Download A 4 The Mixed Economy cont

Industrial Revolution
Free Enterprise
The Roots of Affluence
American Agriculture
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Industrial Revolution
The birth of the
United States and
the publication of
Adam Smith’s book
came at a time when
yet another kind of
revolution was
taking place, the
Industrial Revolution.
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Reasons for Industrial Revolution
Some early decisions by American social and
political leaders planted the seeds of
industrial growth.
A tariff(关税) high enough to discourage
imports and give domestic industries time to
grow.
Other Hamiltonian(汉密尔顿函数)measures gave
great encouragement to business in general.
The Industrial Revolution in England
brought many changes to American industry
between 1776 and 1860.
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Development of Industrial Revolution
One key development was the introduction
of the factory system, which gathered many
workers together in one workplace and
produced goods for distribution over a wide
area.
A second development was the “American
system” of mass production which
originated in the firearms industry about
1800. the new system required precision
engineering to create parts that were
interchangeable.
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Development of Industrial Revolution
A third development was the application of
new technologies to industrial tasks.
A fourth development was the emergency of
new forms of business organization, notably
the bank and the corporation, which
facilitated the growth of industry.
Finally, the construction of railroads
beginning in the 1830s, marked the start of
a new era for the United States.
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Free Enterprise
Most Americans think that the rise
of their nation as a leading producer
of manufactured goods, food and
services could not have occurred
without the economic freedom of
capitalism ----which many prefer to
call free enterprise自由企业 .
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Development of Free Enterprise
The story of American economic growth is a
story of people inventing new devices and
processes, starting new business and
launching new ventures. For each of these
endeavors, money is needed. That money is
known as capital.
Individuals started enterprises with money
borrowed from others. They share the profit
gained with those investors. When they
wanted to expand their businesses, they
again borrow money.
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Very early, people in the United States saw
that they could make money by lending it to
those who wanted to start or to expand a
business. That led to the creation of an
important part of the current economic
scene: the selling of stock, or shares, in a
business. Knowing about business is
important if one wishes to make a profit in
the stock market.
Many problems accompanied the
development of modern American industrial
capitalism during the past century.
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The Roots of Affluence
The vast dimensions and ample(丰裕的 )
natural resources of the United States
proved from the first to be a major
advantage for national economic
development.
A population of more than 250 million people
provides both workers and consumers for
American business.
Rapid growth helped to promote a
remarkable mobility(流动能力) in the American
population----a mobility that contributes a
useful flexibility to business life.
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The Roots of Affluence
The American people have possessed to an
unusual degree the entrepreneurial(企业家的 )
spirit that finds its outlet in such business
activities as manufacturing, transporting,
buying and selling. Some have traced this
entrepreneurial drive to religious sources.
A variety of institutional factors have
favored the success of American business
and industry.
One result was a rapid accumulation of
capital, which could then be used to produce
further growth.
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American Agriculture
American agriculture assumes a richness and
variety unmatched in most other parts of the
word. In part, this is due to the vastness of
the nation itself; in part, it is due to the
generosity of nature.
American agriculture is, by any standards,
big business. Indeed, the term
“agribusiness(农工联合企业) ” has been coined to
reflect the large-scale nature of agricultural
enterprise in the modern U.S. economy.
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Benefits
Both American and foreign consumers
benefit from the American farmers, low-cost
output.
The standard of living of American farmers
is generally high.
The readiness of many farmers to adopt new
technology has been one of the strengths of
American agriculture.
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Problems
While the high productivity of American
agriculture has kept food prices low for
consumers, farmers have been perhaps too
successful.
A period of economic difficulty began in the
early 1980s. Agricultural exports declined,
partly due to the high value of the United
States dollar (which raised the cost of
American products to foreign buyers). Crops
prices fell and interest rates rose.
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Problems
In 1987, there were slightly more than 2
million farms in the United States—down by
about 7 percent from the number just five
year earlier.
Many farm owners, especially owners of
smaller farms, do not work on the farms full
time.
Critics accuse both corporate and family
farmers damaging the environment.
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Changes in the American
Economy:
The Energy Crisis,
Deindustrialization(工业能
力的削减), and the Service
Economy
Stagflation(滞涨（通货膨胀，就业率和
Throughout 1970's, the
economy was
商业活动持续低迷） American
plagued by the unprecedented
combination of soaring prices,
the high unemployment, and
low economic growth.
Economists dubbed the
phenomena "Stagflation," a
period of rising prices in a
stagnant economy.
The high standard of living in
the US following World War II
suddenly began to lag behind
that of Western Europe and
Japan.
Americans found it
increasingly difficult to sustain
a middle class lifestyle.
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Stagflation
Compare the rates of inflation between 1972 and 1980 to those of the
1980's and 1990's.
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Stagflation
GDP measures the total market value of all the goods and services
produced within a region. Note the sharp decline in GDP beginning in
1973.
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Stagflation
In 1975, unemployment reached almost 9%, the highest level since the
Great Depression at that time.
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The Oil Crisis Begins
By the late 1950's, the demand for oil in the United States
outstripped domestic production capabilities.
By 1970's, the US imported a third of its oil, making the American
economy vulnerable to geopolitical upsets in the Middle East.
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The Oil Crisis Begins
On October 6, 1973, the
Yom Kippur War began
when Egypt and Syria
attacked Israel from
two sides.
The US airlifted supplies
to Israel, prompting
OPEC to levy an oil
embargo against
Israel's allies that lasted
until March 18, 1974.
1973年10月（犹太人的赎罪日）
埃及和叙利亚攻击以色列；以色列
进行反击并击退叙利亚把苏伊士运
河划归为埃及
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The Oil Crisis Begins
Gas prices suddenly doubled and fueling stations frequently ran out of gas.
The oil crisis effected almost every sector of the economy .
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Coping with the Energy Crisis
The oil embargo(禁运 )
led to dramatically
increased prices for all
types of fuel, including
gasoline, home-heating
fuel, and electricity.
Prices for virtually
everything else rose in
response to high energy
costs, causing record
inflation.
Long lines for gasoline
became everyday
occurrences.
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Coping with the Energy Crisis
President Nixon appealed to
the nation to make
sacrifices in the name of
conserving energy.
He warned that the country
was "heading toward the
most acute shortages of
energy since World War II.”
The President asked
Americans to reduce air
travel, reduce work and
school hours, turn down
thermostats by 6 degrees,
and reduce highway speed
limits to conserve energy.
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Coping with the Energy Crisis
Nixon also urged the
use of coal and nuclear
power rather than the
limited commodity of oil.
He asked Congress to
approve measures for
increased exploration
and extraction of
domestic oil and to relax
environmental
standards that impeded
energy requirements.
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Economic Policies of President Ford
Gerald Ford replaced Richard
Nixon in August 1974.
Ford attempted to initiate a
grassroots anti-inflation
campaign, but the Whip
Inflation Now (WIN) program
was little more than a public
relations maneuver调动 .
Skeptical(怀疑的) Americans
began wearing the red and
white WIN buttons upside
down to stand for "No Instant
Miracles."
After a few months, the WIN
effort was abandoned as
sluggish industrial and
business productivity along
with rampant unemployment
compelled Ford to focus on
broader anti-recessionary
measures.
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Economic Polices of President Ford
As a Republican, Ford believed
that a balanced federal budget
and reductions in government
spending were the best way to
curb inflation.
Democrats in Congress favored
increased federal spending as a
stimulus to economic and job
growth.
Ford admitted in 1975, “the state
of the Union is not good.”
Ford vetoed more major bills
than any president in the 20th
century.
Despite the legislative battle,
recessionary pressures eased
somewhat by 1976.
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Deindustrialization
"Deindustrialization" refers
to a shift away from a
manufacturing-based
economy.
In the United States and
Europe, deindustrialization
has preceded a shift to a
service-based economy.
The trend toward
deindustrialization began in
the 1960's and continues
into the present day, as the
service sector （部
门)overtakes the
manufacturing sector.
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Deindustrialization
During the 1970's, the oil crisis and the falling productivity of the US manufacturing
sector sped the decline of several industries, including steel, automobiles, and
electronics.
The industrial production index measures the total output of US factories. A decline in
production indicates slow economic growth.
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Deindustrialization
Increases in foreign industrial efficiency allowed Europe, Asia, and Latin America to
effectively compete by producing quality goods for a lower cost.
Many American companies began outsourcing labor to foreign countries to remain
competitive.
This chart illustrates the balance of trade. The United States increasingly imports more
than it exports.
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Deindustrialization
Structural unemployment
often spikes during
deindustrialization.
In this case, "structural
unemployment" refers to
unemployment that
occurs during the
transition from a
manufacturing to a
service economy because
workers lack skills,
education, experience, or
proximity to the new
types of jobs available.
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The Decline of Organized
Labor
Membership in AFL-CIO Unions
AFL-CIO lost over 4 million members between 1970 and 1982. Along with declining
membership came decreased political power for organized labor.
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The Service Economy
Economies in the developed world typically change over time. Agrarian economies first
transition to industrial, then develop into service economies.
Service industries include retail, wholesale, banking, public utilities, entertainment, etc.
This graph shows the eclipse of the manufacturing sector by the service sector by the
early 1980's. The trend toward deindustrialization resulted in a service-based economy.
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The Rustbelt and the Sunbelt
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The Rustbelt美国中西部诸州 and the
Sunbelt阳光地带（指美国南部和西南部地
区）
The economic region known
as the Manufacturing Belt
became known as the
Rust(使)生锈 Belt by the
1970's, as manufacturing
and heavy industry declined
due to high energy costs
and foreign competition.
Cities in the Rust belt were
subject to unemployment,
underemployment in lowpaying service jobs, "white
flight" to the suburbs, and
general out-migration as
manufacturing jobs moved
south and abroad.
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The Rustbelt and the Sunbelt
Meanwhile, Sunbelt states in the West and Southwest continued to enjoy the economic
growth trend spurred by Cold-War defense spending and an influx of retirees.
The South profited from a booming agribusiness industry and the California's Silicon
Valley became the hub of the technology industry.
As population in the Sunbelt increased, so did the region's political influence.
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Working Women
High inflation, a series
of recessions, and the
changing role of women
in society encouraged
more females to enter
the workforce
throughout the 1970's.
Working women became
the norm, as more
households depended
on two incomes.
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Working Women
Women, especially
women of color,
continue to make
substantially less money
than their male
counterparts.
Several factors account
for this wage gap,
including discrimination
and female
concentration in lowwage, non-union
industries.
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The Feminization of Poverty
Despite increased participation in the labor force and the progress made during the
women's movement, women experienced a decline in economic status during the 1970's.
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The Feminization of Poverty
Low pay and inflation combined with increased rates of divorce and teenage pregnancy
led to a phenomena known as "the feminization of poverty," as females became
increasingly economically marginalized.
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Economic Policies of President Carter
As a rhetorical device during
1976 presidential campaign,
Governor Jimmy Carter
combined the rate of
inflation (6%) and
unemployment (8%) into a
"Misery Index" of 14.
At first, Carter modeled his
economic recovery program
after FDR's New Deal by
advocating tax cuts, public
works, and employment
programs to stimulate the
economy.
The Democratic Congress
responded with legislation
in accordance with the
President's plan, but as
unemployment decreased,
inflation continued to rise.
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Economic Policies of President
Carter
In response, Carter tried an almost opposite approach. He attempted to curb inflation by
slashing government spending, deregulating industries, and implementing wage and
price controls.
Many Democrats were alienated by what they perceived as a shift to the right in
presidential policies.
Despite the President's sincere efforts, the "Misery Index" soon rose to 21.
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President Carter and the
Continuing Energy Crisis
Although the oil embargo
had ended and gas lines
had ceased by Carter's
presidency, the threat
created by US energy
dependence loomed on the
horizon.
Carter characterized the
energy crisis as "the moral
equivalent of war," which
critics derisively nicknamed
"meow."
His calls for sacrifice and
conservation were opposed
by the influential oil and
auto industries, and
accordingly the subsequent
National Energy Act of 1978
focused on increasing
domestic production rather
than conservation.
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President Carter and the
Continuing Energy Crisis
Carter was successful in creating the Department of Energy as a cabinet-level position,
and he continued to try and set an example for citizens by conserving energy in the
White House.
President Carter had solar panels installed atop the White House in 1979 (which
President Reagan later removed).
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President Carter and the
Continuing Energy Crisis
Following the 1979 Islamic Revolution in
Iran, Ayatollah Khomeini stopped all oil
shipments, further exacerbating US
energy woes.
In July the president delivered a
televised address that became known as
the "Malaise Speech," in which he
entreats Americans to share the
responsibility of energy conservation.
The public and the press responded
defensively and Carter's approval rating
plummeted.
Although the speech was a frank
diagnosis of the country's ills, Carter was
criticized for "blaming" the American
people and offering few solutions.
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UK Domestic Economy
Economic
System
The British economic system is in nature
capitalist. Britain’s economic system
consists of two sectors: the public
sector and the private sector.
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Economic
System
About 1/3 of all goods and services are produced by
central-owned corporations. A third of all people who
contribute to the economy by their work are
employed by publicly-owned bodies.
Most energy production is socialized: production and
distribution of electricity and gas, production of coal,
part of the production and distribution of oil and the
iron and steel production industry.
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Economic
System
The other 2/3 of the economy is within
the private sector, shared unequally
between public companies, private
companies, and individuals.
Much the greater part of this is owned
and controlled by public companies.
At least one-tenth of the economy is
owned by foreign companies, mostly
American,
or
by
multinational
companies.
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Industry
Coal-mining
Petroleum-mining
Power
Textile industry
Manufacturing
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Coal-mining
Once the largest coal producer in the world
Most important coalmines can be found in
Central Scotland, Central England and South
Wales.
Now also one of the major mining industries
It loses money and the Government has to
shut down some collieries煤矿工人
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Petroleum-mining
Has no large land-based oilfields
Brought ashore oil from the North Sea in
1975, now oil has become the principal
mineral in Britain
Natural gas is produced in association with
petroleum
Oil reserves are nationalized and most of oil
mining is under the control of the
government
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Power
Britain ranked second in Europe after
Germany in electricity production
65% of all coal mines is used to generate
electricity
14% of all electricity is derived from
nuclear power
Large oil-powered generating stations are
located near London, Southampton and
other ports
Hydroelectricity contributed about
4,643,000 KWH of the total
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Textile industry
Britain once led the world in textile industry
and possessed over half of the total spindles
of the world.
From the 12th to 19th century, the woolen
industry was of vital importance.
Now Britain’s wool industry is still important
in its national economy.
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Manufacturing(1)
Avery long history in manufacturing, a
strong basis for the country’s national
economic development.
Workers engaged in manufacturing number
8.5 million, about 31% of the total labor
force.
Largest manufacturing industry is iron and
steel, exports a large proportion of its steel,
25% of the total, either directly or in the
form of finished products.
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Manufacturing(2)
Britain has a large motor vehicle industry
About 1/3 of its cars are for exports, but
also imports many cheap cars.
The most famous are Austin Morris奥斯汀和莫里
斯 , Range Rover路虎, Dodge and Rolls Royce.
Rolls Royce are very expensive cars
specially designed for the extremely rich and
important officials.
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Manufacturing(3)
Other highly developed manufacturing
industries including:
Mechanic engineering
Electrical and electronic engineering and
shipbuilding industries
Food processing and papermaking
Each having its share in the national
economic development
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Agriculture(1)
Agriculture remains important. It is highly
mechanized, including:
Crop farming
Livestock farming
Forestry and Fishing
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Agriculture(2)
The main agricultural products are wheat, barley,
oats, peas, beans, vegetables, sugar beets and
green fodder crops.
Most of them are grown in the east and south of
England, east coast of Scotland, Lancashire and
Cheshire plains.
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Agriculture(3)
Many British farmers are still concerned both
with animals and with crops.
The average farmer has to work very hard:
Ploughing, sowing, harvesting
Cows to be killed, pigs and poultry to be fed
Machinery, buildings, hedges and ditches to be
repaired
Markets to be visited for the buying and selling
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Agriculture(4)
Britain’s animal husbandry农牧业 constitutes an
important part of the nation’s agriculture.
The highland zone is covered by grassland
Owing to the mild climate and abundant rainfall,
the area is green all the year round.
Now about 3/5 of full-time farmers are devoted
to dairying牛奶业, beef cattle and sheep.
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Agriculture(5)
Forestry is of minor national importance, but
has given useful employment in remote
districts that have been reforested.
Fishing has been a major activity. Major fishprocessing industries are l9cated in
Aberdeen, Grimsby, Hull, and Yarmouth.
International tensions over access to fishing
grounds in the North Atlantic and Arctic
threaten the industry.
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mixed economy
Britain’s ‘mixed economy’ – an economy in
which there is some public ownership as well
as privately owned business
During the 20th cent. the government has
become involved in the economy through
introduction of social welfare policies and
laws to regulate industrial relations
In 1945 to ensure full employment, labour
govern. began to nationalise key industries
such as coal, steel and transport.
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A1
Introduction
cont
changing of winds
By the end of the
1970’s Margaret
Thatcher had
started to sell back
those industries to
the private sector,
to beat inflation,
which was her
primary objective.
“ In politics if you
want anything said,
ask a man. If you
want anything done,
ask a woman”
Margaret Thatcher
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A 2 Natural Resources &
Infrastructures基础设施
Highly developed & efficient main road and
rail network and airports-- excellent
infrastructure
Natural resources
Principal resources at present -- oil and gas
in the North Sea, on the coast of Scotland
Large amount of coal, but has been kept for
future use
Manufacturing still playing important role
Services, industries such as chemicals,
electronics, etc all doing well, important
parts of British economy
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A3
Finance
Importance of institutions
of City of London cannot
be over-emphasised
known as the world’s
leading international
financial centre
Over 550 international
banks and 170 global
securities houses have
offices in London
BANKING
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A3

Finance
FOREIGN EXCHANGE
The London foreign
exchange market is
the largest in the
world, with daily
turnover of $504bn in
April 2001, accounting
for 31% of global
turnover, more than
New York and Tokyo
combined.
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A3
Finance
London is the world's
largest fund
management centre,
with $2,460bn of
institutional equity
holdings in 1999.
Assets managed in the
UK on behalf of
domestic and overseas
clients totaled over
£2,800bn in 2000.
London is the leader in
the management of
overseas clients nondomestic portfolios投资
组合 .
FUND MANAGEMRNT
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A3
Finance
SECURITIES DEALING
The number of foreign
companies listed on the London
Stock Exchange is second only
to New York. In the first eight
months of 2002, turnover营业额
in these companies booked in
London accounted for 56% of
all trading in foreign companies
around the world.
London-based book runners
accounted for about 60% of
international bonds issued, with
70% of trading in the secondary
market, including eurodenominated以外币结算 issues,
also based in London.
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A3
Finance
The financial institutions
Banks
Building society
Insurance companies
Stock exchange
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A 4 the Mixed Economy cont
Partnerships–
Such businesses can raise larger amount of
capital and, consequently, are greatly bigger.
Partnerships, however, suffer in the same
way as do single proprietorships in that each
partner is legally liable for all the debts of
the firm, even if they have been incurred by
the activity of another partner.
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A 4 the Mixed Economy
cont
Co-operatives
Such businesses operate mainly in the retail
trade. The most distinctive feature of cooperative societies is that they belong, in a
sense, to some of their customers who pay a
minimum deposit on a share in the business.
Consumer co-operatives have proven to be
rather vulnerable in the face of the intense
competition from other types of organisation.
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A 4 The Mixed Economy cont
Joint stock companies
Such businesses make large amounts of capital much easier to
raise. For these companies, transfer of ownership can take place
with a minimum of formality. In other words, shareholders can sell
their shares to anyone else. but there also lies a risk here. Some
unscrupulous company promoters may fraudulently try to raise
funds for their own ends from the public. (Source: An Introduction to
the UK Economy by Harbury and Lipsey )
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A 4 The Mixed Economy cont
Nationalization
 the acquisition of private companies by
the public sector
Privatization
 the return of state enterprises to private
ownership and control
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A 4 The Mixed Economy cont
Why nationalise?
The post-war Labour government was
elected on a socialist manifesto (see also
Chapter 11 ‘Welfare’), which promised more
political control over the major public
utilities so that their development could be
guided in the public interest rather than
simply for private profit
Those industries which were nationalised
had managing directors appointed by the
government and, whilst they were left to run
their own affairs on a day-to-day basis, they
were accountable to the government
concerning more long-term policy.
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A 4 The Mixed Economy cont
Reasons for nationalization
Natural monopoly
Externalities
e.g. subsidizing public transport (London
Underground) may be a second-best option to
road pricing.
Equity or distributional consequences
e.g. protecting transport in rural areas
Co-ordinating a network
e.g. British Rail could have an overview of the
whole rail system
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A 4 the Mixed Economy
Why privatise?
The main argument used by the ‘privatisers’ is that
nationalised industries are economically inefficient,
when compared to companies operated under private
commercial influences. As mentioned above, the
Conservative governments of the 1980s regarded
decreasing state involvement in the economy as a key
component of their policies
This would enable private companies to compete in a
free-market environment, where consumers of goods
and services decide what is useful or desirable. Prices
should be determined by what people are willing to
pay, rather than based purely on cost.
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A 4 The Mixed Economy cont
Reasons for privatization
Improve incentives for production efficiency
 makes managers accountable to shareholders.
 but sheltered monopolies will be sleepy no
matter who owns them
 so privatization will be most successful where
there is potential for competition.
Pre-commitment by government not to
interfere for political reasons
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Potential or possible advantages of
privatisation
It gives ordinary people a direct stake in the nation’s means of
production and distribution.
It frees those responsible for the industry concerned from the
constraints imposed by State ownership, including governmental
intervention in day-to-day management, and protects them from
fluctuating political pressures.
It releases those industries from the restrictions on financing
which public ownership imposes (i.e. they could now raise
money in the City instead of only from the Treasury).
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Potential or possible advantages of
privatisation
Access to private capital markets makes it easier to pursue effective
investment strategies for cutting costs and improving standards of
service.
The financial markets would be able to compare the performances of
individual sectors of a privatised industry against each other and also
against those of other sectors of the economy, thus providing a financial
spur to improved performance.
A system of economic regulation would ensure that the benefits of
greater efficiency were passed on to the public in the form of lower
prices and better service.
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Potential or possible
disadvantages of privatisation
In effect, privatisation is simply selling
back to people what was already their own
property.
Were the government to allow the
managements of nationalised industries a
genuinely free hand to run them on proper
business lines, there would be no need to
privatise them. Most, if not all, of the
advantages cited above could be achieved
perfectly well without privatisation
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Potential or possible disadvantages of
privatisation
There is not the slightest evidence that widening the number of people
shares has any effect on political attitudes or labour relations. In
reducing strikes or raising productivity, such factors as better
management and better arrangements for collective bargaining, have far
more relevance.
The true weight of the supposed ‘co-ownership’ is very, very light. As
one financial writer observed: If all these worker-shareholders decided
to sell their entire stock (of a company) on the same day, ‘it is doubtful
whether it would even register on the Stock Exchange’.
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A 5 The Role of the
Government
Taxation & Government Expenditure
Despite the different attitudes towards nationalisation,
government influence in the economy has grown during the
twentieth century. (see graph on p 207)
During the two World Wars, the proportion of income from
economic activity devoted to government expenditure not
surprisingly showed sudden increases, to reach a peak of 46 per
cent in 1918 and 61 per cent in 1942 to 1944. However, although
the proportion fell back after each war, in each case it never went
back to its pre-war level.
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Taxation & Government
Expenditure
Throughout the 1980s and early 1990s, an aim of
government policy was to reduce the share of public
expenditure of GDP and the proportion fell from 46 per cent
in 1981 and 1982 to 38 per cent in 1983. There was a slight
rise in the early 1990s during the period of economic
downturn, but in 1998 the proportion had fallen back again
to 39 per cent.
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Taxation & Government
Expenditure
Where does the government get its money from?
Stock exchange
Taxation -- Direct and Indirect Taxes
Direct taxes – national insurance contributions,
income tax (a ‘progressive taxation system),
corporation tax (paid by companies)
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Taxation & Government
Expenditure
Indirect taxes -- VAT (VAT was
introduced following Britain’s
membership of the EEC: a percentage
of the money raised is contributed to
the European Union budget.) , duties
on alcohol, tobacco, petrol, etc.
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Taxation & Government
Expenditure
Government spending Some of the main areas of
expenditure for 1999-2000 were:
social security
£102 billion (29% of total)
health
£61 billion
(17%)
education
£41billion (12%)
defence
£21 billion(6%)
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GDP Growth
GDP Growth
Average Earning
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A6
Consumer
Since 1971 household expenditure has
increased in real terms in all the broad
categories of expenditure with the exception
of tobacco
Some categories of goods and services have
grown faster than others. For example,
spending on financial services and UK
tourists’ expenditure abroad was almost five
times and almost six times higher
respectively in 1999 than in 1971.
In contrast, expenditure on food increased
by only a quarter in real terms over the
period.
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A6
Consumer
Look at the table “Student’s expenditure” on
page 210
British students have very specific spending
patterns. According to the Student Income and
Expenditure Survey, around half of the expenditure
by students under the age of 26 in higher
education in 1998/99 was on what could be termed
“essential items”, such as accommodation, food,
bills and household goods and course expenditure.
Students now pay a larger contribution towards
their tuition, so from 2000 the course expenditure
would be a higher percentage, but it is still mostly
paid for by the government, Students who lived at
home with their parents spent on average a
quarter of the amount on housing of that paid by
students living independently as they were
subsidized by their parents.
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Credit Card Revolution
Consumer Protection guaranteed by the
Consumer Protection Act
The Credit Card Revolution leading more to
Debt Problem
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The Bank of England
Whilst all the important institutions mentioned so far are
privately owned commercial bodies, the Bank of England is
not. It is the central bank of the UK — a nationalised
industry operated on behalf of the government.
The Bank of England controls the currency and acts as
banker both to the government and to the commercial
banks. It also plays a key role in the government’s
monetary policy.
It aims to maintain the integrity and value of the currency,
maintain the stability of the financial system and ensure the
effectiveness of the financial services sector.
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The Bank of England
The Bank of England has a monopoly of the bank-note
issue in England and Wales, though certain banks in
Scotland and Northern Ireland have limited issuing
rights.
Fundamental changes to the Bank’s role took effect
under the Bank of England Act 1998. In particular it
acquired operational responsibility for setting interest
rates.
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