On October 22, the upper house of the French parliament passed a controversial bill to change France’s minimum retirement age. The bill is designed to address France’s budget deficit in pension funding by increasing the minimum retirement age to 62 from 60. Despite the fact France has a generous retirement program when compared to other countries within the European Union (EU), the bill is widely unpopular and the country has been gripped by public protests and strikes. The last few days have seen fuel shortages, shipping delays, and sporadic violence due to the demonstrations and labor strikes. The bill passed the French senate by a vote of 177 for and 153 against. A final version of the bill is likely to be signed into law on Wednesday.
Public protests and labor strikes have crippled attempts by previous government administrations in France to change social-welfare programs, but French government officials expect the current round of protests will fade when the final version of the pension bill is approved by Parliament. Analyze the extent to which you think the protests will continue or will be successful in overturning the pension reform.
The President of France, Nicolas Sarkozy, has said that the French can’t afford to retire earlier than people in other EU countries. Other countries within the EU have cut pension benefits and/or increased minimum retirement ages due to concerns about government spending levels and to acknowledge longer life expectancies. Do you think it would be possible for the 27-member EU to move toward a common retirement program, with consistent age limits for retirement? Why or why not?
If the public protests and labor strikes continue, do you think this will help or hurt Mr. Sarkozy’s chances for re-election in 2012? Defend your position.
Members of the European Union (EU) have reached a tentative compromise agreement about how to deal with euro-zone members who violate EU spending rules. Each euro-zone country is supposed to limit its budget deficit to no more than 3% of the nation’s gross domestic product (GDP) and its debt to 60% of GDP. One of the main criticisms of the common currency is that the EU lacks sufficient political power to keep individual countries from spending too much. Since the euro-zone crisis last spring, EU governments have been trying to implement policies which will keep member countries from overspending and to create systems for responding to a new crisis, should one develop. Germany, the Netherlands, Finland, and Sweden wanted strict and automatic imposition of sanctions against those governments that violate EU spending rules. France, Spain, and Italy wanted a more flexible system allowing member countries to vote on whether to impose sanctions.
In the agreement announced on October 18, Germany seems to have conceded on its views. Germany long resisted bailing out Greece and its citizens tend to have little sympathy for nations that live beyond their means. Angela Merkel, Germany’s chancellor, has been a strong advocate for implementing new reforms with the goal of restoring investor confidence in the euro zone. The compromise deal preserves the rights of euro-zone leaders to vote on whether to impose sanctions. Ms. Merkel may have conceded on the sanctions provision in the hopes of achieving her long-term goals of implementing changes to the treaties governing the EU, which would allow for the suspension of voting rights of euro-zone members who violate EU spending rules, and to create a more permanent system for dealing with debt crises.
QUESTIONS FOR DISCUSSION:
Analyze the advantages and disadvantages of allowing euro-zone members to vote on whether to impose sanctions against nations who violate EU spending rule versus imposing automatic sanctions.
Ms. Merkel may have conceded on the sanctions provision in the hopes of achieving her long-term goals of implementing changes to the treaties governing the EU. Discuss the challenges which will be faced in attempting to re-write EU treaties and analyze if this was a wise political move by Ms. Merkel.
Moral hazard is the academic theory that people (or governments) will continue to engage in risky or aggressive behavior if they never suffer negative consequences for their actions. Greece received a $135 billion rescue package from the International Monetary Fund and the EU in May 2010. Evaluate the extent to which you think this rescue package may contribute to moral hazard for Greece.
After living through near starvation for 17 days, 33 miners had to prepare for the rigors of their rescue. Dr. Jean Christophe Romagnoli developed a training routine utilizing an elastic band that would condition the miners’ muscles to avoid cramps and spasms during their ascent. Dr Romagnoli also monitored the miners’ health and suggested they alter their intake of fluids to overcome the grueling conditions in the mine.
1. Imagine being trapped one-half mile underground. What Big Five personality dimensions do you believe would be most important in surviving an ordeal like this for more than two months?
2. What role do activities such as exercise and clearing mine debris have on the miners’ emotions and moods?
3. Discuss the various stressors that exist for the miners. Do you consider these constructive, destructive, or both? Identify the elements of stress management/personal wellness offered to the trapped minters.
Chilean President Sebastian Pinera had barely been in office five months when 33 miners became trapped in the San Jose Mine run by Codelco. The president was no stranger to disaster, having ushered the country through recovery after one the strongest earthquakes on record. Once again, the national spotlight was upon him as the country waited to see what he could do to locate and, hopefully, rescue the trapped miners. President Pinera marshaled all resources and spared no expense. That included adjusting his own schedule to meet with affected families and culminated in an around-the-clock vigil until each and every miner emerged safely.
1. What bases of power did President Pinera draw upon during the ordeal with the trapped miners? Why does this make him the right person to lead the rescue?
2. Think about the various situations that existed throughout 69-day duration from mine collapse until the rescue of the last miner. Apply Path-Goal Theory to describe the actions taken by President Pinera. You should be able to utilize all four leadership styles.
3. Make a case for the Chilean president as both a charismatic and moral leader.
Imagine being trapped underground for more than two months. Difficulties associated with such a plight include food and water availability, personal hygiene, and psychological issues. The Chilean miners were able to overcome these problems through a vast array of technological wonders, including bacteria-killing clothing, cleansing products that required little or no water, and electronics equipment that allowed the miners to send and receive messages with individuals above ground. Perhaps the most important technological innovation was the Phoenix rescue craft.
1. Was creativity an important aspect of the mine rescue operations? Discuss how many of the solutions provided to the trapped miners constitute creativity.
2. Imagine and describe the process that led to the development of the Phoenix transport system. How do factors such as time and availability of resources influence this process?
3. Think of the Chilean government as the organization leading the rescue operation. What are the characteristics of innovation that this organization brings to the problem?
Demonstrators in Japan staged a massive anti-China rally as tensions between the two nations continue to rise. Long-simmering tensions between the countries have been fueled lately as a result of an incident last month when a Chinese boat operating off the coast of islands that both China and Japan claim as theirs purposely collided with a Japanese Coast Guard vessel. The captain of the Chinese boat was arrested by Japan, who threatened to officially charge him and take him to trial. Members of China’s government were infuriated by Japan’s actions, since ownership of the islands is disputed. China responded by limiting Japan’s access to crucial rare earth materials, over which China has dominate control. Japan relented and released the Chinese captain, to the anger of its own citizens who believe their government gave in to Chinese pressure.
Given current economic output figures, China is on track to surpass Japan at the end of 2010 as the world’s second largest economy. Discuss how China’s recent economic success may be impacting its relationship with Japan.
A pivotal issue in the dispute between Japan and China is the fact that China controls over 90% of the world’s supply of rare earth minerals, which are becoming increasingly important in the production of high-tech and alternative energy products. Discuss how globalization of production processes can be hindered by political tensions between countries.
As China’s role in the global economy continues to grow in importance, discuss the potential challenges in trying to resolve political issues and trade disputes with the country.
Turkish Foreign Minister Ahmet Davutoglu urged France to more actively support Turkey’s application to join the European Union (EU). Turkey’s EU membership talks are currently stalled in the nation’s long quest to become a member of the world’s largest trade bloc. Mr. Davutoglu called on French Foreign Minister Bernard Kouchner to help accelerate the membership talks. France is opposed to Turkey’s membership, and Mr. Kouchner responded by telling Turkey that the “ball is in your court” to rescue its troubled bid to join the EU. Mr. Kouchner’s comments made it clear that Turkey faces resistance to progressing the membership talks, and that the burden will be on Turkey to meet the required conditions of all the member countries. However, Mr. Kouchner did promise to support Turkey in opening three areas of membership negotiations. Turkey recently has been increasingly vocal in calling for the EU to revive the membership talks.
QUESTIONS FOR DISCUSSION:
One of the debates within the European Union is if the trade bloc should seek to “go broader” by bringing in as many countries as possible to promote the benefits of free trade or if it should “go deeper” by limiting new entrants, which would allow the current members to address more substantive policy issues. Turkey, Macedonia, Croatia, and Iceland have all applied to join the EU. Analyze the tradeoffs with expanding EU membership beyond the current 27 members.
Discuss the benefits that would realized by allowing Turkey to become a member of the EU.
Three factors that influence the success of a regional trade agreement are level of economic similarity, geographic proximity and cultural similarity among the member countries. Using these three criteria, evaluate the extent to which Turkey would meet these criteria as an appropriate candidate for the EU. What are the areas of concern with Turkey’s membership application to the EU?
In order for a country to become a member the EU, its membership must be approved by every member country of the EU and by the citizens of the candidate country. Discuss the barriers Turkey will face in achieving those approvals.
What are the potential negative implications if Turkey continues to be snubbed by the EU?
World finance leaders at the IMF and World Bank meetings in Washington last week urged nations to continue their commitment to multilateral cooperation on currency issues. In his opening remarks, IMF Managing Director Dominique Strauss-Kahn outlined four risks to the global economy: public debt, a jobless recovery, inadequate regulation of the financial sector, and the vanishing of commitment to cooperation. Rising currency values have resulted in some countries taking unilateral actions to attempt to push down the value of their currencies to protect their exporters. Many governments consider China’s policy on managing its currency to be unfair, claiming China’s undervalued currency allows it to increase its exports at the expense of its trade partners. Rising frustration and unilateral actions are raising concerns about potentially damaging trade disputes and so called currency wars, but Mr. Strauss-Kahn highlighted that there is “no domestic solution to a global problem.”
Discuss the advantages and disadvantages for a nation when its currency is declining in value.
Analyze the advantages and disadvantages of using multilateral forums such as the International Monetary Fund (IMF) and the World Trade Organization (WTO) to address currency disputes.
The U.S. House passed a bill that would permit the United States to levy tariffs on goods produced by countries found to have undervalued currencies, a legislative action aimed at China. If this bill were to be passed by the Senate, would it likely be effective? Discuss the possible implications of this legislation.
IMF Managing Director Dominique Strauss-Kahn stated that there is “no domestic solution to a global problem.” To what extent do you agree with him?
As fiscal policy efforts by governments seem to have stalled in stimulating economic growth, central banks worldwide seem more willing to use monetary policy tools to address stagnating economic growth. Countries are also taking actions to restrain their currencies from rising to protect their export sectors. Japan will begin a $60 billion program to buy government bonds, corporate IOUs, real-estate investment trust funds and exchange-traded funds. Officials from the Federal Reserve are signaling that the United States is poised to resume next month the large-scale bond-buying effort it stopped in March of 2010. The Reserve Bank of Australia held rates steady, in contrast to market expectations of a rate increase. The Bank of England suspended its bond-buying in February, but it may resume purchases if economic conditions worsen. Brazil raised a tax on foreign fixed-income investments to try to slow the flow foreign investment which has driven the nation’s currency to 25-month highs. Nations seem reluctant to continue to use fiscal spending to stimulate their economies, due to growing public doubts about the effectiveness of the spending and concerns about government debt levels, but cutting back on fiscal spending while using monetary policy is like having “one engine firing in reverse.”
How can fiscal and monetary policy tools be used to stimulate an economy?
Discuss the concerns with using monetary policy to stimulate an economy.
How does the fact that the world’s emerging economies seem to have recovered faster from the global economic downturn than the economies of the United States, Europe and Japan impact global currency rates?
It is not uncommon for a sitting President to experience turnover in Cabinet-level appointments during the mid-term. Presidential administrations go through stages and resignations/replacements sometimes follow mid-term elections, when voters indicate their approval or disapproval of policies enacted. What is a bit unusual is that the present administration is seeing considerable turnover in advance of the mid-term election. This is perhaps an indication of the volatile nature of politics at the national level. These resignations, and the decisions for replacements, provide an excellent opportunity to consider organizational structure.
M1. Review the three traditional organization structures. Which structural arrangement best describes the President’s Cabinet? Why does this structure make sense?
M2. Think for a moment about your reaction when you hear the word “bureaucracy.” Now examine the definitions for “organizing” and “bureaucracy” found in the text. Would you characterize the bureaucratic nature of our government as a positive or negative? Why?
M3. Is the structure of the federal government mechanistic or organic? Why is this design appropriate?