Economy and Standards of Living

free essayThe essay delves into the matter of economy and living standards in five cases such as the measure, which shows the general standard of living of American people; inflation and its impact on standard of living; technology development, its impact on job markets and standard of living; the growth of the economy, its importance to the economic welfare of the nation, GDP as an indicator of a growing economy and the progress of American nation.

Short-term processes and events that affect the state of society are very diverse. Their dynamics can be characterized by indicators of living standards.

Living standards measures are characteristics showing the state of the economy and social life of society. Their study is very important because it helps to identify economic and social trends and predict their future as well as to describe certain aspects of society.

The Measure, Which Shows the General Standard of Living of the American People

If someone had to pick one measure in order to gauge the general standard of living of the specific society, they would choose the Happy Planet Index.

The Happy Planet Index is a composite indicator that can show progress of the USA in terms of its ability to provide a happy life for its residents. Although this figure is not directly economic, it displays the pursuit of happiness as the main value of each person. It can properly describe the general standard of living of the American people, so it is reasonable to pick it.

The main advantage of this measure is a comprehensive approach to assessing the level of life. The Happy Planet Index bases on three main indicators, namely the human impact on nature, life expectancy and life satisfaction. GDP per capita shows the market value of all final goods and services for one person that can show the level of human wealth. The Happy Planet Index allows one to more accurately calculate the standard of living of the American people. In fact, it allows one to calculate not the number of products in the material terms but the satisfaction of their adequacy. As practice shows, people from developed countries may feel less happy than people in developing countries. Apparently, in 2012, the Happy Planet Index of the USA was 37,340 points. Consequently, the United States ranked 105th place out of 151 countries (The New Economic Foundation, 2013). The main disadvantage of this indicator is the inability to take into account the interests of all people living in the United States, but this problem is typical for absolutely all economic indicators.

Thus, the World Index does not give a quantitative estimation (amount of money, etc.), but it gives qualitative assessment (satisfaction from that amount of money).

Inflation and Its Impact on Standard of Living

Modern practical and theoretical economics cannot exist without inflation.

An increase in fuel prices may be a good example of the impact of inflation on my life. I love to travel by car or by bus. It is very important for me to travel a lot across our country because I discover something new and interesting, expand my horizons, and meet new people while traveling. In fact, I feel happy in such moments. Rising fuel prices would not allow me to travel as I did it before. As a result of the depreciation of money, I would have to reduce the consumption of such material benefit as fuel, which would show the negative impact of inflation on my life.

Increase in the overall price level of such kind of good as fuel may have a different impact on someone else’s standard of living. Fuel price rise would cause a reduction of transport on the road and emissions of carbon dioxide in the atmosphere, which would be evaluated positively by conservationists and people who have such disease as asthma. On the contrary, fuel price rise would cause neutral reaction of people who use environmentally friendly kind of transport (bicycle) since they are independent of this kind of good.

Thus, inflation as an economic feature would have a different impact on standard of living of different people, and it would not have any effect on some parts of population (Hirsch, Plunkett & Beckhelling, 2011). In fact, for the majority of people inflation would have both pros and cons.

Technology Development, Its Impact on Job Markets and Standard of Living

Over the last decade, the rate of technological advances has exceeded the level of the development of science and technology for all the twentieth century. The United States is one of the leading countries with regard to scientific and technological progress in the world. Therefore, the United States economy would primarily feel a result of scientific and technical progress.

The rapid development of technology in the field of computing power, trade and communications will necessarily have an impact on the labor market in the United States. Thus, eventually, society would not feel the need for low-skilled workers, their wages would constantly shrink and a lot of low-skilled professions would disappear. At the same time, highly skilled labor would be valued higher. Creative intellectual work would be assessed higher and would be the most popular.

Such situation may bring the United States very large benefits in the international labor market mainly due to the supply of unprecedented new types of goods (robotic machines) to the international market. Consequently, this would significantly increase the productivity of labor. At the same time, wages for the equivalent of mechanized labor would fall due to increased supply of labor, and the salary for the intellectual work would grow. A similar situation would occur in the global labor market. The benefit of productivity growth is an increase in social tension, while the drawback triggered by the introduction of advanced technologies because of globalization would be an increase in unemployment and dissatisfaction of the low-skilled workers (Frey & Osborne, 2013).

Thus, the development of technology would have a huge impact on the labor market, which would have both pros and cons.

The Growth of the Economy and Its Importance to the Economic Welfare of the Nation. GDP as an Indicator of a Growing Economy

Economic growth is the foundation of the welfare of the nation because if the economy grows constantly, the population of a country receives additional income and, more importantly, the opportunity to realize its ambitions in new projects, sectors and spheres of economic activity.


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However, economic growth is important for another reason. Many modern countries are in the process of development. In case of limited primary resources, cessation of the growth of the economy and cessation of the growth of production of secondary products/services in comparison with the primary resources of one country (it can even be developed) mean an increase in production part of other countries. Thus, limited primary resources would continue to diminish with the increasing intensity, which means worsening the position of the first country.

GDP growth rate of any country is a key indicator of its economic development, as GDP growth determines the growth of the national cumulative goods in the territory of a particular state. However, it is impossible to consider GDP growth as the only indicator that characterizes the welfare of the nation. The rate of GDP per capita is also important, as there may be a situation when population growth is much greater than the growth of GDP. Thus, in spite of the growth of GDP in general, this indicative capita will always be decreased, which can lead to poverty. It also should be mentioned that the growth of GDP should be compared with indicators of country’s external debt, as GDP growth should always exceed the growth of the external debt (Barnes, n.d.).

Thus, GDP is a good indicator of a growing economy, but it should be considered in combination with other macroeconomic indicators.

The Progress of American Nation

Modern United States is an interesting sample for research for economists around the world. The United States deliberately put the path to globalization as a basis for its strategy of the XXI century. Economy of the USA with its potential, market size and involvement in the world economy has become an important segment of the globalizing world economy over the last 10 years. Apparently, the United States possesses mainly starting opportunities. The country used the entire block of technical, economic, social, environmental, military and political factors to strengthen its leading position through the main areas of the globalization process. The United States entered the XXI century as the undisputed leader in the economic and military strategic plan and became the sole superpower. Moreover, today America still shows a significant progress not only in the economic sphere but also in social sphere, organizing social programs that aim to help the poor and combat unemployment, racial discrimination, and crime, among others. The outbreak of the global financial and economic crisis has led to new shifts in world economic relations. However, at the moment, in spite of the economic crisis, the United States is still one of the most diverse and developed national economies in the world maintaining leadership in the global economy during the last 100 years (Center for American Progress, 2013).

Thus, over the last decade, in the context of the economy America and Americans have acquired and achieved greater results both in economic and social spheres then in the past despite the fact that they experienced various difficulties. Thus, the duty of every citizen of the USA is to be proud of the United States economy and to understand that every American should work toward the welfare of the country with the highest degree of responsibility.

Conclusion

Measures of living standard help to assess economic and social life from different sides. The next five ideas were emphasized in the paper:

  1. The Happy Planet Index may be the measure according to which the general standard of living of American people can be estimated.
  2. Inflation as the second evaluated index can have its pros and cons, which may be different for various people.
  3. The level of technology development would have a significant impact on job market.
  4. Economic growth is the foundation of the welfare of the nation, and it can be considered with GDP and other macroeconomic indicators.
  5. Americans and America have achieved greater results than 10 years ago.

All these ideas were explored with the help of living standard measures, which confirms the thesis of the essay.