Corona Economics: Existence of Negative Price    



Dr. Mohammed Saiful Islam
Photo: collected

Photo: collected

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During the delivery of lectures on Microeconomics, the students put questions to us like demand, supply, price can be negative. In all cases, answer is no but they can be zero. Zero demand refers to unwillingness to buy; zero supply means one does not want to sell.

In the special case when price is extremely low, the seller may be prompted to buy goods instead, and this situation characterizes negative supply. What about price?

Apparently positive price is the only possibility. If you want to buy goods or services, you have to pay price. However, in rare cases free goods may be available, signifying zero prices. But the existence of negative price is far from the reality.

What does negative price actually mean? If you buy something you won’t pay the seller, rather the seller will pay you! The corona world does not view this as surprising. Buyers in the United States (US) are getting money while buying fuels. Fuelling stations are overstocked in the pace of dramatic fall in demand for their product.

Coronavirus spreads, lockdown continues, hotel- restaurants-malls are closed, and the economy is in stagnant thereby plummeting the demand for fuel. Buyers of crude are paid 37.63 dollars by the sellers for every 1 barrel purchase. So price per barrel of crude oil in the US is -37.63 dollars, which is negative. Readers of Microeconomics should note this revision. Earlier we ruled out the possibility of negative price but here you find the opposite.

Dr. Mohammed Saiful Islam, Professor, Department of Economics, University of Chittagong

Is negative price attributable to crude oil alone? Is the US the only country where this microeconomic concept gets reverse turn? Possibly no. It appears to be a global phenomenon. Does negative price exist in Bangladesh? Yes, it does. Sellers with huge perishables in their stock might prefer buyers take them not only for free but they may be offered some money, given that the amount does not exceed the cost of freeing their stores, godowns hiring a third party, probably human labor. Price of the perishable turns out to be negative.

Similarly ‘Corona price’ of service can also be negative. Imagine a workaholic teacher who earlier used to educate students at school and home. Corona has paralyzed his life and now he is at the risk of psychological disorder. He might, aiming at spending busy hours, opt for offering tuition to students.

In addition to the lessons taught, instead of being charged, the student has to be paid a ‘corona premium’ as an incentive. Price of the service of this hypothetical teacher is negative.

Negative price does not adhere to goods or services market alone. Money market is more likely to experience negative price. Before corona outbreak, bank rates, for example of Bangladesh, Japan and the US were 5 percent, 0.3 percent and 1.6 percent respectively.

Commercial Banks, in order to meet the demand of investors, could borrow from the central banks at the above rates. Amid dramatic fall in the demand for investment, central banks are cutting their rates. But that is not the end of the episode. Finally, if not the commercial banks, governments will have to channel additional sum to the investors as a motivation to borrow. This indicates a negative price of money.

Coronavirus has changed the concept of non-negative price no matter what it is of- goods, service or money. This contradicts with the modern theory of pricing where price of a good or a service equals the amount of satisfaction obtained through consumption.

Arguably, this is not the only notion getting revised; COVID-19 will change many other concepts of modern economics once it wins the armless world war III where the opponent is not any individual or nation, rather the entire global community. If COVID-19 continues to spread, great depression will hit the world causing significant structural change in the world economy making the appearance unfamiliar to many of us.

Bangladesh is not yet ready to cope with the post-corona economic behavior. The overnight exponential rise in the number of infected people in Bangladesh underlies the warning of tougher time ahead made by the world health organization (WHO). The above mentioned notion of negative price is cited as a symbolic example of post-corona perverse economic behavior.

Rather than focusing on what we did or envisaged, master plan of future course of action should be in place. According to a Harvard research, at least two more years of social distancing is needed for arresting the outbreak. Ideas of distance working, distance learning, distance producing, distance training should be made familiar and operational. Private and public organizations should frame corona-robust policies. Central bank, being the monetary authority, should be proactive in order to meet the fiscal needs so that the hardest-hit vulnerable group can be rescued.

Dr. Mohammed Saiful Islam, Professor, Department of Economics, University of Chittagong, Bangladesh.

Who will lead France for the next five years?



Dr Mahfuz Parvez
Macron and Le Pen Prepare for Showdown

Macron and Le Pen Prepare for Showdown

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France on Saturday (April 23) prepared to choose between centrist President Emmanuel Macron and far-right challenger Marine Le Pen to rule the country for the next five years after a bitterly contested and polarising election campaign. By Sunday (April 24) evening, the world will know whether France has elected its first female leader, or the first two-term president since Jacques Chirac.

Considering the election processes, It’s looking like Emmanuel Macron is headed for victory; he holds a ten-point average lead in polls over his challenger, the far-right Marine Le Pen. That she is still within range of Macron, who trounced her by 30 percentage points in 2017, has Western capitals nervous that the French could swap an ardent EU supporter for one closer to Moscow than Brussels.

However, Undecided voters are one concern, with as many as 11 percent still yet to make up their minds. The supporters of the far-left candidate Jean-Luc Mélenchon are another wildcard. The worry for Macron is not so much that they would go over to Le Pen, but that they simply won’t vote at all. Just under half of his first round voters don’t intend to cast a ballot on Sunday, but two-thirds of those who plan to vote say they’ll back Macron.

Michele Barbero, in a Paris dispatch for Foreign Policy Journal, spoke with one Mélenchon supporter who isn’t sure whether to vote on Sunday. “I feel disillusioned, desperate, and I have less and less confidence in politics to bring about more social justice,” she said.

As the election of Joe Biden in 2020 showed, a victory for a centrist candidate doesn’t magically de-polarize an electorate. So even a loss may not spell the end for Le Pen, who will be just 58 when the 2027 elections come around—and would no longer have to face Macron, who would be barred from serving a third consecutive term.

With Le Pen within arm’s reach of Macron, some world leaders have gotten off the fence. In a rare foray into French politics, German Chancellor Olaf Scholz made the case for Macron in a Le Monde op-ed on Thursday. Sharing a byline with his left-leaning counterparts Spanish Prime Minister Pedro Sánchez and Portuguese Prime Minister António Costa, the three men presented a choice between “a democratic candidate, who believes that France grows in a powerful EU. And a far-right candidate, who openly sides with those attacking our freedom and democracy.”

Luiz Inácio Lula da Silva, the former Brazilian President has also stated his support for Macron, describing the election as one where “the future of democracy” is at stake.

Although U.S. President Joe Biden has not publicly expressed his preference, his Democratic predecessor Barack Obama still might. The former president would be leaving it late; he already had backed Macron by this time in the 2017 election cycle.

Perhaps doing Le Pen a favor, given the distance she has tried to put between herself and the Russian leader during her campaign, Russian President Vladimir Putin has stayed silent. Her ideological allies in Hungary and Poland have too.

Imprisoned Russian dissident Alexei Navalny has also stumped for Macron—while skewering his opponent, saying on Twitter that any so-called conservative who is sympathetic to Putin “is actually just a hypocrite with no conscience.”

Barring a too-close-to-call election, exit polls should predict the winner by the time voting ends at 8 p.m. Paris time on Sunday.

Dr. Mahfuz Parvez, Professor, Political Science, University of Chittagong and Associate Editor, barta24.com

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Let’s talk about the elephant in the room



Tazlina Zamila Khan
Let’s talk about the elephant in the room

Let’s talk about the elephant in the room

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Our nation has reached a point where just walking down the street is the most risky and courageous undertaking that one can perform. Once you go out into the street, there is no assurance that you will be able to return to your loved ones. No matter what mode of transportation you choose, such as a bus or a car, you are not protected. I was taken aback when I received some news about one of my students. He and his mother were driving home from school like they often did when their car collided with a rickshaw, killing one of the passengers. The chauffeur was able to flee the scene very quickly, but my student's mother was gravely injured. It was a traumatic experience for such a young boy like him to see such an occurrence unfold in front of his own eyes. The person who died could have been anybody, and it might have been someone you know. Every day, the number of accidents increases, and the worth of human life decreases.

Sometimes it does remind me of one of the dialogues of Spiderman II --‘Uncle Ben was killed that night for being the only one who did the right thing’. Bangladeshi street scenes are similar to this in terms of situation. Even if you are driving safely and, in your lane, you may be involved in an accident due to the negligence of another driver. Thousands of Uncle Ben is Somebody else's careless behavior resulted in these people's death. To make a safer road, how much blood must be shed?

According to a news report of The Daily Star which stated the road accident rates increased by 30%. In addition to reckless driving, a lack of skilled drivers, mental and physical illness in drivers, insufficient benefits for drivers, slow vehicular movement on highways and youths riding carelessly on motorbikes, an ineffective traffic management system, and a lack of awareness among the general public are all factors contributing to traffic fatalities and injuries.

If the management is tight, however, all of these issues will not be addressed for some time. What annoys me the most is that in our nation, there is no consequence for individuals who are guilty for their actions on the road. The vast majority of the time, drivers escape after murdering someone. Every attempt is made to bring justice to the victim's family, but all of it is in vain.

With each victim who escapes, it sends a message to the whole society that "it is alright to murder someone since no one else will come to haunt you." This is very hazardous, and sadly, this is the reality of the situation in the country. As a result, accidents are happening on the other hand culprits are moving freely without being punished.

Despite the government's stated goal of reducing road accidents by 20-25 percent by 2024 and 50 percent by 2030, the number of accidents in the nation has continued to rise over the last few years.

When it comes to following the rules of the road, motorcycles have a particularly difficult time. They indicate that time is more important than human lives by rushing to the destination with the passengers. Every member of the family is affected by even a little accident. No matter how sympathetic or empathic you are to the victim's family, you will never be able to replace the gap left by the death of a spouse, a daughter, or a son. It's impossible to fathom the anguish and misery endured by the families affected by such tragedies.

Despite this, traffic accidents are still being referred to as the elephant in the room. As a matter of fact, it should have been dealt with and resolved much sooner had it been given more priority. In reality, though, it is steadily increasing. Why has it been put off for so long?

Road accidents are still a severe problem, despite the fact that our communication system has undergone a major shift. Adequate driving instruction is essential, and law enforcement authorities should be harsher with those who breach the rules. To illustrate that no one is above the law, the perpetrators of these crimes should be punished.

The writer is a faculty member of a private school

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Japan, China and Asian Peace



Dr. Mahfuz Parvez
Japan, China and Asian Peace

Japan, China and Asian Peace

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Japan and China, two important countries in Asia, are also influential in regional and international politics. These two countries can play a leading role in peace and development in Asia. Although their pasts are conflicting, their peaceful alliance is essential to world reality. Especially for Asia-Pacific peace, it is essential that the two countries come together.

Considering the important position of two countries, researchers have worked on the positive aspects of the friendly role of Japan and China. As they look to the past and the present, some researchers have raised hopes for the future. Ezra Feivel Vogel was an one of them.

Ezra Feivel Vogel, (Born: July 11, 1930, Delaware, Ohio, United States, Died: December 20, 2020, Mount Auburn Hospital, Cambridge, Massachusetts, United States) was an American sociologist who wrote prolifically on modern Japan, China, and Korea, and worked both in academia and the public sphere. He was Henry Ford II Professor of the Social Sciences at Harvard University and the author of a masterpiece titled China and Japan: Facing History, published in 2019 just before his death.

According to Ezra Feivel Voge, China and Japan have cultural and political connections that stretch back fifteen hundred years. But today their relationship is strained. China’s military buildup deeply worries Japan, while Japan’s brutal occupation of China in World War II remains an open wound. In recent years less than ten percent of each population had positive feelings toward the other, and both countries insist that the other side must deal openly with its history before relations can improve.

From the sixth century, when the Japanese adopted core elements of Chinese civilization, to the late twentieth century, when China looked to Japan for a path to capitalism, Ezra Vogel’s book examined key turning points in Sino–Japanese history. Throughout much of their past, the two countries maintained deep cultural ties, but China, with its great civilization and resources, had the upper hand. Japan’s success in modernizing in the nineteenth century and its victory in the 1895 Sino–Japanese War changed the dynamic, putting Japan in the dominant position. The bitter legacy of World War II has made cooperation difficult, despite efforts to promote trade and, more recently, tourism.

Vogel underscored the need for Japan to offer a thorough apology for the war, but he also urged China to recognize Japan as a potential vital partner in the region. He argued that for the sake of a stable world order, these two Asian giants must reset their relationship, starting with their common interests in environmental protection, disaster relief, global economic development, and scientific research.

Dr. Mahfuz Parvez, Professor, Department of Political Science, University of Chittagong, Bangladesh and Associate Editor, www.barta24.com.
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Our victory: our pride



Syed Iftekhar
photo: Barta24.com

photo: Barta24.com

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In the 21st century, technology is a crucial factor for economic development. Bangladesh is not left behind, the current time the region is part of the global community. The country embarked on a long way since the declaration of independence in 1971.

Nowadays, Bangladesh turns 50 years. Digital Bangladesh is developing swiftly with this momentum that will lead the territory into achieving its future goals. Meanwhile, the region has commenced the journey towards Bangabandhu Sheikh Mujibur Rahman's 'Sonar Bangla' through this massive triumph.

Here and now, Bangladesh is making an impressive leap on the Earth as our situation has dramatically improved. The world leaders have even noticed our successful transformation. Consequently, Bangladesh has ranked the fastest-growing economies in the world. From 1971 to 2021, Bangladesh ameliorated enormously; our food safety has significantly improved, poverty is also declining.

On the other hand, the private sector has expanded at an astonishing rate. Although there are still some sectors Bangladesh needs to address. We need to do major works more efficiently at present to secure an ample future. In this case, the present government is striving. As conscious citizens of this country, we have individual responsibility too.

However, as a firm citizen, I also have a gigantic dream. A dream for a better life, prosperous life. It is not just a conception. This would happen soon. I am immensely hopeful because without hope this country could not be created. Further, we could not overcome several obstacles as well as challenges. Nonetheless, the rigorous reality is hopes are not well enough. We must make a noteworthy endeavor to turn them into reality, thus, we can go far.

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