Real-world examples

2.5 - Norway expects to earn a record $131 billion from oil and gas in 2023 (economic growth due to demand increase)

Following Russia's reduction in supplies both before and after its invasion of neighbouring Ukraine, gas prices in Europe have approximately tripled in 2022; they are now ten times higher than they were before last year.

Norway, the top gas provider to Europe and a significant producer of crude globally, plans to increase production to 4.3 million barrels of oil equivalent per day in 2019 from the anticipated 4.1 million in 2022, ensuring significant financial advantages from the rise in energy prices. According to the Norwegian finance ministry, oil and gas revenue is expected to reach 1.38 trillion crowns ($131 billion) in 2019 from 1.17 trillion crowns in 2022.

The increase in demand for Norwegian has allowed the government to increase gas prices due to the demand being inelastic. The Government has planned to increase the taxes on the oil and gas industry to be able to have a tax deduction from 17.69% to 12.4%. This is an effort by the Norwegian government to help reduce inflation.

An issue with the increase in Norwegian oil and gas is that the countries being provided with their oil supplied have thought about requesting lower prices which would affect the government’s plan for a tax deduction.

2.7 - French government's support program for electric vehicles, known as the "Bonus-Malus" system. (subsidy)

The Bonus-Malus system was introduced in 2019 and provided financial incentives to consumers who purchase electric or hybrid vehicles while imposing a penalty on those who purchase high-emission vehicles. The system offers a bonus of up to €7,000 for electric or hybrid vehicles and a penalty of up to €20,000 for high-emission vehicles.

The program has successfully encouraged the adoption of electric and hybrid vehicles in France. In 2020, electric and hybrid vehicles accounted for over 11% of all new car sales in France, up from just 2% in 2015.

The program has also helped reduce carbon emissions from the transportation sector, a major contributor to greenhouse gas emissions in France. Additionally, the program has supported the growth of the electric vehicle industry in France, creating jobs and stimulating economic growth.

Overall, the Bonus-Malus system is an example of a successful subsidy program that has helped to support the transition to a low-carbon economy in France while also creating economic benefits for the country.

2.7 - Alcohol Tax Increase in Poland Leads to Falling Alcohol Sales (indirect tax)

The consumption of alcohol, particularly cheap alcohol, was a prominent issue in Poland. Therefore, the government increased the indirect tax on alcohol products. These measures have led to alcohol products becoming less affordable, increasing the total spending on alcohol products by poles. However, the new measures have also led to a decrease in the total sales of alcohol in the country. Poles bought 4.1% less alcohol in the 12 months through March compared to that same period the year before.

2.8 - Managing land used to herd reindeer in Finland and Sweden

Around a third of the area of Finland (in the North) is defined as a reindeer herding area. Most of this land is state-owned. Reindeer are semi-domesticated animals which are gathered together once twice a year. Most reindeer spend the rest of the year roaming wild, eating e.g. lichen. The state-owned land is thus used for grazing as a common access resource (rivalrous & non-excludable) by the roughly 4500 reindeer owners. The reindeer herders are organized in 54 associations called paliskunta. To ensure sustainable use of the common access resource, the maximum number of reindeer in Finland has been determined by law to be 203 700. This number is set for ten years at a time, taking into account the carrying capacity in terms of providing enough for the reindeer to eat in winter when snow covers the ground. In practice, it is estimated that there are roughly 185 000 - 192 000 reindeer in Finland. Further, the paliskunta associations mainly only consist of people living permanently in the sparsely populated reindeer herding area, and to start herding reindeer one has to first be accepted as a member of such an organization. There is a law prohibiting the use of the land in such a way that would harm reindeer herding substantially. Major logging could be such an example. In practice, state representatives and a delegation of paliskunta representatives meet on a yearly basis to negotiate about this (e.g. planned logging would harm reindeer food supply (lichen) or their habitat otherwise and whether it can go ahead or not). In neighbouring Sweden, an indigenous Sami reindeer herder district took the Swedish state to court (the state had allowed small game hunting and fishing in an area used for reindeer herding, and these activities harmed the reindeer herding) and won the case in 2020.

To summarize, the maximum amount of animal grazing has been determined to avoid unsustainable use; laws regulate the use of land; institutions have been set up and can control access to the resource (accepting new members), yearly meetings are instituted between state representatives and the representatives of the reindeer owners and finally, the state can be taken to court if disagreement about resource us arises.) I might be partial, but this way of governing common pool resources seems effective to me, as the reindeer herders and the state seem to be satisfied with the system. Clear rules have been defined, a timeline and procedure for revising the rules exist, and the state can be taken into court if there is a problem.

2.8 - 2015 Paris agreement aims to achieve net-zero emissions by 2060

In 2015, in Paris, 195 governments agreed to the text of the most significant global climate agreement. Known as the Paris Agreement, the international deal commits nearly every country to lower greenhouse gas emissions to curb the dangerous effects of climate change.

The Paris Agreement, which entered into force in 2016, aims to prevent global temperatures from rising above pre– Industrial Revolution temperatures by 2˚C. Ideally, the Paris Agreement strives to limit global temperature increases to 1.5˚C, as scientists caution that the effects of temperatures rising any higher would be catastrophic and potentially irreversible.

Unlike other environmental policies, the Paris agreement established that all countries voluntarily set their goals based on their economic abilities. To achieve this, countries put forward individual plans known as nationally determined contributions (NDCs), which outline their proposed emissions reductions and adaptation strategies.

Unlike previous climate agreements, the Paris Agreement is entirely voluntary. This means that while the agreement requires every country to submit an NDC plan, there are no stipulations on how and by how much countries should cut emissions. Countries' plans can differ significantly, varying concerning their specific goals, levels of ambition, and even how they measure emissions cuts.

In 2017, the top ten emitters of greenhouse gases accounted for more than two-thirds of global emissions. However, according to Climate Action Tracker, which monitors the Paris Agreement, India is one the only top ten emitters whose current policies are on track to help keep global temperature increases below 2˚C.

Moreover, Where India is setting the tone for responsible climate policy, Russia is doing the opposite. It took Russia four years to secure domestic political approval—ratification—for the Paris Agreement. Meanwhile, Russia's leader has flip-flopped on climate change in recent years. In 2015, Russian President Vladimir Putin cautioned that "the quality of life of all people on the planet depends on solving the climate problem." Two years later, however, the Russian president adopted a different position, denying humans' significant role in contributing to climate change. No real progress has been made toward responsible climate policy in Russia. Russia's pledges are either vague or weak and unlikely to meaningfully reduce its emissions.

Rather than reducing emissions and focusing on the root cause of climate change, Russia appears to respond to climate-related disasters as they arise. This adaptation strategy could prove prohibitively expensive in the long run as climate disasters increase in frequency on a rapidly warming planet. If all countries followed Russia's example, rises in global temperature could far exceed 2˚C.

As it currently stands, existing NDCs are not enough to achieve the Paris Agreement's objective. Many are vague, unclear, and short, missing important details on how the country plans to tackle climate change. So far, the voluntary pledges made by governments would still result in global warming exceeding 3˚C by the year 2100, well above the 2˚C goal.

2.9 - CARES Act as a way to boost the economy through the direct provision and transfer payments (provision)

On 27th March 2020, Congress signed into law a $2 trillion emergency aid package designed to mitigate the economic impact of the coronavirus pandemic (1). Called the Coronavirus Aid, Relief, and Economic Security (CARES) Act, it is a comprehensive relief package that includes:

• One-time direct payments to adults who filed income tax returns in 2018 or 2019

• An increase in the number of unemployment benefits as well as an expansion of the eligibility requirements

• Loans (which can be partially or entirely forgiven depending on eligibility) for small businesses and non-profits.

• Free counselling, low-cost training for small businesses, and a temporary pause on student loan payments and interest.

3.1 - Qatar GDP/GNI compared to the economic well-being

The Gross Domestic Product (GDP) in Qatar was worth 179.68 billion US dollars in 2021, according to official data from the World Bank. The GDP value of Qatar represents 0.08 per cent of the world economy

DOHA, Qatar — In recent years, the gulf state of Qatar has managed to grab the attention of developed nations worldwide by rapidly becoming one of the wealthiest nations in the region. However, by many standards, Qatar’s means of creating this wealth have been highly unique.

By and large, two factors that have coordinated with one another to foster this economic growth have been a considerable influx of migrant workers in addition to the exploitation of enormous oil and natural gas reserves, which accounts for more than half of all government revenue.

The population is approximately 2.5 million. The cause for this increase in population can be attributed for the most part to migrant workers, who now comprise around 90 per cent of the country’s population and workforce. The reason per capita income published by Qatar does not always paint a realistic picture is the fact that the data is typically based only on the incomes of native Qatari citizens, a demographic of Qatari society whose population is estimated to be about 250,000.

While the salaries of migrant workers in Qatar vary on a case-by-case basis, the lowest-paid migrant worker will, on average, earn about $1,920 per year working in construction — an industry that comprises tens of thousands of jobs for Qatar’s migrant workers. The higher-earning workers generally never receive a salary exceeding $500 per month.

3.3 - Venezuela sets new price controls, with eggs costing more than a month's wages (price floor)

Venezuela on May 2020 published a list of new price controls for 27 essential food items, fixing the price of eggs, some cuts of meat, and sausage above the monthly minimum wage President Nicolas Maduro set for the inflation-stricken country this week.

The move marked the return of strict state economic controls, after more than a year of relaxation in the face of U.S. sanctions. Maduro’s socialist government is now seeking to calm inflation in the face of a collapse in crude prices, fuel shortages and a national lockdown to prevent the spread of the coronavirus.

According to a document published by Commerce Minister Eneida Laya on Twitter, products including butter and powdered milk will cost more than 400,000 bolivares, which is the new minimum wage the government set on Monday. That is equivalent to just $2 at the official exchange rate.

The document listed the prices both in bolivares and in Petros, a state-run cryptocurrency.

Private food-production companies and industry groups have warned that setting price controls will mark a return to the scarcity of essential goods that plagued the indebted OPEC nation for years, exacerbated by a collapse in crude prices in 2014.

Supermarket supply has improved since the government relaxed price controls, but with inflation of 3,365% in the year through March, according to the opposition-held National Assembly, many goods were sold at prices beyond the reach of most Venezuelans.

The new prices set by the government are generally lower than current levels, but not significantly. (Because people couldn't afford to pay for their daily needs, Venezuela uses price controls to set a more reasonable and affordable price.)

3.3 - Price ceiling on the cost of COVID-19 PCR tests in the United Kingdom

In December 2020, the UK government introduced a maximum price ceiling of £120 for private COVID-19 PCR tests, which are required for international travel and for people who do not qualify for free testing under the National Health Service (NHS).

The price ceiling was imposed in response to concerns that some private testing companies were charging excessive prices for COVID-19 PCR tests, which were making it difficult for some people to afford the tests and thus limiting their ability to travel or return to work.

Under the price ceiling, private testing companies are not allowed to charge more than £120 for a single COVID-19 PCR test. However, some companies have been criticized for charging additional fees for services such as express results or travel certificates.

While the price ceiling has helped to make COVID-19 PCR tests more affordable for some people in the UK, there have been concerns that it has also limited the availability of testing, as some private testing companies have stopped offering tests due to the cap on prices.

3.3 - Norway steps up rates rise and warns of more to come (increase in interest rate / contractionary monetary policy)

Norway increased their interest rates twice in 2022 due to the “persistent global price pressures.” The increase in interest rate was done for the country to counter inflation and ensure that they would not go into recession as several other countries had during high inflation rates. The governor of the Norges Bank, Ida Wolden Bache, stated that “ a markedly higher policy rate is needed to ease the pressure in the Norwegian economy and to bring inflation down towards the target.”

3.3 - Pros and cons of economic growth

In the UK in 2021, the GDP growth rate increased. This led to a positive aspect for the environment where the production of hydrocarbons now covers three-quarters of energy needs in the UK. On the other hand, public and household debts are very high (115% of gross disposable income.) Further, living standards are set to fall by so much for 2023-2024 that it will have the power to wipe out all the growth made up until now. This is all occurring because wage rises are not keeping up with inflation. In Japan, from 1990-2010, when inequality grew, it grew at a rate of 0.73% instead of 0.9, which could have been the case if income inequality had been diminished.

3.4 - The effect of income and wealth inequality on the population of South-Africa

Efforts to reduce inequality have been: increased consumer expenditure, government expenditure and attempts at redistributing the country's wealth. Contrary to these attempts, the country's inequality has remained persistently high due to the legacy of apartheid, hindering specific groups to possess equal economic opportunities. The top 20% of the population holds over 68% of South Africa's wealth. Meanwhile, the bottom 40% holds 7% of income, creating disparities between different groups of people, those affected especially in the lower class. With the country's economic growth stagnating over the past decade, it has become increasingly more difficult to create jobs that will eradicate the unemployed and offer jobs to those newly entering the labour market. Economic growth generating more low-skilled jobs may help reduce inequality. South Africa’s unemployment rate is significantly high, with over 50% of capable and willing-to-work youths in the country unemployed. Employment prospects could be improved by enhancing the quality of and access to education and facilitating affordable transport to and from job facilities. Fiscal policy has been successfully implemented to reduce inequality by implementing a slightly progressive tax system.

3.4 - Hong Kong minimum wage to rise by HK$2.50 to HK$40 an hour in May after 4-year freeze (minimum wage / labour market)

Ninety thousand Hong Kong’s low-income workers will get HK$2.50 (US 32 Cents) more every hour after the minimum wage increases from HK$37.50 to HK$40 an hour after a four-year freeze.

Additionally, the increase of around 6.7% could add up to as much as HK$910 million per year to employers' wages.

The Hong Kong government declared the increase would shove up the income of 87,000 workers, primarily in cleaning/security jobs.

“We believe the new rate can strike the right balance between the objectives of forestalling meagre wages and minimising the loss of low-paid jobs,” Priscilla Wong Pui-Sze, the commission chairwoman, said.

This will help work towards tighter income inequality and reduce poverty in Hong Kong.

3.5 - How the federal reserve (US Central Bank) responded to COVID (expansionary monetary policy / decrease in the interest rate)

After the outbreak of COVID in 2020, the fed immediately responded by lowering interest rates from 1.5% to 0- 0.25%. They also removed all reserve requirements, enabling banks to give more credit and thus increasing the money multiplier. Quantitative easing in the form of buying $500 billion of treasury bonds from private banks was used to provide private banks with money to encourage giving out more credit to households and firms. All of this is an effort to close the recessionary gap due to COVID by stimulating aggregate demand. The time lag is a limitation, as unemployment rose to 14.7% in April. However, it fell to 8.4% by August 2020, showing the effectiveness of the policy. An advantage over fiscal policy is that the fed is not limited by political processes and is empowered to use all monetary tools to keep inflation and unemployment at acceptable levels. By April 2022, the unemployment rate had normalized.

3.5 - How did the US central bank use expansionary and contractionary policy to regulate the economy

During the great recession, the US central bank implemented an expansionary monetary policy in 2007. As housing prices began to drop and the economy slowed, the Federal Reserve began cutting its interest rate from 5.25% in June 2007 to 0% by the end of 2008. The goal was to encourage consumption, a positive component of AD, to increase AD and reduce cyclical unemployment. With the economy still weak, it embarked on quantitative easing, purchasing government bonds to increase money supply from January 2009 until August 2014, for a total of $3.7 trillion.

3.6 - Turkey increase the corporate income tax rate (contractionary fiscal policy)

On 22 April 2021, the Turkish government approved the corporate tax rate change from standard 22% to 25% for 2021 and 23% for 2022. The reason for such a contractionary fiscal policy was raising additional revenue for new spending and deficit reduction caused by the Covid-19 pandemic.

Possible disadvantages of this policy:

• Decreased corporate profits: An increase in the corporate income tax rate will reduce the profits of businesses, which may affect their ability to pay dividends to shareholders, invest in new projects and recover from the pandemic. Since it might worsen their ability to recover from the pre-pandemic work regime, it severely hurts the Turkish economy because services and industries contribute to almost 84% of the country's GDP.

• Negative economic growth: An increase in the corporate income tax rate will discourage businesses from investing in new equipment, technology, and other forms of capital and hurt their business confidence. Consumers will face lower disposable income. That will lead to a lower real output level, illustrating negative economic growth.

• Decreased employment: Increased corporate income tax rate may lead businesses to reduce their hiring or lay off workers to offset the additional tax burden. This can lead to higher unemployment and reduced job security.

• Bad public image: the next presidential elections are in 2023. Since the voters do not like tax increases because it endangers their job security and decreases disposable income, the policy will put certain political pressure on the government and the president in particular because he can be voted out of office.

Possible advantages of this policy:

• Decreased prices and deflation: Turkey's inflation rate severely increased from 15% in 2021 to 85% in 2023. Therefore, any policy that deals with such high inflation would be helpful for the economy because it will help the economy as a whole and low-income earners, in particular, to stay out of poverty.

• Increased government revenue: An increase in the corporate income tax rate will generate additional revenue for the government, which can fund public goods and services such as education, healthcare, and infrastructure. In this case, it can be used to decrease government indebtedness (it already happened because there was a significant drop in government debt in the first quarter of 2022), which has severely increased since the start of the Covid-19 pandemic.

• Progressive taxation: An increase in the corporate income tax rate can make the tax system more progressive, as businesses typically have higher profits than individuals. This can help to reduce income inequality.

• Reducing corporate power: An increase in the corporate income tax rate can reduce the power and influence of corporations, as it reduces their profits and ability to invest in lobbying and other forms of political influence.

• Encouraging businesses to focus on long-term growth: An increase in the corporate income tax rate may discourage businesses from relying on short-term, tax-avoidance strategies and encourage them to focus on long-term growth and innovation. Therefore, Turkey will face a long-term increase in government revenue.

3.6 - Corporation Tax main rate at 19% in 2020 and charge and main rate for 2021

The measure sets the Corporation Tax main rate at 19% for the financial year beginning 1 April 2020. This maintains the rate at 19% rather than reducing it to 17% from 1 April 2020.

This measure supports the government’s objective to raise revenue whilst maintaining the UK’s competitive rate of Corporation Tax and stimulating consumer expenditure and investment.

In the summer Budget 2015, the government announced a reduction in the Corporation Tax rate from 20% to 19% for the financial years beginning 1 April 2017, 1 April 2018 and 1 April 2019, with a further reduction from 19% to 18% for the financial year beginning 1 April 2020.

At Budget 2016, the government announced an additional 1% reduction to 17% for the financial year beginning 1 April 2020.

3.7 - French government slashes unemployment benefits (unemployment benefits)

The current regulations limit the amount of compensation anyone under 53 can receive after leaving their employment to two years, while those over 55 can receive compensation for up to three years.

Labour Minister Olivier Dussopt believed that by cutting the duration in half from February 2023, 100,000 to 150,000 people would re-enter the workforce earlier than anticipated in 2019.

To comfort workers concerned about their rights being reduced, he continued, "We're preserving one of the most generous systems in Europe."

Lowering unemployment benefits helps achieve supply-side policies by increasing the population's incentive to work and rely less on the government. This means that the government controls the economy less and promotes a freer market which, according to supply-side economists, promotes economic efficiency, while government intervention hampers it.

In his successful attempt for a second term in the May presidential elections, Macron included achieving full employment (natural unemployment), which would bring the unemployment rate down to about 5.0 per cent, as one of his campaign objectives.

4.3 - Australia Ratifies Free Trade Deals With India and Britain

Australia implementing new free trade policies with India and Brittan

• Australia’s parliament signed a free trade agreement with India and Britain on Tuesday, November 22nd, 2022.

• This will allow Australia to trade with no barriers with India and Britain.

• Over 99% of Australian goods exported to Britain will have no taxes included. Making it cheaper for consumers to buy Australian-imported products.

• The disadvantage of Free trade is that there will be competition between Britain's and India's domestic supply of goods vs the Australian supply.

4.4 - United States-Mexico-Canada Agreement

The United States-Mexico-Canada Agreement (USMCA) entered force on July 1, 2020. It was substituted in the North America Free Trade Agreement (NAFTA). It is mutually beneficial and considered a win for North American workers, who can benefit greatly from it, especially farmers, ranchers, and businesses.

The Agreement states that it creates more balanced, reciprocal trade supporting high-paying jobs for Americans and growing the North American economy.

Agreement Advantages:

• Creating a more level playing field for American workers, including improved rules of origin for automobiles, trucks, and other products, and disciplines on currency manipulation.

• Benefiting American farmers, ranchers, and agribusinesses by modernizing and strengthening food and agriculture trade in North America.

• Supporting a 21st-century economy through new protections for U.S. intellectual property and ensuring opportunities for trade in U.S. services.

• New chapters covering Digital Trade, Anticorruption, and Good Regulatory Practices, as well as a chapter devoted to ensuring that Small and Medium Size Enterprises benefit from the Agreement.

• There were about three times higher pay rates for Mexican workers than before the deal.

• The USMCA updated the digital trade and patent and trademark protections for digital intellectual, e.g. music and video, and increased the copyright terms from 50 to 70 years.

• The trade between the US, Canada and Mexico will significantly increase, meaning the three countries can rely less on partners further away.

Agreement Disadvantages:

• The wage requirements of the USMCA may damage the US trade with China.

• Even if manufacturing companies benefit from high workloads, they may not hire many new employees due to automation developments.

• Auto companies and workers would lose competitiveness.

• Unlike past US trade deals, the USMCA makes almost no changes to tariffs or non-tariff barriers; such restrictions were removed years ago under NAFTA. Trade liberalization under the USMCA, including the changes in U.S. access to the Canadian dairy market, is limited and more than offset by the new protectionist measures.

• The USMCA should have promoted investment and trade in renewable energy resources and other measures to encourage low-carbon emissions. Officials could draw on specific provisions in the recent EU-Mercosur trade pact promoting “domestic and international carbon markets” and “energy efficiency, low-emission technology and renewable energy.”