has been challenged in court and is also under review by the Romanian Competition Council and by competition authorities at the European Commission. Romania has a nuclear power plant at Cernavoda, with one nuclear reactor in operation since 1996 and a second one commissioned in the fall of 2007. The return of collectivized farmland to its cultivators, one of the first initiatives of the post-December 1989 revolution government, resulted in a short-term decrease in agricultural production. Some four million small parcels representing 80% of the arable surface were returned to original owners or their heirs. Many of the recipients were elderly or city dwellers, and the slow progress of granting formal land titles remains an obstacle to leasing or selling land to active farmers. Financial and technical assistance continues to flow from the U.S., European Union, other industrial nations, and international financial institutions facilitating Romanias reintegration into the world economy. The IMF, World Bank, European Bank for Reconstruction and Development (EBRD), and European Investment Bank (EIB) all have programs and resident representatives in Romania. U.S. Agency for International Development (USAID) programs were phased out completely in 2008, except for Small Project Assistance Grants, which are still available through the Peace Corps. According to the National Office of the Trade Register, which measures foreign direct capital registered and disbursed to firms, between 1990 and November 2010 Romania attracted a total of $37.91 billion in foreign direct investment, of which the U.S. represented 2.59%. The actual level of U.S. investment, however, is underreported as much of it flows to Romania through European subsidiaries of U.S. companies. After years of consistently high inflation in the 1990s, Romanias inflation rate steadily decreased through 2004, only to rise again along with high GDP growth rates of 4% to 8% through 2008. The deep recession beginning in late 2008 dramatically reduced inflationary pressures, but the VAT tax hike from 19% to 24% imposed in mid-2010 reversed that trend and pushed prices higher. Stoked also by rising global food and energy prices, inflation hit an annualized rate of 8% at the end of 2010, the highest in the EU. The IMF has been critical of Romanias low rate of tax collection and poor enforcement mechanisms as a medium- to long-term impediment to growth. Tax arrears are slightly decreasing, but Romania still has one of the lowest percentages in the EU of revenues collected, at 33% of GDP in 2010. The current account deficit had been a concern, as it reached 13.6% of GDP in 2007 and 12.4% of GDP in 2008. However, due to the recession, the current account deficit dropped to 4.2% of GDP in 2010. Deteriorating education and health services and aging and inadequate physical infrastructure continue to be seen as threats to future growth. Sometimes a picture is worth a thousand words Conclusion As a conclusion we can say that government’s intervention in the economy can have both a positive and a negative influence on the market. Government intervention does not always end up the way it was intended or the way in which economist’s theories say it would. A fascinating part in the study of Economics is that the law of unintended consequences often comes into play – events can affect a particular policy, and consumers and businesses rarely behave precisely in the way in which the government might want! We will consider this in more detail when we consider government failure. One important thing to remember is that the effects of different forms of government intervention in markets are never neutral thus financial support given by the government to one set of producers rather than another will always create winners and losers. Taxing one product more than another will similarly have different effects on different groups of consumers. A concret example of too much government intervention is the following. Let’s assume that in a time of recession, a government makes and agreement with the banks to lower interest rates and people will start buying houses and other goods on loan. As time goes by, government debt also rises and thus they will be obliged to print out their own money. Printing their own money has a negative impact on the inflation rate and money value will go down. Also, after the recession, the interest rates will go up again and people will end up losing their previously bought goods. Nevertheless in most cases, the government’s intervention proved to be efficient and actually helped the market economy. It all depends on the people that take the decisions and they need to take into consideration any factors that can influence the result of their decision. The European Union provides me the best opportunity to connect with people Europe and to develop my ability of communication. I think is very important to get in touch with different people from different cultures and different countries.
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12/19/2019 0 Comments Perseverance Essay Example for Free Perseverance Essay Perseverance is such a powerful word that has so many meanings. Mastering what this word means, results in such a successful life which yet takes a lot of discipline to achieve. Most peoples summaries of perseverance is never giving up even when things aren’t going your way. Which is correct, but I think about perseverance in references of some of our world’s greatest leaders. Take for instance one of America’s greatest Civil Rights leaders Dr. Martin Luther King Jr. People were so hatred, spiteful, and cruel to this extraordinary man. But did he ever give up when the going got tough, no. Did he just say, “Hey man, this is too hard for me to handle! â€, no. What did he do, He kept pushing through. When people were spitting at him or cursing at him or even burning down his house, he didn’t stop what he was doing. Now you might ask why would someone go through so much trouble. Well that question is easy to answer. He never stopped because he believed in what he was doing. He believed that the dream he was chasing for, was to better the world and to better the human race. That’s why when he was announced deceased everyone commended him on his great accomplishments. He showed an abundance of perseverance. Nothing is better than you. You should never give up. You can take a break, but never give up. Perseverance is a very important and positive character trait to have in your life. You have to have steady persistence in spite of difficulties, discouragement, or obstacles. Failure only occurs when you stop trying or pushing through. You can’t go through life quitting everything that seems to be too hard to handle. If you’re trying to excel in something you have to stick to it, better yourself, and try harder. Someone or something is always going to be there trying to distract you from achieving your dreams and/or goals. Your job as a person is to decide not to be distracted and let go of anything that is standing in your way. You have to have faith, hope, consistency and hard work to accomplish anything. You also have to take responsibility for yourself. If you need help ask for it. Chances are someone has the same question as you but are just too scared to ask. Being optimistic and having self-confidence help you to reach your goals and purposes. Even though people express it more than others, perseverance not only ensures survival but it also ensures success. When we have that burning desire to achieve something, it is a great feeling of accomplishment when the goal we strive for is fulfilled. Unfortunately, throughout our journey, on the road to success there will be a great amount of trials and tribulations standing in our way. Only through perseverance can we conquer those obstacles that make our journey harder. When I used to have trouble with my schoolwork with not turning them in, not doing it, or turning them in late, I was so confused. I used to be unorganized and wouldn’t ask question when I don’t understand the work that was handed to me because I didn’t want to be made fun of. That’s what’s wrong with our generation now. No one wants to ask question because we’re scared of being laughed at or made fun of. I knew that I could do better than what I was doing. I knew that it would only get harder and harder as the days went on and when I collected more and more homework. I came home one day and decided to watch a movie just to ease my mind. I logged on my Netflix account and watched Pixars: Finding Nemo. This is one of my favorite childhood movies. As I watched it I heard the voice of Ellen DeGeneres who starred as Dorothy sing “ Just keep swimming, just keep swimming, just keep swimming swimming swimming.†That’s when my life turned around for the better. That quote had me realize that when the going get tough, just keep going. When things become difficult, just keep going. When life throws obstacles your way, just keep going. When you feel like there’s nothing you can do, just keep going. My life has just began throwing obstacles out me. I know it will only get harder as time rolls on. But I’m confident and I know I can handle it. There’s no obstacle too big that you can’t handle. If you feel as though it is too difficult to handle ask for help or guidance. There will always be someone who’s there to help you. Having a positive outlook on negative situations are the key to success. Having patience is another key to success. Knowing that things take time and nothing comes over night is a good way to think positively. For example: if you had a bad day at work, no one was doing their job correctly and and cooperates are blaming you is a good time to show positivity. You can ask everyone to make sure their job is done correctly and hopefully the next day won’t be so bad. Without perseverance our world leaders wouldn’t explore new lands and human civilization would be impossible. A great number of modern successful international corporations were close to bankrupting, but perseverance enables them to stay and improve their businesses. People who have lack of perseverance either ends up poor job that pays less than minimum wage or with a tremendously bad life situation. Most people are waiting on someone to do their work for them. Relying on the government, law, and some donations but never put in the effort to do their own work. A perseverant person can stand all the difficulties of the environment and survive in the most difficult situations, including nature, unfavourable government, etc. Perseverance to me is the determination in a person to not let anything or anyone stop you from obtaining a goal. It is very important that everyone have perseverance because most people would not make it in life without it. It gives you ethics and makes you a more stronger and more responsible person. A person who is highly intelligent, and a scholarly genius, but is lethargic by nature, and reluctant to diligence, can hardly prosper in life, because he does not know how to use his brain and labour in the right direction. In this world, all the great things have been made or constructed only by perseverance.In human life, perseverance plays a very important role. Modern science, architecture, literature, music-in every sphere of life-perseverance is the root cause of sucÂcess and glory. Shakespeare did not compose such volumiÂnous works just in a day. He had to work hard during days and nights with tremendous perseverance to create such great masterpieces. Therefore, perseverance must be practised from the very childhood so that the noble habit becomes a part and parcel of ones life. With that great asset or goodwill, a man can walk easily on the hazardous road of his lifes journey; and success will be his and his only.
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