Video assignment Essay Example | Topics and Well Written Essays - 750 words

Video assignment - Essay Example From the film, the United States is brought out as one of the most individualistic society in the world. They tend to put more emphasis on individual achievement, equal rights, informal communication as well as little dependence on authority. The US employees are seen consulting with each other frequently and sharing information openly. They are also extremely comfortable interacting with people they don’t even know, and they aren’t shy doing so. On the other hand, the Japanese managers are more of collectivists. They seem to value harmony and loyalty to both the group and company. The movie successfully brought to light the clash between individualist and collectivist cultures in the most beautiful way. For instance, the Japanese workers performed their duties without complaint and a lower salary and higher production rate consistently. On the other hand, the American auto workers depicted less loyalty to the company compared to the Japanese employees. This is evident when Stevenson (role played by Keaton) tried to convince his American workforce to meet the 15000 production quota. Rather than make concessions to accomplish the company goals like their Japanese counterparts had, the US plant employees immediately started talking themselves out of achieving the goal and further looking for ways to lower the quota. In the beginning, Stevenson thinks that he can get them to push the quota nevertheless. However, he discovered that in the absence of the same level of loyalty, the American workers weren’t as motivated and driven to make the set goal a realit y. Quick advancement and reward appear to be the norm in America and is usually based on merit. On the other hand, Japanese culture values dedication and long service are always rewarded. The expectation of rapid reward by the Americans is depicted in the movie when the plant employees ask if they will receive a reward even if they don’t meet the production quota. This means that they

A Critique of Frye’s, Jordan’s, and Miller’s Feminist Theories Essay Example for Free

A Critique of Frye’s, Jordan’s, and Miller’s Feminist Theories Essay Marilyn Frye’s feminist theory is based on a mix of art and philosophy as well as a presentation of her own ideas in the context of the world. Frye’s theory stresses among other things, the fact that the power of feminism is embedded in the capability of making women’s lives and their experiences understood by a vast majority of the people (Frye, 1983). On the other hand, Jordan’s feminist theory lays emphasis on the woman’s self with reference to her relational well-being (Jordan, 1991). Closely related to this, Miller’s theory is based on the view that there is need to address women’s experiences and make the world understand them better. Thus, Miller suggests that in order to understand women, there is need to understand their lives and values (Miller, 1987; Davis, 1999). This paper will examine and appraise the aforementioned theories and draw a conclusion based on the flaws or incongruence depicted by the theories, and will thus suggest whether the theories can be used together or as separate entities. Frye’s Feminist Theory Frye affirms that in order to understand women fully, that is in terms of their feelings, motivations, ambitions and how they are likely to react to different situations, there is need to understand their driving forces, which are the determining factors in various responses (Frye, 1983). Frye’s feminist theory thus presents an attempt to explain the forces and how they apply to different women. While it may be true that there are deciding forces behind every woman’s response to different situations, it is also evident that the forces cannot be studied conclusively. This viewpoint is instigated by the fact that women live in different conditions, and these conditions are likely to affect how they react to different circumstances. Thus, a generalization cannot be used to describe women’s attitudes. In view of sex and sexuality, Frye notes that sex roles have inhibited men and women from being in charge of their choices since the activities involved in sex are already predetermined (Hoagland Frye 2000). However, this supposition fails to address the sex drives involved among same-sex partners. Thus, even though Frye notes that women are sexually oppressed, it is difficult to concur with the argument since sexual freedom has increased tremendously in the world over the past few years. Frye’s likening of women to a birdcage in which if one observes one wire of the cage, she or he is likely not to see the other wires present in the cage (Davis, 1999) presents an interesting point of discussion. This is true given that in there are instances when women are ignored, for example in restaurants when waiters expect men in company of women to pay the bills. This implies that much attention is paid to men, who are perceived to be a superior sex. Jordan’s Feminist Theory This theory emphasizes the connections among different aspects of women’s lives, which are developed through relationships. It dwells on factors such as sexism and heterosexism, which separate women and alienate them from the rest of the society, thus subjecting them to a lot of suffering (Jordan, 1991). In view of this, while it is true that women are more affected by issues that concern sex it is also imperative to note that such issues are not just limited to women. Concisely, men also suffer from issues related to sex. Jordan’s theory also dwells on the self-condition of women in relation to their relational wellbeing. Jordan emphasizes that most Western psychological theories tend to point too much on the woman’s self rather than her relations with others (Jordan, 1997). Along this line, Jordan asserts that men have subordinated women and view them as their subjects, thereby undermining women’s relation capacity. This presumption has some substance with reference to how women were treated in the past. However, it may loose significance in the contemporary world where women have taken more leadership positions and have better control of their undertakings. Jordan addresses desire by relating it to adolescent sexuality, noting that it arises from people’s integration with others and creation of relationships (Jordan, 1997). This is true in the context of what people commonly refer to as â€Å"real love† that develops between men and women through their continued association. On the other hand, since relationships commonly break, there is an indication of a flaw in Jordan’s theory. Nevertheless, Jordan’s point of challenging the tendency by men to be dominant over women (Jordan, 1991) stresses the need for equality between men and women. Miller’s Feminist Theory Miller focuses on the concern of men’s domination over women and their tendency to subordinate them (Miller, 1987). She asserts that the propensity by men to be dominant over women causes conflict between the two sexes because men fail to understand women. Miller also notes that in dealing with conflict, women, who are usually the subordinates revert to overt conflict, a phenomenon that is prevalent in the present day (Miller, 1987). Miller therefore questions why men should be dominant over women yet women have equal capabilities do what men can do. Miller’s feminist theory is important in addressing gender disparity in the world. It also supports women in having voices to do what pleases them irrespective of what men think about them. However, its flaw lies in the fact that it fails to address why men have higher propensity to be dominant over women and why women usually revert to overt conflict when dealing with men. Conclusion The feminist theories by Frye, Jordan and Miller all address issues that though not congruent are closely related. Frye’s theory is centered on understanding women; Jordan’s theory recognizes the woman’s self worth and the importance of women’s participation in relations; whereas Miller’s theory in centered on understanding women and why men should not treat them as subordinates. All these issues are closely related since they address the status of women and their role in the society, which is paramount in eliminating injustices against them. Hence the theories should treated together to achieve the objective. References Davis, F. (1999). Moving the mountain: The women’s movement in America since 1960: Chicago: University of Illinois Press Frye, M. (1983). Politics of reality: Essays on feminist theory. New York: Ten Speed Press Frye, M. (1992). Willful Virgin: Essays in Feminism, 1976-1992. New York: The Crossing Press, Inc. Hoagland, S. L. Frye M. (2000). Feminist interpretations of Mary Daly. Pennsylvania: Penn State Press Jordan, J. (1991). Women’s growth in connection: New York: Guilford Publications, Inc Jordan, J. (1997). Women’s growth in diversity. New York: Guilford Press Miller, J. (1987). Toward a new psychology of women. Boston, MA: Beacon.

A Critique Of Mills Harm Principle Philosophy Essay

A Critique Of Mills Harm Principle Philosophy Essay In this essay, I will be writing a critique on Mills harm principle. Evaluate its criticisms and explain why its positive influence far outweighs the negative ones in a society which its citizens are free to dictate their notions. In his Autobiography of 1873, John Stuart Mill described On Liberty as a kind of philosophic textbook of a single truth (Mill (1989 edn), p.189) and rather than speak in terms of rights, some may claim a right not to be harmed, Mill said only Harm (or the threat of Harm) is a sufficient justification for exercising power over another. Mill further qualified his Principle by adding that it wouldnt be a sufficient condition to exercise power over someone simply for their own good and he does permit some exemptions to the Harm Principle. So he allows coercion in an economic context, like when a more efficient and presumably more profitable company Harms a competitor by seizing an increase in market share. Another exemptions are of the incompetent, the retarded, the ignorant, children, all those below the age of consent. They may all be coerced; in short all those not competent are exempt and Mill allows for coercion by the judiciary. So for example the type of legal coercion which punishes murder by imprisonment is exempt. However probably the most controversial exemption in, On Liberty is Mills reference to backward states of society, Mill refers to barbarians and says We may leave out of consideration those backward states of society in which the race itself may be considered as in its nonage. (Mill, John Stuart. Stefan Collini (ed.), On Liberty and Other Writings, (2000 edn), p.13.) Mill is referring here to societies so backward theyd hardly be capable of understanding the Harm Principle let alone responsibly applying it. The implication here is that society needs to recognize concepts like free discussion before it can achieve that level of education and understanding which enables it to benefit from The Harm Principle. Yet when considered in its totality his Principle is anything but simple, because On Liberty is concerned with, Isaiah Berlins later defined concept of Negative Liberty that is, freedom from interference. To quote Berlin, the freedom of which I speak is opportunity for action, rather than action itself. If, although I enjoy the right to walk through open doors, I prefer not to do so, but sit still and vegetate, I am not thereby rendered less free. Freedom is the opportunity to act, not action itself. (Berlin (1969), p.xlii). Some significant criticisms of, Mills Harm Principle have been expressed over the years. I intend to consider the three leading arguments, 1. VAGUENESS. In other words what exactly does Mill mean when he uses the word Harm? Its notable that no definition of Harm is to be found in, On Liberty, granted Mill gives us some exemptions, but no more than that and accordingly Mills use of the word Harm is often considered imprecise. Its this very lack preciseness (vagueness) that prompts us to wonder if there could be a point at which acts of offence become acts of Harm. Without an adequate definition of Harm it becomes difficult to derive to a meaningful definition of Offence and without that judgments of rightness or wrongness are in danger of becoming blurred. In a book by the philosopher Joel Feinberg entitled, Offence to Others, he discusses a thought experiment whereby the reader is assumed to be a passenger on a crowded bus. Its possible to leave the bus of course, but that would be inconvenient and theres not another seat to move to and theres also no prospect of leaving ones seat to stand. Feinberg relates a set of examples, each more offensive than its predecessor, which take place in full view of the passengers. He starts innocently enough with comparatively mild examples like horrible smells, migraine inducing lights, intolerable noises and so on. In the next section which is headed, Disgust and Revulsion, he outlines even more revolting examples; people eating live insects, each others vomit and so on. Further on Feinberg talks of sex acts on the bus, both heterosexual and homosexual. He goes on to suggest increasingly more offensive examples, cataloguing in all 31 distinct illustrations. It emerges that some actions, although of fensive, can be tolerated in public whilst others may be so intolerable as to be better conducted in private. During our earliest years we learn to be conscious of concepts such as yours and mine (that is your sandwich but this is my sandwich) and its from these formative years that our notions of property as well ideas like property rights and obligations derive. Mine has a deeply personal value ascribed to it, encompassing not only physical things (like sandwiches) but also more abstract things, like personal space. An invasion of mine can invariably bring with it an almost instinctual reaction and Suppose someone, in an effort to signal friendliness, stands that bit too close or the person in the next seat plays their walkman that little bit too loud. We can feel aggrieved perhaps even angry? We often describe the other person as, invading our space. A proportion of the public space has become deeply personal. In other words, something about that public space has become mine. In this respect then we often hear somebody say that what someone is doing is, so unnecessary. By that she means i ts unnecessary for an activity to be conducted in public, because it could just as well be carried on in private. It may well be then that offensive public displays should be prohibited by law but still be allowed in private. When one tries to draw a line between Offensive Acts and Harmful ones its not unusual to be faced with a dilemma. Suppose someone is running, naked, along a street that could be interpreted by some onlookers as an Offensive Act, it might even be considered a Harmful Act towards children. In a similarly vein it may be that someone could find the idea of a homosexual relationship, even if behind closed doors, more offensive than an intimate heterosexual liaison which takes place in public. So, just as before, it seems that some things are judged offensive if conducted in public but may well be condoned in private. On Liberty makes it clear that in order to tolerate what Mill calls experiments in living, the toleration of some things, in private, is necessary. For example, some things which are objectionable to this generation may well be acceptable to the next. To him experimentation is a necessary attribute to drive society forward. Mill makes it clear that its by experiments in living that society progresses, an open-minded society would tolerate geniuses because, as Mill maintains, to prohibit everything but the norm would have the effect of stifling innovation and experiments in living'. Thus, a follower of Mills Harm Principle allows offensiveness but modifies the distinction to say that, if offensiveness is conducted in private with each participant having full knowledge of consequences and outcome and each being fully and freely aware of what theyre doing, then the Harm Principle would be complied with. Others however take a different view. Lord Devlin however admits no distinction between public and private actions. He maintains, see Dworkin Ronald (ed.) (1977) The Philosophy of Law, Oxford University Press, pp76-77, that private morality if widely adopted can become public morality. He considers that just as treasonable acts, plotted in private, can eventually adversely affect society so immoral acts, conducted in private, can become similarly antisocial. For Devlin the test of rightness is not linked to Utilitarian Theory at all. He famously refers to The Man on the Clapham Omnibus, his test being the feelings of intolerance, indignation and disgust of a reasonable man. But there are difficulties with relying on what an ordinary person would find morally acceptable. Presumably, in the heyday of the Taliban, if we had asked the reasonable man on a Kabul omnibus whether or not there should be a law barring female children from attending school, his feelings of intolerance, indignation and disgust would be a sufficient justification to allow the introduction of such a law. H. L. A. Hart, Professor of Jurisprudence at Oxford University, differs from Devlins reasonable man view holding it better to adopt a rational person test. (Ibid, pp83-88). A reasonable person is neither required to have reasons for, nor to justify, moral beliefs. Instead they depend upon convictions of what is and isnt morally acceptable. Its apparent then that, despite an intuitive appeal, Devlins approach fails to fully refute Mills Harm Principle. 2. NO MAN IS AN ISLAND. Mills implicit assumption that its possible to undertake an action in such a way that it wont affect anyone else is called into question here. Of course, its quite possible to do something which only appears wholly self regarding. Suppose I enjoy rock climbing. I may believe that my climbing, if solitary, could harm no one but myself, even if I should suffer a fatal accident. In such circumstances I wouldnt, on the face of it, be causing Harm to another but should I have a climbing partner she may well be Harmed by my demise, even though not in any way responsible for my misfortune. And even if I made certain that I and only I climbed, in the event of a fatal accident, grieving relations could be harmed. There could well be a similar Harmful effect suffered by members of a mountain rescue team that recovers my body and so forth. Therefore some might say I should be stopped from participating in dangerous hobbies because of a risk of possible Harmful effects an accident to myself may have upon others. If, being aware of the dangers of passive smoking, I smoke cigarettes heavily but only in my own home, taking care not to impose the effects of my smoking upon others, it could be said that I stand to harm no one but myself and so Mills Principle would then apply because I could be persuaded of the danger to my health but coercion shouldnt be used. But if my risk of a serious smoking related disease puts an unfair burden upon an already overstretched asset, perhaps even reducing the resources available to other people with serious illness. For this reason Mills implied assumption that some actions regard the perpetrator alone has been questioned. Fitzjames Stephen held that, by far the most important part of our conduct regards both us and others (Fitzjames Stephen (1967 edn), p66). This view is held by many of Mills critics. Nonetheless its implausible to assert that every self-regarding act has a Harmful effect upon others. 3. LIBERTY AND UTILITARIANISM. A foundation of On Liberty is Mills professed Utilitarianism, where each persons individuality and happiness is the objective of a civilised society. But because Mills Utilitarianism has its emphasis on consequences of action, some have questioned whether its correct to assume the Harm Principle is truly Utilitarian and so Mills Utilitarianism is often termed a consequentialist theory. Happiness, according to Mill, is not as simple as Jeremy Benthams idea, where he thought of happiness as, a blissful state of mind. Mill believed happiness to be something more complicated; he thought the sum of human happiness was better served by the preservation of as wide a range of negative liberties as possible. Its been argued though that many of the negative freedoms put forward by Mill were ultimately incompatible with his Utilitarianism because the Utilitarian aim of maximum happiness gives way to other considerations. But this view misses the fact that far from abandoning Utilitarianism, Mill argues that The Harm Principle and Utilitarianism can go hand in hand, so to speak. He certainly holds that there should be complete freedom of thought and discussion. Almost a third of, On Liberty is devoted to these vital freedoms yet, as a consequence of his thoughts about experiments in living he also makes the case for individuality and individual freedoms. Mill holds that the very concept of Negative Freedom allows for a choice between good and evil, for the freedom to choose between overall happiness and the gratification of individual desire. In other words people are free to accept or refuse an opportunity. As Mill said, The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs or impede their efforts to obtain it. (Mill, John Stuart. Stefan Collini (ed.), On Liberty and Other Writings, (2000 edn), p.16.) In the section of On Liberty entitled, On Liberty, as one of the elements of well-being. (ibid, p68) Mill maintains that the fact of human diversity is itself an argument for liberty. He argues that imposing one way of life upon every member of a society would be as disastrous as treating a cactus and an orchid in the same fashion. Mill says (putting aside some exceptional circumstance, such as monastic institutions) that human beings differ so much from each other that it would make no sense at all to expect each one to conform to a single model of a good life. Mill differentiates private interests, where no intervention is permitted, and public interests where, to maximize general happiness, intervention is allowed. For example, there are certain things like murder and fraud which a civilized society could not tolerate and against which it would have to protect itself but that same society should still encompass within it private interests of freedom and liberty. Its clear then tha t Mill adopts a utilitarian philosophy when addressing matters of public interest, but its a subtler form of utilitarianism which weve come to know as Indirect Utilitarian. While a direct utilitarian believes that any action which promotes general happiness is good, an indirect utilitarian would follow a more understated interpretation, holding that individuals should not simply be left to maximize happiness for themselves and its this indirect utilitarianism which Mill assumes throughout, On Liberty. He says, I regard utility as the ultimate appeal to all ethical questions; but it must be utility in the largest sense, grounded on the permanent interests of a man as a progressive being (Ibid, p.14) CONCLUSION In, Thinking from A to Z, Nigel Warburton reminds us that a Socratic Fallacy is: The mistaken belief that if you cant define a general term precisely you wont be in any position to identify particular instances of it. Warburton. Nigel. Thinking from A to Z. Routledge (2nd edn. 2000), p.120 The vagueness objection is a Socratic Fallacy, because whilst a concise definition of the word Harm isnt to be found in, On Liberty the following argument is sound: Premise 1. Minor objections should be set aside if an idea withstands the test of time. Premise 2. On Liberty has withstood the test of time. Conclusion. On Liberty should have minor objections set aside. To insist that Mills Harm Principle is specific at every eventuality is tantamount to asking for the impossible simply because the very concept of freedom (or liberty) carries within it an element of vagueness. The most a person reading, On Liberty with charity could reasonably expect is a Harm Principle with illustrative examples, and where fitting, appropriate definitions. This essay has reviewed the major criticisms leveled at Mills deliberations. The question of Mills alleged vagueness has been addressed as well as the problems associated with deciding what is Harmful as against Offensive and its been argued that consenting adults, acting in private, are unlikely to harm anyone but themselves. With regard to the claim that Mill has neglected his utilitarian principles it has been argued that, On Liberty has remained true to Mills utilitarian ideals, accommodating the negative freedoms necessary for an individuals freedoms. Mills arguments favor through Utilitarian means a concept of negative liberty, making the point that its only when were given sufficient freedom to freely choose how to live our lives (follow the good, if you will) that were most likely to maximize happiness. He says that a diversity of lifestyles is necessary because it allows differing individuals to find their own fulfilling ways of living. Its useful to remind ourselves that, On Liberty was published in 1859 and that it was intended primarily for the general public, it certainly wasnt presented as a dissertation solely for the academic world. Reading, On Liberty one is struck by Mills feeling for humanity and by his concern for his fellow man. He goes to some lengths to point out that his Principle is intended to protect those less able or, as he said, those not in the maturity of their faculties. All in all, On Liberty gives a structure within which to discuss the question of how free a person should be to live life as they please. For us in the 21st century, On Liberty embodies truths of tolerance, liberty and accountability to which the best of our societies aspire to today. From Mills writings its clear that the Harm Principle is essentially sound and that Mill is still relevant after nearly one hundred and fifty years. For example the rise of religious fundamentalism often brings with it an intolerance of alternative views that runs counter to Mills ideals. By the same token, its not too difficult to find totalitarian regimes (be they left or right wing) whose subjects are required to repress their individuality in service of the common good. Its right that the last word be left to J. S. Mill. The mischief begins when, instead of calling for the activity and powers of individuals and bodies, it (The State) substitutes its own activity for theirs; when instead of informing, advising, and, upon occasion, denouncing, it makes them work in fetters, or bids them stand aside and does their work instead of them. (Mill, J. S. On Liberty and Other Writings, (2000 edn), p.115.) THE END

The Postal Service Monopoly :: Economy

The Postal Service Monopoly In the United States economy most markets can be classified into four different markets structures. But, each and every market in the United States is completely unique from the others. Generally the best type of market structure for the general public is per- fect competition because it creates the lowest possible price for the public. There are some exceptions were perfect competition isn’t the best choice for the public on account of various reasons. The United States Postal Service is one of them and since the Postal Service is a monopoly, it is its own market. This paper will discuss the budget dilemmas that the postal service has faced for the past twenty years and if it is in the best interest of the economy for the United States Postal Service to continue as a monopoly. The first time there was talk of privatizing the Postal Service was in 1979 when the Postal Service was losing vast amounts of money in the long run. But since the Postal Service is a necessity for America, the government had to subsidize the service in order for it to continue in operation. In 1979 the United States Postal Service had a cash flow of $22.5 Billion and was additionally receiving $176 million from investing(#1, Intro). Even with this added revenue the Postal Service was still greatly under funded on its own (#1, Intro). During this time it was discussed to privatize the postal service and introduce competition because of the extreme losses that the service was experiencing. A positive argument for privatizing the Postal Service was with numerous competitors in the market there would be more efficiency and the public would receive lower prices. But this would also increase the usage of resources, for example airplanes and cars. One of the problems the Post Office had was its receipts from consumer purchases that were submitted the next day after the transaction (#1, i). If the receipts were submitted earlier the postal service would receive more money because they could invest that money sooner (#1, i). Another way the Postal Service could increased

food :: essays research papers

Food My family and I are absolute meat lovers; from poultry, fish, beef, and even an occasional pork diet. Despite the unhealthiness pork might cause there’s no discrimination when it comes to satisfying my family’s appetite. About the time when I was a young boy my mother would do her best to include vegetables in our meals. We hand a small, but very diverse garden in our backyard. They were the healthiest collard greens, bell and hot peppers you would ever notice. These greens would wave like trees in the spring winds that flew across southeast Texas. The green and red bell peppers were in comparison to a traffic light but without the caution. Once the afternoon arrived, I took that as an early hint that my house was going to start warming up, from the action taking place in the kitchen. I knew instantly that the air would be filled with an aroma that only my mom knew exactly. After the curiosity reached its peek, whatever was in the oven or on the stove would start to take its form. No matter what was being cooked, meatloaf steaks, chili with hot peppers, or catfish my mother would watch over the kitchen like she was the secret service guarding the president of the United States. Meat preparation would always seem to take a long while. I can remember sometimes the smell of chicken being fried stuck on your clothes. Or the smell of bar-b-q roaming down the block just to make its way up my nose. I would ask my friends do you smell that and they would reply strongly, â€Å"No,† like I was having dreams or been in the sun too long. Although I’m a carnivore, and to me meat is essential in my lifestyle, having balance with my meals played a significant role in my development. As you get older one person can see the value eating vegetables and other sources of nutritious foods have. My absolute favorite was greens and others related to it. It was something about those steamy greens that made them almost perfect. What gave them there wonderful smell was the precise amount of pepper and sometimes, for instance, if you were to look into and study that pot of greens you can see little black specs of pepper floating around in the water as they boiled to temperature so hot it would sizzle you skin.

Write a Brief Description of the Fiscal Policy of the United States.

2–3 paragraphs Details: During recent political campaigns, taxes and budget policy were key issues. White House budget packages are often designed to stimulate economic growth. From the library or from www. whitehouse. gov, obtain a current summary of government spending and tax legislation signed by the president. †¢Write a brief description of the fiscal policy of the United States. †¢Would you describe it as â€Å"expansionary† or â€Å"contractionary†? †¢How can American consumers influence decision makers on fiscal policies? Explain and discuss if and how this has changed over the past 5 years For the last several years, the U. S. government has been primarily in an expansionary mode of fiscal policy. President George W. Bush signed a $152 billion stimulus bill to help fight off a recession. This bill primarily resulted in the mailing of $600 rebate checks to millions of Americans to encourage consumer spending. In 2009, President Barack Obama signed the much larger American Recovery and Reinvestment Act, which provided tax cuts, loans and contracts, and new or expanded entitlements. The Congressional Budget Office estimated that the legislation would increase the U. S. budget deficit over a 10 year period by $787 billion. According to www. whitehouse. gov, this legislation created or maintained almost 700,000 jobs in the first quarter of 2010. The main way consumers influence fiscal policy is by their spending habits. When citizens become anxious about the economy, they tend to save more and spend less. This leads to decreased production, lay-offs, and unemployment, which in turn causes even lower spending rates. The Federal reserve usually tries to modulate the effects of these situations by manipulating key interest rates. For example, right now the federal funds rate is at a 60-year low, making borrowing for investments cheaper than it has been in memory. Until recently, consumer spending saw long-term increases due to the availability of personal credit, but since 2008, as consumer credit markets have tightened, it has dropped.

The Theory of the Contestable Market

The theory of contestable markets, along with the static and dynamic views of competition, are used as theories to analyse how markets perform. The static view focuses on the structure of the market as the determining factor of competition, with the dynamic view focusing on dynamic aspects such as technology and entrepreneurship. The contestable markets theory has a different focus, focusing on the importance of barriers to entry and exit. Nonetheless it does incorporate features from both views.More importantly it shifts the focus and provides new insight into the workings of competition. The two differing views of competition will be examined, followed by an examination of the contestable market theory, concluding with an analysis of the degree to which there is synthesis. Static view of competition The static view of competition focuses on the market structure as the key determining factor in the performance and behaviour of firms. It is the neoclassical approach of competition, o rigination from the work of economist’s Cournot and Edgeworth.This traditional view sees market structure as rigidly determining firm's conduct (its output decisions and pricing behaviour), which yields an industry's overall performance, such as its efficiency and profitability. Firms limit their behaviour to a certain industry model or strategic logic that is built on frequent price cuts, in order to out-compete rivals and deter entry. An industry is considered competitive depending on its market structure. At one extreme is perfect competition, which is considered perfectly competitive. At the other extreme is a monopoly structure, with a sole producer, characterised by low competition.In between the spectrum is an oligopolistic structure, and a monopolistic structure. These structures embody less competition than in perfect competition, but more than in a monopoly situation. The characteristics of competitive markets are thus large number of firms, or in other words a low concentration ratio. The number of firms is determined by the market demand and the output level set at that which minimises average cost. As the number of firms that enter the industry increases, firms become price takers rather than price makers, and they are forced to apply the price that is set in order to survive in the market.They thus receive normal profits, as opposed to abnormal profits when the market structure was more concentrated (please refer to figure 1 below). Fig 1 Thus the organisation of industries is considered to be generated exogenously. Therefore the market concentration decides the nature of competition within each market. The static view of competition thus concentrates on the structural characteristics of competition, with a ‘structure-conduct-performance’ based paradigm, in which market structure decided conduct of firms, deciding their performance.The static competition approach excludes non-price competition, such as quality and product diff erentiation, and strategic behaviour which does occur. This view of competition has been criticised for ignoring the more dynamic methodology of competition, which will now be analysed. Due to the importance of market share in the static view of competition, the resultant policy implication calls for regulation of markets, in order to ensure low marker concentration, in order to move towards perfect competition, and its associated benefits. (Schwartz 1986). Dynamic view of competitionThe dynamic view of competition revolves around the role of the entrepreneur and firms using innovation to compete with their rivals. The neo-Austrian school of thought, in particular, Schumpeter, and those economists influenced by it have been redefining the concept along classical lines, although with a much greater emphasis on the entrepreneurial role, the role of discovery, and rivalrous competition. Performance in industries is argued to be characterized by dynamic competition, expressed through in novation and variation rather than through efficiency and price reductions, which is the case in the static approach.This view portrays competition as a process of change and evolution rather than a static state in which equilibrium will be reached. Hayek, a main architect of this approach, defines competition as a dynamic behavioural activity. Central to this activity is knowledge, how it is acquired and communicated through the economy. He criticises the neoclassical assumption of perfect knowledge, with the view that costs are not a given, and so not exogenous. Competition is a process of interaction with the environment, in which innovation, such as new methods of production and new products, are a response to the unique situation of the economy.It results in the optimal use of resources. (Auerbach 1988) Alchian believes that there is a natural selection process which results in a competitive outcome. Such competition depends not only on the physical possibilities but also the a bilities and attitudes of participants, the entrepreneurs and consumers. It therefore argues for property rights, as to increase the level of competition, forcing companies to undergo research and development and to innovate, in order to survive.For competition to be improved and sustained there needs to be a genuine desire on behalf of entrepreneurs to engage in competitive behaviour, to innovate and to invent to drive markets forward and create what Schumpeter famously called the â€Å"gales of creative destruction†. (Vickers, 1995, pp15). In the classic dynamic view, it argues that there is a tendency for rates of return to equalise, due to profit seeking behaviour, and the movement of capital from low profit areas to that of higher profit areas. However equilibrium may never be reached.Before the tendency for equalisation, the economy may have changed, such as the structure of demand, or the available technology, and products may have evolved. The general criticism of the dynamic view of competition is that is lacks the simplicity and decisiveness than the static view of competition. The policy implications of the dynamic view of competition is less concerned with regulation of markets, instead encouraging property rights in order to allow firms to benefit from their own research and development, allowing for technological advancement, and the ensuing competition.Theory of the contestable market The theory of contestable markets describes how competition will exist in any market if there are no barriers to entry and exit, as firms will be forced to act competitively in fear of new firms entering the market. The contestable markets approach to competition represents an alternative to the neo-classical theory of the firm. It came to prominence in the early 1980s, largely through the work of the American economist Baumol. The threat posed by the possibility of new firms entering the market is taken to be a key determinant of the behaviour of existing f irms.Accordingly, barriers to entry and exit play a crucial role. Its fundamental feature is low barriers to entry and exit; a perfectly contestable market would have no barriers to entry or exit. This means no sunk costs. Sunk costs will be low where the firm can sell or in other ways dispose of its capital equipment without cost. For example, a new airline might lease aircraft rather than purchase them and can then leave the industry at the end of the lease period without the costs of having to sell its aircraft.Contestable markets are characterized by ‘hit and run' entry, whereby if a firm in a market with no entry or exit barriers raises its prices above average cost and begins to earn abnormal profits, potential rivals will enter the market to take advantage of these profits. When the incumbent firms respond by returning prices to levels consistent with normal profits the new firms will exit. In this manner even a monopoly market can show highly competitive behaviour (suc h as in perfect competition), as it fears potential competition.Such optimal behaviour applies to the full range of industry structures. Natural monopolies are of course not included in such a theory, as by its nature barriers to entry and exit exist. In this view of competition, the direction of causation between the market structure and competition is reversed from that of the static view. The theory of contestable markets sees contestability as influencing the performance and conduct of firms, and thus deciding on the resultant market structure.Perfect contestability would lead to firms earning normal profit, embodying cost-minimisation behaviour, resulting in a cost-minimisation structure (P=MC= AC), whatever the actual form of the market structure. Thus, the market structure is determined by the price and output decisions, or the behaviour, of firms. In a perfectly contestable market, there would exist profit equalisation across firms and industries, such as in perfect competit ion, even under market imperfections, such as a concentrated structure. Under a contestable market there would be maximisation of consumer welfare due to cost and price minimising.Contestable markets would also result in optimal firm sizes (economies of scale), product-mix (economies of scope) and industrial organisation (dynamic efficiency). Compared to the static view of competition, the contestable market views is not so much competition within the market, but competition for the market. Attention has been shifted away from actual competition to potential competition. Critics of this theory includes the argument that perfectly contestable markets are rare, and thus should only be applied to specific cases.It is true that perfect contestability is an extreme, and should be viewed as a benchmark rather than the norm, but the same applies to perfect competition in the static view of competition. (Schwartz 1986). More empirical research is needed on the extent of free entry and exit. Criticism has also been placed upon the reaction time of incumbents as new firms enter the market, which is also a hotly debated subject. Contradicting assumptions of ultra-free entry and the response of firms is another criticised aspect of the theory. (Shepherd, 1984, pp585)In terms of policy implications, the theory suggests that competition policy should be as much concerned with the levels of barriers to entry and exit in a market as with existing levels of competition. Synthesis? There is much debate as to whether contestable market theory is a synthesis of the static and dynamic views of competition. Some observers comment that the theory may even be an uprising from the traditional theories (Baumol, 1982), and to the other extreme where it is a mere extension of the traditional theories of competition.The theory of contestable markets incorporates important concepts from the static view of competition. The relationship between market structure and competition is a major fac tor in contestable market theory as it is in the static view, however in the former, as stated earlier, the causation is reversed. So the relationship is still key, albeit with market structure being dependent upon its firm’s behaviour. Furthermore, barriers to entry and exit, which are important in the static view in terms of its negative effects in allowing incumbents to earn economic rent, are of prime importance in the new theory.Although the new theory turns it on its head and focuses on the positive effects of removing barriers, and the resultant competition that comes with it. Barriers are thus significant market determinants. Thus for some contestable market theory provides a static equilibrium theory of industry structure which is generally more applicable than before. The theory also points towards some dynamic interpretation of markets. Firms are able to enter on an ongoing basis, constraining market behaviour of incumbents.The degree of contestability of a market can change over time with technology, regulatory breakdown, or changes in other barriers altering the entry and exit conditions. An incumbent pricing optimally can protect them self against new entrants using the same technology, but can’t protect against innovation or technological advancements. Furthermore, the threat of competition should lead to a faster rate of technological diffusion, as firms have to be particularly responsive to the changing needs of consumers. Thus dynamic aspects of competition are also important in the new theory.Baumol et al have argued the contestable theory as a new general system to replace the original static and dynamic views of competition. However their analysis should only be treated as a specialised, extreme set of conditions, which are unlikely to be found in reality, due to rigid assumptions of contestability theory. Some have even argued that little has been added to the pre-existing entry and exit analysis. (Shepherd, 1984). Conclusio n Contestable market theory is an attempt to impose a dynamic mechanism upon a static equilibrium analysis, thus providing new and valuable insights into competition theory.It offers a host of new analytical methods, new tasks for empirical research, and new results. It allows the reconsideration of the domain of the invisible hand, yields contributions to the theory of oligopoly, provides a standard for policy that is far broader and more widely applicable than that of perfect competition, and leads to a theory that analyses the determination of industry structure endogenously and simultaneously with the analysis of the other variables more traditionally treated in the theory of the firm and the industry.It aspires to provide a unifying theory as a foundation for the analysis of competition. The theory manages to blends in some aspects from both the static and dynamic analyses of competition, however shouldn’t be seen as an overarching theory. It embodies a different focus t o the two traditional views of competition, as already mentioned. It should be applied to unique situations, on which the assumptions of the theory are built. The new theory provides for a new dilemma rather than the final solution.