Week 1: CheckPoint - Principles of Economics

Grade: 30/30
A recent article called A fair-minded report at a crucial time, posted on economist.com pulls from several of the Ten Principals of Economics.  The article discusses the Volcker commission’s upcoming report on the United Nations Oil for Food scandal, which is likely to have several repercussions.  The principals most relevant are “people face tradeoffs, and “trade can make everyone better off”.  (A fair-minded report at a crucial time, September 7, 2005)

The principal “people face tradeoffs” is best understood by the UN’s failings.  Originally the Oil for Food program was to be small.  When oversight of the project was decided upon, no one prepared for the possibility of its popularity.  As a result, the UN was overwhelmed and unable to oversee the project properly.  The tradeoff was that in order for the program to grow, the process of oversight needed to accommodate the vast changes.  (A fair-minded report at a crucial time, September 7, 2005)

The second economic principal relevant with this article is “trade can make everyone better off”.  In this case, Iraq was in dire need of money to provide medicine and food for its people.  Although its leadership was corrupt, this program would enable the world to benefit from the vast oil supply in Iraq, while keeping needed supplies in Iraq where those items were of desperate need.  (A fair-minded report at a crucial time, September 7, 2005)

The chapters in the economic book most likely to correspond with the article would be chapter six, “Supply, Demand, and Public Policies” and chapter 11, “Public Goods and Common Resources”. 

References
A fair-minded report at a crucial time (September 7, 2005).  Retrieved on September 11, 2005, from http://www.economist.com/agenda/displayStory.cfm?story_id=4368984.



© Erik Smith 2005
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