15 Feb 2010

Sample Essay: The Globalisation of Capital

The globalisation of capital is about movement.  Capital is a moving entity, with a value system based, not solely in one country, but universally defined as attached to industry in more than one part of the world.  Capital has the ability to move, so that even though factories whose homeland endorses a company in another country, the capital can exist bilaterally.  Capital can also detach itself from one particular owner or activity; though it is mainly attached to a specific type of owner or activity first and foremost.  The globalization of capital exists in the secondary nature of money; that is, it’s inherent ability to become mobilized.  In this paper, an analysis of the globalization of capital will be examined from its traditional roots in Marxism to its more, or less, modified roots in modernism.  Capitalism is about ownership.  This paper will explore the source of ownership and the history that ownership has undergone to come to its current stage.  Also, a prediction of the future of the globalization of capital will be given, and its predetermined state defined by labor and by the country in which capital is attached.

In analyzing the current state of the globalization of capital the history of feudalism, and capitalism will be imparted.  Marx himself will be given a brief glance, as his theories focuse on “…capital’s inherent drive for self-expansion and technological innovation on the one hand and its tendency to exacerbate social inequality and instability on the other” (Hudis, 2001).  Globalisation itself will be dissected and its fundamental paradoxes and successes will be instrumentally examined and the idea of hegemony will be brought to light in the discussion of the WTO (World Trade Organization).

The capacity for monetary funds to overwhelmingly define a nation, let alone the world, is one which entails great power.  In society there exists the capacity for nation states to discover what to do with this power and how to best organize the funds by which it can be sustained.  This alone will aid in the discovery of what the globalization of capital is at its base, its roots, and its future.  The following paper will yield the idea that in labor and class relation between worker and capitalists there is the potential to exert the funds by which power is held, and capital can be the key to the pursuit of autonomy.

Marx

To discover what globalization of capital means, an overview of the man whose ideas flood the gateway of capitalism must be undertaken, and examined.  Though Marx himself wasn’t a capitalist, his writings on capitalism are still widely held in view today.  Capitalism is mainly and chiefly about an inherent impetus for technology and social innovation, as Hudis writes in his 2001 article, Marx in the Mirror of Gobalization, As Marx saw it, capitalism is not only about the production of material goods and services, but also about the production of value.  Labor, in Marx’s view, is the source of value.  And the magnitude of value, he argues, is determined by the amount of socially necessary labor time it takes to produce a given commodity.  Marx held that there is a continual contradiction between these two purposes:  producing for material wealth and producing for value.  As productivity rises, more goods are produced in the same unit of time, so the value of each commodity falls.  The increase in material wealth corresponds with a decline in the magnitude of value-that is, production costs fall and prices tend to fall as a result.

In different countries the labor market presents itself so frugally which in turn harbors other countries to suffer from the low cost of goods being imported (China is an example of this, but their situation will be discussed in length later on in the paper).

In the struggle of dominance and power, countries are prone to replace value with numbers, which causes a nationwide if not worldwide effect.  In America this is overtly true, as the market system prizes surplus product made cheaply rather than valued goods made with worth.  Marx’s statement about wealth collides with the ideas of value.  In the contradiction, in economy terms, wealth overshadows value to an extraordinary degree and what results sometimes is a struggle between trading countries in either the import of cheap goods or the export of high quality goods.  The decline in value in goods, in capitalism, is a risk.  The funds needed to support the production are in jeopardy when trying to maintain a high production output.  To counteract this problem, a capitalist will try to advance productivity, and since the greater the amount of export produced, the better the opportunity to receive a high dividend.  As Hudis writes,

The best way to increase productivity is to invest in labor-saving devices.  The resulting growth in productivity, however, reproduces the initial problem, since the increase in material wealth leads to a further decrease in the relative value of each commodity.  Capitalism is thus based on a kind of treadmill effect, in which the system is constantly driven toward technological innovation regardless of its human or environmental cost.  The restlessness and drive for innovation that characterize contemporary high-tech capitalism was long ago anticipated by Marx.

In Marx’s view, the unremitting improvement and productive increase ultimately proceeds with blatant discount of national borders.  The ingenious of capital was that it created a world market.   As Hudis writes of Marx’s ideas on capital, “National restrictions on the movement of capital would eventually have to be lifted, he argues, because capital must constantly find new markets to absorb its ever-growing productive output”.  This process then leads to the pinpointing and centralizing of capital, and a ‘relative immiseration’ of the mainstream population.  The essence of capital is to increase production by ‘labor-saving devices’ (which could mean through technology or machinery to cutting down the cost of workers through foreign market places).  Due to the fact that workers do not own capital but do own their own initiative and labor power, social wealth conglomerates in the hands of less and less people.  As Hudis states on this subject, “Many consider this confirmed by the growing inequities that follow from the globalization process, as indicated by the fact that 225 individuals now control more wealth than half of the world’s population”.  What testifies to this factoid is that labor saving techniques or dead labor induce in the population a level of comfort that their jobs are being done for them which leaves them more leisure time, which in turn aids in the economy because the workers use their money to insure that their leisure time isn’t thwarted.  This is true for most capitalist societies, and is especially prevalent in the United States.

In the interest to returning to the idea of globalization, Marx and Engels write,

“Modern industry has established the world market.  All old-established national industries have been destroyed.  They are dislodged by new industries whose products are consumed in every corner of the globe.  In place of the old wants, we find new wants, requiring for their satisfaction the products of distant lands and climes…All fixed, fast-frozen relations are swept away; all new-formed ones become antiquated before they can ossify.  All that is solid melts into air” (From the Communist Manifesto cited in Michael Elliott’s 2001 article, The Wrong Side of the Barricades).  In this statement, the idea of mom and pop shops, of locally owned businesses, have fallen, and the idea of world trade and major corporations capable of mass trade, have risen up, and typically stayed at the top of the economy game.

History/Analysis

The history of globalization can best be cited in Marx’s era.  Globalization served to unfetter the degree of human potential, and the despots of the time such as priests, and other rulers no longer held power.  It was in the vast wealth of technology that promised a surplus to all cultures of people, and that which saved them from the degrading rural life.  It was trade that refocused the idea of where power was held and which altered greatly the difference between states and countries, and that offered the gift of nationalism and liberty.  At least, that is how globalization started.  Now, globalization is a dichotomy in terminology and practice, it offers inferior men while also providing those men/workers with the chance to revolt against capitalism.  The Unites States itself, although considered a great leader in power, cannot be so considered when in fact its economic and political resources are spread out so widely through the world; in fact the modern world does not have one source of a definite power center.

So, in the history of the globalization of capital there is also a history of exploitation.  The intricacies of trade also have in their wake a wide spread geographical playing field.  It was first with the Chinese trade routes in the 15th century that the true physical concept of globalization was put in record books.  The Chinese however, dropt this globalization idea during the Ming dynasty and it was the Europeans who quickly took it upon themselves to become the harbingers of globalization.  (Wolf, 2003).   In the roots of globalization is the concept of technology and its advancement as key to altering the course of the world’s economy.  As has been aforementioned, the human workforce is rapidly becoming dispensable with the oncoming investment in machines to do the labor more quickly, and more cheaply.  This, throughout history, has lead to the decline of cost of product.  Transportation and communication have also become more than affordable, as Wolf states, “…natural barriers to trade and communication are far lower than they have ever been before.  The railway, the steamship, the refrigerator and the telegraph created the opportunities for the integration of the 19th and early 20th centuries”.  With a rapid transition, cost production quickly fell to popular affordability.

To return to capital, and the history therein, the idea of feudalism can be quickly glanced over.  Feudalism gives a harrowing example of labor in a business type relationship.  The ideas of labor that existed in that era are still to an extent alive today.  The transforming characteristics that are prevalent in labor is monetary compensation; and this definition holds true throughout the centuries, as John Holloway states.

Value, in the form of money, is the new liquidity of the class relation. It is the fact that social relations come to be mediated through money that makes it possible for the worker to shift from one master to another, in each case selling his or her labour power in return for a certain amount of money. It is the fact that the lord-turned-capitalist can convert his wealth into money that makes it possible for him to abandon one group of workers and move to another, and to participate in the global exploitation of labour.

Cheap labor allowed globalization to maintain a certain prestige of power because, the labor in turn allowed for cheaper transportation which in turn lead to a high demand of product across the globe.

In the globalization of capital, globalization will only become more widely accepted as the new economic mandate because the new device of the computer is permitting trade across borders quickly and with ease; the internet also has brought down the cost of communication to almost zero (Wolf, 2003).  Going back to the idea of exploitation that this section began its inquiry, it is with exploitation and the cheap labor force in either immigration or companies transferring to lower cost production countries that still enforces the negative side of the globalization of capital.  The world will not be less, civilized, cultivated or globalised.  The vastness of opportunity afforded by globalization despite its exploitation will continue to grow because demand is high enough.  In the interest of dominance, globalization continues, as Wolf states, …protection against imports of manufactures intensive in the use of low-wage labour was an obvious way to reward the industrial working class.  Protection could also be justified for militarily essential products, such as steel.  Policy-makers also wanted an economy capable of fighting long wars.  This led to government involvement in the development of the ‘national economy’- an abstract entity that belonged to the nation state, collectively, not to its people, individually.

The history of globalization entails the development of trade.  Ending laissez faire, immigration and free trade all resulted in universal suffrage, the mobilization of armies, and industry (in advanced countries).  Especially in industry is found the unmitigated growth of population, and technological advancement. In postindustrial countries, the retarding of the three aforementioned items paved the path for trade unions, labour market legal protection, and welfare states (Wolfe, 2003).

It is in the First World War that the liberal global system was tested.  In this war, the increase in power affected all post-industrial or industrial countries.  In war, the ability for nations to be innovative is unceasing; in the First World War the innovation was the first coordination of national economic development.   Of this subject, Wolf states, Lenin explicitly recognized the German war economy as ‘a complete material preparation for socialism’.  This new form of planned economy subsequently became the model for all the developmental states of the post-colonial developing countries.  The First World War also greatly increased the sense of obligation to the citizen-soldier.  Welfare states were bigger in the inter-war years than they had been before the war, just as they were bigger in the 1950’s than before the Second World War.

During war, the ability for a nation in becoming vested with capital is surprising.  During times of war, the economy is at a high, because jobs are needed and during the First and Second World Wars, the labor market turned to women as the men were fighting.  The rate of employment then was also in great surplus as most men were employed through the war and those left were employed in industry for developing and catering to wartime needs.  Industry during war then was in great demand for the export of war machines and war related equipment was in high demand in same-sided countries.  War, then, extended the need for the globalization of capital.  This effort however did not go unmitigated.

With the surplus of jobs, of capital and of globalization of capital there comes great responsibility.  The war afforded jobs, and wealth, but all that increase in revenue could not go without restrictions.  In this regard capital had to surrender to certain specification, as Wolf states,

By the 1930s the combination of collectivist ideas, protectionist interests, universal suffrage, war, monetary disorder and economic depression had destroyed the assumptions, beliefs, policies and practices that had underpinned the liberal world economic order.  The final blow was a breakdown in international political relations, as the great powers created economic systems that reinforced their own power and shielded them from the power of their rivals.  Multilateralism was replaced by bilateralism, non-discrimination by discrimination, free trade by comprehensive protection, freedom for capital flows by exchange controls and free movement of labour by rigorous restrictions.  National socialism fascism, militarism and communism were seen as the waves of the future, loathed by some and love by others.

The restoration of the world after the wars depended greatly on the advancement and capabilities of a country to illicit trade.  The globalization of capital became very strong in the proceeding years of the war.  Globlisation of capital aided in stabilization of economy; this happened through labour employment, trade agreements and control over immigration.

The focus of the world after the wars was directed towards trade and currency conversion.  In the later half of the 20th century, particularly the 1970s through the 1990s, there was crises.  The crises came in the form of a fixed exchange rate and domestic stabilization (Wolf, 2003).  In 1971 it is noted that the Bretton Woods system of exchange was abandoned which led to monetary expansion due to inflation (oil).  This then led to the floating exchange rate and inflation control.  Though capital can be seen as lost in the exchange rate, it also affords necessity in determining the appropriate amount of exchange for goods or labour, despite qualms to the negative effect.  In defining the new exchange rate and the discussion and sentiment other countries had towards such a rate, Wolf states,

Countries that could not tolerate floating rates, notably in Europe, decided that there was a need for a new exchange rate arrangement based on the principle of Europe-wide stabilization.  Thus was born, also in the early 1970s, the process that led three decades later to currency union.  Developing countries meanwhile clung as long as they could to their exchange rate pegs, almost all of them against the dollar.  When combined with excessive borrowing by governments and incompetent liberalization of controls on capital flow, the result was to be a series of shattering exchange rate and financial crises in the 1980s and 1990s.

Exchange rate then is detrimental to the concept of the globalization of capital.  Capital is dependent upon the rate by which it is given, and this rate was in need of a leveling ground after the wars.  So that one country wouldn’t have monetary dominance over another country, the exchange rate was put into force.  Trade then, became not so dependent upon unmitigated exchanges, but became more about increase in product output.

Developing Countries and the Exchange Rate

When the Chinese sailed across their trade routes, the idea of money wasn’t necessarily involved in profit, but rather the exchange of goods was more in lieu of their desired gain.  After the wars, across the globe, the devastation of war was felt on the defeated side, as well as the side that invested their money, and labor in war machines, and now that the war had come to an end, their investments were made nil, and debt settled into the countries woes.  On this topic Wolf states,

The move to floating rates and domestic monetary stabilization made it easier to contemplate the abolition of exchange controls.  But this move, which was to become universal among the advanced countries by the early 1990s, was also consistent with the advance of information technology and the general move towards reliance on market forces.  For the high unemployment, high inflation and lower growth of the 1970s did more than destroy faith in naïve Keynesianism, it also created increased interest in market solutions.  With Ronald Reagan and Margaret Thatcher in power in the US and UK, respectively, there began what amounted to a market counter-revolution in the advanced economics.

The liberalization of exchange controls helped to enable the devastated, war-ravaged countries and to regain their economic power.  The history of the globalization of capital carries with it the analysis of inflation, exchange rates and liberalized exchange controls.  There cannot be a modern view of the globalization of capital without its history put into focus.  Today, the trade in goods and other services is more integrated than in its preceding history.  World trade today has doubled, and barriers (both naturally and man-made) have collapsed.

The gross domestic product (GDP) has even more today, than in its history, been increasingly preceded by services (Wolf, 2003).  This is thanks to war mainly, and the continual cheapness of all labor.  The trouble with services is that it is often times very difficult to trade.  The decrease in goods however is still predominately seen across the globe thanks to the steady increase in productivity.   Trade then thrives in areas where goods are the cheapest and the exchange rate follows suit.  The globalization of capital is relevant to the free labor movement and the cheapness of labor because of the mobility of people, especially in countries where immigration is not so restrictive, as Wolf states, “A German bus driver is paid thirteen times as much as a Kenyan one, for example, in terms of purchasing power.  These controls have locked a large part of humanity into failed states and economies, with inevitably adverse consequences for their incomes and so for global inequality.  The emergence of a global market for skilled people may be making this even worse since the wages of the unskilled depend heavily on the presence of the skilled”.  It seems that the globalization of capital would defect the ideas of impoverished countries, but with trying to find the cheapest labor to produce the most product, such ideas are still prevalent around the world.

Mobility & Capital Today

The idea of the globalization of capital is one that is mobile.  Trade agreements, communication technologies and cheap labor (often times overseas) all enable capital to be a mobile entity.  The foreign exchange rate market for example has a turnover rate of over a hundred trillion dollars a year (Wolf, 2003).  This is thanks to mobility.  Investments, stocks, portfolios, and bonds are all based globally due to the technological advancement of the Internet.  International relations need to be harmonious in order for capital to maintain its mobility.  Wolf gives a dissection of the fundamental changes in international relations in regards to trade, capital and globalization,

First, there is a single undisputed hegemon, the US, and little chance of a war among great powers in the near future, except perhaps between the US and China.  But China is not, at present, powerful enough to be a genuine rival of the US.  Second, all the great powers have abandoned the atavistic notion that prosperity derives from territorial gains and plunder rather than internal economic development and peaceful exchange.  Indeed, the striking feature of today’s war against terrorism is that all the world’s great powers are on the same side.  Third, all the great powers share a commitment to market-led economic development and international economic and political integration.  Fourth, the global institutions and the habit of close co-operation reinforce the commitment to cooperation.

Trade then, and by extension the globalization of capital becomes one in which the gains for the country outweigh the future threat of war.  The stability in a world market comes from the continual agreement between countries to maintain stable ties with one another: cooperating in exchange rates and product output does this.  By combining the wealth of each nation through the exchange rate and then allowing either the country, the business or the individual their own rights to trade, there begins to exist hegemony throughout each person, institution and state.  This in turn allows for peace, and in the idea of the globalization of capital, each trading organization has the opportunity to come into their own wealth with regards to the free trading laws.

Now, there is found the disappearance of the nation-state and the appearance of individual economy, to some degree.  The World Trade Organization allows the individual their own rights in trade and interest in capital.  Globalisation is dependent upon financial structure, and the development of global credit; it is also becoming the new grounds by which oligopolies are becoming wealthy (that is multinational corporations who stand to gain the most in the globalization of capital because they produce more product for less money).  In the globalization of product as well, a new power base has emerged in banks, and the new freedom of capital has lead to poverty in un-industrialized nations (Rikowski, 2001).

Conclusion

In conclusion Rikowski states,

…economic factors such as the deregulation of labour and financial markets, the ‘communications revolution’ through the Internet, the growth of e-commerce, knowledge as a leading factor of production, and many other economic developments are brought in. The speed, intensity and volume of economic transactions increase, and the markets never sleep. The point is that in this form of analysis these technological and economic trends, together with the rise of transnational institutions regulating world trade, finance, competition and investment, are seen to be undermining the political integrity of the nation-state. Since the integration of the old Eastern Bloc countries and China into the world economy, global capitalism has become a reality.

Therefore, the globalization of capital is dependent upon the trade formations between countries, which in turn enable other countries to increase their revenue through trade.  Capital, though mobile, depends on a home base to ensure its own exchange rate and labour costs.  World finances aren’t dependent upon governmental control mainly but instead the WTO sets regulations and by these regulations hegemony in monetary regards is being the forerunner of national relations.

The globalization of capital is the ability of companies to gain revenue in a foreign market place.  By this, the nation-state is losing power and the power is transferring hands from government to trade unions and even down to the individual who trades on eBay.  The Internet is the driving force of globalised capital, and cheap communication, trade, and technology.  More and more, trade is becoming less and less expensive.  Turning any type of activity or products of value into a commodity demands labor (cheap labor) and the idea of a high yield profit from a high yield investment is the center definition of globalization (Rikowski).  In the end, the globalization of capital will serve to unite the world in monetary terms.  The globalization of capital gives the free trading world the opportunity to become self-made, and gives countries the opportunity to become wealthy after devastation (either by war or natural affects).

Work Cited

Elliot, Micheal.  The Wrong Side of the Barricades. Time Canada.  Vol. 158, Issue 3, p19.         September, 2001.

Holloway, John.  Capital Moves. Capital and Class, No. 57.  pp.137-144, Autumn, 1995.

Hudis, Peter.  Marx in the Mirror of Globalisation. CYREV: A Journal of Cybernetics   Revolution, Sustainable Socialism, and Radical Democracy.  Issue 7, Spring 2001.

Rikowski, Glenn.  Transfiguration:  Globalisation, the World Trade Organization and

The National Faces of the GATS. < www.libr.org/isc/articles/14-Glenn_Rikowski.html>

Wolf, Martin.  Is Globalisation in Danger? World Economy.  Vol. 26, Issue 4, p.393-411, April,          2003.

18 Jan 2010

Sample Essay: New Zealand

The Silver Fern is a reflection of New Zealand’s acceptance and celebration of nature in their everyday life. It acts as an unofficial national emblem being used in lieu of various national emblems such as the Coat of Arms and the New Zealand One Dollar Coin. It is also used by various sports teams such as the Silver Ferns and All Blacks. It is a part of the New Zealand national identity and a readily identifiable symbol in New Zealand.

Agriculture is an important part of the traditional New Zealand economics.  Carried out primarily by the Maoris, Agriculture was a primary occupation of the pre-European New Zealand.  When the first settlers of Captain Cook arrived, the natives were willing to embrace them due to the reason that the latter would provide New Zealand with a new social and political perspective in the modern world.

The tribes of New Zealand respect their history and are firmly devout; they have a certain respect regarding agriculture. They have remained steadfast in their efforts to sustain a healthy economy and lifestyle, and religion and agriculture have been their means for attaining their goal.  They were able to enhance their farming and hunting capabilities.  It was not until the first settlers had arrived, that they were finally introduced to a new perspective of the need for diversity of having a new economy with foreign investors. Furthermore, they realized that they would be able to interact with traders in order to have an adequate relationship with their agricultural background.

For example, from the standpoint of a farmer, he would be able to have a new agenda from obtaining good returns on his crops which would lead to the eventual prosperity of his family. Instead of being happy with the meager returns from traditional avenues, they would have a new government which would establish a new treatment of his or her land, and bring in good and just trade and barter policies, which are necessary to sustain a beneficial economy.  The merchants for example, in the 18th century, had wanted to utilize their land, not for the prosperity of New Zealand, but to use it as an import and export industry, in order to benefit from certain agricultural phenomena which were exotic to the merchants and the Europeans. Furthermore, the settlers began to realize that New Zealand could in fact be a frontier in which it could setup colonies, and treat it as if it were the British Isles.

An author explains this situation and its impact on New Zealand in its future relations with the foreign market:

‘New Zealand welcomes and encourages foreign investment without discrimination. The Overseas Investment Commission (OIC) must give consent to foreign investments that would control 25% or more of businesses or property worth more than NZ$ 50 million.’

In this respect, we can see that New Zealanders had a new inspiration with which they were to view this rise in their economy and population growth. There was also intermarriage, between natives and settlers which had promoted a new way of adapting to this society, and being able to establish relationships with foreign settlers. This is an important aspect to realize, because New Zealand would have a new diversity which played a role in providing for the proper form of education and urban planning.  With regard to economics, it would establish a foundation for their land to prosper alongwith the industries which had embraced the frontier of New Zealand.

In 2007, New Zealand has experienced a rise in their population growth – for example, the increase in the number of immigrants which has been imperative, since the 18th century, for the establishment and growth of their economy. However, since the settlers’ arrival in New Zealand, the trade industry has still remained an industry which these people have used, as their main identity and asset, in establishing relationships with other foreign countries; and from these relationships, they have been able to have a new policy on New Zealand’s agenda.

We can see this agenda as a new form of understanding in the social and political stance. Yet, they have still remained aggressive in their handling of political agenda and in its relationship with foreign currency in order to better their economics.  They have a different approach in analyzing the ways in which this could be interpreted.  Once again, from this standpoint, we can see these people have a new agenda in which they were able to carry forth and not be hassled by the strict rigors of their economic agenda which have marred the import and export industry.  In recent times, they have tried to expend their capital by including other industries which would help to establish New Zealand as a country which has a diversified revenue portfolio. Furthermore, they have still been able to handle their import and export industry, which is native to the prosperity of this island-nation.

New Zealand’s economy presently suffers from huge deficits year after year, a sure cause of concern to those who hold the reigns of this bustling economy. According to a public source:

‘The large current account deficit, which stood at more than 8% of GDP in 2000, has been a constant source of concern for New Zealand policymakers.  The rebound in the export sector is expected to help narrow the deficit to lower levels’.

New Zealand still relies on to this day, on its import and export industry because of its locality. The country has been able to cultivate its land in order to raise the market value of their agricultural heritage.  Author Fredrick Wood, in his book Understanding New Zealand (Wood) explains:

‘From the country’s earliest days, for instance, saw-milling has been an important industry; and many sawmill workers rarely see a town, great or small.  They pursue timber in receding forests up the sides of mountains.’

We can see that New Zealanders have the advantage of having an exotic frontier, and have learned over their history to utilize their natural resources in establishing a new perspective on how to formulate their trade policy.  For example, foreign relations currently is the most important aspect for their economy to maintain a proper market value, because they rely on this in order to strengthen their import industry.  We can see this has an effect on the surplus of immigrants who have been able to reside in New Zealand the last ten years.

Furthermore, New Zealand has been able to sustain a new mindset in which they could be seen as establishing a healthy wave of influence in this political arena.  For example, the rules and regulations on the basis of which they have been able to diversify their growth and still maintain a coherent national and international identity is indeed noteworthy, considering that there has been little room for them to have prosperity in this region.

Because of their relationships with other countries, they have been able to consider a new perspective in establishing a foreign policy. Furthermore, under these circumstances, New Zealanders have been able to have a new understanding with which they would be able to set forth new social and political goals, establish a different agenda and have a new platform on which they should conduct their business when dealing with other foreign nations. Jason Wai from BERL explains in Immigration delivers government $3bn surplus:

‘BERL determined that migrants contributed $8.1 billion in income tax, GST and excise duties whereas they consumed $4.8 billion of education, health and welfare.’

If New Zealanders will learn from their tradition and understand what these traditions mean in themselves and for the ethos of the business policy, we can see them begin to have a development in which they will be able to expand their trade policy and incorporate their trade policy in order to strengthen their economy. The Economist explains the importance of the New Zealand:

‘A strong currency can be a curse for exporters, however. In New Zealand’s case, the carry trade has given the kiwi dollar an extra upward push. With the yen nearing five-year lows against the American dollar this week, such trades may well continue… As rising interest rates in some countries exacerbate the differences between high-yielding currencies and low-yielding ones, such as Japan’s, New Zealand’s predicament may become more familiar. Most nations with strong currencies should refrain from following its lead. After all, peashooters are of little use against a determined foe.’

New Zealanders have lately discovered their new international identity, and they would be willing to have this identity reflect their own procedure and their trade policies. According one author, this implies that New Zealand must diversify its trade policy in order to conduct business and reach the business decisions that will come to influence them.

If we talk of turnkey projects, we are able to see the numerous appeals which New Zealand would have on private investors in developed countries – a venture capital firm in America could be considered an example. One of the main reasons they would have this appeal is because New Zealand has already set up its own identity as a place which cultivates exotic things which are only found in this country. Because New Zealanders have learned to embrace the history of their culture, they have used this as an advantage in establishing themselves with their agriculture and being able to have a trade industry which is self-sufficient and reliable without the support of other countries. Jason Wai from BERL explains:

‘BERL’s report shows a defined fiscal impact of New Zealand’s resident migrants on a set of government activities, and gives comparable figures for the New Zealand-born population. The report also summarizes the fiscal impact of migrant subgroups by the duration of residence, region of birth and region of residence.  The study examines occupational and study characteristics of migrants, and considers migrants’ long-run impacts on the economy.’

We can see that New Zealand’s economy would grow from these relationships and industries which they have cultivated. However, a new political goal has transpired in New Zealand in the last two years; though New Zealand has had the lowest employment rate, a country that must deal with a rise in population, must also reconfigure its trade policy in order to establish itself and not have a problem with new employees of this industry – for example, a political demonstration or a labor union strike is more probable as their rise in population has transpired. Wood explains, the current standing of New Zealand, and its government:

‘The British Common­wealth is a developing institution and is governed by custom and personal understandings rather than by law. Its habits can be changed overnight to meet new needs. It has many sides, and looks different when observed from the different dominion capitals.’

Therefore, New Zealand must establish firmer labor unions and have numerous divisions which are justified to shoulder responsibility in handling these affairs. From this context we can see them have a new division with the help of which they would be able to have a grasp of the facets in labor regulations and still maintain their economy and currency. Also, from the example of China, we can see that this nation has let its currency fall, in order for it to have a stronger export industry because the price of manufacturing would have competitive rate with other nations in this world. It is uncertain if New Zealand would like to venture here, because they have to maintain a strong enough economy, by establishing their relationships with other nations in order to promote the quality of their export industry.

In recent times, China which has been used as an example, is having their export industry back fire on them, because of their low labor and manufacturing cost has caused the quality of its work to suffer.  Furthermore, in this argument, we can see that New Zealand has had to deal with international relations in order to establish itself as a nation which has impacted the global export industry, which then could be seen in connection with their consumer goods.

New Zealanders have been able to maintain the market value from the trade industry, therefore they will have to continue establishing new relationships with the foreign market, in order to see their economy maintain its value, and not necessarily increase.  An example of this could be seen in the tendency to have a new policy and reinforcing that this policy does not conflict with the future of New Zealand’s market of export goods, which it would have to sustain from keeping their currency competitive from the likes of China and India.

In this predicament, New Zealanders have been able to remain on their own, by cultivating the natural resources in order to further their economy and keeping their inflation rate at a competitive level. If New Zealand’s government is planning to expand the export industry into a new frontier, than it would have to be mindful of having to divide the classifications of labor or lower classes with the median earned income, because this could result in a demonstration if the workers are against certain conditions which the government have chosen to disregard.  There is statistical evidence of the climb of income which New Zealand has experienced, and its relation to other developed countries, most notably the U.S.A.  This evidence of the average income in New Zealand is relative to their export industry, because it proves the correlation between a rise in their economy, and also the rise in the price of manufacturing and goods.

New Zealand business is affected by two types of cycles – the classical cycle and the growth cycle. The classical cycle concentrates on the fluctuations in the absolute levels of economic activity, whereas growth business cycle concentrates on fluctuations in the relative economic activity. (Kim, Buckle, Hall)

As New Zealand has enabled itself to have a new agenda in its political stance on trade policy, we can see their economy grow with the numerous facets which would influence its relations with foreign investors.  Furthermore, now that they have been able to forward this policy, in order to incorporate their identity with the quality of manufacturing, we can see this economy begin to have a social and political structure.

In the light of this evidence, we are able to see New Zealand have a social impact in the ways in which it would begin to develop its industry through the use of trade and also from attempting to raise their currency in order to ensure not only diplomatic relationships but also those with private investors and venture capitals from other countries for the sake of their export industry.

We are able to understand the international relationship in which they have been able to resurrect and in which they have been able to safeguard by increasing the quality of the environment. New Zealand has had to develop as a country; they have been able to sustain their healthy economy through their trade policy. With regard to their trade policy, we can see this demographic have a new social order. Their currency value would have to be safeguarded in order to maintain its international relations.

David Norman in his article US & Australia continue to grow, explains New Zealand’s current labor situation:

‘Previous reports of the loss of 4,000 jobs in the US in August have turned out to be erroneous. Revised figures indicate that in fact 89,000 jobs were added during this period, almost as many as the 93,000 in July. September job growth is even better, up 100,000. Unemployment is flat at 4.7%, with growth in health care, food services, and professional and technical services, and declines in manufacturing and construction.’

New Zealand has started carving its identity, the New Zealanders were also willing to have this identity not conflict with other policies, which would have caused it to have a new approach and interpretation in the ways in which it could be seen resolving the issues of its trade policy. We come to the conclusion that they have been able to sustain a new ground of cause and justification. We are able to reach the conclusion as to what this economy has now implied, and in this reference, we can see their economy have a different factor and an economical trend.

Ultimately, so far as we are able to have a new agenda in this regard, we are able to see their economy grow with the numerous aspects as to what this may now imply.  Furthermore, now that they have been able to forward their economy, we can see this trend begin to have a social and political agenda. New Zealand has been able to aid its economy growth by maintaining a structure and trade policy and the growth is poised to continue.

Works Cited

Björn, Bjerke. Business Leadership and Culture: National Management Styles in the Global Economy. Edward Elgar: London, 1999.

Kim, Buckle, Hall. “Key Features of New Zealand Business Cycles.” Economic Record, Vol. 70, 1994.

Norman, David. “US & Australia continue to grow” BERL. Retrieved on 14 December, 2007. Available on <http://www.berl.co.nz/content/worldeconomy/unitedstates/896/australia-continue.aspx>

Wood, Frederick. Understanding New Zealand. Coward-McCann: New York, 1944.

“A Warning Shot.” The Economist. Updated on June 14th 2007. Retrieved on 14 December, 2007. Available on <http://www.economist.com/displayStory.cfm?story_id=9340724>

11 Aug 2009

Sample Essay: Southpark IV Case

Basically, the investment that Laflin wants to acquire is a good one since there is a positive net operating income that results even after his conservative estimates and added deductions to ensure that his projections can absorb unexpected incidents and lower results in the operating income that was expected in the first place. The idea of whether or not the investment is a good one basically depends on the perception of his fellow investors if the kind of returns shown in the financial projections is acceptable to them. Take note that it depends on their opinion and not on the fact that they are actually making a good investment in the first place.

The assumptions made by Laflin in his calculations for the investment includes a potential loss of rental income at 5%, a management fee of 4% and a yearly expense intended for the rehabilitation of the structure at  $15,000 with the net operating income of $68,060 all in all. His final operating cash flow from the operation after taxes is $36,000. The changes that I would make in his assumptions are to include the depreciation costs of the buildings which is $38,095 on a 39 years basis. He can then ad this deduction on a per year basis to his projected income on a per year basis. Also, his estimated vacancy loss at 5% should also be changed into the lowest possible rate that the competitors are experiencing. Since there is a competitor in the area that is experiencing a vacancy loss of 65% at the lowest it would be conservative enough to use the next lowest vacancy loss at 47%. This is used in order to come up with a more realistic projection as compared to the previous 5% that Laflin had used in order to project his income. Another major change in the projections that Laflin had used is the kind of rental income that he assigned to his units. He should change it to the currently lower rental rates as opposed to his previously higher rates. This should have a major impact on the kind of calculations that he previously came up with. This can mean the definition whether or not his intended investment is going to be an attractive one or not based on the revised conservative estimates as compared to his previously optimistic estimates.

As of the current asking price of the building and the revised income that was suggested above, the kind of returns that Laflin and his investors would have is actually a negative return. This was mainly influenced by the second to the lowest occupancy rate that was used but since the likelihood of this thing happening is most likely, then Laflin and his group should take care to renegotiate the asking price of the building in the first place.

The suggested asking price of the building in order for them to at least break even is $511,729. This is the maximum price that they should pay for the building and not more than this in order to achieve a realistic rate of return. This is the figure that Laflin should use as a ceiling in bidding for a lower price of the building from the bank. It is recommended that he should ask for a price lower than this.

The reason why there is such a wide variation in the prices of the real estate prices is because there are a number of factors that affect its value in the future. One of them is the possibility that the rental income would increase or decrease, if the area within the real estate investment is deemed to increase in population and employment, then the value of the property will rise as there are going to be more tenants that will demand for the space offered by the real estate investment. The second factor will be the kind of structural maintenance that the building currently needs or will need in the future. This can simply be included in the initial calculations however and the investor can decide right away if the investment is still attractive in their eyes. Another factor that can also affect the valuation of the real estate investment is the initial price that was paid to the bank or the original owner in the first place because this will dictate the kind of returns that the investor will have even if the other numbers are fixed. If the asking price for the property is high, then the investors will have significantly less returns no matter how robust the economy is or how attractive the rental rates will be and the level of occupancy. On the other hand, if the asking price is considerably low, then the investors will enjoy very high returns on their investments since the lower capitalization costs can absorb the lower rates and even the lower occupancy that will occur on down economies even on a prolonged basis. It is just a matter of numbers but one can be sure that it is to the favor of the investor as long as the initial capitalization price is already low enough. It can absorb a lot of negative impacts to the investment later.

Filed under: Sample essays — Tags: , , , , — admin @ 8:15 am
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