Economy

Spending and saving money

Money is a tool we use to achieve a goal. Different people have different strategies for what to do with money.

Some spend everything on consumer goods or recreational activities, such as enjoying a meal in a restaurant or going to a cinema. Others are in a situation where they can’t save money at all. They have to live from paycheck to paycheck. Such people are said to be living hand-to-mouth.

Other people save money for a rainy day. They can keep their money at home or in a bank. Still, other people invest their money. They invest in safe places such as properties or precious metals, or stocks of large companies. Some invest in risky places such as cryptocurrencies. They hope to gain a large return on their investments.

The true power of a passport

Most organizations, such as the widely recognized Henley Passport Index, believe the strongest passports are the ones that allow their citizens to enter more countries without a visa. They rank Singapore as the most powerful passport in 2023 because it provides easy access to 194 countries.

But is this the best way to decide how strong a passport is? Global Citizen Solutions has developed a more detailed but slightly different approach. The Global Passport Index analyzes how desirable a country passport is, considering the following:

Changes in the job market

In the US, the labor market is slowing down. Around 250,000 workers found new jobs and the unemployment rate fell to 3.4%, last April.

However, few jobs are hiring at the moment. Employers are looking for highly skilled individuals and cutting unnecessary jobs. Some of the industries hiring are professional and business services, health care, leisure, and hospitality. There is also high demand for specialized construction contractors and food service experts. Professional and business services had the biggest increase, adding 43,000 jobs. Employees in this industry made an average of $40.20 per hour.

Do we need to replace the GDP?

The standard measure of economic performance, the gross domestic product (GDP), measures the value of goods and services produced within a country over a given period. However, the GDP doesn’t measure social factors like income inequality, domestic violence, drug addiction, or the impact of today’s actions on future generations. It also ignores sustainability and environmental destruction. It’s a very short-term view of market factors without respect to what’s happening on the social and environmental levels. As a result, the GDP gave us no warning of the impending global financial crisis in 2008.

But we continued to base our economic predictions on that metric. And it began to show economies recovering and growing—so everything’s going well again, right? But what if we factor in social and environmental realities?

Visuals: The world gets better

The Conversation, a publication that promotes academic debate, posits that not only do many people across advanced economies have no idea that the world is becoming a much better place, but they actually think the opposite. This is no wonder, when the news focuses on reporting catastrophes, terrorist attacks, wars and famines. These subjects simply make for more exciting coverage than stories about how more than 300,000 people a day get access to electricity and clean water for the first time.

The Conversation states that globalization has helped lift hundreds of millions of people above the global poverty line.

Take a look at the three graphs below and discuss their meaning with your teacher.

New Zealand new trade agreements

The UK agreement

A new free trade agreement with the UK allows New Zealand to remove export tariffs during the next 15 years. This deal promises a GDP boost of up to $1 billion.

On top of the economic elements, the agreement includes conditions for the environment, tackling climate change and creating equity in economic advancement. According to New Zealand Prime Minister, Jacinda Ardern, it is the country’s “first bilateral trade agreement to include a specific article on climate change”. 

Another unique point of that agreement is a separate Māori trade chapter featuring the acknowledgement of the relationships between the Māori people and the British, who colonised the country. In addition, the chapter included the protection of Ka Mate haka, in which the UK promises to protect the famous ceremonial dance. 

Visuals: the price of war

The war in Ukraine has had a vast impact on the whole world. In addition to the humanitarian catastrophe, it has also caused increased rates of inflation all over the globe. 

This rise is mostly linked to increases in food, energy prices and disrupted supply chains. The impact is affecting the poorest countries the most. 

Look at the graph below describing the projected inflation rates for several countries, and discuss it with your teacher.

The idea of Universal Basic Income

According to Vox Media, the idea of a basic income was, for decades, something of a policy fantasy. However, the last few years have seen it become less fringe and more mainstream. In fact, we now have many limited basic income programs running around the world.

The general idea—that the government should give every citizen a regular infusion of money with no strings attached—has been around since the 16th century. However, the COVID-19 pandemic has given the idea fresh momentum, with the crisis generating significant financial loss and uncertainty.

Critics worry that UBI will disincentivize work and hurt the economy. They also say that it is unaffordable for the government to pay every citizen enough to live on, regardless of whether they work. So far, the evidence has not supported these critiques.

Will US hedge funds go bankrupt?

An interesting situation has emerged in the American stock market. It has caused the stock of several companies to be extremely volatile.

Hedge funds in the US have opened so many short positions—basically, they have bet that stock prices will fall. Now it is believed that they have short sold more than the number of shares available on the market.

However, savvy retail traders noticed this. They started to buy up these shares in large volumes in the hope to push up the price.

Trading has been so aggressive that the share prices have wildly fluctuated and multiple brokers have been refusing to even allow purchases. The situation has gotten lots of attention, with multiple members of congress showing interest in the behaviors of brokers and hedge funds. Some have called for congressional inquiries.

It isn't clear what the aftermath will be. Only time will tell.