Living Well on the Basics of Organization
When I was a Ph.
The fundamental principle, which applies to all monetized economies, is that associated with each expenditure in the economy, there is a direct and indirect flow of material inputs, and ultimately, a disposal of an equal amount of wastes. For example, energy-intensive products such as transportation result in much greater emissions of greenhouse gases than the services provided by hairdressers. Over the years, I kept in touch with Gideon. It was an opportunity and a privilege to work with Gideon again. Even in his eighties he was an intellectual force to be reckoned with.
Although it was not our original intention to build a macroeconomic simulation model, we found a common interest in doing so. We were skeptical of the mainstream view that endless economic growth was feasible, desirable, and essential for full employment, eradication of poverty, and significantly reduced impacts on the environment.
We were also unsatisfied by critiques of such a view that did not also provide an account of how an economy might function in a radically different way. So we set ourselves the task of answering the following question: is it possible to have full employment, no poverty, fiscal balance, and reduced greenhouse gas emissions without relying on economic growth? We developed LowGrow, a simulation model of the Canadian economy specifically designed to answer this question. Our results suggested the possibility that an attractive set of social, economic, and environmental objectives could be met in the absence of economic growth.
This led us to the conclusion that economic growth could and should be relegated to its proper secondary place as a policy objective. All models are simplifications of whatever they represent. This is as true of computer models as it is of model aeroplanes and model villages. Whether they are satisfactory simplifications depends on their intended uses.
A model plane may be designed to closely resemble a particular commercial or military jet but rest on a stand, unable to fly. Another model might be designed to fly powered by hand, an elastic band, or an onboard engine. Yet it may only vaguely resemble a full-size aircraft. Which of these two model planes is better depends on whether you want a visual replica of a real plane or something that flies.
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Building simulation models of an economy is not that different. The overview of LowGrow that follows may appear tedious, but it is necessary to give some idea of what lies behind the scenarios that it generates.
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Macro demand is determined in the normal way as the sum of consumption expenditure, investment expenditure, government expenditure, and the difference between exports and imports. Their sum total is GDP gross domestic product measured as expenditure. There are separate equations for each of these components in the model, estimated with Canadian data from about to , depending on the variable.
Production in the economy depends on employed labor and employed capital i. Changes in productivity from improvements in technology, labor skills, and organization are captured depending on time.
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Macro supply is shown at the bottom of figure 1, and it determines and is determined by employment and capacity utilization shown in the center of figure 1. There is a second important link between macro demand and production. Also, capital and labor tend to become more productive over time. It follows that, other things equal, without an increase in macro demand, these increases in capital and productivity reduce employment: as labor becomes more productive over time, less is required to produce any given level of output.
On this basis, economic growth i. Population is determined exogenously in LowGrow, which offers a choice of three projections from Statistics Canada.
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Population is also one of the variables that determines consumption expenditures in the economy. Figure 1.
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Source: P. There is no monetary sector in LowGrow. LowGrow includes an exogenously set rate of interest that remains unchanged throughout each run of the model.
A higher cost of borrowing discourages investment, which reduces macro demand. It also raises the cost to the government of servicing its debt. The price level is not included as a variable in LowGrow, although the model warns of inflationary pressures when the rate of unemployment falls below 4 percent effectively full employment in Canada.
LowGrow includes features that are particularly relevant for exploring possibilities for an economy that is not growing. It includes emissions of carbon dioxide and other greenhouse gases, a carbon tax, a forestry sub-model, and provision for redistributing incomes.
Expenditures on anti-poverty and environmental programs are automatically added to government expenditures in LowGrow.
Other changes in the level of government expenditures can also be simulated in LowGrow through a variety of fiscal policies, such as an annual percentage change in government expenditure that can vary over time and a balanced budget. LowGrow keeps track of the overall fiscal position of all three levels of government combined federal, provincial, and municipal by calculating total revenues and expenditures and by estimating debt repayment based on the historical record.
As the level of government indebtedness declines, the rates of taxes on personal incomes and profits in LowGrow are reduced endogenously, which is broadly consistent with government policy in Canada. In LowGrow, as in the economy that it represents, economic growth is driven by: net investment, which adds to productive assets, growth in the labor force, increases in productivity, growth in the net trade balance, growth in government expenditures, and growth in population.
Low- and no-growth scenarios can be examined by reducing the rates of increase in each of these factors singly or in combination. It is convenient to start analyzing low- and no-growth scenarios by establishing a base case with no new policy interventions. It is not a prediction of the future, but rather a benchmark against which to compare alternative scenarios. In the business-as-usual scenario, between the start of and , real GDP per capita more than doubles; the unemployment rate rises, then falls, ending above its starting value; the ratio of government debt to GDP declines by nearly 40 percent as Canadian governments continue to run budget surpluses; the Human Poverty Index rises, largely due to the projected increase in the absolute number of unemployed people; and greenhouse gas emissions increase by nearly 80 percent.
A wide range of low- and no-growth scenarios can be examined with LowGrow. One promising scenario is shown in figure 3. Compared with the business-as-usual scenario, GDP per capita grows more slowly, leveling off around , at which time the rate of unemployment is 5. The unemployment rate continues to decline to 4. By the poverty index declines from Greenhouse gas emissions are 31 percent, lower at the start of than in , and 41 percent lower than their high point in Figure 3.
A Low- or No-Growth Scenario. Some health departments require healthcare providers to report the name of your sex and needle-sharing partner s if they know that information—even if you refuse to report that information yourself. Any individual who believes that his or her employment rights have been violated may file a charge of discrimination with the Federal Equal Employment Opportunity Commission EEOC. In addition, an individual, an organization, or an agency may file a charge on behalf of another person in order to protect the aggrieved person's identity.
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