Please help with this Macro-Economics question?
Say you are watching your favorite television program, and a commercial comes on. A soothing voice begins to describe your imaginary vacation in the lush, tropical paradise of Timbucktoo (a remote island in the South Pacific-fictitious of course), while pictures of rain forests and secluded beaches flash across your T.V. screen.
The commercial begins to describe your daily itinerary while showing you the “gentle and friendly” native peoples of Timbucktoo, performing native dances and other activities to the delight of the tourists.
You begin to think (sadly enough!) about macroeconomics. You wonder about these “gentle and friendly” people of Timbucktoo living on an island thousands of miles away from anything out in the middle of the South Pacific, and you ask yourself why the people of Timbucktoo would desire tourism to come to their peaceful and secluded island? What could they possibly do with that added aggregate income (generated by tourism) when they are out in the middle of nowhere. What could they possibly spend their money on? What about the pollution and the noise? The hustle and bustle, the crime! And what about their peaceful and gentle way of life? Is it worth sacrificing for more income?
As we have discussed, increases in GDP and aggregate income do not always mean the level of well-being and happiness increase as well for all citizens of a society. With this in mind, please explain your thoughts or insights regarding this hypothetical commercial.
10 Points asap!! I promise!! =P
There are a few queries in your question.
Why would simple people want to modernize and get more cash and subject themselves to the stress of modern city type life.
1. For ego and prestige. It’s the same reason why India spends pots of cash on sending a few morons up into space while the rest of their people are starving and suffering from underdevelopment in other parts of the country.
The main things of ego and prestige in a country to show that they are not backward.
- National air line
- national team
- nukes
- some sort of space exploration programme
-lots of cars
-tall buildings
+ 5 star type buildings
+ good houses for elite rulers.
And these things require income, development and modernization.
Other thoughts. Although the people who are working in the tourist industry in this simple country may enjoy the simple pleasures in life and don’t want their country to become a manufacturing depot or a huge unnatural city like NY, they themselves want to better their lives by being able to afford more goods. OR if it is a crap poor country, they may want basic healthcare and education so that their children can survive longer and achieve more than they do.
And if it is a tiny tinpot of a country, it is probably run by elites who want to become like their betters in European nations, which is why they would encourage modernization, foreign investment, tourism and other modern amenities so that they would profit from the taxes. Look at Asian tiger economies like Singapore, HK, Thailand and Taiwan, they have changed considerably in the past 4 decades, and who reaps more of the benefits?
I feel we westerners frequent small asian countries for tourism so that we can learn more about other cultures and places. But some of us prefer 5 star accomodation and amenities rather than simple back-packer joints which do not do much to change the surrounding environment.
Also we invest in these countries because they are sources of cheap labour so we can make greater profit. Asian countries have no minimum wage, so we exploit them to make money, while people do not earn as much as we do in the USA or Australia, and their governments do not provide much welfare. Because their lives are unstable, they save a large bulk of their income in elite controlled banks, which goes to invest back to us in Europe and the USA, whereby we contribute to housing price crisis and corporate scandals.
True, we in Europe spend too much. But Asians can also be accused of saving too much. We could not have spent that much if someone at the other side of the world did not save to give us cheap capital/money.
This makes me sick.
It is worth sacrificing a simple way of life for more income because some asian societies really have nothing to give to their people. No minimum wage, free healthcare or pension benefits or political freedom: Think Thailand and Burma.
Hope this helped.