Hong Kong’s Protests
Shrewsbury
Economists
Malawi’s Tobacco industry
Myanmar’s Rohingya Crisis
Turbulent times for Flybe
Through corona times 2020
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Contents
The Shrewsbury Economist 2020
China’s project of the century
1 The Belt and Road
Initiative
Pages 3-6
Digital art by
Ruby Read
This first ever issue of
the Shrewsbury
Economist is a
magazine inspired by
The Economist and
run entirely by pupils
of Shrewsbury
School. Contributors
come from the
Economics Faculty.
We hope to give you
our take on some of
the biggest news this
academic year,
ranging from the
tobacco industry in
Malawi (9 Malawi’s
Tobacco industry
industry, by Sam
Freeman) to Hong
Kong (10 Will 2020
mark the end of freemarket capitalism? By
Milton Tai).The year
has been eventful to
say the least, though
that also makes it a
very exciting time to
live in - 'a smooth sea
never made a good
sailor', FDR said. We
enjoyed writing it very
much, and we hope
you find pleasure in
reading it too.
9 Will 2020 mark the end of
free-market capitalism?
By Max Cheung
Pages 18-19
By Milton Tai
United Kingdom
Greenhouse gases
2 Independent Schools
have a Positive Impact on
the UK Economy
10 Electric Cars
Pages 7-8
On the cover
Hong Kong
By Ben Ware
United Kingdom
3 Will Britain have a
nationalised railway system
once again after 23 years?
Pages 8-9
By Cosmo Waddell
Crime
4 Crime drop: The mystery
as to why crime has been
dropping everywhere since
the 1990s
Pages 9-10
By Chris Beard
Hong Kong
5 What has caused the
protests in Hong Kong?
Pages 10-13
By Ruby Read
Wales
6 The economic impact of
Gavin and Stacey
Pages 13-14
By Sophie Thomas
Sport
7 Economic impact of
technological
advancement in sport
Pages 15-16
By Sophie Thomas
Malawi
8 Malawi’s tobacco
industry
Pages 16-18
By Sam Freeman
Pages 19-20
By Lenka Hozzava
Flybe
11 Turbulent times for Flybe
Page 21
By Lenka Hozzava
Europe
12 The rise of President Orbán
in Hungary
Pages 22-23
By Mark Ellis
UK & Hong Kong
13 The minimum wage
Pages 24-26
By Max Cheung
Myanmar
14 Myanmar’s Rohingya Crisis
Pages 27-28
By Johan Wong
Scotland
15 Scottish Independence
Pages 28-30
By Mark Ellis
Venezuela
16 Juan Guaidó and
Venezuela’s Hyperinflation
Pages 30-32
By Tim Levin
Coronavirus
17 The Coronavirus Disaster
Pages 32-35
By Kanei Nishii
Economics Crossword
Page 35
By Lenka Hozzava
Vote of thanks
page 36
By Chris Beard
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The Shrewsbury Economist 2020
China’s project of the century
1 The Belt and Road Initiative
By Max Cheung
The Belt and Road Initiative
(BRI) is also known colloquially
in Asia as the ‘One Belt, One
Road’ project – a reference to
the two proposed new trade
routes or corridors (see photo
below). It is an ambitious global
development strategy adopted
by Chairman Xi Jinping of the
Chinese government in 2013
with 5 objectives – coordinate
policies, facilitate connectivity,
boost unimpeded trade,
integrate different economies
financially and establish bonds
between people. The BRI is
meant to be the Silk Road of
our times, and will encompass
around 70 countries in Asia,
Europe, and Africa, covering
economies that in total account
for a quarter of world’s GDP.
Since 2010, economic growth in
China has begun to slow down,
and the introduction of the BRI
is meant to act as a stimulus
package to solve the bottleneck
of economic growth and
development with investment on
infrastructures and capitals. The
Chinese government has
invested more than $210bn
USD into the project, while
private firms in China have
earned around $340bn USDs
worth of construction contracts
in places such as Vietnam,
Burma and Kazakhstan. The
Chinese calls the BRI “a bid to
enhance regional connectivity
and embrace a brighter future”.
Was this the true intention
behind one of the world’s
biggest projects in 21st century?
How will it reshape political and
economic situations in Asia?
This year’s Briefing hopes to
find out the answers for you
with a breakdown of how each
country is impacted by this
project.
Burma – Investment
Underway
Burma is one of the key countries in
the project. Chinese investments in
the past six years seem to have
supported the development of Burma
significantly, creating jobs and
improving infrastructure, helping
Burma to achieve economic growth in
the long run; the economy currently
grows at around 6% per year. As the
rural areas develop, workers will be
trained better and obtain more skills,
and thus will be able to produce more
valuable goods. This will raise the
living standard of ordinary citizens.
However, this growth has come at a
cost. Burma is a Buddhist country with
88% of the citizens practising the
religion regularly, and mining by
Chinese firms has already disrupted
the lives of many Buddhists there. An
ancient temple on the Letpadaung
Copper Mine was removed in 2014 to
make way for mining fields. The
temple is reconstructed on a new
location, but mining has caused air
and noise pollution and the new
temple has lost its ancient style and
atmosphere. Fewer and fewer people
are visiting it. Mining has also
destroyed woodlands nearby, and
fields that could have been used to
farm have been taken away from
villagers for the disposal of wastes.
These are externalities – external
costs that affect third parties who are
not involved in the transaction – that
are often overlooked by Chinese firms
and even the local government itself.
It is, in the end, the locals who will
suffer. As a Burmese puts it, “The
reason why we do not like Chinese
people is because they only take
profit from us.” Another example is the
Sino-Burmese pipelines, where
Burmese and African energy is
transported
and sold as exports to China. It serves
as an alternative to the South China
Sea route. The South China Sea has
long been strategically important as it
is a pathway to transfer resources
such as oil and natural gas to China. If
this pathway is blocked, China could
face a serious energy crisis, leading to
unemployment, cost-push inflation,
and negative economic growth. The
new pipelines will be a shortcut if the
Strait of Malacca is shut for any
reason reason. The irony is that in the
local villages next to the new pipelines
more than 90% live without electricity.
A few years later an electric tower
was finally built near the villages, but
to the disappointment of the villagers,
it was found out that the tower only
serves a nearby Chinese-invested
port and not the villages.
Chinese firms have tried to redress
these problems. They have
increased their environmental
awareness and now compensate the
locals. For every tree on the field that
was chopped down to make way for
construction, a farmer gets $15 USD
in reparation. This naturally doesn’t
fully close the gap between the
private cost and the social cost, but
is nevertheless a step in the right
direction.
On the whole, have the investments
helped Burma? In macro-economic
figures, yes.
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The Shrewsbury Economist 2020
But in terms of the effect on
ordinary locals, whether the
benefits outweigh the costs
remains a question.
But then firms and government should
be training the locals and giving them
the ability to take on those jobs in the
future– this is still yet to happen.
Kazakhstan –
Major Gateway of
the ‘Belt’
Additionally, when the BRI was
introduced, the Chinese and the
Kazakh government agreed on a
trade deal. It sees the Chinese
government investing a huge sum–
US$ 2bn – in Kazakhstan. This has,
however, caused Kazakhstan to be
increasingly reliant on China. Now,
most of the essential goods in
Kazakhstan are imported from China.
Railway is a major aspect of the
new initiative. Another project of
the BRI takes place in Khorgas of
Kazakhstan, where the East meets
the West. Goods are traded,
discharged and loaded here.
Khorgos was a rural area where
not many people lived in. In recent
years it saw the construction of the
Khorgos gateway, a hub to
connect the European railway
tracks to the Asian ones. This has
created more job in Khorgos and
increased the economic capacity
of the place.
China has also increased its
involvement in the oil industry in
Kazakhstan. Atyrau is the ‘oil city’
of Kazakhstan, and now most if
not all of the oil-related firms or
projects there have the backing of
Chinese investment. China claims
the investment and construction of
infrastructure from China are to
help the development of
Kazakhstan. Indeed, Chinese
investment has helped improve
the oil industry in Kazakhstan,
allowing them to use better
technology from China in order to
produce and export oil to China
more easily. However, Chinese
firms that invested in Kazakhstan
often bring in an ‘army’ of Chinese
workers from China instead of
employing the locals. This does
not help with the problem of
unemployment. Some local
workers can only work in lowskilled or low-paid works. In other
cases, workers are unemployed
for such a long period of time, that
they become
unemployable.Kazakhs have
agreed it is fair that in the first few
years high-skills jobs should be
occupied by qualified Chinese
workers.
Xi Jinping claims that “Chinese
money will not burn your hands”,
meaning Chinese investment does
not come with additional
requirements. Until now that seems to
be the case. Countries such as
Kazakhstan, however, are becoming
more and more dependent on
Chinese trade and investment every
day. Perhaps Xi’s claim will not be so
true in ten years’ time.
Infrastructure
Building in Vietnam
Vietnam is still a developing country
that sometimes lacks resources,
creating a market gap which acts as
an incentive to attract lots of Chinese
Most of the capital goods used in
constructions are also imported
from China, helping China’s
economic growth and balancing
their current account.
Because of BRI, China also has
loaned out money to the
Vietnamese government to
construct infrastructures like
bridges. (Having said that, the
construction contracts are usually
won by Chinese firms, as they are
usually more willing to provide
their services at a lower price.)
After the construction, the loan
has to be repaid, and the problem
is that countries like Vietnam –
which have debts that are
equivalent to over 50% of their
GDP – are sometimes not able to
do so, according to research from
the Centre for Global
Development.
The risk is that China will now
have the ability to use debt-trap
diplomacy against these countries
to extract strategic concessions
with high economic values. This
only gets worse as countries
become more and more
economically dependent on
China, and Vietnam could well be
the first victim.
Trading with Iran
investment
and firms to profit from these
opportunities. Constructing
infrastructure outside of China can
also solve the problem of excess
capacity. Just like Kazakhstan,
Vietnam is also very dependent on
China. Again, most essential goods
sold in Vietnam are imported from
China, which has been Vietnam’s
largest trading partner for more than
Iran is described as the most
important ‘piece’ in the BRI
‘puzzle’. Since Western countries
have imposed economic
sanctions and stopped trading
with Iran due to nuclear-related
disputes, it is the only country in
the Middle East not influenced by
US. Without trade going on
between Iran and other Western
countries, China has now become
its largest oil trading partner.While
most Western firms divested
during the economic sanctioning
period, Chinese firms stayed, and
have been helping Iran to improve
their infrastructure as well as
increasing their efficiency.As
China is now Iran’s biggest
trading partner, Chinese imports –
cars – are seen everywhere in
Iran.
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The Shrewsbury Economist 2020
they are popular because of their
price; cars of the same standards
produced from China are half the
price of the cars produced from
Japan. As European firms fear
the US are reluctant to trade with
Iran. China remains dominant in
Iran, and it will act as an
important transit point for trading
between Asia and Middle East.
Entering the
European Markets
Before the BRI, trading along the
sea for Chinese firms to Europe is
very time-consuming, which
requires ships to go across the
Mediterranean Sea, taking nearly
60 days to transport goods. This
is not great for the Chinese firms
exporting to Europe as this
contributes to a high cost of
production.With the new ‘Road’
maritime route the Chinese firms
can transport their goods to a port
in Piraeus in Greece which is
leased to China. From there the
Chinese are trying to build a
railway through Greece, Serbia
and Hungary to Budapest. This
would lower the production cost
for firms, causing a rise in
aggregate supply. Switching
towards the demand-side, exports
of China will now become more
price competitive in the European
markets. As a result, aggregate
demand of China would see an
increase too. Combining the two
results, this would lead to a
growth in the real GDP in China.
The BRI has had a major impact
on Eastern European countries.
Since many people from Eastern
Europe are migrating to the west,
the population in Eastern Europe
has reduced significantly such as
in the four “Visegrad” states (the
V4). Although labour shortage
can drive up wages, leading to a
rise in consumption, it would
cause foreign investors to invest
in countries where labour remains
cheap. Not just that, it would also
shift the production possibility
frontier inwards, and hence a
lower economic capacity
in Eastern Europe, making it hard to
achieve significant economic growth.
With the introduction of BRI, the
‘Belt’, railways connecting China and
Europe which goes across Eastern
European countries, would help them
develop and stimulate their
economies. This shows profiting is
not the only consideration of the BRI.
Investing in
Undeveloped
Countries
Hence, it shows how a small
project of the BRI can affect the
whole of Central and West Asia
significantly.
Again, in Laos where foreign direct
investment is lacking, China has
invested in constructing A railway
from Kunming to Bangkok going
across Laos. This would boost
Laos economy. However, the
construction fee has accounted for
half of their GDP, which is
borrowed from China at a high
interest rate.
Pakistan and Laos
Africa
Pakistan is a developing country
where no one would invest in, but
China has invested USD$46bn in
Pakistan, which is 3 times the foreign
direct investment in the past 3 years,
helping them to build infrastructures
such as roads, bridges, ports and
electric facilities. Most Pakistani lived
without electricity, but by the end of
2018 all electric facility invested by
China had been completed, allowing
them to enjoy a life with electricity.
This has improved living standards
for all of Pakistan. This has caused
enormous positive impacts to the
society and the economy. There has
been criticism that Chinese
government are just losing their
money by investing, but actually all of
these construction contracts are won
by Chinese firms. Therefore, this
simply means the Chinese
government are just subsidising their
own Chinese firms. More importantly
if we look into the long-term impacts
– if Pakistani household (population
about 200mil) are finally able to use
electricity, what action would they
take? A simple answer would be that
they would buy electric appliances,
most of which will be imported from
China.The most significant aspect is
that with infrastructure investment
creating jobs and with Pakistan
achieving economic growth,
teenagers will not have to join
terrorist groups and sacrifice
themselves just to get paid. This
would cause a major impact on the
society as a whole, and even on
neighbouring countries such as
Afghanistan.
Africa is the continent with the
greatest population growth.
Research predicts that by 2035,
the increase in the working
population aged 16 to 64 in SubSaharan Africa will be greater than
in the rest of the world. A
motivation for investment in Africa
is that China’s population is
expected to fall by half by the end
of 2050, and Africa would be the
foremost industrial area in the
globe, huge investment from China
would help reduce the time to
achieve this. Africa is now one of
the fastest growing regional
economies in the world, for
example Ethiopia has a real
economic growth of 10%. Chinese
construction firms have been
building railways across East Africa
acting as a catalyst to boost the
development and economic growth
in Africa. China has already been
exporting to Africa, helping raise
living standards and productivity of
firms, leading Africa to develop at a
faster rate. These are the projects
of the BRI aimed at Africa which
have made significant impacts on
African economies and will affect
the global economy in the future.
Because of the BRI, China has
been investing in undeveloped
countries that lack foreign
investment from Western nations.
China is now leading these areas
to grow and industrialising them.
The BRI is believed to be
extending towards Latin America in
the upcoming years which would
create a true global trading
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The Shrewsbury Economist 2020
At this current time, the whole
world economy is influenced by
the US as their economy is the
largest in the world. However,
due to their current account
deficit and budget deficit, the
global economy has been
affected negatively. When the
BRI causes other countries in the
world to develop and grow, the
impact of the US will be relatively
less significant. This would trigger
a change in the structure of the
world economy, leading to a more
balanced and diverse economy.
Trading Route Across
the Globe
The BRI has initiated a change in
direction of the flow of trade.
There has been a significant
escalation in trade between
China and Europe. Also, trading
between Asia and
This encourages world trade,
especially between Europe and
Asia. The BRI introduces a larger
variety of goods in different
countries, which would raise living
standards. For example, fruits in
Kazakhstan would be exported to
Vietnam, and they would import
fruits from Vietnam, where that
specific type of fruit can only be
produced in that specific country.
This creates numerous business
and trading opportunities.
There has also been a change in
the way goods are transported.
Before the BRI, goods were of
transporting goods were usually
transported by ships. This is not
just cost ineffective; it neither
promotes world trade, nor benefits
the economies of the countries
along the way. However, now with
the ‘Belt’, railways can solve this
problem, owing to the fact that
trains can stop in any countries
along the route and trade, boosting
their economies.
Conclusion
Europe has now taken up to 50%
of Europe’s foreign trade. The
world economy is now switching
its focus towards South East Asia
and Europe.
The BRI has connected the
whole of South East Asia, making
it into an efficient world trading
sector. With railways and
shipping routes, goods are being
transported to Singapore and
Vietnam, which are acting as a
transit point, creating the most
efficient and cost-effective way of
transporting goods. China is also
acting as a transit point where
goods from Japan and Korea are
transported to, then onwards to
Europe.
The objective of BRI is "to construct
a unified large market and make
full use of both international and
domestic markets, through cultural
exchange and integration, to
enhance mutual understanding and
trust of member nations, ending up
In an innovative pattern with capital
inflows, talent pool, and technology
database". This is not just an
attempt to achieve economic
growth but is also a renaissance of
different culture around the world.
The BRI adopted by China has led
to huge Chinese investments in a
lot of countries. This can be seen
as a reallocation of resources.
China believes when all the
countries become wealthy, then a
sustainable economic growth can
be achieved by all. In contrast,
when all resources are only
allocated in a few countries,
sustainable economic growth is
much harder to achieve.
The BRI has brought development to
countries and contributed to their
economic growth with an increase in
people’s living standards. This
demonstrates that the BRI does
benefit participating countries.
Although in some countries people
are not satisfied due to multiple
reasons – negative externalities –
such as pollution, destruction of land,
the BRI will have major long-term
beneficial impacts on these countries.
For example, as Chinese workers
leave, there will be jobs created
which will reduce unemployment.
Long-term economic growth in these
countries will be made possible as
the economic capacity increases due
to investment. There are arguments
stressing the problem that most
participating countries are deep in
debt to China. Having said that, in
most cases for undeveloped or
developing countries, China would
actually cancel their debt, not
needing these countries to repay.
Countries along the route of the BRI,
most of which such as Iran and
Kazakhstan are experiencing political
instability, cause a major threat to the
BRI as a change in political power
can usually cause a huge shift in
economic policies.
Xi Jinping said, “Belt and Road
Initiative isn’t a Chinese solo, instead
it is an ensemble of all participating
countries.” He believes for the BRI to
be successful, it would require the
cooperation of all countries to create
a truly globalised economy.
Consequently, all countries, not just
China, will be able to relish these
achievements.
Countries listed above are just
part of the BRI, there are a lot
more that can be mentioned. The
whole picture is much more
complicated and far-reaching. It
would not simply just be
economic growth and
construction of infrastructure, but
would involve cultural, political,
and even military aspects. This
radical change of the global
economy will go on for decades,
replacing the monopolisation and
dominance of the US in the world
economy.
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The Shrewsbury Economist 2020
United Kingdom
2 Independent Schools have a Positive
Impact on the UK Economy
By Ben Ware
When most people think about
independent schools, they do not
consider the benefits that they
bring to the economy. The majority
of people believe that they are
unfair luxuries, only benefiting the
selected few who can afford them.
This resulted in many agreeing
with Labour’s policy to abolish
independent schools. This article
will be explaining how these
schools have a large, positive
impact on the UK economy.
Independent schools influence the
economy in many different ways,
as shown by a survey undertaken
in 2018 which examined 1,318
independent schools in the
Independent Schools Council. The
diagram above gives some
examples for each type of impact
that the schools have upon the
economy.
The schools, in total, spent
£7.83bn (excluding trading,
fundraising and other financing
activities) in 2017. The majority of
the funding, £6.05bn, had a direct
impact on the economy, including
£5.25bn being spent on labour.
£1.15bn were used for the
consumption of goods and
services provided by other firms.
This led to an indirect impact on
the economy. The firms will then
spend the money on investment
projects or other goods and
services. Overall, the schools
actually have a much bigger
contribution to the economy than
being shown just by the direct
impacts.
The schools’ direct contribution
towards the nation’s GDP mainly
consists of labour costs, capital costs
and a small net surplus.This has been
found to have generated a further
£1.59bn in tax revenues. The ISC’s
estimated expenditure on goods and
services produced by other firms
triggered a further indirect
contribution of £1.15bn. This
generated an extra £270mil in tax and
created 27,000 more job
opportunities. Finally, there are
525,000 pupils in these schools,
which only make up 6% of the total
pupils in the UK. Having said that, this
is still a vast number of students, and
it provided 65,600 jobs for academic
teachers in 2017. Overall, these
schools employed 147,000 people
(including support staff) in 2017. With
a job their disposable incomes will
have inevitably increased and so will
their consumption. The wage-funded
expenditure (an induced impact) of
the staff and other affected firms was
estimated to be around £4.42bn in
2017 and this consequently resulted
in an additional £1.65bn in tax
revenues and 84,000 more job
opportunities.
As one can see in the diagram below,
the total Gross Value Added (GVA)
was £11.63bn in 2017. This is
excluding the tax revenue from the
direct, indirect and induced impacts,
which added up to £3.5bn, as shown
on the diagram. This is a major
economic reason why some people
are wrong to believe that independent
schools should be abolished, as they
do not fully understand how these
schools contribute towards the
economy. Consequently,
independent schools helped the
taxpayers save around £3bn. This
amount of money could pay the
wages of 108,000 nurses or fund
the building of 20,000 new homes.
Last but not least, independent
schools have created 257,020 jobs
– similar to the number of jobs in
Liverpool. This has helped to keep
unemployment rate low which is of
course one of the key
macroeconomics objectives.
These schools provide education at
the highest level - not only to
English students but to foreigners
too. Foreign students accounted for
10.2% of the pupils in these schools
in 2017. This meant that the
services provided by these schools
count as exports, which increases
the GDP of the country. Also, in
2017, 7.6% were given some sort of
bursary and the total amount of the
subsidies given out added up to
£800mil. This allowed those who
initially might not have been able to
afford private education to send
their children to these schools to
have a better education, which will
certainly improve the economy as a
positive externality. Finally, it is
estimated that if the ISC schools
had not been around for the last 70
years, the UK’s GDP could be
£62bn less than it is today. They
were, and will continue to be, an
essential part of our economy that
should not be overlooked.
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The Shrewsbury Economist 2020
Statistics were sourced from the ISC census and annual report in 2018.
United Kingdom
3 Will Britain have a nationalised railway
system once again after 23 years?
By Cosmo Waddell
Nationalisation is a process by
which the ownership of a firm is
transferred from the private to
public sector. In the wake of the
Second World War many sectors of
the UK’s economy were
nationalised, including the coal
mines, electricity, gas and rail
transport. The railways were
subject to great changes in
ownership over the 20th century,
being nationalised from 1914-21
due to the First World War and
again from 1948-94. As far as the
railways are concerned,
nationalisation was supposed to
bring several advantages including
secure jobs, keeping areas of the
network open and reducing the
price of tickets. British Rail of
1948-94 largely failed at these
objectives, apart from affordability.
Nationalising can bring benefits to
workers because the state will seek
to provide better working
conditions, more employment
opportunities and decent wages.
However, this can increase the
burden on the taxpayer as the greater
volume of workers in certain sectors
means that trade unions can gain
more power and can push for higher
wages. Such an event happened in
the 1978-79 ‘Winter of Discontent’.
This was a large strike by British
Workers and Trade Unions in
opposition to the current Labour
Party’s attempt to enforce limits on
pay rises to curb inflation after it
reached a staggering 26.9% in August
1975.
However, British Rail failed to provide
secure employment, with staffing
falling by 362,000 between 1950 and
1976. This unsustainable workforce
also led to the railways being
inefficient and trains not running to
their timetables, resulting in
passenger numbers dropping by 3.75
million between 1948 and 1980. Miles
of track were not safe either
according to ‘The Beeching Report’
published by the British Railway
Board in the 1960s.
After being adopted by the
government, the British Rail were
forced to identify areas of the
network that had to be closed. By
1976 the cuts had resulted in a
loss of 8282 miles of track twothirds of stations however, £18
million was saved per year. This
was partly due to increased
competition from road and air
transport which were turning out
to be cheaper and more efficient
alternatives. While recently,
some of these lines have been
re-opened, others have been
turned into heritage sites, others
into the National Cycle Network
while the rest have remained
derelict.
Nonetheless, in light of the
recent coronavirus pandemic, the
UK government has had to
nationalise British Rail, but only
partially. As a temporary
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The Shrewsbury Economist 2020
measure to both prevent the virus’
spread and keep financial
difficulties from surfacing, the
passenger rail network is under
government control while the
freight network is still under the
private eye of British Rail. The
network has seen a 70% decline in
passenger numbers which could
has been catastrophic to the
business had it still been under
private supervision. However, in
this time of crisis, cooperation
between British Rail and the
government have been necessary
when deciding the short-term
future for the freight network.
Negotiations have had to be made
regarding the amount of freight
that can be transported: too much
and more key workers will be
needed which could further
encourage the spread of the virus.
Too little and vital supplies would
not reach various corners of the
country. Tim Shoveller, Managing
Director of the North West and
Central Region, said: “Our role in
Britain’s Coronavirus response is
clear: to keep the Key Workers,
including the NHS and emergency
services, as well as food, fuel and
medicine moving safely.”
Overall, British Rail was
successful in unifying the
network and making rail travel
affordable, but it ultimately
failed in providing job security
and keeping unprofitable areas
open, instead making workers
redundant and cutting off
isolated communities from the
rest of the network. In light of
the pandemic, British Rail may
see changes due to the extra
help they have been given by
the government, but only time
will tell.
Crime
4 Crime drop: The mystery as to why crime
has been dropping everywhere since 1990s
By Chris Beard
As the world worked its way
towards the 1990s, there was an
underlying fear that we were about
to witness the worst decade of
crime ever, as countries in the
western world, especially in
America, had experienced rises in
crime that seemed never-ending.
However, if one looks at the
statistics, we see that in this feared
period, the world experienced the
beginnings s of a huge decline in
world crime. In the UK, 1995 was
the peak of our crime, with violent
crime being the highest form of
crime. However, in an interview with
the Guardian, Home Office
Statisticians have said crime is
down a staggering 44% since 1995,
something they themselves
described as, “quite extraordinary
and historically unprecedented.”
Jon Simmons, who was assistant
director of Home Office research in
2005, stated how the data
suggested that whereas in 1995
one could expect to be burgled
once every 27 years, in 2005 it was
once every 58 years. This is a huge
decrease in the way that now a
person would be unlucky to be
burgled in their lifetime at all! In the
news today, there appears to be a
rise in knife crime, other violent
crimes and antisocial behaviour,
(ASB accounted for the largest
portion of crimes in 2019).
However, if we glance backwards, it
is arguably a notable achievement
of how much crime has declined in
the UK, and the world. That is not to
say that we shouldn’t strive to
reduce crime further still. Despite
this, there has been no clear-cut
reason as to why the crime drop
experienced in the UK has
happened. One can search through
banks of statistics and data, and
there appear to be no real patterns
or causes that are what one might
describe as obvious.
The question that I claim to
answer today is whether it is a
question of economic affairs or
not.
There are some explanations that
aren’t directly linked to economic
affairs, but nevertheless put
forward convincing arguments. In
the book, Freakonomics, Steven
Levitt, a Professor of Economics
at the University of Chicago, has a
chapter titled, “Where have all the
criminals gone,” in which he
highlights the legalisation of
abortion in America as the main
reason to this, as fewer children
are being born into families that
cannot care for them effectively,
and thus do not have to turn to
crime. Another key reason that he
identifies, that was also identified
by a report in 2014 by the Home
Office in the UK, was significant
changes in the drug market. In
America, it was for crack-cocaine,
whereas in the UK it was
forHeroin. Both suggest that
across the 1990s there was a
significant decline in the demand
for such illegal drugs, and thus the
crime and violence caused by
drug gangs and other distributors
also saw a decline as they lost out
on business. Levitt also highlights
another cause that he argues as a
false-belief, and that is changes in
policing and police-strategy. This
largely stems from the example of
New York, where the police grew
by 45% from 1991 to 2001, and
accompanying this was the drop
in crime. However, the sceptic
would argue that the crime drop
was experienced elsewhere, in
places such as Canada, where
the police force remained
unchanged, yet the same
phenomenon was observed.
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On the other hand, the commonly
held view of many economists
would be focused on the
relationship between
unemployment and crime. If legal
means of employment and
income are more available than
that off illegal methods, then
people will choose the former.
Since America saw substantial
economic growth (around 4%
across the 1990s), then arguably
this boost to the economy
creates more jobs and thus
moves these people in crime, out
from it.
up. Therefore, it is evident that
there is not one explanation for
this subject, and that it differs in
different places, as seen by the
examples of America and the
UK here. The crime drop has
been observed worldwide, but it
is not as simple as an overall
drop. For example, the homicide
rate in the UK peaked in 2003
as the murderous Dr Shipman
was exposed as euthanising
people
without consent, and equally, some
crimes didn’t exist in 1995, such as
computer hacking with regard to
fraud or online banking.
Nevertheless, it is accurate to say
that we have witnessed a decrease
in crime over the last few decades
that is unprecedented, and that it
has to have at least some relation
to the economic advancements of
the worldwide community.
Perhaps a better example
can be found in the UK, and
the relationship between
crime and unemployment. In
1992, the rate of
unemployment was 10.7%,
and by 2001, it had
decreased by over half to
4.9%. This accounts for a
huge number of people, and
undoubtedly had to draw a
substantial number of people
away from crime, otherwise
the numbers simply don’t add
Hong Kong
5 What has caused the protests in Hong
Kong?
By Ruby Read
Despite demonstrations in Hong
Kong being attended by millions of
people, the government are yet to
stand down and agree to the
demands the protesters have set.
This has caused tensions to rise
and violence between police and
citizens to spiral across the city.
Uncertainty for the future of Hong
Kong resonates through the city.
The situation has been labelled by
the Chinese central government as
the “worst crisis in Hong Kong”
since the handover in 1997.
Protests began in June 2019 after
the Hong Kong government
introduced the Fugitive Offenders
amendment bill. This bill would
have allowed local
authorities to detain and extradite
criminal fugitives who were wanted
in territories which Hong Kong didn’t
currently have extradition
agreements with, namely Taiwan,
Macau and mainland China.
The government had argued that the
proposal of the bill would “plug
loopholes” and make the city a less
safe haven for criminals. However,
critics stated that those in Hong
Kong would be exposed to China’s
deeply flawed justice system which
would lead to erosion of the city’s
independence. This bill was later
retracted and finally, after much
protesting, was withdrawn in
September 2019.
Hong Kong has a unique status
- it is significantly different from
other Chinese cities. It was a
British colony for more than
150 years resulting in Hong
Kong island being given to the
UK by the Chinese in 1842
after the commence of the
Opium War. Later, China also
leased the new territories of
Hong Kong to the British for 99
years.
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The Shrewsbury Economist 2020
As the end of the 99-year lease
approached, the discussions of the
future of Hong Kong began
between China and Britain. The
Chinese government argued that
all of Hong Kong should be
returned to Chinese rule. In 1984
the two sides came to an
agreement that Hong Kong would
return to China in 1997 under the
principle “one country, two
systems”. This meant that whilst
becoming part of one country with
China, for 50 years Hong Kong
would enjoy “a high degree of
autonomy, except in foreign and
defence affairs”. As a result of this,
Hong Kong was given its own legal
system, borders, and rights including freedom of assembly and
free speech.
Hong Kong still retains freedoms
not permitted on mainland China,
but people fear that their rights and
freedoms are being eroded. China
has been accused of meddling in
Hong Kong affairs, citing examples
such as legal rulings that have
disqualified pro-democracy
legislators. They have also been
concerned by the disappearance of
five Hong Kong booksellers. Artists
and writers state that they feel
under increased pressure to censor
their work. A Financial Times
journalist was barred from entering
Hong Kong after he hosted an
event that featured an
independence activist.
As Hong Kong has been a separate
colony for 150 years with its own
legal, social and cultural differences,
the majority of the population,
known as ‘Hong Kongese or Hong
Kongers’, don’t identify themselves
with China, despite most being
ethnic Chinese. Only 11% of the
population call themselves
‘Chinese’, as shown from a survey
by the University of Hong Kong.
Carrie Lam was elected on July 1
2017 as the Chief Executive of
Hong Kong and was the city’s first
female leader. This election
symbolically took place on the 20th
anniversary of Hong Kong’s return
to Beijing. Lam’s position was
chosen by a 1,200 member
election committee, said to
represent the city, but made up of
largely Beijing loyalists. Since the
protests began in June over Lam’s
push for the extradition bill, her
popularity ratings have significantly
dropped, making her the most
unpopular leader since the former
British colony returned to China in
1997. Protesters initially called for
her resignation as part of their
demands, but have since realised
that whoever Beijing replace her
with will be more of the same.
Instead the protesters have
demanded that the Hong Kong
government allow Hong Kong
residents to vote for their leader
and members of the legislative
council.
overseas students also appeared
online. Hundreds of thousands of
people have taken to the streets
for many weekends in some of the
largest demonstrations since the
territory was handed over to China
in 1997. Several other countries
also expressed their concern. A US
congressional commission said it
risked making Hong Kong more
susceptible to China’s “political
coercion” and further eroding Hong
Kong’s autonomy. Britain and
Canada said they were concerned
over the “potential effect” that the
proposed changes would have on
UK and Canadian citizens in Hong
Kong. Finally, the European Union
also issued a diplomatic note to
Mrs Lam, Hong Kong’s Chief
Executive, expressing concerns
over the proposed changes.
The proposal came after a 19year-old man allegedly murdered
his 20-year-old pregnant wife
whilst on holiday in Taiwan in
February 2018. Taiwanese officials
needed help to extradite the man
from Hong Kong authorities,
however Hong Kong officials
stated that they could not comply
due to a lack of extradition
agreement with Taiwan. However,
the Taiwanese government has
said the man would not seek
extradition and urged Hong Kong
to handle it separately.
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The Shrewsbury Economist 2020
The focus of the protests is
changing, and there are now wider
demands for democratic reform,
despite the withdrawal of the
extradition bill, the original cause of
the riots. Some protesters have
now adopted the motto “five
demands, not one less!”.
The five demands of the protesters
are:
1.Firstly, that the protests are
not referred to or
characterised as ‘riots’.
2.Amnesty for arrested
protesters. Amnesty meaning
a pardon extended by the
government to a group or
class of people, usually for a
political offence.
3.An independent inquiry into
alleged police brutality.
4.Implementation of complete
universal suffrage. Suffrage
meaning the right to vote in
political elections.
5.The withdrawal of the
extradition bill, which has
already been met.
The protests have not only been
taking place in Hong Kong; the
movement has spread across the
globe, with rallies taking place in
Canada, Australia, UK, France and
the US.
Carrie Lam visited three police
officers injured in violent
disturbances between police and
demonstrators angry about the
extradition bill. She announced,
“we thank the police officers for
maintaining social order loyally and
professionally, but they have
suffered in attacks from those
rioters, they can be called rioters”.
Some activists dislike the term
“riot” to refer to the protests, as a
conviction for rioting can carry a
10-year prison sentence. Another
of the protesters’ five demands is
an independent inquiry into alleged
police brutality. Many videos
have appeared online of aggressive
police action. Footage showed tear
gas canisters being fired at peaceful
and unnamed protesters, first aid
volunteers, and reporters. One
video allegedly showed a protester
being hit in the face by a police
projectile. A New York Times video
essay, showed that tear gas was
used as an offensive weapon and
that in several cases, unarmed
protesters were being beaten and
dragged by police commanders.
After the young people of Hong
Kong decided to take to the streets
to show their opposition to the
extradition bill, the police came
down on the protests hard, further
raising tensions and escalating the
crisis to a tragic new level,
unprecedented for such a modern
prosperous nation. Remarkably the
Chinese government has remained
restrained and hasn’t intervened
with force to squash the protests.
More than 1,300 people have been
arrested in the context of mass
protests. I believe that the police
brutality is a key reason that the
protests and riots are not being
resolved and are getting
increasingly worse. A police force is
put in place to make people feel
safe. However, Hong Kong police
are doing the opposite.
Erica, a citizen and secretary in
Hong Kong who I have interviewed
via email says if
protesters are caught by the
police, they are beaten and
tortured. A lot of people have gone
missing (presumed dead) in the
protests. A body was found in the
sea a few days after a protest. Her
younger brother goes to the
protests with his girlfriend. Her
mum hates it, she sits in front of
the TV watching the news until he
comes home late. Some adults in
Hong Kong understand why the
young people are protesting and
support them even though it is very
dangerous. But others don’t. She
has heard stories of the police
targeting smaller groups of
protestors, even as they are
walking home from the protests.
The deadly outbreak of
coronavirus, which originated in
Wuhan, China and spread to many
other countries, has added to the
tensions within Hong Kong and
China. It was first detected on
January 22 in Hong Kong. There
have been 62 confirmed cases and
two deaths in Hong Kong. Which is
nothing compared to mainland
China where at least 1,868 people
have died so far. However, the
people of Hong Kong remember
the severe outbreak of the deadly
Acute Respiratory Syndrome
(SARS) in 2003 which killed 300
people in Hong Kong, and they are
not taking any chances this time.
Coronavirus has added to the
current divided society of Hong
Kong, firstly fuelled by a paralyzed
Map showing the protest-related arrests that Amnesty International
documented from July to September 2019.
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The Shrewsbury Economist 2020
government and now facing a
public health crisis. In January,
many people in Hong Kong
demanded to shut Hong Kong’s
borders with mainland China to
contain the virus. But these
demands have reintroduced
localism, an ideology focused on
preserving Hong Kong’s
autonomy. Lam has resisted
closing the Chinese borders as
she argued they needed to stay
open for Hong Kongers in the
mainland to return home.
However, allegedly this delay was
because Lam was trying
to please Beijing and she was
making decisions with politics in
mind rather than public health.
What began as a targeted
protest against a controversial
extradition bill in June, has now
morphed into a fight for
democracy and the future of
Hong Kong. Protesters are not
just fighting for their local
government, but they are taking
on one of the most powerful
countries in the world, China.
Their lack of a democratic vote forces
them to turn to the streets and
protest. They do not want the
Chinese government to erode their
rights and freedoms. China however,
cannot tolerate dissent and rebellious
behaviour as democratic ideas could
spread to the mainland and cause
even bigger issues for the Chinese
government.
It is clear that the people of
Hong Kong feel strongly about
their basic rights and freedoms
but equally are frustrated with
the negative effect that the
protests have had on the
economy and Hong Kong as a
whole.
As it stands the two sides are still at
loggerheads, with neither side
showing any sign of backing down.
Coronavirus has impacted protests
for now but the people of Hong Kong
are prepared to protest again.
Wales
6 The economic impact of Gavin and Stacey
By Sophie Thomas
Gavin and Stacey is a hit BBC TV
show, set in the heart of South
Wales – Barry Island. With its first
release in 2007, the show has
caught the eyes of millions of
viewers, simultaneously gaining
global attention for the unlikely area
of South Wales. Despite the third
season of programmes ending in
2010, producers ran a one-off
‘Christmas special’ in 2019,
featuring the same cast and in the
same locations as fans had loved
nearly a decade earlier. The
economic impacts of both the
original series and the Christmas
special have certainly been colossal
for South Wales’ economy, resulting
in the revival of Barry Island, despite
it being difficult to exactly quantify
this.
Ten years ago, the economic impact
of Gavin and Stacey was at its peak
in South Wales. The area had a
huge sphere of influence, with
people flying from around the world
to visit the little coastal town of Barry
Island in order to view Marco’s
kitchen, and go to the iconic funfair.
Barry Island has
consequently become a
tourist hotspot, so much so
that locals now run Gavin and
Stacey bus tours of the area:
their success evidence of the
fact that people are gripped
by the show. This impact,
although still present in the
area, has slowly declined
since the series’ finale in
2010, arguably, until the
announcement of the
Christmas special last
summer.
The production process for
the Christmas special lasted
6 months, in which the film
crew spent a budget of over
£1million. 70% of this went
directly into the Welsh
economy through provision of
employment opportunities for
locals (an estimation of 200
of the 250 staff used
throughout the production
were from a radius of 30
miles of the filming location),
through the use of local
feed the cast and crew for the
duration, and also through the use of
local services such as restaurants
and accommodation for the staff. This
is a major injection into the South
Wales economy as this type of event
is not frequent for the area. As a
result of the initial injection, one can
see a multiplier effect occur, meaning
the actual economic impact of the
filming of the Christmas special is far
beyond the given figure, as there
were indirect injections into the
economy as a result. An example of
some of these additional injections
included the influx of visitors and fans
to the area who came to watch the
filming; the production staff claimed
of there were at least 400 spectators
daily. Although the majority of these
were local, the sphere of influence of
the filming process became
international as there were even
visitors who had flown across from
the US purely to watch the globallyrecognised cast, including the likes of
James Corden. This adds to the
economic impact of the show as it
means more people were spending
money on goods and
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The Shrewsbury Economist 2020
services during they stay in South
Wales and so attributing to their
economic growth, instead of
elsewhere. The total fanbase of
the show has spiked in activity
again as a result of the release of
the Christmas special, and events
such as this certainly contribute
to the local economy. An example
of this includes a Gavin and
Stacey themed charity ball which
was held in Radyr, as although
the direct money made for this all
went to a local charity, spending
on costumes and food and drink
all contribute to greater spending
within the south Wales economy.
The economic impact does not
stop with purely the production
process of the Christmas special
itself. It has been building up over
the past decade and will continue
to do so for a prediction of ten
years, according to a member of
the production team who chooses
to stay anonymous.
Although the economic impacts
cannot exactly be quantified, the
idea that the local economy is
benefitting is implied by the fact
that Barry Island Council allowed
the production process to occur,
willingly shutting off the roads and
providing support staff to man
traffic control. It is implied that
they did this as they knew that in
the long term, they would be
economically stronger from the
process. The Vale of Glamorgan
Council used the extra funding
which the production team paid to
use the local facilities needed in
the filming process to improve
facilities and services in the local
area. This makes Barry Island
itself more attractive, attempting
to destroy its reputation of being
a little ‘run down’, and so further
inducing tourists to South Wales,
consequently gaining more
economic benefits for the area,
as the more tourists present, the
more spending in local
amenities.
The impact of the hit BBC comedy
show Gavin & Stacey has,
according to Marco, owner of
Marco’s cafe, been immeasurable
for the revival of Barry Island, and
so largely helping to boost the,
what could have been struggling,
economy, particularly in the Vale of
Glamorgan. He believes Gavin and
Stacey has made people curious,
and it is this curiosity which attracts
people to the Island. In his eyes, it
is the stunning beach and the local
businesses which then kept
bringing them back. He believes it
is Gavin and Stacey which put
Barry Island upon the map as a
tourist destination through the
widespread coverage of the area,
which would not have happened
had it not been for the show.
It can also be argued that the
revival and arguable transformation
of Barry Island is certainly assisted
by the influence of Gavin and
Stacey, when studying house prices
within the area. The average price
tag on a home in the seaside town,
which is within commuting distance
of Cardiff, an economic hub, has
jumped by 10.6% annually, when
analysing figures provided by
property website, Rightmove. It said
the average asking price in Barry
has increased by over
a fifth over the past five years
and now stands at £191,050.
Rightmove's property expert
Miles Shipside said: 'It's great
to see Barry named as the
country's hottest property
market’ as it can be used as
demonstration of the growing
strength of South Wales’
economy. Shipside attributes
the growing demand for
housing in Barry to be as a
direct result of the show. This
is hugely significant for the
South Wales economy as it is
not only ensuring Barry Island
has become a place of note,
but also drawing in labour for
work in Cardiff, improving both
the size and quality of the
labour force there, which is
clearly economically beneficial.
Furthermore, as mentioned
previously, it is expected that
the economic impacts of Gavin
and Stacey will be seen in
Wales for the next ten years,
according to a member of the
production team. This means
that the multiplier effect from
the initial injection of Gavin and
Stacey will be immense and
keep generating economic
benefits for South Wales’
economy.
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Sport
7 Economic impact of technological
advancement in sport
By Sophie Thomas
Technology is integrated into both
professional and grassroots level
sport in many ways. Professionals
often have fitness trackers in their
shirts, have top of the range
sporting review systems in live
matches, have readily available
video analysis, amongst many
more sport-specific innovations. At
grassroots level, one can see
technological advancement
present too, including, for
example, the use of light-up bails
in cricket to replicate the novel
advancements in the professional
game. Technology is having a
huge impact within the sporting
world. All these advancements
have economic implications and
their huge demand in global sport
has attributed to a flourishing
industry for sports technology,
with huge economic benefits for
mainly leading countries’
economies.
There are four sectors in which
technology is used within sport.
These are the rules enforcement
and referee assistance, the media
& reach sector, the wearable
gadgets and equipment used for
training and coaching support
sector, and within Ticketing &
Spectator Experience. Each
sector will bring its own economic
benefits to both the sport itself and
overall economy.
Chuck Pagno, ESPN Executive
VP of Technology, claims that
sports are actively using ‘more
cameras at better points as they
want to get better story telling
from the stadium’. Being able to
do this grips both viewers at home
and spectators at the stadium who
can see the same in a better light
with more high definition footage
at different angles. The larger the
public attention to sport, the more
money will come into the sports,
showing, as mentioned previously,
that the sectors of technology in
sport are all linked when studying
their relationship within the sporting
economy, as they all assist each
other in boosting the economic and
public profile of sport. Sensors on
players’ for biometric data has also
become a huge innovation in sport
which has had major economic
benefits. These sensors are often
used in team sports such as rugby
and cricket, where trackers are fitted
to the players shirts in order to
measure and monitor their physical
statistics during a game. According
to Johnathon Kraft, President of New
England Patriots and Co-Chair of the
NFL Digital Media Committee: ‘so
many people are into fitness today,
they like to know how fast a ball is
moving or how far or fast someone
has run’. This gives people an
incentive to buy similar gadgets to
those used in the professional game,
hence the innovation and popularity
of the Apple watch, which is in everincreasing demand. In 2015, the
Times reported a huge spike in Apple
profits as they made $1billion
annually in sales from just the first
series watch. This highlights how
changes in technology in sport can
influence public buying trends, as it
has increased demand for fitnessrelated equipment for the average
consumer. However, as one can see
by the fact that it is large monopoly
firms such as Apple gaining the
benefits of technologically enhancing
the sports industry, it is clear that
once again it is MEDCs (More
Economically Developed Countries)
who are economically advantaged as
a result of changing technology in
sport.
It is here where consumers have a
large enough disposable income to
afford these merit goods, and so
here where
economies are most largely
impacted. That said, it is not here
where these goods are actually
produced, as many large scale
firms such as Apple base their
production factories in LEDs (less
economically developed
countries). These countries are
therefore also benefitting as the
factories require labour, so there
are employment opportunities for
the locals which have little
opportunity cost for other
employment options within their
working areas are few and
undesirable. That said, the extent
which the total economies each
benefit in terms of MEDCs to
LEDCs is far greater for the first,
as this is where profits are at their
maximum, for the power is in the
hands of the CEOs of the
company.
A further way in which the
economic impact of changing
technology in sport can be seen is
through the signage at sport
stadiums. Previously, sponsors
would provide brick posters to go
on display for crowds, but with
modern advertising methods such
as LED, advertising is more eyecatching and greater volumes of
sponsors can be seen throughout
the duration of the game. For
example, instead of displaying the
score between overs during a
cricket fixture, digital screens can
be used to rotate, for instance,
six-second advertisements for
crowd viewing, while not
interfering with the game as no
play takes place at this moment in
time. Here, the flexibility of this
form of advertising makes a
difference economically as it
ensures that many more products
can be viewed by the spectators,
hence contributing to the growing
overall
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The Shrewsbury Economist 2020
economic impact of changing
technology in sport as it contributes
to overall economic growth if more
people are consequently spending
on these advertised goods.
Furthermore, the growing media
coverage and accessibility of sport
assisted by technological change
has evolved to include sport-related
video gaming and alike. FIFA 20 is
a football simulation video game
published by Electronic Arts as part
of the FIFA series which can be
played on gaming consoles and
has over the past decade, in all
different versions of the game,
gripped the minds of, particularly,
British youths. The game allows
one to play using the professional
players’ characteristics in
tournaments which replicate the
structure of the professional game
itself, including the use of real time
action replays and alike. This is
revolutionary as these luxuries
perhaps would not usually be
accessible for the standard teen at
their local club fixture. These luxuries
which feature on the app really
attempt to engage players in the world
of professional football, and in recent
years football coaches have noticed
that the players demand to learn set
plays as those
which feature on the game,
something certainly not on the
minds of those who were brought
up as the pre-online generation, as
they were not exposed to these
ideas. This draws more players to
the sport, increasing the economic
strength of local clubs as they will
have greater funding through
membership subscriptions and
perhaps increased spending in club
bars. It also increases the fan base
for football itself as it gets more
people engaging in the sport,
possibly so much so that crowds
increase in numbers, economically
benefitting professional clubs too.
Overall, technological advancement
in sport is a flourishing industry. The
advantages they bring to sport itself
in terms of improving standards by
allowing players to monitor their
fitness and replay any mistakes
they make in games
increases the overall profile of
the sport, as more people are
willing to attend matches if
they know the game will be
played to the highest level
possible. This has economic
implications as it gets more
people involved in the fanbase
for sport, and so allows clubs
to use this extra revenue to
improve their facilities. The
extra money in sport also
means clubs are paying
greater levels of tax, and so
their success also attributes to
the economy’s success. The
greater consumer spending on
electronic sport-related goods
has also proved to have huge
economic benefits as more
people become healthconscious and so have a
greater demand for monitoring
their fitness.
Malawi
8 Malawi’s tobacco industry
By Sam Freeman
Owing to its effects on the body and
highly addictive nature, tobacco has
become a highly popular and
valuable commodity globally. It is
thought to have been worth almost
$700 billion in 2019 and has helped
many countries, including the USA,
on their respective routes to
economic growth.
(Malawi’s national flag since
independence from British rule in
1964 credit: Wikipedia)
Malawi had until recently shared in
the benefits of its entrance into this
lucrative world market, as tobacco
production continued to shift to
developing countries in order to
take advantage of the cheaper
supply of available labour during
the 1990s. At first this impact of the
widespread cultivation of tobacco
on the national
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The Shrewsbury Economist 2020
Peter Mutharika, President of Malawi
credit: The Guardian Nigeria)
economy was hugely beneficial, with
Malawi’s GDP growing 15% in 1995.
However, with the increased profits
associated with the industry arose
the eventual problem: the country
was inadvertently growing more
dependent on the crop which today
is believed to represent 55% of its
total exports. Without alteration, this
dependency could seriously delay
Malawi’s economic development,
with regulations and anti-smoking
campaigns gaining increased
popularity globally as further
scientific evidence finds links
between tobacco consumption and
serious health problems. This has
led consumption in the developed
world to fall steeply, with the effects
of this being felt by Malawi in
particular. With GDP
(Coffee grown in Malawi, credit:
CoffeeStrong.org)
growing at just 2% in 2012, this
obviously presented a severe
issue and led to questions over
whether the country’s tobacco
industry could survive. From
Malawi’s perspective, the
potential consequences of a
global decline in tobacco
consumption on its fragile
economy could be disastrous for
all corners of the country. Malawi
faces a problem that is common
amongst developing countries:
consumer preferences are
leading to decreased demand in
richer countries. This problem
stacks against the expansion of
its major export and therefore
economic development. Brazil
faces a similar problem with the
lucrative cattle farming industry.
With Jair Bolsonaro’s election in
2018 and promise to expand
industry regardless of the
consequences for the Amazon
rainforest, Brazil’s frustration
surfaced at the apparent
hypocrisy of developed countries
prohibiting emerging economies
from using their own resources in
order to develop. However, within
the tobacco market, worldwide
government initiatives seem to
be succeeding in gradually
reducing the levels of tobacco
smoking. Assuming this trend
continues, Malawi must adapt
and transform its economy if its
development is to continue in the
long run. Malawians view
tobacco as ‘green gold’ and
despite falling global demand,
the industry still provides jobs for
over 5 million workers. Therefore,
a rapid movement away from the
industry could be catastrophic in
a country where unemployment
can often mean starvation.
Ordinary Malawians are unlikely
to push for reduced tobacco
production. Even amongst the
wealthier elite who govern
Malawi, there exists a lack of
political will to reduce the relative
size of the tobacco industry.
Malawi scored just 31 out of 100
in the UN’s corruption perception
index (0= very corrupt, 100=very
clean) and so it
comes as little surprise that
many highly influential
government officials are linked
to the tobacco industry.
Therefore, in the short term
there are numerous obstacles
(both political and social) to
Malawi reducing its
dependency on the tobacco
industry.
Despite this, it may be that
Malawi is able to find a viable
alternative. For example, the
government has recently
signalled its intention to invest
in Malawi’s previously declining
coffee industry. Global demand
for the cash crop is growing
under similar conditions to
tobacco, rising for the seventh
year in a row. The U.S.A. is
registering an interest in
importing the country’s supply
of the crop. Opportunities will
also become more widely
available in industry in the long
term, with the size of Malawi’s
secondary sector growing to
10.7% in 2019.
However, the closely matched
skills between those needed to
farm tobacco and coffee
means the expansion of coffee
growing in Malawi may just
hold the key to moving away
from the tobacco industry and
towards a more stable
alternative whilst minimising
the economic consequences.
Tobacco being stored in a
warehouse in Malawi credit:
tobaccoasia.com)
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The Shrewsbury Economist 2020
Equally essential will be the support
of the government towards this
initiative. Malawi has liberalised
since the death of long-time leader
Bingu in 2012. Nevertheless,
corruption still remains prominent
and so the continued increase in
government transparency will be
necessary to further allow an easy
transition away from the country’s
dependency on tobacco. Will this
be possible in the long term? The
answer remains unclear but Malawi
can hope to follow in the example of
China
who were traditionally almost
entirely dependent on natural
resources for its exports but
through investments into its
manufacturing sector were able to
become one of the world’s
economic superpowers; iron and
steel represented just 2.6% of its
exports in 2018. Malawi’s ability to
move away from the tobacco
industry will largely depend on the
degree of political corruption within
the country. Let’s hope that the
new president in July can change
the country for the better.
A cigarette stand in
Edinburgh, Scotland credit:
Breitbart news)
Hong Kong
9 Will 2020 mark the end of free-market capitalism?
By Milton Tai
Friedman famously said, ‘If you want
to see capitalism in action, go to
Hong Kong.’ Thanks to Sir
Cowperthwaite, Financial Secretary
of Hong Kong from 1961 to 1971, the
then British colony prospered under
the policy of ‘positivenoninterventionism’. It was an
economic wonder; with virtually no
natural resources apart from a
harbour, it transformed from a small
village into one of the most
developed cities in the world. It
proved that the free market works.
Flash forward fifty years, the scene is
very different. It is the most
unaffordable place to live in the
world, with the average home costing
£0.96 million. As The Shrewsbury
Economist is going to press, Beijing
is in the process of imposing national
security laws on the supposedly SAR
after a year of civil unrest.
This is, sadly, not the only example
where countries are swapping a
liberal approach for a more
authoritarian or at least a more
protectionist one. In recent years we
saw Brexit, the rise of Trump and
Orbán, and the almost-rise of
Corbynism (including in the internal
election in this school). By the end of
2019, it seemed like the time has
passed for classical liberalism. Yet, all
these pale into
insignificance when compared with
the effects of the global pandemic.
Governments around the world are
reporting budget deficits on a scale
never seen before; Britain’s
monthly borrowing in April, at
£62.1 billion pounds, was the
highest ever number since the
modern records began. Countries
are bringing production lines back
home in the name of resilience, as
they discover that relying too much
on China or India might not help
them in a time of crisis. Firms are
forced, by hastily-introduced
legislations, to produce much
needed equipment to fight the
virus.
Few people are questioning these
measures that would seem bizarre
in normal times, and rightly so.
Special times indeed call for
special measures, but the question
of how it will shape our future
Hong Kong, source: Flickr
have to be paid at some point. No
one will say that Mr Sunak’s
furlough scheme is harming the
general public, but many will, and
should, question the sustainability
of such projects. The postpandemic economy will operate
at a level much lower than full
capacity for a considerable period
of time. what happens to the
unemployed/ recently fired then?
The collapse of world trade will
come at a cost, particularly to
developing countries.
Globalisation has helped to
narrow the gap between
developed and developing
countries while largely benefiting
both; the reverse will be true if
countries embrace protectionism
and even isolationism. The
special legislations, if not carefully
used, are arguably the deadliest
of all. The Hungarian strongman
Orbán now rules by decree, after
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The Shrewsbury Economist 2020
continually undermining the
checks and balances since being
in office. Many other less wellestablished democracies are
seeing similar trends.
Yet there does not need to be a
dichotomy between a free market
and a strong government.
Contrary to popular belief, they
are not mutually exclusive. Going
back to the example of Hong
Kong, there is perhaps still
something to learn from the
(deformed) emblem of capitalism.
The government took control in
almost every aspect imaginable
in the name of the common good.
However, by letting individuals,
which
sometimes include doctors and
nurses, to secure their own masks,
it allowed prices to skyrocket.
Unsurprisingly, supply surged.
Entrepreneurs bought face mask
machines for five times the market
price to set up factories that run
24/7; logistics companies, attracted
by the profits, are bringing in so
many masks so quickly that prices
are a fifth of that at the peak. The
absence of a PPE shortage no
doubt played a part in limiting
corona-related deaths to well below
10. It is a delicate balance, and
some countries might find it
tempting to tilt towards central
planning. Whilst we are mandating
the government to act decisively in
these unprecedented times, let us
not forget the merits and
efficiency of the invisible hand. Let
2020 mark not the end of freemarket capitalism, but the
rejuvenation of it.
Greenhouse gases
10 Electric Cars
By Lenka Hozzava
As our world pushes for a
greener future, electric cars are
becoming all the rage! 2019 was
a sorrowful year for petrol and
diesel cars, as diesel car sales
plummeted by 26%.
Nevertheless, we are striving to
achieve our goals - electric car
sales increased by 41%. Petrol
and diesel cars are known to
have a devastating impact on not
only our atmosphere but also the
environment and our health. In
an ideal car, the fuel would burn
to produce water and carbon
dioxide as well as energy to
power the car. Alone, this influx of
CO2 contributes to the harmful
greenhouse effect, causing global
warming. However, in the
common case of incomplete
combustion, the CO2 can react
with limited O2 causing the
formation of carbon monoxide, a
poisonous gas which can cause
severe respiratory problems. This
has many consequences not only
on individuals and their families
but also the healthcare system.
The NHS will be spending money on
a simply avoidable problem which is
of high importance as it would allow
greater funding to those with
unavoidable problems. One may
therefore argue, at its extremes, that
the only way we can make sure this
does not become a routine is by
converting to electricity. Electric cars
can come from much more reliable
and cleaner sources. Although
currently only 40% of our energy
comes from renewable resources,
this is nearly triple the amount in
2013. The percentage of cars reliant
on electricity is bound to increase,
with net zero carbon goals meaning
that electricity will be a greener
source of energy than oil or gas.
The government is keen for people
to replace petrol and diesel cars and
is offering a grant of £4500 to
subsidise the buying of an electric
car, showing the
significance of electric cars in the
government’s efforts to reduce
carbon consumption.
Nevertheless, the government are
thinking of lowering this to £3500.
Instead, it is thought that they
could spend money on other
pressing issues surrounding
electric cars. For example, roadside chargers. There are currently
4800 locations over the UK with
roadside chargers with 7500
individual charging ports,
compared to 8385 petrol stations
totalling 61200 petrol pumps. This
raises certain issues with
employment. With the inevitable
shutting down of many petrol
stations, many people will be left
unemployed. After all, a charging
port does not require employees
to operate. The government will
have to consider alternative
employment opportunities
perhaps in the manufacturing
industry as well as addressing the
issues of retraining in order for
workers to have the right skills.In
addition, the money may also go
to the manufacturing sector
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The Shrewsbury Economist 2020
allowing the cost of production of
these cars to fall, making them
cheaper and more accessible for
households to buy. By working
with the industry, the government
is hoping to reduce the price of an
electric car by a tenth. The
average price for an electric car
now is about £35,000.
Originally, petrol and diesel cars
where due to be scrapped by
2040, however this has been
brought forward to 2035. Already,
online searches for electric cars
have risen by 162% and sales
have tripled in January alone.
With the hope of having more
electric cars on the road, the
government is hoping to achieve
net zero goals sooner. This is a
hopeful sign as still only 1.6% of
our cars are powered by
renewable sources. This number
is worryingly low, and it needs to
be raised quickly. With 15 years
till polluting vehicles are banned,
many households will choose to
convert to electricity sooner. Many
will not see the benefits of buying
a polluting vehicle if they will have
to replace it soon anyway.
Therefore, it would only make
sense that there will be a sharp
increase in those buying electric
cars.
Although electric cars are glorified
by many, it Is important to
address some of the
potential disadvantages
associated with them. The main
concern is their practicality.
Once a charging port is found, it
can take a long time to charge.
It can take up to 8 hours to fully
charge an electric car, and even
the faster points take around 30
mins to reach 80%. Even this
figure is still unfavourably high
in comparison to the time it
takes to fill a standard petrol or
diesel car. Many are also faced
with the problem of the limited
range of the car. An average
electric car can travel 275km
before it needs recharging. This
is perfectly reasonable for short
around-town journeys; however,
it is unpractical for people who
travel frequently. Pedestrian
accidents are also a lot more
likely to happen due to the lack
of noise associated with the car.
You are 37% more likely to be
hit by an electric car than
another type of car. However, it
is also a beneficial aspect of the
car as there is less noise
pollution associated with it than
other models. Consequently,
many would argue that it is
simply a matter of getting used
to them and learning to be more
cautious drivers as well as
pedestrians.
But should we just rely on
electric cars? How about
electric scooters? A seemingly
ridiculous idea on the surface
but with certain unexpected
benefits! If governments where
to legalise electric scooters,
one-third of car journeys within
cities would be replaced! These
scooters take up less energy
and also allow people to be
outside in the fresh and healthy
air! An idea without flaws?
With that thought in mind, we
have managed to reduce our
greenhouse gas emissions by
2% in the last year. We are
heading in the right direction.
By getting rid of polluting
vehicles, we will by taking away
26% of our greenhouse
emissions, over a quarter of the
way to zero emissions. Electric
cars, and perhaps also
scooters, have the potential to
revolutionise our planet.
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Flybe
11 Turbulent times for Flybe
By Lenka Hozzava
Flybe is facing turbulent times.
After facing financial troubles,
companies including Stobart Air
and Virgin all have shares in the
airline. However, Flybe failed to
change barely any of their routes,
meaning that they were plunged
into a financial crisis yet again.
The government is currently in
talks with the European Union as
to whether they will be able to
assist Flybe to help pull them out
of financial struggle. However,
should the government intervene?
Would it be beneficial to assist this
airline in the hope that they will
learn from their mistake and invest
into new technology and ideas?
Or, would it be better for the
government to let Flybe fail, with
the hope that other airline
companies (such as Lonanair)
would pick up the routes and earn
a bigger profit?
Since 2010, a variety of economic
issues have meant that there has
been a significant profit loss for
the regional airline company,
Flybe. 2010 saw Flybe buying 35
new Embraer jets which proved to
be a large financial burden on the
company. It was an investment
that did not pay off as the
company is still trying to pay it off.
Soon after that, a failed IT system
upgrade meant that again, Flybe
lost millions. In 2017, Flybe started
competing with Loganair and they
both began to fly to the Western
Isles and areas in northern
Scotland. This proved devastating for
both companies as they both lost
millions. On top of all this, the
uncertainty of Brexit caused the
company a decline. It is estimated
that Flybe was losing £7000 per hour
during this period. Virgin Atlantic,
Stobart Air and Cyrus Capital
Partners all came to the rescue by
buying the company. Virgin Atlantic
owned 30% of the company and
rebranded Flybe as its own.
This is said to double Sir Richard
Branson’s fleet of aircraft. Stobart Air
did a similar thing and rebranded the
aircraft, and also diverted its route to
Southend and Carlisle. Cyrus
Capital Partners had the remaining
40% and said they would sell it once
Flybe’s value had increased.
However, after this happened in
January 2019, February 2019 saw
yet another sharp turn for the airline.
After the selling of Flybe Limited and
Flybe.com Limited to Connect
Airways, which saw many aircraft
rebranded as Virgin planes losing
their commercial value,
simultaneously Stobart Air withdrew
from the deal. Despite this, Flybe
continued to operate as normal.
Although this incident had certainly
been an eye-opener for Flybe, Flybe
itself failed to fundamentally change
its routes or prices. Instead, it
continued to operate as it did before
it reached its financial difficulties.
Therefore, as expected, in Jan 2020,
it emerged that Flybe was again
experiencing financial difficulties
despite financial support provided by
Connect Airways. As a result, the
government agreed to review Air
Passenger Duty on domestic flights
(this would usually mean that £26 is
added onto every domestic return
flight meaning that many people
would consider road or rail to be a
cheaper substitute). Now, the UK
government is in talks with the
European Commission as it is
considering taking a stake for the
airline, meaning that it will buy
some, if not all, of the company’s
shares, essentially making it a
government-run company.
The government therefore has to
be in talks with Flybe and the
European Commission to ensure it
does not break any state aid rules.
In addition to this, the government
is considering giving the company
a loan of up to £100 million.
However, the debate remains
whether the government should still
help support Flybe. It is obvious
that Flybe would have to make
some large changes in all areas of
the company. However, it has failed
to do that once so the government
would be taking a big gamble.
Some people would also argue that
by helping Flybe, they would be
causing not only heavy reliance on
government for help, but also
causing financial problems for
other competitive airlines such as
Loganair. Some people would think
that it would be better to let Flybe
fail, which will allow other
companies to excel and profit
more, meaning the opportunity cost
of the government purchasing
Flybe is high. Nevertheless, it is up
to the government how they chose
to help Flybe in this turbulent time.
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Europe
12 The rise of President Orbán in Hungary
By Mark Ellis
Viktor Orbán, Hungary’s prime
minister since 2010, has during the
last decade transformed Hungary
from a functioning democracy to a
one-party state in all but name
under a de facto supreme leader. He
has bludgeoned the Hungarian state
to his will, crushed domestic
opposition and spun events using
the state television service to create
mass hysteria, with cases in point
such as the migrant crisis. In 2016,
he laid out his vision of a ‘cultural
counter-revolution’ based on
defence of the nation, family and
Christianity which has worrying
parallels to the eugenics of the early
20th century especially prevalent in
Nazi propaganda in the 1930s.
Before the financial crisis, Hungary
had come to be regarded as one of
the most prosperous developing
European countries following the
collapse of the Soviet Union in the
late 1980s and early 1990s - a far
cry from the satirical description of it
being the "happiest barrack" in the
Soviet bloc. The Fidesz’s first
electoral victory occurred in 2010
partly due to Hungarians’
disillusionment with the Socialist
government following the 2008-9
financial crisis which had caused a
6.7% decline in GDP, with
unemployment rates increasing to
over 10% leading to many social
problems. Orbán gained large
popularity and thus votes from the
scapegoating of migrants as the
cause of Hungary’s problems, a
point which resonated with a large
swathe of the electorate.
Since Orbán took office,
unemployment has fallen from
11.4% to 3.5% due to what has
been coined as ‘orbanomics’ which
has confounded critics in its
success: The implementation of a
vast programme where hundreds of
thousands of low-skilled jobs were
given to the unemployed.
Furthermore, government debt, as a
proportion of Hungary’s GDP, has
fallen by more than 6% since 2010.
The country’s credit ratings have
improved. The budget deficit has
roughly halved. Growth has almost
quadrupled. These vast
improvements have been accredited
to Orbán by many Hungarians and
thus many are prepared to vote for
him without questioning his other
more controversial policies such as
attacks on civil liberties, the judiciary
and opposition groups.
Some critics have even accused him
of presiding over the centralisation of
political and economic power
unparalleled since the collapse of
communism. For instance, the
nationalisation of compulsory private
pension funds, which opened up a
public revenue stream that has been
accredited with reducing the deficit,
but some estimates have put the
increase in the government’s
liabilities as being by more than 15%
of national output. Orbán has
changed the constitution of Hungary
in order to retain and expand his
power by making the most of his
large mandates. One of the
significant changes to the
constitution was that voters only
elected 199 MPs in 2014 instead of
the previous 386 in 2010 which
practically redrew Hungary’s
electoral map. Critics of the new
electoral boundaries argue that the
borders were gerrymandered in
favour of Fidesz at the expense of
traditional left-wing electoral districts
which has enabled him to implement
his economic reforms such as a
huge surge in military spending by
over $500 million since 2014.
Immigration has been a crucial part
of most European elections
especially since the migrant crisis of
2015. It has fuelled many populist
movements with examples including
Marine Le Pen’s campaign which
claimed they would “protect France”
with a vow to suspend immigration
and defend the country against the
threat of “savage globalisation” which
leads to
increased unemployment.
Furthermore, immigration was
one of the main reasons why the
UK voted to leave the EU in
2016. Increased immigration
causes there to be an increase in
the supply of labour which thus
results in the LRAS curve shifting
to the right. However, due to the
surplus in labour, wages fall. The
issue of migration has proven to
be an especially effective
instrument in mobilising less
educated voters, chiefly in rural
areas for Orbán. He has
successfully persuaded this
significant part of the electorate
that he and his party are the only
ones who can protect the country
against a “Muslim invasion”. In
Hungary, the Fidesz party
increased its vote share in 2018
following a campaign based
almost entirely on the premise of
being tough on immigration with
ever more draconian, and
unsustainable, enforcement
policies. The creation of
“container camps” at the
Hungarian-Serbian border is a
good example of one of the more
extreme measures to ensure
lower immigration.
Whilst Orbán has restricted the
flow of immigration, Hungarian
workers have continued to
migrate out of the country in
pursuit of higher wages abroad.
This outflow of workers worsens
the dependency rations as the
number of taxpayers decreases
and thus leads to the
government having to increase
spending on pensions.
Furthermore, this has lead to a
skills shortage in Hungary with
many better educated
professionals leaving, with nearly
600,000 Hungarians (9% of the
working-age population) now
working outside of Hungary.
Orbán’s refusal to allow
immigrants to fill this void has
only exacerbated the
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The Shrewsbury Economist 2020
problem as the LRAS curve has
shifted left. The government was
forced into pushing legislation
through Parliament, commonly
known in Hungary as ‘slave laws’,
to try to address this shortage,
with new measures including
giving businesses the right to
make employees work up to 400
hours of overtime a year, whilst
only demanding that employers
pay for that overtime within three
years. This is much higher than
other EU nations such as the
Czech Republic where the
maximum is only 150 hours.
Increasingly, the issue of identity
has been a key part of the debate
across most European elections.
Many nations have followed
Hungary’s example, such as in the
Netherlands, where Thierry
Baudet, the leader of the FVD,
warned that immigration may lead
to the “homeopathic wateringdown” of Dutch culture, as well as
in Germany where the Alternative
for Germany (AfD) party brought
far-right nativism into the
Bundestag. Orbán has capitalised
on this sentiment and even stated
that “liberal democracy was
capable of surviving until it
abandoned its Christian
foundations.” Illiberal democracy,
he said, “is Christian
liberty and the protection of Christian
liberty.” He has advocated that
illiberalism is about putting the
common good first. An illiberal is one
who protects the country’s borders,
who protects the nation’s culture. In
this, Mr Orbán and his supporters
resemble the eugenics of the early
twentieth century, who worried that the
“superior races” (Europeans) were
doomed. This kind of ideology only
leads to devastation, as shown
throughout history such as the mass
genocides in Armenia and Rwanda
and more famously the Holocaust
throughout Europe.
Over the last ten years, Orbán and his
colleagues have sought to align the
executive, legislative and judicial
powers of the state in what he calls as
the “system of national cooperation”.
This “illiberal democracy” has been
accomplished with no violence and
comprehensive public support, which
has been partly achieved due to the
complete restructuring of Hungary’s
medialandscape to skew coverage in
favour of his party. The effects of such
a policy can be seen virtually
everywhere. However, the problem
has worsened since with the takeover
of the regional papers as well as the
closure of
Népszabadság, Hungary’s
largest opposition print
newspaper, which has led to a
pro-government media
conglomerate fuelled by lucrative
state advertising contracts. This
all leads to information failure
and thus market failure.
Unfortunately, the future does not
look bright for Hungary with
Orbán only strengthening his
position with every day that
passes. His gerrymandering of
election boundaries as well as
restrictions on freedom of the
press and strong anti-immigration
rhetoric have all placed him in an
unassailable position unless
Hungary’s economy collapsed.
This would be the only way that
Orbán could be realistically
challenged as this would cause
incomes to decline and thus lead
to the electorate turning against
his regime of “soft fascism” and
turning towards an alternative
party. Although Hungary may be
over 2000km away from the UK,
the problem of Orbán is a
pressing issue as other nations
may well follow suite and thus
threaten the democratic
freedoms that have been
unchallenged since the fall of the
Soviet Union. However, this is a
more significant issue for Europe
and more specifically the EU
which Hungary is a member of.
The continent of Europe may
have many kinds of regimes, but
member states within the
European Union must be
democratic for it to function as
intended and to uphold its
values. The rise of Orbán must
be seen as a warning to other
European nations of the dangers
that the rise of populism can
cause.
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UK & Hong Kong
13 The minimum wage
By Max Cheung
In most parts of the world, the
labour market is not a free market.
It is usually intervened by the
government by introducing a
minimum wage. Minimum wage
(MW) is the lowest remuneration
which employers are legally
excepted to pay their workers.
This legislation has been
introduced by most countries at
the end of the 1900s. In the UK,
the minimum wage was
introduced by the Labour
government in 1998, with the rate
at £8.72 starting on the 1st April
2020. The Legislative Council of
Hong Kong enacted the Minimum
Wage Ordinance to set a
minimum wage in July 2010, with
the current rate at $37.5 HKD
(~£3.75). Comparing the two
figures, UK workers at minimum
wage seem to be much better off,
as they are earning more than
double of what Hong Kong
workers are receiving at minimum
wage in nominal terms. However,
is this the actual case? In this
article we will be discussing
whether it is justified to have the
current rates of minimum wage by
comparing numerous factors of
these two countries.
In Hong Kong, a normal worker
who is working at MW works an
average of 42 hours per week.
This gives an annual income of
$75,600 HKD (£7,560). This is
way below the income tax
allowance in Hong Kong.
Hence these workers do not have
to pay any tax. Whereas in the UK,
an average worker working at MW
works around 37.5 hours per week
– which is the median of the UK.
The worker will, therefore, be
earning £15,696 annually. With the
UK's income tax allowance at
£12,500 and a basic income tax
rate of 20%, the worker will be left
with a disposable income of
£15,056. Although workers in
Hong Kong at MW do not have to
pay tax, from the statistic above it
shows that UK workers at MW,
after paying tax, earn about twice
as much as Hong Kong workers
do at MW. Having said that, UK
workers work fewer hours than
Hong Kong workers. Is this
because the minimum wage in
Hong Kong has forced the workers
to work for longer hours to fulfil
their basic needs? 'Yes' would be
the simple answer.
Hong Kong is known to be one of
the most densely populated places
in the world. It has a population
density of 6,659 people per km2.
With limited space for housing, the
housing price in Hong Kong is the
most expensive on our planet.
This is further worsened by
mainland Chinese immigrating,
who raise the housing price even
further. The average cost to rent a
flat in the UK (£728/month) is
more than 2 times cheaper than
renting an adequate flat in Hong
Kong(£1,743/month). People in
the UK working at MW with £1,308
every month will be able to afford
shelter. Not such the case in Hong
Kong. workers at MW would be
earning only £630 per month. This
gives them no option but to give
up renting an adequate flat and to
go for a than 2 times cheaper than
renting an adequate flat in Hong
Kong(£1,743/month). People in
the UK working at MW with £1,308
every month will be able to afford
shelter. Not such the
case in Hong Kong, workers at
MW would be earning only £630
per month. This gives them no
option, but to give up renting an
adequate flat and to go for a
subdivided flat. This type of rental
housing is introduced in the
housing market to solve a market
failure – shortage of housing.
Subdivided flats are usually
disturbingly poor in quality and
unsanitary, yet they are
ubiquitous in Hong Kong. Some
might argue public housing
(council houses) should resolve
this problem. However, in both
the UK and Hong Kong, there is
an excess demand for public
housing, creating a shortage. In
Hong Kong, it is even being
categorised as an 'impossible
task' to buy and own an adequate
place for living. The average
price to buy an apartment in
Hong Kong is 5 times as much as
the UK's, even if we compare the
price of Hong Kong to London,
the price in Hong Kong is still
doubled. Overall, ceteris paribus,
looking at the housing market
and supply of housing in both
countries and doing a
comparison, the statistics show
an overwhelming result of how
Hong Kong's MW is being set too
low in relation to the housing
market, which leads to workers
working at MW unable to find
adequate shelter, thus a low
standard of living.
Cost of living is inarguably the
most important aspect
considered when setting the
minimum wage. Cost of living
includes the cost for food,
transport and shelter (which is
mentioned above), which is
positively correlated to the price
level. The price level is measured
by the CPI (Consumer Price
Index). Most food-related goods
like milk, beef, fruits or bread in
Hong Kong are at
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The Shrewsbury Economist 2020
least double the price of the UK.
For example, 1L of milk cost £0.91
in the UK, whereas in Hong Kong,
that would have cost £2.22. Food
is the most commonly consumed
type of goods, as it is essential in
everyday life. On the
other hand, transport costs in
the UK are more than double
what they are in Hong Kong.
Cost for transport in the UK is
more than double of what it is in
Hong Kong. Combining these
two costs of living, the UK is still
cheaper to live in than Hong
Kong. The reason for this is that
food is regarded as the more
significant factor between the
two, as it 'weights' more to
consumers. Therefore, a higher
price for food would affect
ordinary consumers greater. As
a result, the cost of living in
Hong Kong is higher relative to
the UK's, linking with the low
MW, it is clear to everyone that
Hong Kong workers are worse
off.
Minimum wage should be
related to productivity; as MW
increases there should be an
incentive for workers to become
more productive. Moreover, it
would encourage employers to
train their workers to become
more productive to avoid being
eliminated from the market.
When productivity increases,
MW should be raised to reward
and motivate the workers.
However, in both the UK and
Hong Kong, no pattern of this is
seen. In fact, in the UK, labour
productivity has barely
increased after 2014, averaging
an annual increase of 0.3%.
Therefore, productivity has only
risen by 1.5% over the last 5 years.
However, MW in the UK has
increased by more than 30% since
2014. The inability to increase
productivity combined with a rise in
MW has affected society
negatively because this made it
harder to lift GDP and impose
higher wages for ordinary workers.
This lowers the standards of living
as a whole for society. In contrast,
Hong Kong has achieved an
annual increase of around 2% in
productivity since 2014, giving an
overall rise of 9.5% for the past 5
years. Although the MW in Hong
Kong has been raised, it is
nowhere near the 30% which UK
workers enjoy. Hong Kong's MW
only rose by 15% over the past 5
years. The increase in productivity
has allowed wages for ordinary
employees to go up. This would
lead to an upsurge in consumption,
causing an increase in aggregate
demand and pushing up the price
level. Therefore, workers at MW –
fixed income – will be worse off.
Inflation is a sustainable increase
in the price level. Inflation rate in
Hong Kong has averaged 3.3% for
the past 10 years, while the UK
has been close to its trend at 2%
inflation with its current rate at
1.8%. As the UK government has
announced an increase in MW by
6.2% to £8.72, UK workers will,
therefore, receive a pay rise which
is quadruple the inflation rate. This
is known as a rise in real income;
thus, the employees are better off.
In 2019, Hong Kong had saw its
MW rise by 8.7% to $37.5 HKD
(£3.75) which beats the inflation
rate, Unlike in 2017, where MW
trailed behind inflation by 0.1%. An
increase in MW would lead to
higher purchasing power, hence
create demand-pull inflation. In
Hong Kong, the inflation rate was
expected to rise by 0.1%, meaning
workers would have an 8.6% rise
Putting income aside, welfare
benefits can create a huge impact
on low-income households. To
claim benefits – universal credit – in
the UK, workers have to be working
under 16 hours a week. Therefore,
a normal worker at MW who works
the average number of hours in the
UK will not be entitled to claim the
benefits. In contrast, the
Comprehensive Social Security
Assistance scheme is a welfare
programme in Hong Kong which
provides supplementary payments
to low-income households. These
households usually work at the MW
and find it difficult to meet their
basic needs. The scheme ensures
an extra $32,000 HKD annually.
Since the Hong Kong government
spends more on benefits, Hong
Kong employees will be able to take
advantage of this. Having said that,
this wouldn't necessarily close the
gap of living standards between
British workers and Hong Kong
workers, even though this is a good
policy to minimise the governmental
interference with the labour market
and simultaneously subsidise these
low-income households.
Alongside the monetary factors,
health care and crime will play
a part in determining standards.
The health care services in
both Hong Kong and the UK
are two of the best in the world,
as they are affordable by
normal citizens and guaranteed
high-quality service. The only
downside is the long waiting
times. The crime rate in Hong
Kong is 3.2%, whereas in the
UK the rate is 9.5%. Therefore,
in terms of crime rate, Hong
Kong workers will be better off.
The minimum wage is not
favoured by free-market
economists as they believe
minimum wage can cause a
rise in unemployment.
However, the unemployment
rates are 3.4% and 3.8% in
Hong Kong and the UK
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The Shrewsbury Economist 2020
respectively. Although
unemployment rates have
been low, this has neglected
the problem of underemployment. In the UK, more
than 14% of employees
working part-time would wish
to work full-time. This is the
case because when wage
levels go up, firms lower their
cost of production not by
cutting back labour, instead by
reducing the working hours of
employees. This can be used
to justify the reason for not
increasing the MW immensely.
Minimum wage – price floor of
the labour market – is
introduced to protect workers
from exploitation in work. Also,
it is used to ensure workers’
basic needs are met. In the
UK, the level of the minimum
wage is justifiable as it
provides employees with a
decent standard of living. Along
with this it will not shock the
market and cause mass
unemployment. On the other
hand, lots of workers at MW in
Hong Kong struggle to fulfil
their daily requirements.
Although they are subsidised
by the government, it has only
contributed trivial effects on
improving their lives. A reason
for this is the MW is only
altered once every two years,
therefore, workers at MW will
experience a fall in real income
in the year in-between the
adjustment due to inflation.
Overall, MW in Hong
Kong seems unreasonable.
However, it could be
justified, because a massive
increase in MW will trigger
an increase in
unemployment, especially
for inexperienced teenagers
and workers with a disability.
Hence employees will be
worse off because of the
scheme which is supposed
to be used for protecting
their rights.
To conclude, it is indubitable
that the minimum wage has
improved people's living
standards, compared with
the times without it. Since
the policy acted as an
incentive to work, it has led
to economic growth.
Therefore, higher quality
products are produced,
giving a better standard of
living for ordinary people.
Conversely, an introduction
of a minimum wage has
raised price levels, as firms
decide to place their burden
(cost of production) on the
consumers instead.
Furthermore, the long-run
aggregate supply will not
grow, because firms will be
less willing to employ
inexperienced workers and
train them. As importantly, the
flexibility of the labour market
has reduced due to minimum
wage. This lowers the
competitiveness of the
economy as a whole. Although
there are negative effects of
the minimum wage, I believe it
is essential for the economy.
The minimum wage in Hong
Kong is unjustifiable as it does
not ensure the basic needs of
workers are being met.
Although some might argue a
greater increase in minimum
wage will cause
unemployment, this is not true,
as this pay rise is only suitable
for workers at minimum wage.
These workers work in lowskilled jobs. In Hong Kong,
there is inelastic demand for
low-skilled workers as more
and more people graduate at
the university level, fewer lowskilled workers are available in
the market. As a result, the
minimum wage should be
raised higher to reduce poverty
and close the inequity of
wealth in Hong Kong.
Additionally, unemployment
caused by a higher minimum
wage will be outweighed by the
long-term benefits of a
minimum wage, as a higher
level of minimum wage will act
as a strong incentive to raise
productivity. Once productivity
is raised, sustained economic
growth will be achieved,
therefore more jobs will be
created. Hence the whole of
society will be better off.
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The Shrewsbury Economist 2020
Myanmar
14 Myanmar’s Rohingya Crisis
By Johan Wong
Portrayed by UN SecretaryGeneral Antonio Guterres as "one
of the, if not the most,
discriminated people in the
world", the people of Rohingya
are a Muslim minority group
situated in the Rakhine state of
Myanmar's Buddhist majority
country. They represent the
largest percentage of Muslims in
Myanmar. This article illustrates
the current crisis occurring in the
northern Rakhine state and its
economic impacts on the country.
The crisis started in August 2017
when deadly attacks launched by
the Burmese military forced
hundreds of thousands of
Rohingya Muslims to flee their
homes and villages. Most of them
were forced to migrate across the
border to Bangladesh and some
to other neighbouring countries
such as Thailand, Singapore and
India. This act was described by
the United Nations as a "textbook
example of ethnic cleansing" and
although the government
identified them as "illegal
immigrants from Bangladesh",
their origins trace back to the
fifteenth century when thousands
of Muslims immigrated to what
was formerly known as the
Arakan Kingdom. Many others
arrived in the late nineteenth and
early twentieth century when
Myanmar was governed by
colonial rule as part of British
India.
Years later, Burma gained
independence in 1948 and
renamed the country to Myanmar
in 1989, and in the same year the
government labelled the
Rohingyas as "one of the
country's 135 official ethnic
groups". This essentially meant
that most of them had no legal
documentation, leaving them
stateless with no real citizenship.
Without this, the
Rohingya people lacked basic
access to health care and lived in
inhumane conditions. This law was
enforced by the military-ruled
government who took charge in
1962.
An exodus began on the 25th of
August 2017 when Rohingya
insurgents launched deadly
attacks overnight on more than 30
police posts in Rakhine, leaving 71
people dead including 13 Burmese
police officers. This infuriated the
military which led to the start of a
‘brutal campaign’ against them.
The action took place as the
military attacked Rohingya villages
and burned down homes with a
genocidal intent. In the first month
6,700 Rohingya including at least
730 children under the age of five
were killed, according to the BBC.
This forced the vulnerable
Rohingya people to flee their
homes. Some of the Rohingya
questioned by reporters from the
BBC say that people were being
killed, women were being raped
and their homes
were being burnt down. Today,
there are still over half a million
Rohingya believed to be living in
Rakhine state. Over the last 2
years, it is estimated that
Bangladesh has accepted around
1.1 million refugees but as of
March 2019, Bangladesh
announced it would no longer
accept refugees fleeing from
Myanmar. Furthermore, satellite
images and investigations in the
state has shown that the Myanmar
government has cleared the
villages to make way for
government facilities. However
when questioned, all claims were
denied.
Almost a year after the exodus, a
year's worth of research (including
875 individual interviews), a report
was published to the public
confirming that the Burmese
Rohingya Muslim refugees wait
to receive food distributed from a
Turkish aid agency at
Thaingkhali refugee camp in
Ukhia, Bangladesh on Saturday.
Source: Tauseef Mustafa/AFP/
Getty Images
army led the mass killing of over
10,000 Rohingyas. In the 2019
summit, Myanmar's de facto
leader Aung San Suu Kyi, a
Nobel Peace Prize winner and
the current State Counsellor of
Myanmar, denied all allegations
of genocide insisting that it was
all under control. In January
2020, the UN's top court ordered
the Burmese military to act to
protect members of the
Rohingya community from this
genocide.
This crisis has massively
impacted Myanmar's economy.
Aung Naing Oo, a Myanmar
foreign investment official, has
said that "Myanmar has
completely underestimated the
economic impacts of this crisis",
especially since the country's
FDI (Foreign Direct Investment)
is declining. Between April and
September 2017, the exodus
was not recognised
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The Shrewsbury Economist 2020
Rohingya Villages being burnt down.
Source: BBC News
globally. During this time,
investments were at $3 billion and in
2018, they almost halved to $1.7
billion. The decrease in investments
consequently caused inflation to rise
to 8.5% as of 2018, compared to
5.5% in 2017. Moreover, it resulted
in higher costs of living and a
decrease in national output. The
Burmese currency known as kyats
has also depreciated at around 25%
against the US dollar, this being a lot
more than any other currency in
south-east Asia. However, this can
be seen as a good thing, especially
for the
Myanmar export industry. The
second biggest export sector in
Myanmar, garment-making, is
under threat as the European
Union is assessing whether to
accept exports from Myanmar
with the current crisis going on,
like it has stopped with
Cambodia's manufacturing
sector due to Hun Sen's
dictatorship. If the EU decided
to stop receiving exports from
Myanmar, thousands of people
working in this sector could
lose their jobs because, as of
2017, garments comprised
nearly 72.2% of Myanmar's
$1.8 billion exports to Europe
where Myanmar relishes a
trade surplus. The crisis has
driven tourists, particularly from
Europe and North America,
away from the country. This
had negative consequences as
6.6% of the Gross Domestic
Product in the economy is
through tourism. However
quick action was taken by the
government as they introduced
visa-free tourism
for the citizens of Japan, South
Korea, Hong Kong and another 21
countries as of 1st October 2018.
Although you would expect this to
decrease the annual rate of
economic growth, astonishingly,
the GDP in Myanmar has
increased from 5.9% in 2017 to
6.8% in 2018.
In conclusion, both Myanmar
and Bangladesh will
eventually, supported by the
UN and foreign countries,
have to not only stop the
massacre but also resolve the
issue of Rohingyas’ legal
status, like giving them
Bangladesh citizenship as
there is little hope left that
Myanmar will ever give them
one. Although with potential
sanctions charged against
Myanmar, they will most likely
result in becoming Burmese
Citizens.
Scotland
15 Scottish Independence
By Mark Ellis
Ask the people a question and you
may not get the answer you want. This
is what happened to Alex Salmond and
Nicola Sturgeon in 2014 following the
‘once in a lifetime’ referendum on
Scottish Independence. The resulting
outcome was that 55 percent of votes
cast rejected the breakup of the United
Kingdom, which has been a longstanding union since 1707 under King
James VI.
perpetuated by figures such
as Alistair Darling for staying
part of Britain was the
economic argument and
research has shown that
anyone worried about the
potential negative economic
impacts of an independent
Scotland voted No, whereas
others voted Yes purely for
the reason of sovereignty,
which echoes the ‘illegal’
Catalonian referendum.
The 2014 Scottish independence
referendum was ‘lost’ primarily as a
result of the nationalists being unable
to convince the electorate that they
would be better off economically
outside of the union. One of the main
arguments
The nationalists had promised
a land of milk and honey, full
of opportunities and
prosperity for the Scottish
people should they vote for
independence, and
suggested that one of the ways
that this would be covered was by
tax revenues from North Sea oil
and gas production which would
return from Westminster. In 2013,
the Scottish government
suggested that such revenues
could be worth £7.5bn per year.
However, oil prices slumped in
2014 partly due to OPEC’s
decision not to cut production
levels despite the increase in
production from non-OPEC
nations.
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The Shrewsbury Economist 2020
Government tax revenue from
oil and gas has declined from
2014 and even turned negative
in 2015/16. Scotland’s economic
growth is expected to remain
below the rest of the UK, partly
as a result of the decrease in
annual revenue from North Sea
production.
Scotland’s net fiscal balance
excluding the North Sea
revenue in 2013 was a deficit of
£14.1bn. Currently the
difference is made up by money
from Westminster (figure 2)
which would be lost were
Scotland to go it alone. It would
appear that Scotland would
suffer significant problems from
breaking away in a similar way
to any other British region if it
were untethered from the
economic dynamo that is
London. Some commentators
have even suggested that
Scotland is about as fiscally
independent as Yorkshire.
Running such a large deficit
(8.5% of GDP) is not a feasible
strategy and would probably
result in a decrease in
government spending. This
appears to present a grimmer
future than the end of the
rainbow which nationalists had
previously advocated, most
likely having to reduce
expenditure on infrastructure
and the NHS. A significant issue
that Scotland faces is that its
economy is missing a large
productive city like London,
Paris or Copenhagen, which can
subsidise less productive rural
areas. Scotland’s population of
5.4 million is less than two-thirds
of London’s. Its capital,
Edinburgh may have a high
output per resident. However, it
is just too small to produce the
required tax revenue, and
Scotland’s largest city, Glasgow,
isn’t productive enough.
Typically, the most economically
dynamic cities in a nation are
the largest, due to the benefits
generated by “economies of
agglomeration,” which bring
people and
businesses closer together to
improve efficiency.
Since 2014, the political climate has
changed substantially following the
polarising Brexit vote. The Scottish
National Party has since increased
its seat share in Westminster from
35 to 48 of Scotland’s 59
constituencies, which has only
strengthened calls for a new
referendum. Opinion polls appear to
have shifted slightly towards
independence to around a 50:50
split which shows the divisive nature
of this matter. Since the 2014
referendum defeat, the SNP has
been constructing a case for another
referendum and their case appears
convincing (assuming most SNP
supporters would also vote for
independence) considering their
strong election results in 2015, 2017
and now 2019.
The most recent election has
been coined as a Brexit election
in England especially, with
traditional labour seats such as
Blythe Valley turning Tory for the
first time ever which has been
attributed to Boris’ supposedly
clear position on Brexit.
However, the election was a
much more complicated affair
north of the border. Scotland
voted by 62% to 38% to remain
in the EU. The SNP have taken
the result as showing a change
in Scottish opinion over its
future relationship with the rest
of the UK. Others have
suggested that it was just the
result of anti-Brexit sentiment in
Scotland. Neither Boris
Johnson’s Conservatives nor
the
broken
Labour
party
have high levels of support
and a rising number of
Scots have come to the
conclusion that an
independent Scotland
inside the European Union
would be much more
favourable to staying in an
English-dominated, Brexited
Britain.
Nationalists have pointed to
the fact that despite the
economic warnings,
orchestrated by the ‘Project
Fear’ campaign that Brexit
would result in an
immediate economic
collapse, leave won and
there was no collapse. The
nationalists have argued
that this would be mirrored
in the event of an
independent Scotland.
However, new polls show
that there has been an
increase in the number of
Scots who believe that the
prospect of re-joining the
EU as an independent
country will be beneficial for
the economy, although
there are some significant
barriers to entry as Turkey
has found out. Another
issue that nationalists must
face is the highly likely
prospect that their
application to join the EU
will be rejected as a result
of every EU member state
having to ratify any treaty,
and nations such as Spain
will reject in order not to set
a precedent for states such
as Catalonia to follow
Scotland’s route.
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The Shrewsbury Economist 2020
At the centre of the
nationalist campaign is the
assertion that Scotland
would be a more prosperous
and more equal nation if it
went alone. They accuse
successive British
governments for almost all of
Scotland’s past and present
problems, from the decline of
manufacturing industry to
poor health to the high price
of sending parcels in the
Highlands. However, it is
worth noting that most of
their trade is done with the
rest of the UK. The core
economic arguments for
independence are that full
control over tax rates, North
Sea oil and membership of
the EU will foster great
prosperity. Nevertheless, in
order to achieve
independence, nationalists
must convince the ‘silent
majority’ of the Scottish
people who are sceptical of
the alleged economic
benefits and still believe
that it would be too great an
economic gamble.
Independence will cause
problems such as whether
the England-Scotland border
will be able to remain
frictionless with one in the
EU, which is not without
precedent, as shown by the
Venezuela
16 Juan Guaidó and Venezuela’s Hyperinflation
By Tim Levin
Imagine the price of your
groceries, electronics and other
goods consistently doubling,
month after month, with no visible
end in the near future. This,
together with the most severe
humanitarian crisis in the
Americas, is what the citizens of
the Latin American country of
Venezuela have been suffering for
over 3 years under the unbudging
dictatorial regime of Nicolás
Maduro. Despite the awe-inspiring
demonstrations of oppositional
leader Juan Guaidó in January of
last year, recent developments
seem to show that Maduro has no
plans to give up his leadership and
that the country will continue in its
chaotic state.
The roots of the issue go back to
Maduro’s undertaking of the
presidential role in April 2013, when
he took control of a country whose
currency had already undergone
continuous and uninterrupted
double-digit inflation rates since
1983, and one which was greatly
dependent on its oil exports to
foreign countries. This allowed
previous president Chavez to pay for
social programmes to combat
poverty and inequality, thus
increasing the budget deficit with
hopes of continued rises in oil prices.
In 2014, however, Maduro was faced
with a global drop in oil prices,
caused by a gradual reduction in
growth and demand from large
emerging economies. This heavily
damaged Venezuelan exports,
causing a depreciation of the Bolívar
(the national currency) and a spike in
import prices for the country’s
citizens. Maduro’s first response was
to print more money, in an attempt to
keep Venezuela’s
economy moving and maintain the
previous social spending. Despite
this, oil prices continued falling and
so did the country’s output,
causing international investors and
local savers to exchange their
Bolívars for U.S. dollars, further
contributing to the depreciation and
rises in prices.
Over the course of the following
years, rampant hyperinflation
(peaking at 10,000,000% in 2019)
forced the Maduro administration
to devalue the currency by a factor
of 1,000,000 Bolívars to 1 new
‘Bolívar Soberano’ (sovereign
Bolívar) which has been valued at
80,000 Bs.S to 1 U.S. dollar as of
January 2020. Moreover, the
government’s ‘increases’ in
minimum wage fell far behind
inflation rates, causing it to fall in
real terms from the equivalent of
$360/month in 2012 to a meagre
$2/month by late-August 2019.
Many of Maduro’s attempted
solutions to the crisis have been
met with criticism and mistrust
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The Shrewsbury Economist 2020
country has since been locked in a
political stalemate: an
internationally infamous
government, with no control over
state functions, running parallel to
an unyielding regime.
Juan Guaidó on the left, Nicolás
Maduro on the right
stemming from accusations of
interferences with elections.
Therefore, the country
experienced an increase in
‘dollarization’ (about 54% of
Venezuelan transactions in Sept.
2019 were in U.S. dollars) and
prevalence of black-market
currency trading between citizens:
a common coping mechanism for
an economy’s inability to provide.
Juan Guaidó, former leader of the
social-democratic Popular Will
party, has shown in the past year
to be the boldest challenge to
Maduro’s dictatorship. On 23rd
January 2019, the National
Assembly leader protested on the
streets of Caracas against the
legitimacy of Maduro’s 2018
presidential re-election, labelling
him a ‘usurper’ of the role.
Cheered on by hundreds of
thousands of supporters, he
proceeded to declare himself as
the country’s rightful president,
constitution in hand. Immediately,
he gained the recognition of over
50 countries, with the US even
imposing sanctions against
Maduro’s administration. Guaidó
promised Venezuelans and the
socialist administration
‘dictatorship’ and free and fair
elections ‘within months’.
However, over the past year,
Maduro – with the broad support
of the military – has refused to
cede power. Peace talks by
Guaidó have made no tangible
progress and the
More recently, Guaidó faced
obstacles regarding his re-election
as head of National Assembly, a
position he needed to keep in
order to continue as president.
Although he was confident he had
the votes necessary for this to
happen, just days after Christmas
of 2019, he was restricted from
entering the parliament on election
day - 7th January 2020. A
blockade set up around the
building by Maduro’s national
guard prevented Guaidó from
putting himself forward as a
candidate, forcing him to try to
climb over the surrounding fence
in an unsuccessful attempt to
enter. This allowed Maduro to
hand the position, without vote, to
Luis Parra, a former ally to the
opposition recently expelled due to
corruption allegations.
Guaidó sought to rebuild
momentum to oust Maduro during
his 3-week international tour in
February. After disobeying his
travel ban and leaving Venezuela,
he visited countries around the
world, delivering speeches about
Venezuela’s current crisis and
pleading for support at the World
Economic Forum where he
described the situation as
‘comparative to Syria’. He also
managed to demonstrate his
retained international backing by
meeting heads of state of Britain
and France, and most notably U.S.
president Donald
Trump who called him the
‘legitimate president of
Venezuela’ and has promised
further sanctions on Maduro.
However, Guaidó’s main
problems remained within
Venezuela, where, upon
return, he was greeted with
insults and dubbed a ‘traitor’
by crowds of Maduro
supporters
The government have
themselves admitted that the
last 12 months have been
‘very tough’, after polls
suggested their popularity
among Venezuelans has
plummeted from 63% in
January 2019 to 39.9% in
December of the same year.
As time passed following the
eminent protests without any
significant advances from the
new government, many of
Guaidó’s supporters became
‘exhausted’, losing faith in his
ability to deliver the promised
regime change. He himself
attributes the slow process to
his underestimation of the
regime’s tenacity, failing to
account for Maduro’s heavily
bribed allies and loyal army,
who he initially believed would
be moved by the rallies. He
also criticised the severe lack
of the new government’s
‘ability to inflict harm’ to
Maduro’s administration and
the ‘absence of a credible
threat of the use of force from
the international community’,
expressing that current
sanctions are simply not
enough. Although Guaidó has
recently tried to rebuild the
momentum he appeared to
have in early 2019, frustrated
citizens have shown waning
enthusiasm,
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The Shrewsbury Economist 2020
with only several hundred
attending his most recent protests,
with the rest retreating to their
homes and a continued fight for
survival. As a result, Guaidó’s
future within the country is quite
uncertain and only time will tell
whether he will be successful in
his fight for democracy. He
himself has said that ‘there is
no manual...for battling a
dictatorship’. Meanwhile, we
are left with a country holding
the world’s largest oil reserves
while experiencing a
hyperinflation crisis more
severe than even
that of Zimbabwe in the late
2000s; a country whose
society is in such despair and
distrust of their government,
that over 1 in every 6 of its
citizens has fled across its
border since 2015.
Coronavirus
17 The Coronavirus Disaster
By Kanei Nishii
No one could predict 2020 to be
a year of a devastating wildfire in
Australia, the assassination of
Iran’s General Soleimani by the
US military, the impeachment of
Donald Trump, and on top of all
that, an unprecedented global
pandemic killing hundreds of
thousands, and bringing the
world into economic turmoil. The
impact of the Coronavirus
pandemic was by far the most
devastating out of the other
pandemics in recent past, and
the economic impacts are
forecast to be worse than the
Global Financial Crisis.
The economic effects of
Covid-19 were the worst for
countries with a failed response
to the crisis. In the US, a
controversial President and an
extremely slow response to
contain the virus led to more
than 30 million people becoming
unemployed. In a desperate
attempt to save Trump’s
presidency, he reopened the
country sooner
than many other countries, which
inevitably led to more infections
and more deaths. Internationally,
the value of world shares
decreased by 20%, oil prices hit
negative values per barrel for the
first time ever, and flights were cut
to a quarter of the annual average.
The majority of developed nations
went into recession, including
China for the first time in decades.
This pandemic forced the world to
take unprecedented measures,
which led to global economic
turmoil.
Out of the countries affected by
Coronavirus, China’s economy
was disrupted more than
anyone’s. The unavoidable truth of
Covid-19 originating from Wuhan
damaged the country’s reputation
on the international stage,
especially considering they
accidentally released SARS from
their virus testing lab in 2010.
Their lack of transparency and
urgency when the virus first
emerged was also questioned,
prompting many world leaders to
condemn China’s inability to
contain the virus within Wuhan.
While the WHO was praising
China and its measures to prevent
Covid-19 from spreading, articles
emerged of WHO’s internal
discontent towards China for not
sharing sufficient information
about the virus. Claims of China
using the WHO as a puppet to
spread its presence
on the international stage, and its
mismanagement of the virus in the
first place, caused a worldwide
backlash which led to many
countries changing their relationship
with China. As a result, free trade
negotiations were put on hold or
went into review. China’s lack of
clarity, transparency and urgency
made it ‘the enemy of the world’
during the pandemic, which will
have severe implications on
international relations and economic
growth in the future, and rightly so.
The UK government’s economic
response was credited across the
world, although its overall handling
of Covid-19 was one of the worst. A
policy led by the Chancellor of the
Exchequer Rishi Sunak, the
‘furlough’ scheme paid up to 80% of
the workers’ wages who stayed at
home. Unlike economic policies of
most countries which gave funds to
corporations and businesses, the
UK’s furlough scheme sent money
33
The Shrewsbury Economist 2020
directly to those that needed it the
most. This meant a significant
proportion of firms didn’t have to lay
off its workers, protecting workers’
jobs and income. This also reduced
the financial burden imposed on
businesses to keep operating which
protected many small, independent
companies who would have
otherwise struggled to survive. This
scheme cost the UK government
£14 billion every month, covering
around 9 million workers. This
significant spending spree could
have been avoided with a quick and
effective response to the pandemic,
but the government did well to put
its economy on hold until the crisis
was over.
The UK - What went wrong.
The UK’s response to this
pandemic was undoubtedly the
worst in Europe, and quite possibly
one of the worst in the world. The
UK government failed to deliver on
its primary message to ‘Protect the
NHS’, ‘Stay at Home’ and ‘Save
Lives’. More than 300 NHS workers
passed away from Covid-19, one of
the highest death rates of health
workers in the world. Government
officials and aids broke lockdown
rules, betraying the immense
effort and diligence shown by the
British people during the pandemic.
There were more than 40,000
recorded deaths from Covid-19 in
the UK, the highest in Europe, the
highest death rate in the world. The
irony of instructing the general
public to follow these slogans, while
politicians themselves blatantly
ignored them, was a situation which
angered, disappointed and
saddened many people in the UK.
The government failed to take
action right from the start. It
refused to shut borders to prioritise
the economy over preventing the
virus from entering the country. It
ignored the situation Italy and
Spain were going through, and
pretended Coronavirus was not a
concern. The policy of the
Conservative Government was to
keep calm and carry on - until lots
of people started to die.
Cabinet officials seemed
convinced they were doing the
right thing to indeed not do
anything, as they were following
the scientific advice given to them
by medical professionals. It was
obvious to everyone what was
about to happen: an explosion of
Covid-19 cases and deaths, and
the overwhelming of the NHS.
However, the medical advisors,
who were too hung up on scientific
evidence, failed to use common
sense to advise the government to
take action.
The government being pathetically
late to their response to Covid-19,
initiated its “Containment” phase.
This was initially done using the
‘Test and Trace’ programme,
which tested those with symptoms
and people who come in contact
with those who are infected. The
capacity for the test and trace
programme, however, was a
maximum of five infections per
week, a comical amount exposing
the inadequacy of the
government’s initial response.
Evidently, there were too many
people already infected with the
virus, causing the UK to quickly
and quietly U-turn on its test and
trace policy.
“Happy birthday to you, happy
birthday to you, happy birthday
dear Melogic happy birthday to
you” - Boris Johnson 2020
After the government’s test and
trace programme failed, the
public were told to wash their
hands for the duration of two
verses of Happy Birthday. This
was demonstrated with
remarkable eloquence by the
Prime Minister during a press
opportunity in Bedfordshire,
where this ground-breaking
governmental policy to contain
Covid-19 was released. This
was perhaps the low point of
the government’s response,
gaining international attention
and mockery of the UK,
although it didn't get much
better from this point.
As a result of the government’s
lack of urgency and ignorance,
people lived their lives as
normal, going to schools,
football matches and concerts
with no concerns about
spreading the disease. While
some with common sense
started to worry about Covid-19,
others dismissed the
Coronavirus as “just flu” and
reminded everyone that far
more people die from the flu
than Covid-19. Students and
teachers laughed at the
prospect of schools being shut,
and claimed no one young or
healthy was going to die from
the disease.
After two weeks of an
uncontrolled rise in infections,
the UK reluctantly moved on to
‘Delay’ the spread of the
disease. In the early stages of
the Delay phase, no one was
told to stay at home, not even
the elderly or the vulnerable.
Instead the government,
“guided by scientific evidence
and advice”, kept telling us to
wash our hands and sing happy
birthday
34
The Shrewsbury Economist 2020
twice. Their continued refusal to
protect the health and wellbeing
of the general public made the
Government’s ultimate goal very
clear: to protect the UK economy
at all costs.
As the ‘Delay’ programme
progressed, various changes
were taking place in the UK.
Students across the country
were ecstatic when schools
were told to close, celebrating a
week of no school and longer
holidays. The cancellation of
GCSEs and A levels, and the
inability for some to complete
their time at school were
obviously not on their minds.
They also failed to realise why
schools were being told to shut:
an unprecedented global
pandemic which was taking over
the world, causing the death of
tens of thousands. While NHS
workers risked their lives
working in dangerous conditions
without proper equipment, the
government had its priorities set
on economic stability, and
inadvertently made the public
naïve about the threats of
Covid-19.
During the period of lockdown,
extended greatly by the
government’s inaction during the
first few weeks, caused many
businesses to suffer from a lack
of sales and the UK economy to
take a worrying turn. The UK
economy was set to shrink by
14% according to the Bank of
England, and despite its furlough
scheme, more than a million
people lost their jobs. The rate of
infection was high enough to
prompt the government into
building 7 temporary hospitals,
which came at a massive
expense for the government.
Scenes in care homes were a
disaster, with the elderly dying
from Covid-19 at such a rapid
rate, coffins and funerals
couldn't keep up. As people
were prevented from seeing
their loved ones, and forced to
stay in their homes, public
morale and community spirit was
the only thing keeping the UK
afloat. The whole country looked
forward to a safe, orderly
reopening of the UK as soon as
possible.
However, the way in which the
government lifted lockdown
measures was abysmal. “Stay
Alert” was another pathetic
attempt by Dominic Cummings
to satisfy his obsession with
catchphrases and caused more
confusion and frustration than
clarity. The government constant
U-turns on policies such as
wearing masks, two-week
quarantine period for overseas
arrivals, and the reopening of
schools was a shambolic
attempt at restarting the
economy. Cummings exposed
as breaking governmental rules
on lockdown, and the Prime
Minister desperately trying to
defend his actions, was the final
straw for the people of the UK.
All the credibility and trust of the
government was lost with this
shocking exposé, which made
every Briton question the
suffering they had to endure
during the lockdown period.
People enjoyed going to parks
and beaches, and some went
out of their way to do so in order
to rebel against the government
which failed to serve and protect
the British people during this
pandemic.
The Conservative government’s
obsession with economic stability,
and the lack of leadership and
direction showed by Boris Johnson
led to a catastrophic response to the
Coronavirus pandemic. Behind the
deceptive messages spread by Boris
Johnson and his team: “the
government saved thousands of
lives”, “the UK has a world beating
test and trace system”, and morale
boosting events such as ‘Clap for
Carers’, there lies an unescapable
truth that the Conservative
government was responsible for the
death of more than 40,000 of people
in this country, and the greatest
downturn of the UK economy for
decades.
A Post-Covid society
The Coronavirus pandemic exposed
many weaknesses in the modern
world. It showed us first-hand the
disadvantages of a connected,
globalised society, where an outbreak
in one region of a country can rapidly
affect the whole world. It revealed the
true colours of national governments
and leaders: many showed heroism
and leadership and saved countless
lives, while others led their countries
into a health emergency. What
became very clear during the
Coronavirus Pandemic was the
importance to fully appreciate the
work of doctors, nurses and other key
workers. They risked their lives to
keep countries operational, even
when national Governments did not.
The moment the Conservative
government proposed to
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The Shrewsbury Economist 2020
raise the surcharge for migrant
NHS workers (a policy which
would give a bill of £224 to the
migrant doctors and nurses that
saved Boris Johnson’s life), all
decent people with a moral
compass protested with disgust
and outrage to repeal this
proposal, which was thankfully
reversed after the government
came to its senses. The least this
country can do is to give NHS
workers a pay rise, to show
appreciation and support for their
incredible work both during this
pandemic, and in daily life. It has
to be noted that Boris Johnson
and the current health secretary
Matt Hancock voted against the
pay rise of NHS workers, which
highlights the Conservative party’s
neglect for these key workers. The
lesson in light of this pandemic
should be for the UK government
and institutions around the world to
fully recognise the heroism
demonstrated by health workers,
and reward them sufficiently for
their contributions to society. It is
crucial for the whole world to
move on from the Coronavirus
pandemic with positivity and unity,
having overcome this challenge
one way or another. The
international community must
strive to create a safer, less
vulnerable society in the future:
one that can make us proud.
Economics Crossword
By Lenka Hozzava
Name:
Economics Crossword
Complete the crossword puzzle below
1
2
3
4
5
6
8
7
9
10
11
12
13
14
15
Created using the Crossword Maker on TheTeachersCorner.net
Across
8. will replenish after consumption (9)
9. an indivisible unit of capital (6)
12. a monetary policy whereby a central bank buys government bond or
assets to get money back to the economy (18)
13. Action taken to prevent or stop a policy or event (8)
15. a sudden reduction in the general availability of loans (12)
Down
1. A disease that has spread over a large region or several countries (8)
2. A gradual increase in average temperatures in the world (13)
3. A share index of the 100 companies listed on the London Stock
Exchange (7)
4. A legislative body in the government (10)
5. Current Prime Minister (12)
6. Money owed (4)
7. An organisation which includes members of countries in Europe (13)
10. A continous increase in the general level of prices (9)
11. A general decline in economic activity (9)
14. Stacey's best friend (6)
36
The Shrewsbury Economist 2020
Vote of thanks
I would like to thank everyone who was involved in producing this magazine: the writers and
editors, and the outstanding teamwork that has been displayed throughout the process. I
would also like to thank the rest of the Economics Society who all offered their services and
skills and took up their respective roles without question. The names of all those involved will
be listed below, but I would like to draw special attention to Milton Tai and Ruby Read, who
were the real organisers and leaders of this project. Equally, I wish to express my thanks to Mr
Zafar and Mr Merricks-Murgatroyd for setting up the Economics Society, without which this
would never have even been started, let alone completed, and fellow Head of the Economics
Society Sophie Thomas, for her assistance and leadership of the team. And to all of the
readers, I extend my gratitude for taking interest in the work of all these remarkable students. I
would love to mention more names specifically, but the list would be far too long, but please
take the time to read through the names of all those who contributed below.
Many Thanks,
Christian Beard,
Head of Economics Society
Milton Tai –Chief Editor
Ruby Read – Creative Director
Chris Beard – Head of Economics Society
Sophie Thomas – Managing Director
Freddie Norval – Creative Designer
Lenka Hozzava – Editor
Max Cheung – Editor
Mark Ellis –Editor
Special thanks to Mrs Warburg for giving up her time to proof read the articles.
The Shrewsbury Economists, Until next time…