Term Paper: George Magnus Is a Leading

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[. . .] Even though, the crisis in 2008 didn't led to a collapse of the capitalism. The way Marx analyzed the misunderstandings between the labor and capital and it causing political and economical unrest politically. Where Smith was sure that public institutions were necessary to good working economy, Magnus didn't agree with notion. As mentioned earlier, Magnus is more inclined towards Marx's economist theories as opposed to Smiths. In his opinion, the economic crisis of 2008 revealed due to the environment created in different economies simultaneously. The house hold debt to GDP augmented and kept on increasing.

The theories and works of Magnus are strongly affected by and are somewhat in favor of Marx's work as well. Just as Marx pointed out, there would be conflict between the labor and capital. He also emphasized on the fact that one sector of the society would have accumulated wealth and the other side would be living in poverty. As is mentioned above, the economic crisis led to a lot of unemployment. The U.S. companies in order to increase their profit and cut down their costs didn't think twice about firing so many people. (Subrahmanyam)

Apart from his works on his works regarding the economic crisis, Magnus is also concerned with the growing population. With his theory put forward, there would be a decrease in the working population in the upcoming years. When it comes to population growth, Karl Marx considered population growth was not a factor in causing poverty. His work seemed to differ from that of Thomas Malthus, who considered that misery and bad economic conditions prevailed due to growing population. Marx argued that the misery and poverty is there due to messed up social structure and extreme capitalism. The crisis that occurred was an instance where capitalism didn't prosper very well. The idea of free economy and low interest rates led to miser.

According to Magnus, much more focus should be given to the production of better institutions. The social structure and the economic values need to be looked into and reanalyzed. However what Magnus believes is differed from Malthus. Those who follow or are more affected by Theories put out by Malthus are in panic and concerned as to what will happen in the future. Maybe his worries are better linked to environmental and natural resources. However, when keeping the economic concerns and economic disparities in mine, population is such a significant causative agent.

Magnus is in sync with Marx's theory of over production and under consumption as well. This is easily explained by the fact that when people are not in a good situation economically, they won't really have much of a buying power as well. The economies following the 2008 crisis were in situation of unrest. Where there was financial insecurity, industries such as housing and automobile sector remained bellow their 2006 peaks. (Magnus) This was largely due to the increased purchasing of houses in turn. Magnus proposes and is sync with Marx on the fact that there shouldn't be over production of a single sector. This meaning that the economic growth needs to be split. If the GDP is largely dependent on one industry or sector, then problems can emerge when that sector crashes.

Paulson stated earlier that if one country has to recapitalize its banking sector, it is evidence of an economic failure. Subsequent to the failure, both United Kingdom and United States went on re invest in their banks. Reagan stated that Government has a long standing role in the economics. As for the future of the economy, he believes that the Labor's plan to take into Keynesian economics will work out. Magnus is aware that the crises that hit the American and global economy will not blast into a depression like the one that occurred in the 1930s. The economic advisors and planners did learn some alterations to the structure following the Great Depression. It is true that John Maynard Keynes work did gain more momentum when the Great Britain was not able to stabilize subsequent to the depression. (Johnson&Cate).

There has been seen some similarities in his theories and those of Keynes, as he says that the depression of 1930s wouldn't have hit its peak if Keynes method was put in action. Keynes proposed different theories about interests and unemployment. According to him, wages should be settled in cooperation with both the employer and employee. The wages were thus not only affected by monetary factors but also by environmental factors as well. (Johnson, Ley, and Cate) Another thing he hinted on was the fact that saving did not prevent any economy from recession. Thus Magnus accepts and adds to this theory that even during the recession, the people should borrow their way out of the problems. This could be looked at in a more logical perspective if we bring the government into the picture. Subsequent to the crisis that took place, government took out money from the Federal Reserve and bought huge amounts of mortgage backed systems. A lot of the assets that were stuck due to obstruction in the banking system led to relief all thanks to the U.S. Federal reserve. Thus the government gave in money for the growth of the private sector so that would then go on to stabilize the economy. Here, the whole idea of invisible and visible hand comes in. Saying that when the business sector needs the government, the hand becomes charitable and benevolent. This as opposed to when everything is fine; the government appears as a hindrance in the way. (Subrahmanyam)

The modern economic outlook suggested by Magnus is surely an alarming one to the United States. He argues that the changes that were started in China by Deng Xiapoing in 1978 paved way for a lot of progress. In just a matter of some decades, China has gone to become the largest exporter in the world today. It has the second largest economy and owns a total of three trillion dollars of foreign financial assets. (Magnus) These figures should set off the alarm for United States and the Western countries especially after the crisis that occurred. If China continues to progress at the rate that it is, the GDP of China will bypass United States by 2030 or maybe even before. Magnus however puts in the idea of China growing old at a faster rate when compared to the United States. Magnus states that in 2050, there will be 2.5 people to support one old citizen as opposed to ten people today. Even though a setback in China's path, there is no guarantee that it won't get rich before it gets old.

Magnus predictions about the modern economics aren't so positive. In his opinion, the credit crunch which was a partial reason for the economic collapse is still continuing. Where the credit crunch increasing, the working population is shrinking. Due to the advent of enhanced medicines and medical technology, people are living longer. Not that it's a bad sign, but people are having lesser children as well. It is explained by the economist that growth of the economy is dependent on the capital and the labor supply. If United States is taken as an example, the working population is declining. With other things remaining static, the growth is likely to decrease in the future. Another thing that deserves more attention is that with a reduced workforce, the amount of taxes collected for the general welfare of the society would decrease as well. George Magnus highlighted several key factors for an improved and growing economy. He highlighted that governments along with focusing to enhance the capital of the country, should play close attention to the education sector as well. Here, he gave example of the Chinese. Magnus indirectly stated that they are surpassing other nations in creativity and skill merely on the basis of strong education. (Moulds) Magnus also stated that for a country to make sure that skill or labor never runs out, it should keep its focus on more immigration. Thus the credit issues and the problem of the population numbers are two major factors that he has now warned against. According to him, if both of these are left unchecked, the governmental and the economy could land up in a lot of trouble. (Moulds)

After the United States and many interlinked economies have gone through crisis due to debt, other factors are still unstable in the economy today. Magnus has kept emphasizing in his reviews, articles and even realized a book about the demographical problem in the United States. The recession is a part of the problem but it is more linked to how fast the western society is ageing. The ageing rate of China and Germany are almost alike. With improved sanitation and vaccinations, there is no prospect of any pandemic to arrive until 2030. These are the issues that Magnus forecast and predicts about the future. Magnus has… [END OF PREVIEW]

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