Port Talbot & A’level economics

A’level economics students frequently moan  that what they have been taught is not relevant to what is going on around them while economics teachers complain that students do not relate what they have been taught to the real world!

The recent events at Port Talbot provide an ideal example to use economics concepts.

The multiplier can be used in assessing the costs to the area should Port Talbot close since not only will steel jobs be lost if the plant closes, additional jobs will also be at risk as steel workers suffer lower disposable income and cut back on expenditure,  particularly in non-essential areas.

In considering the type of unemployment created, one can use the idea of structural unemployment since many of the steel workers affected will not have the skills needed in newer, growing industries.

The possible closure of the plant is relevant to the arguments about the benefits of free trade and the theory of comparative advantage whereby UK steel purchasers benefit from cheaper steel imports from China which need to be set against the  job losses among UK steel producers. This aspect can be expanded to consider whether the Chinese are dumping steel on the world market and, if so, what action should be taken, especially in the light of the tariffs on Chinese steel imposed by the USA and those imposed by China on imports of steel from the EU and elsewhere.

A final example is in the  field of market failure where Tata have complained that the UK Government’s environmental policies have raised energy prices and helped make UK produced steel (and heavy industry generally) uncompetitive. UK electricity prices are almost double those in the rest of the EU and more than double those in China and while these high prices help to subsidise renewable forms of energy, they make life difficult for UK firms.

Frognal Way, Hampsted… where the average house price is £10m+

http://www.theguardian.com/business/2015/jul/11/uk-sees-surge-in-property-millionaires-despite-slowdown-in-house-market

Frognal Way in Hampsted (so exclusive it doesn’t appear on Google street view) is in 10th place in the UK’s most expensive streets league table. Top spot belongs to Kensington Palace Gardens where the average abode will set you back the small matter of £42,591,972. But why are house prices so high? Or, more importantly, why are house prices so high in some parts of the UK, predominantly London, and so low in other parts of the country (last month someone bought a house in Grimsby for £8,000, the same amount of money I paid for my car)?

There are many different reasons, some of those are linked to the market forces of demand and supply, and others related to government intervention. Those getting ready to embark on the new A level or IBDP economics courses are expected to write a short commentary on the UK housing market over the summer break. The Guardian article (link enclosed) is the sort of article that should be used as a source – although using this particular article would lack a degree of originality.

Feel free to ask questions regarding the summer work by using the comments section of this post.