Effects of Financial Liberalization on the UK Essay

Effects of Financial Liberalization on the UK Essay INTRODUCTION TO THE LITERATURE The McKinnon and Shaw publication of what was dubbed â€Å"Financial Repression† in 1973, triggered off a global scholarly debate over financial liberalization and the widespread policy implications among governments in the developed world, and perhaps even most crucially for the developed countries. The lifting of restrictions on the global capital transactions did result into multiple growth and efficiency opportunities for the United Kingdom, opportunities that however, been tempered by the widespread financial instabilities that have destabilized global economies, with a growing magnitude. These difficulties are perhaps best evidenced by the recent global financial crisis that emanated from the US’s subprime mortgage market, as well as the 1997 Asian Financial crisis that had equally far-reaching financial and economic effects across the globe, Barrell Davies (2009). It is not readily possible to determine whether the changes have had a positive impact on the United Kingdom economy, without a closer examination of the impacts on the different sources of growth, as well as the destabilizing effects of the frequent crises on the financial sector and the economy. This paper reviews the existent literature in a bid to determine the varied effects of financial liberalization on the UK economy, and a limited extend on the economies of the Kingdom’s close trading partners, that has an effect on the bilateral and multilateral trade as well as on other sectors of the economy. EFFECTS OF FINANCIAL REBERALIZATION Financial Liberalization Growth Growing scholarly attention has been paid to identification of the financial liberalization on the expansion of the UK’s GDP. According to Arestis (2005), this increased scrutiny has largely been driven by the theoretical ambiguities surrounding the subject, with some literatures pointing to resultant effect of promoting risk diversification in the UK as well as across the world, coupled with increased economic specialization, which must necessarily spur growth and economic stability. In addition, economic liberalization is theoretically expected and has been empirically proven to boost efficiency in the allocation of capital, while at once promoting more efficient domestic financial systems that have increased the capacity of the UK economy, to better mobilize savings for investments. These benefits can however only be realized, without the economic distortions that are characteristic absence of financial restrictions. Empirical literature has equally not resolved the theoret ical ambiguity. A number of studies have established that effect on growth is limited if any at all, while Arestis Caner (2009), determined that the effect could well be detrimental. There is however, a convergence in the literature showing heterogeneous effects on the UK economy depending on the different times of the economy and the policies implemented by successive governments, as indeed across the world, depending on every country’s individual state of development, coupled with the policy and the institutional arrangements, Acemoglu, Aghion, Zillibotti (2010). As such, the effects of liberalization on the UK has been mixed, depending on the country’s fiscal and monetary policies at different times since financial liberalization, with the deepest reaching effects (whether negative or positive) being dependent on the government’s ability to effectively deal with the external pressures on the economy, Barrell Davies (2009). Most recent literatures that point to this possibility, have highlighted the recent financial crisis and the expansionary monetary and fiscal policies undertaken by the UK government, such as Bank of England’s b ase interest rate cuts among others, as perhaps the best examples of how the UK can make good or worse, the opportunities presented by liberalization. These ambiguities have effectively been addressed by various scholars separately, leading to the existence of different strands of literatures and bodies of knowledge, that address specific effects on not only the UK economy, but multiple other economies as well, Acemoglu, Aghion, Zillibotti (2010). Cobham (2004) sets out five different results of liberalization on the UK’s Total Factor Productivity (TFP) included the assertion that the effect is positive and pronounced on the TFP, but has a weaker effect on the total on the country’s investments, Barrell Davies (2009); Turne (2010). This is not least because it increases the ease and efficiency of financial intermediation in the UK, but perhaps most crucially, reduces the returns on local investmtns due to global competition, trade fluctuations as well as general economic instabilities. Secondly, the book asserts that finacial liberalization affects growth levels, implying a possible positive effect of the UK GDP, occassioned by liberalization both in the short run, and perhaps most crucially in the long term. The long term positive effect on the economy is perhaps the strongest recommendation for liberalization, which serves to militate against the limited number of economic stabilities that can be prevented, al beit with some difficulty, and if not, its effects can be comfortably be contained by the use of fiscal and monetary policies, Acemoglu, Aghion, Zillibotti (2010). The ease and importance of controlling the financial sector instabilities is emphasized by the lessons learnt from both the Asian and the subprime mortgage crises. An understanding of the nature of these crises, reveal that better management would have, will in the future, help avert the negative effects of financial liberalization, Turne (2010). Financial Liberalization The Banking Crisis The UK has experienced continued positive growth rates, close to the country’s historical average of 5.5% (since 1955) since the emergence of financial liberalization, coupled by minor instabilioties stemming from the banking crises. Arestis (2005) asserts that the increased regulation of the financial sector in Britain, complete with the projects that these industries engage into has the capacity to limit the effects of financial industry instabilities on the economy. This, according to Kentikelenis (2009), is in line with Gordon Brown’s nationalization of Northern Rock, coupled with even more stringent Bank of England’s controls of over the country’s financial sector, that have seen increased efficacy of both the monetary and fiscal policy initiatives by the UK governemnt, that have been instrumental in mitigating against the worst effects of the global economic crisis that stemmed from financial liberalization. Kentikelenis (2009) reviewed the literatur es on the subject, and assessed them against the empirical findings on the same, with the view of ascertaining the conclusions arrived at by Mckinnon Shaw. To establish this, the paper explored the link between savings and financial liberalization. The investigations revealed that the effects of deregulation were largely as predicted by theory i.e. (a) the link between the savings in the UK and financial liberation remains unclear, not least because far too many variables paly a crucial part depending on the political, social and economic circumstances in the country (b) liberation boost credit vailability, that eats into the UK domestic savings, but without a significant effect on the overall savings while (c) there is need for the UK to careful manage the implications of financial liberation, in order to minimize its effects and maximeze the gains attained as well as the potential, Turne (2010). The banking difficulties hurt the country’s productivity and capital accumulation, which can be minimized by economic diversification. It is the effect of, or through the banking crises that has drawn the firce opposition to financial liberalization from a section of scholars. The banking crisies and its effects on the economy in the UK have long been the subject of empirical and theoretical investigation, that have in turn yield a great majority of academic literature. These go as far back as Keynes’ Treatise on Money, which effectively asserted that the banking industry is a channel to fuel investments in an economy, that ultimately leads to the expansion of the economty, both in the short term as well as in the long run, Turne (2010). Keynesian economists believe in the role of the bakning sector in financing growth, despite their scepticism of the role of monetary policy as an engine for growth. The emergence of the endogenous growth literature and the assertion th at financial intermediation has a necessarily ositive impact on the economy’s expansion, in line with the assertions that run as far back as 1958, When Modigliani Miller, that while the ease of availability of financing helps economic growth, the finance industry is independent from the other industries in the UK and thus the difficulties with the finance industry, may only affect the finance industry. Acemoglu, Aghion, Zillibotti (2010), this view downplay the negative efffects of banking crises on the economy, instead blaming ill information and panic as the actual causes of the negative effects on growth. This view has been widely criticized. Acemoglu, Aghion, Zillibotti (2010) established that financial liberation and the effciecny implications have effectively relieved the risky innovations from the traditional constarants to accessing capital and financing, which effectively boosts both innovation, technological change and development. In addition, the article argues that deregulation fosters growth through it effect on increasign economic participation of the population, coupled with increased risk pooling. The analysis of the effects of banking crises and financial liberalization on the varied growth sources is associated with the literatures on the banking sector fragility. Some scholars have pointed to models that have multiple equilibria, with financial liberalization boosting the prices of assets, incomes and investments in countries, which serves to create income and wealth disparities, that are detrimental to growth. In Smith Searle (2007), attributes banking difficulties to excessive growth in countries that exibit many imperfections in the credit market, as perhaps best exemplified by the Asian Financial Crisis in 1997. Liberalization according to this strand of the literature, promotes credit accessibility, whiile at once increaseing the fragility of the industry. A study of more than nine countries indicated that liberation has had predictable, effects on the finacial markets of any individual country, but further asserts that the negative effects only last for a few years following the adoption of financial liberalization, while positive impacts follow in the later years. This view has been multiply been disproved by the negative effects that have been continually been suffered by countries in the successive global financial crashes. Finacial Liberalization Consumption Changes in consumption attracts greater investments in the economy, which combine through the multiplier mechanism to boost economic growth, which results into long term development. The ease of credit availability as pointed out in the review, have a positive impact on the economy. Barrell Davies (2009) reviews multiple empirical works in seven OECD countries, according to the life cycle theory, that makes planned consumption a function of non human as well as human capital stock in the economy, that in turn gives a helpful indication as to whether income and wealth changes affect the consumption expenditure. This relationship was used by Barrell Davies (2009) to formulate hypotheses that facilitated the study of the effects of financial liberalization on the economy. Other scholars did use the quarterly long-run consumption in different countnries, that established statistically considerable income and wealth effects on the levels of consumption. Barrell Davies (2009) adopted relationships founded on the cointegration vector that contained non stationary variables’ logs (income, net wealth measures and consumption), to obtain Log approximations to identify and measures the effects of the variables on one another. There are other branches of literature that are founded on the Euler Equation, that aggregate the maximum attainanb;le intertemporal consumption decisions of sampled consumers, who are assumed to exercise rational expectations. As such consumption decisions are made randon, albeit with discounting factors that serve as driving variables. These studies established that consumption can be easily be forecast, with the help of additional lagged variables, as a function of waelth and economic expansion, Smith Searle (2007). Given the positive impact on the economic expansion, it can be safely concluded that increased consumption and investments lead into further multiplier effects, that emphasize the effects of f inancial deregulation. An investigation by Barrell Davies (2009) revealed that real interest rate, wealth and income have an aggreagte negative effect on the United States, the United Knigdom, Canada, Sweden as well as Japan, effectively implying that financial liberalization leads to a decline in thr income and wealth gaps in the economy. On the other hand, according to the OECD, increased liquidity of assets and wealth, cpoupled with the reduction of multiple liquidity constraints results in increased, and amplified effects of short term asset values as well as increased exposure to the effects of real rates of interest, OECD (2009). There is a convergence in the literature, in line with the theoretical prediction that financial liberation, increased availability of credit and the ease with which assets may be liquidized, lead to an upward shift of the consumer spending behavior. Typically, this does involve fast adjustment in consumption to fit the expected long run levels consumption, Smith Searle (2007). As such, the economy’s marginal propensity of consuption will increase, beyond the ratio expected at the current level of growth and incomes, which will spur greater growth. Keynesian Neoclassical Economic Theories Neoclassical growth literatures welcome increased liquidity and availability of credit in economies, which accelerate growth and development, by making markets more efficient and complete; not least because these literatures are themselves founded on the assumption of perfectly competitive markets, which are devoid of government controls. The assumption provides that freely competitive markets neocessarily result into increased efficiency, provided that the markets have all the elements to render them complete, Smith Searle (2007). Complete markets are attained when, among others, markets are able make and complete contracts that relate the present and the future, while at once keeping the labor, commodity and services markets in tandem. It therefore follows that increased efficiency of the finacial markets, due to financial liberation,will effectively lead to an more efficient economic system, Arestis (2005). This is not lease because liquid and efficient futures markets for commodities allow producers and consumers to efficiently hedge the production risks, which allow then to more stably increase their output and consumption, Arestis (2005). In addition, efficient financial systems permit corporate debt issuers and investors continuosly attain and adapt to the optimal risk profiles. There are further benefits that did emerge in the ninties as a result of increased financioal liberalization across the world. These according to Turne (2010) and Arestis (2005) included (a) the possibility of investors selecting the cominations of liquidity, returns and risks that best suit their varied preferences, (b) increased options of intermediation between the demand and supply for financing, which allows investors and the market to more efficiently allocate capital resources and (c) increased financial innovation leads to a better attainment of more complete, thus efficient financial markets. The lo wer the level of regulations the more pronounced these benefits would be, which are made even more efficient by opennong up cross country, financial movements. Neoclassical literatures do however require regulation in order to minimize market imperfections, in order to attain perfect markets in all markets. Keynesian economic literatures on the other hand, recognize the need for regulation of not only the financial markets, but the entire economy, coupled with regular government interventions in order to kinimize market imperfections caused by the free operation of the market, as envisaged by the Neoclassical literatures. Turne (2010) asserts that liquidity of finacial markets is not necessarily a guarantee for allocative efficiency, led by rational expectations anticipated by Neoclasicals, but are limited by oother self reinforcing effects. Market speculation and uncertainity are on their own, able to create instabilities in the market, which would distort prices and lead to innefficiencies, Arestis (2005). As such, the effects of financial liberalization are acknowledged by both Keynesian and Neoclassical economic literature, but with the former schoolof thought being more sceptical about the benefits. RESEARCH METHODOLOGY There methodology adopted will seek to asses the effects of financial liberalization on the UK economy, by providing a measure fo the overall effect on the economy, but perhaps most crucially providing methodologies to assess the effects of financial liberation, on the channels through which it acts. These include its effects on (i) productivity, (ii) banking industry instabilities, (iii) capital accumulation and (v) consumption, as a selection of the major variables that in turn have far reaching effects on the UK economy, OECD (2009). There are multiple other variables that will not, and have not been covered in this literature, review, that have varied effects on the economy as a consequence of financial liberalization, that have not however, been included in this methodology section, due to wide variations. In addition, literature review has widely been used by many scholars, and it will as w ell provide an important research tool in the bid to establish the effects of financial liberalization on the UK economy. A review of the literature on the various aspects higlited in the above literature, with an emphasis on the banking industry, economic productivity and consumption among others will offer a great indication of the overall effects. However, the first measure will adopt the IMF method (0-1 indicator) to assess the existence and scale of economic liberalization in the United Kingdom, by reference to the IMF reports as a basis for further analysis of the effects of liberalization on the country’s economy, World Bank (2007). Financial Liberalization The research will employ two, 0-1 financial liberalization indicators thata are based on the de-iure criteria. One of the indicators will serve as a dummy, which will assume the value of 0 in the case the United Kingdom does have capital account restrictions on the transactions, during any year in the past decade. If not there were no restrictyions, then the indicator will assume the value of 1. This methodologyu is widely adopted by the Interneational Monetary Fund, which classifies countries on the 0-1 base, in its annual report on exchange arrangements and restrictions (AREAER). These annual reports are available for upwards of 212 IMF member nations, for the time period ranging from 1967 to 1996, effectively offering a common, and relaible liberalization measures, World Bank (2007). The initial indicator is coupled by a further measure that uses the liberalization of equity markets (Equity Market Liberalization), provided in multiple finacial liberalizationn literatures. The indi cator assumes the value of zero (0), if there are global equity trading in the United Kingdom and the value of one, if there are no global equity trading. The Equity market liberalization indicator, changes as soon as a country opts for financial market liberaliztion, and once it changes, it may not be reversed, as against the first measure, (Arestis Caner, Financial Liberalization and the Geography of Poverty, 2009). UK Capital Accummulation as a Result of Finacial Liberaization The study will come up with several measures of the country’s stocks of capital, by firstly estimating the UK’s initial capital stock K(i), by using the formula I(i)/(g+d), where the initial stock is estimated at the time when the country adopted liberalization. In the formula, I represents the level of investments during the initial period (the base period), while g represents the geometric rate of growth of investments in the UK, in the initial ten years, after the base period. The base period will be selceted at any time when the (0-1) indicators were both had the value of 0, while the final period shall be selected be 10 years after the initial period. The d is the rate of depreciation of various depreciable investments made in the UK, Barrell Davies (2009). Once the initial capital stock has been computed, it will be possiblt to compute the United Kingdom’s capital accumulation as a result of liberalization, it will be necessary to compute the level of capi tal stock in the UK by using the formula K(f)= (1-d)K(f) +I(f). For comparison purposes, and in order to minimize the effects of other factors on capital accumulation from clouding the results, the capital stock in the period of ten years from the initial period backwards will as well be computed. The rates of capital accumulation in the two separate ten year periods will then be assessed against each other. Effects on the UK Economic Productivity The research will seek to detetminer the TFP by using the Cobb Douglas function of production i.e. Y= AKJ(HL)1-j. K represents the United Kingdom’s total stock of capital, while the L represents the country’s stock of both human capital and labor. The function does as well have the efficiency factor, providing a an indicator of the country’s efficiency in the use of its productive factors. The differences in the efficiency coefficient (A) offers a great measure of measure of the level of efficiency in different economies, OECD (2009). The variable j is equal to 1/3, and is generally considered constant across all the economies. The research will seek to identify the average productivity of a worker in the UK and the ration o labor and capital. Once these are d etermined, the initial level of productivity will be computed by the use of the formula, where the initial period is given be the period (i) used in the computation of capital stock. The final period (f) is the time period, ten years following the initial period. Once again for comparison purposes, the time period, ten years befor the initial period of the study (i) will as well be computed. These will then be coupled with an assessment of the two rates of growth in the productvity of production factors, following the introduction of financial liberalization measures. Consumption Changes as a Result of Financial Deregulation Consumption spending is an important influence on the UK economy’s health and growth, which points to the increases incomes, ease of credit availability as well as multiple other factors. To determine the effects of finacial deregulation on the consumption behavior and levels in the United Kingdom. The method adopted for estimating these effects is derived from Barrell Davies (2009), which presumes that planned consumption is not by default not equal to the actual level of consumption. It then becomes possible to assess the long term relationship between between actual and desired levels of consumption in the future, followed by a computation of the correctionary factor betweent the actual and planned consumption. The UK economy’s consumption income may be distinguished from from the country’s real wealth in the future, by treating them differently, World Bank (2007). This may be attained by differently treating the tangible wealth changes from the changes in financial wealth. The Euler appraoch does as well enable the testing of the effects to the consumption behavior and the overall economy. Banking Crisis The classifications of different crises varies from economy and time period to another, but also according to the cause and magnitude, However, for the purposes of the study, the data in Caprio Klingebiel (2003), of non systemic and systemic banking difficulties for several decades beginning in the early seventies. In the absense of a banking crisis, the banking crisis indicator assumes the value of zero, while it assumes the value of 1 or 2, in the event of borderline or systemic difficulties in the country’s banking sector respectively. The indicators are taken every given year. Systemic banking problems occur when the country’s banking sector suffers the exhaustion of the entire capital (run on banks), as against much more mild, effects on the industry, such as the difficulties experieced by the industry, following the dry up of credit, at the onset of the 2007 global economic crisis, OECD (2009). The harsher the effects of banking the crises, the more difficult the negative impacts on the country’s economy are expected to be. Estimation of the Effects of Liberalization As indicated priorly, the effects of financial liberalization are complex, and affected by a multiplicity of factors. However, for the purposes of this study, the measures obtained from the consumption, capital stock accumulation, increased productivity and banking sector shocks will be assessed for correlations with not only the values prior to liberalization, but perhps must tellingly, with the economic perfomance growth figures over the same duration. Theoretically, the positive consumption growth, should be accompanied by increased productivity and output, with an inverse expansion of the banking crisis indicator. References List Acemoglu, D., Aghion, P., Zillibotti, F., 2010, Distance to Frontier Selection Economic Growth. Journal of European Economic Association. Arestis, P., June, 2005, Financial Liberalization and the Relationship between FInance and Growth. CEPP Working Paper Series No 5/05. Arestis, P., Caner, A., 2009, FInancial Liberalization and the Geography of Poverty. Cambridge: Cambridge University Press. Barrell, R., Davies, P., 2009, FInancial Liberalization, COnsumption and Wealth Effects in 7 OECD COuntries. NIESR DIscussion paper No 257. Caprio, G., Klingebiel, D., 2003, Episodes of Systemic Borderline Financial Crisis. Mimeo. Cobham, D. P., 2004, The making of monetary policy in the UK, 1975-2000. London: John Wiley Sons. Kentikelenis, A. E., 2009, Assessing the Link between Financial Liberalization and Saving. ESDS International Case Study. OECD., 2009, Main Economic Indicators . Manchester: ESDS International, University of Manchester. Smith, S. J., Searle, B., 2007, The Blackwell Companion to the Economics of Housing: The Housing Wealth of Nations. London: John Wiley Sons. Turne, A., 2010, Feb 12, After the crises: assessing the costs and benefits of financial liberalisation. Retrieved November 24, 2011, from FSA: http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2010/0215_at.shtml World Bank., 2007, August 18, FInance for All? The Pitfalls of Expanding Access. World Bank Policy Research Report.

Comparison Of Flight And The Masquerade Of The Red Death

In the story â€Å"Flight† by John Steinbeck and â€Å"The Masquerade Of The Red Death† by Edgar Allen Poe, both protagonists meet a similar fate. In â€Å"Flight†, the main character named Pepe, of mexican descent, is described as a lazy kid at the age of 19. His mother sends him to Monterey to get medicine and bath salts. In town, pepe gets insulted by a white man, and kills him with his fathers knife. His vision of being a man was taking someones life. He is hunted down by men seeking revenge for the man who he kills. In â€Å"The Masquerade Of The Red Death†, A self absorbed and obnoxious prince invites people to his impenetrable castle to avoid the plague. He and his guests are soon tracked down by the disease itself. Both Protagonists are hunted down†¦show more content†¦Throughout Pepes journey to Monterey and to the mountains to seek shelter, Steinbeck changes the environment along with Pepes physical traits. At the beginning of the story, Pepes mouth is described as sweet and shaped like a girls mouth. Pepe draws many resemblances of being a child in the beginning, whereas at his death scene, his mouth is dirty and bloody; â€Å"Between his lips the tip of his black tongue showed† (129). Steinbeck also uses the color black to foreshadow Pepes upcoming death. Steinbecks use of imagery in the story shows how the environment is changing as well as Pepe himself to his inevitable death. Steinbeck masterfully creates a constantly moving environment as well as flowing characters to relate to the common theme of confronting death. In the story â€Å"The Masquerade Of The Red Death†, Edgar Allen Poe describes how gruesome the red death is. For example, There were sharp pains, and sudden dizziness, and then profuse bleeding at the pores, with dissolution. 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Modern Psychology Essay Example For Students

Modern Psychology Essay Jerry, Jerry, Jerry Everyday, this chant is heard by millions of people watching the now infamous talk show, Jerry Springer. Even though just a few years ago, most people regarded these shows as ridiculous, now this chant is recognized and adored by many people in society. The most parsimonious explanation for this is that the shows now have more interesting and captivating topics. The premise of most episodes of these shows has changed greatly over the past few years; The topics have moved away from large scale social issues, like homosexuality and cancer, to relationship and familial issues, like adultery and mothers who are too flirtatious with their daughters boyfriends. Many people would argue that the issues being presented now are not as interesting or captivating as the older issues. However, after watching an old episode and a new episode, most people agree that the emotions displayed by the guests in the newer shows are more visible, with actions such as onstage yelling and fighting. The general emotional content of the episodes has changed from sadness to anger. From a psychological standpoint, there are many influences that cause extreme anger to be displayed by the guests on talk shows. Imagine being a guest on the Jerry Springer show, as you walk onto the stage you see the large audience chanting those infamous words. You sit down next to your fiance not knowing what to expect, you are nervous and anxious. Finally, Jerry says those terrible words, So, dont you have something to tell your fianc? She turns to you, looks into your eyes and says, Remember about a month ago when I disappeared at that party at your house?Well, that night your brother and me left the party early. Im sorry, I have been sleeping with your brother for the past month. Suddenly, the anxiousness that you experienced is gone and replaced by anger, intense anger. You turn to Jerry as he asks you, Wow, she has been cheating with your brother, how does this make you feel? Your anger only gets more intense, you ramble to your ex-fiance and ask her how she could do such a thing. Again, Jerry interrupts the moment and yells into the microphone, Alright lets get the brother out here! As you see your br other walk through the door, you again hear that irritating chant echoing through the crowd. You jump to your feet and go after your brother, within seconds you are pulled away by security guards and forced to return to this humiliating situation. Soon enough, you are too angry to talk, you simply scream obscenities at your brother and ex-fiance. It seems like every word Jerry says makes you angrier and angrier, and all the while Jerry Springers ratings are soaring through the roof. There are many psychological explanations for this increasing anger experienced by the guests on a talk show. It is a well-known psychological observation that questions can be phrased in different ways eliciting different responses. A study conducted by Amos Tversky and Daniel Kahneman displayed that the same question phrased in two different ways to the same person can receive two different results. Interviews or surveys often use this framing effect to try to get the response that is more favorable fo r the interviewer or surveyor. Based on this discovery, it is reasonable to assume that the framing of a question can also affect the emotional response that is elicited by the subject. Knowing that there is a strong correlation between the anger of his guests and the ratings he receives, Jerry Springer can use this framing effect to his advantage. By framing questions in a certain way, Jerry can intensify the anger of his guests. Often, when Jerry asks a question to his guests, he tends to include words with strong negative connotations. For instance, in a topic like the one presented above, Jerry tries to use words like cheating, sneaking and lying. Jerry also phrases the question in such a way to evoke anger in his guests. He typically asks questions like, Can you believe that your fiance and your brother would go behind your back like that? The question is framed in such a way that any answer given to it would evoke or intensify anger. A no answer increases the feeling of surpri se and causes the guest to think to himself, How could they do such a thing? A yes answer could mean that the guest may have noticed something going on between his fiance and brother before the show. Yet, it is more likely that the guest has fallen prey to hindsight bias. .ua282587a6e3537512353077fdf86de79 , .ua282587a6e3537512353077fdf86de79 .postImageUrl , .ua282587a6e3537512353077fdf86de79 .centered-text-area { min-height: 80px; position: relative; } .ua282587a6e3537512353077fdf86de79 , .ua282587a6e3537512353077fdf86de79:hover , .ua282587a6e3537512353077fdf86de79:visited , .ua282587a6e3537512353077fdf86de79:active { border:0!important; } .ua282587a6e3537512353077fdf86de79 .clearfix:after { content: ""; display: table; clear: both; } .ua282587a6e3537512353077fdf86de79 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .ua282587a6e3537512353077fdf86de79:active , .ua282587a6e3537512353077fdf86de79:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .ua282587a6e3537512353077fdf86de79 .centered-text-area { width: 100%; position: relative ; } .ua282587a6e3537512353077fdf86de79 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .ua282587a6e3537512353077fdf86de79 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .ua282587a6e3537512353077fdf86de79 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .ua282587a6e3537512353077fdf86de79:hover .ctaButton { background-color: #34495E!important; } .ua282587a6e3537512353077fdf86de79 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .ua282587a6e3537512353077fdf86de79 .ua282587a6e3537512353077fdf86de79-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .ua282587a6e3537512353077fdf86de79:after { content: ""; display: block; clear: both; } READ: Why Marc Antony is a Round Character EssayHindsight bias is the inclination to remember things in a certain way based on information obtained later. So, in this situation the guest, now knowing that his fiance is cheating, will remember anything that seemed awkward in the weeks approaching the show. Although these moments may not have been very common, they will now stick out in the guests mind. The guest will tend to recreate many of his memories of the past few months based on this new information. He may interpret common events with no major emotional value as strong signs of his fiances cheating. As he thinks about these memories, his anger towards the situation will i ncrease greatly. Jerry is able to cause a great increase in the anger felt by the guest by framing the question in a certain way. Besides Jerrys questions, though, many factors influence the emotional content of the show. When a guest enters the stage, there are hundreds of people looking down chanting and cheering. When placed in such situations, in front of large crowds, people tend to feel nervous. Their heart rate, breathing rate and production of sweat all increase due to the reaction of the sympathetic nervous system. Based on the Schachter and Singer theory of emotion, this helps to explain why the emotions displayed in the shows are so intense. Schachter and Singer believed that the intensity of emotions are determined by the intensity of the physiological state, but the emotion itself is determined by the situation. As explained earlier, the situation that the guests are put in is definitely an angering situation. Therefore, when the guests are placed into the angering situation, their sympathetic nervous system has already been aroused and the intensity of the anger is much stronger than it would have been otherwise. The participation of the audience, with shouts and cheers, tends to increas e the intensity of the anger even more. So, these guests are manipulated psychologically to deal with difficult situations with even more anger than they would display normally. To make matters worse, when the guests try to fight they are torn apart by security guards. Yet, they have enough time to activate a fight response; their sympathetic nervous system is aroused greatly, releasing a great deal of adrenaline causing an even greater increase in heart rate and breathing rate. This intensifies their emotions in multiple ways. First of all, the physiological state is further intensified, corresponding to even stronger emotions of anger. Yet, along with this, there seems to be a great deal of frustration evoked in the guest. Based on the frustration-aggression hypothesis, frustration causes aggression. In other words, failure to obtain something causes raised aggression. In the case of the guests, their failure to get revenge or resolve out of the issue causes an even greater feelin g of outrage. All of these factors cause the guests on the Jerry Springer Show to elicit strong emotions of anger and violence. Although the talk show was created as a way for people to share their problems with society and try to resolve them in a group situation, now it has become simply a quest for more money. The Jerry Springer Show simply causes more anger and disappointment in situations that are already very difficult for people to deal with. Many psychological influences affect the guests on talk shows into becoming much more angry than necessary. Rather than solving any of the problems discussed, shows like Jerry Springer tend to create a great deal of tension. Jerry is able to manipulate his guests into intense anger; since the general population would rather watch anger and violence, rather than peaceful resolve, the Jerry Springer Show is greatly benefiting from the strong psychological influences on the guests. Bibliography:

Purpose Of Constituting Term The Contract â€Myassignmenthelp.Com

Questions: Whether Gluten Free Cake Is The Implied Term In The Contract Between Dan And Jacob With Mikaela? Term Related To The Icing Color Is The Condition Or Warranty To The Contract? Whether Mikaela Is Responsible For The Wrong Icing On The Cake? Answers: Introdcation Generally, rights and liabilities of the parties to the contract are considered by the terms of the contract. Terms are divided into two parts that are express terms and implied terms. Express terms are those terms which are stated by the parties either in written form or in oral form. For the purpose of constituting the term of the contract, it is necessary that statement made by the party must intend to be promissory in nature. Court considered the element intention to create legal relation, and in this context intention is determined on objective basis. In other words, whether though made by the reasonable person was intended in those situations (ACL, 2017)? This can be understood through case law Ellul and Ellul v Oakes. In this case, Court stated that if representation was made by one party under the contract for the purpose of inducing the other party to enter into contract and actually induced the other party to enter into contract, then it was considered as prima facie evidence for treating that representation as the term of the contract. Therefore, if any representation made by one party induces the other party to enter into contract and parties has intention to create legal relations then such representation is considered as term of the contract. In the present case, Mikaela specifically asked about the gluten free almond flour, and Ricky replied yes to her. In this both the parties has intention to create legal relations and representation made by Ricky induce the Mikaela to enter into contract. Therefore, Gluten free almond flour can be considered as term of contract. Implied terms are considered as those terms which are implied by law in the contract, but these terms are not discussed by the parties or referred in the contract. These terms are generally implied by common law or by statute. Common law implied the terms on the basis of actual and presumed intention of the parties under the contract, and such terms generally give business efficacy to the contract which may be result from the transactions between the parties. This can be understood through case law Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337. In this case, Justice Mason stated that those conditions on the basis of which term can be implied in the contract are defined under BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40. These conditions are stated below: Terms must be reasonable and equitable in nature. It is necessary that term provided business efficacy to the contract, and it must be noted that term is not implied in the contract if contract is effective in nature even without that term. Term must be so obvious in nature that it must be understood without saying. Term must be capable of clear expression. Term must not violate any express term of the contract. Usually, Court compare the implication of term with the rectification of the contract, and stated that in both the cases issue raised because of the deficiency of expression on the part of the parties in the contract. In other words, parties omit to include the term in the contract. The difference between implication and rectification is that in rectification parties omit to include the term and when term is included then it was actually agreed between the parties. In case of implication it is presumed that parties are already agreed upon the terms in their mind, which means that term on which parties are already agreed upon. Therefore, rectification give effect to the actual intention of the parties but implication gives effect to the presumed intention (Austlii, n.d.). In the present case, Dan and Jacob do not specifically ask about the gluten free cake, but they asked for almond flour. In this case, Condition stated in above case law is satisfied in this case: Term related to gluten free cake is not reasonable, and this term is not necessary for business efficacy to the contract because it is possible to make the cake with gluten free cake also. Term is not obvious in nature because Dan asks for almond flour but not for gluten free almond flour. Dan does not give any clear expression of gluten free almond cake. Therefore, term is not capable of clear expression. It must be noted that there is no presumed intention on the part of the Mikaela for gluten free almond flour. More important terms related to the contract are considered as condition and less important terms are considered as warranty. It must be noted that conditions are very important for the contract that without that term party would not enter into the contract. For the purpose of determining the condition or warranty court considers the circumstances of the case. Breach of condition allowed the innocent party to terminate the contract. This can be understood through case law Poussard v Spiers (1876) 1 QBD 410 (ACL, n.d.). In the present case, term related to color is considered as condition because Kimiko wants that cake for sports team celebration, and green icing is not appropriate for that celebration. Kimiko would not enter into the contract if Mikaela said no for the purple icing. Therefore, this term can be treated as the most important term and classified as condition of the contract. Conclusion: Exclusion clauses are those clauses which are usually stated in the contract and exclude the liability of one party under the contract in case of certain happenings. This can be understood through example, when person join the gym then generally contract states that owner of the gym will not be responsible for the injury caused to person while exercising. Exclusion clauses are valid only when these clauses are properly included in the contract. In other words, exclusion clauses are those terms of the contract which limit or exclude the liability of one party, and these clauses are generally effective if properly drafted. There are some laws which prevent the party to rely on exclusion clauses, especially in case of consumer contracts (ACL, n.d.). It must be noted that, it is not possible for parties to exclude the liability related to the conditions and warranties under the contract, and those rights and remedies which are stated by the Australian Consumer Law. Section 64 A of the Schedule 2 Competition and Consumer Act 2010 (Cth) states that it is not possible to exclude the consumer guarantee. In case person exclude the liability related to any term which is considered as condition or warranty of the contract then such exclusion clause will considered as void This can be understood through case law Glynn v Margetson [1893] AC 351. In this case, Court stated that carriers agreed to carry the oranges from Liverpool for the purpose of allowing the ship to call at any port in Europe or Africa. When ship arrived in Liverpool, it was found that oranges were already destroyed. Defendants try to depend on exclusion clause, but Court stated that main purpose of the contract is to deliver the goods safely to the ship, and it is not possible for defendants to rely on any clause which exclude the liability for the main purpose of the contract. In the present case, the main purpose of the contract is to deliver the cake with Blue and purple icing, but Mikaela deliver cake with blue and green icing which is considered as breach of condition. As per section 64 of the ACL it is not possible for parties to exclude the liability related to the conditions and warranties under the contract, and those rights and remedies which are stated by the Australian Consumer Law. In above stated case, Court stated that it is not possible for defendants to rely on any clause which exclude the liability for the main purpose of the contract, and in this case main purpose of the contract is to deliver cake for sport celebration. Therefore, Mikaela cannot rely on exclusion clause in this case.In this case, Mikaela cannot rely on exclusion clause and Kimiko can sue her for breach of contract. References: ACL, (2017). Terms of a contract. Available at: https://www.australiancontractlaw.com/law/scope-terms.html. Accessed on 22nd August 2017. ACL. Classification. Available at: https://www.australiancontractlaw.com/law/scope-classification.html. Accessed on 22nd August 2017. ACL. Exclusion Clauses. Available at: https://www.australiancontractlaw.com/law/scope-exclusion.html. Accessed on 22nd August 2017. Austlii. Implied terms in Australian contract law. Available at: https://www.austlii.edu.au/au/journals/MonashULawRw/2011/22.pdf. Accessed on 22nd August 2017. BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40. Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337. Ellul and Ellul v Oakes, (1972) 3 SASR 377, Supreme Court of South Australia. Glynn v Margetson [1893] AC 351. Poussard v Spiers (1876) 1 QBD 410.