Ecunomist, volume 21, issue 1

The Ecunomist

Year 22 Issue 1

Doping: A reasonable thing to do?

Employers: Interested in me or in my GRE? Rigorous door deprivation policy in ECU’92 student house

DECEMBER 2012, YEAR 22 ISSUE 1

Good reasons to start eating

grass and other greenstuff.

Page 18

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Wat dacht je van een traineeship in het zenuwcentrum van de economie?

Word trainee bij DNB. Schrijf je in op werkenbijdnb.nl

Ben je ambitieus en wil je worden opgeleid tot een breed inzetbare professional? Dan is dit je kans. In twee jaar tijd doorloop je een intensief programma waarbij alles draait om inhoudelijke kennis en je persoonlijke ontwikkeling. Binnen drie verschillende divisies ben je verantwoordelijk voor uitdagende projecten die zoveel mogelijk aansluiten bij jouw ambities en capaciteiten. Daarbij leer je alles over de werking van de financiÍle markten en het toezicht daarop. Zo bouw je een rotsvast fundament voor je verdere carrière.

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Werken aan vertrouwen.

4 From the Editor 6 From the Board

Contents

7 Agenda 8 Introducing...

8 Meet the Editorial Committee

12 Economics & the World 12 Dope 15 World’s Hippest Economists Matching bachelors and bachelorettes for $1.2 million 18 Tasty waste 20 United debts of Europe 23 History and origins of the financial crisis 25

Business & Career

26 Within or without standards?

28 EI: The key to success 30

Student Life

30 Entering the third level 34 ECU’92 CRIBS Where magic happens...

Several times a year, The Ecunomist is published in a circulation of 2,000 for the members, patrons, Ecunomen and external contacts of ECU’92.

Kai Strohmeyer | Thomas Huigen | Leila Maria Scott | Dea Tusha | Mithra Madhavan | Natalia Neustroeva Julia Bolk | Sander Bouw | Sofia Monshouwer | Javid Allahverdiyev | Marco Engler

Study Association ECU’92 www.ecu92.nl Kriekenpitplein 18, Room 1.21 editorial2@ecu92.nl 3584EC Utrecht T 030-2539680 Printed by flyeralarm BV 3

From the Editor

Dear readers,

I want to start this issue with

thoughts about change. In studying economics, we find our feet by focusing on comparative statics: We depart from one situation, something occurs, and suddenly, we have arrived at another situation. Then, we compare. What is lost in this simplistic picture is the way. Change does occur, but how and through which channels? What do the dynamics look like?

The mechanism of change in economics is prominently promoted by Austrian economist Joseph Schumpeter, who coined the notion of “creative destruction�. The underlying idea is that the current economic situation constantly undergoes change due to entry of innovative entrepreneurs, whose new or improved products and services take the place of established ones, thereby destroying the value of existing companies. From this logic follows an urge to innovate in a sufficiently competitive situation.

As the only magazine of the study association ECU’92, it seems that we find ourselves in a monopoly position, yet a lot of competition is going on; we want our work to be read, so we compete for your leisure time, which is composed of numerous alternatives activities. There is only one way to appeal to you: by quality.

Therefore, the Ecunomist is also subject to creative destruction. We find ourselves in a comparative statics situation of a normative nature: We know where we are and we have a good idea of where we want to be. But which is the right path to take, which ways will work out? First of all, a major change has already occurred: The composition of the committee is more diverse than ever before. From a whopping 52.5%, we reduced the German share to 20.45%. Combining our nationalities and life experiences, we can count on expertise from Albania, Azerbaijan, Costa Rica, the two Germanies, Ireland, India, the Netherlands, Russia, Spain, the United States, and South Africa. You are welcome to meet us in person on page 8.

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The loyal reader may have noticed that no subject for this issue has been introduced yet.

This is change-induced as well, since in the course of creative destruction, we felt that a superordinate topic would rather destroy creativity. So now we hope to determine the contents of our pieces more independently and write about our interests more passionately.

This is to be reflected in the articles’ quality in the end, which only needs to be linked to the Ecunomist’s newly defined broader subject areas of Economics and the World, Business and Career, and Student Life. These are to be filled by articles, interviews and reviews. However, we would never pretend the presented views to be the only valid ones, nor claim that our articles always account for every single detail of their thematic field. Feel invited to write constructive feedback as well as opinion letters; they might be published (editorial2@ecu92.nl).

Last but not least, the editorial committee has gotten scent of a new, innovative technology, the so-called internet, where spaces such as social networks exist. Of course such a domain is subject to network economies, and entry is only sensible if many people use it. We hope that this will soon be the case, since we have plans to also publish online and create a level of interactivity never seen before in the history of the magazine. The digital revolution is on its way…

As for now, lean back, dive into the diversity of this Ecunomist and have a nice, joyful and inspiring read. Oh, by the way, change hasn’t even spared the chief editor’s position.

Yours,

Kai Strohmeyer Editor in Chief

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From the Board

Dear all,

The year has hardly started and yet the Christmas Holidays are about to come up! Some

activities that have already taken place are the Introduction, the Battle of the Committees followed by the Russian Roulette party, the Beer Cantus, the Economic Careers Day and the REBO Party. Obviously this is just a start considering all the upcoming activities that the committees are busy organizing.

A large group of very enthusiastic and ambitious students have successfully started up the committees. The ECU’92 Board 2012-2013 is very proud to see their progress. Their hard work will definitely pay off through great results and various Board activities. Do not hesitate to join the activities and events that these students organize, and do not forget to come by at the ECU’92 room to get a cup of tea or coffee.

Besides all the activities, you may also have noticed that the ECU’92 has an amazing new website! It captures the developments of the study association and includes all the upcoming activities. So to keep up to date, make sure you keep an eye on the website!

Best,

Anne van Breen Chairman of the ECU’92 Board 2012-2013

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What to do with ECU’92?

Monday, 17th December: B.O.M.B.

Agenda

Right after the pre-Christmas midterm week!

Wednesday, 19th December: DLC Discussion

The Discussion and Lectures Committee invites you to learn about State Capitalism.

Monday, 7th January: New Year’s Dinner

With hopefully a lot of exciting stories to tell about the Christmas break, this is the perfect opportunity to get together and welcome 2013 - in case we got through doomsday.

Tuesday, 15th January: REBO lecture

In times of globalization, this exciting question is worth to be discussed: Global shift - Survival of the Fittest? The best about it: It’s in English! Join your fellow law and governance students at Academiegebouw.

Buzzing Utrecht

8th December - 7th January: Neude on Ice Ice-skate the night away!

Sunday, 16th December: Christmas market

At Twijnstraat you will �ind a Christmas Market to ensure yourself of some Glühwein and Christmassy stuff!

Thursday, 20th December: Serious Request

Although the ‘House of Glass’ will be in Enschede, Serious Request will also visit Utrecht at Mariaplaats, Steenweg and Neude!

Friday, 21st December: Pink Christmas Market

You can �inally get hold of some pink Christmas decorations. Jacobskerkhof & Oudegracht.

22nd December - 6th January: Winter Circus

A human canon ball, motors inside a globe, horses, clowns, you name it. You can �ind it at the Jaarbeurs this winter!

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Introducing...

Meet the Editorial Committee

Kai Strohmeyer

Check that out, we even ha ve a moustache!

(Chairman)

Aka Kyle or Kein according to Starbucks +++ From Heiligenhafen (in Chairmany) +++ 3rd year Bachelor +++ 21 years old +++ Swing dance, debating, concerts +++ +++ I love it, how the Dutch say “Ja leuk hoor, lekker gezellig, toch? ” – all day long. +++ Like series, comedy shows, and movies +++ My personal hero? Cat face! +++ Live in a student house behind a garage, with a Dutch guy, a crazy Lithuanian and a mad Chinese +++ Where I see myself in 10 years? Not there! Celebrating the successful acquisition of the Economist, during a BBQ with loads of delicious in vitro meat. Or maybe, I will be a researcher somewhere.

Thomas Huigen

(Secretary)

2nd year +++ Old +++ my hobbies are playing guitar +++ writing and packing shelves at the Albert Heijn +++ I’m South African-Dutch +++ The thing I hate the most in this world are sitcoms +++ optimistic job will be head editor of The Economist, realistic job will be door to door washing powder salesman +++ My idol is Karl Pilkington +++ Dutch strangeness would be dogs walking around at night with lights attached to them

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Leila Maria Scott

(Spellcheck)

3rd year +++ 22 years old +++ Hobbies +++ Half and half: American and Dutch, with some German thrown in for good measure. +++ Things I love about NL: Riding a bike everywhere, Cheese, poffertjes, stroopwafels and drop, taking trains. +++Favorite food: Japanese, Italian, Latin, basically any kind of food that doesn’t contain mayonnaise. +++ Realistic future job: member of a non-profit organization, saving the world. +++ Optimistic future job: Dictator +++ Love leather boots, hate bad grammar and spelling. +++ Bellybuttons are gross (especially boys’). +++ Favorite city: Cambridge, Massachusetts. San Jose, Costa Rica or Utrecht, NL.

Mithra Madhavan

(Coordinator Layout)

From Chennai, India+++ 19 years old+++1st year bachelor+++Hobbies: dancing, playing tennis, watching tv shows+++ favourite food: Mexican, Indian... and anything baked and vegetarian+++Favourite city: Utrecht!!.... no.

New York City!!+++ Idol: Chandler from Friends+++ Hate when people speak with food in their mouth+++ Love extremely clean and organized places, and Aloe Vera juice.

Sofia Monshouwer

From Tenerife (Spain) +++ 1st year bachelor +++ 18 years old +++ Hobbies- dancing, painting and paddle surfing +++ Nick names- I have thousands: sof, sofi, sopa, sofichu, mons, shower, monflower..... +++ Favorite food- tricky question, I love food.

But the only thing I will never get fed up with are Spanish meatballs. +++ Funny fact- if there’s someone next to me crying or laughing I do the same unconsciously. +++ Dutch cultural differences- Meals and timetables. A “tosti” for lunch, seriously?

That’s just like a starter if you were in Spain. Not to mention dinner at 6...... +++ Idol- Coco Chanel +++ Favorite city- Rome 9

Sander Bouw

(Online editor)

From Harderwijk +++ 3rd year Bachelor +++ 20 years old +++ Football, playing the guitar, cooking +++ People always think my name is Jasper for some reason +++ I climb the Domtower a few times a week +++ I want to have a Volkswagen van +++ Like cycling through Utrecht +++ In 10 years, I will have a nice apartment on the Oudegracht, where I will enjoy a cup of coffee on my balcony every morning, watching all the people walking by. Every now and then I will take my VW Type 2 and I start cruising through Europe. I’ll have my own small enterprise, so I can always work at home, playing with my two little boys: Tom & Jerry.

Marco Engler

(Treasurer)

From: Dresden, GDR +++ Study: 1st year Bachelor +++ Age: 24 years old +++ Hobbies: I like to ride on my unicorn over the rainbow to gather daffodils +++ Where I see myself in 10 years? In San Francisco with a flower in my hair

Natalia Neustroeva (Promoter of gezelligheid)

Russian (blood) Irish (mindset) +++ 1st year Bachelor +++ Mindlessly wandering around cities, cafe bars, bothering cats +++ I can only eat yoghurt if I’m standing up +++ Only in the Netherlands have I come across such a huge amount of guys with gel in their hair +++ I collect elephant figurines of all shapes and sizes - so far I have 32 +++ Dutch chocolate sprinkles are going to be the death of me; they are just ridiculously good. +++ I have to close the door in whichever room I’m in. If it remains open, I become very agitated.

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Dea Tusha

(External Affairs)

Tirana, Albania (originally from a tiny town, pop. 12,000) +++ 3rd year Bachelor +++ 20 1/2 years old +++ Reading, movies & series marathons, 9GAG-ing +++ Love everything spicy (food, conversations, you name it!) +++ Strong believer in lucky charms. +++ Optimism: In 20 years I see myself as the Secretary General of the United Nations. High expectations: In 10 years, I am writing about the Secretary General of the United Nations in the Economist. Realism according to me: In 5 years I am reading about the Secretary General of the United Nations behind some office desk. +++ Always amazed by the lack of curtains on the windows in this country. Also, everybody seems to have a smartphone! +++ Favourite place on Earth: Jane Austen’s 19th century England.

Julia Bolk

(External Affairs)

Dutch Ă— Freshman +++ 19 years old +++ Studied at Millersville University, USA last year +++ Travelling, photography, running, going out for dinner/drinks/coffee/anything +++ Boyfriend: Scott from Scotland +++ New York, New York, New York +++ Pancakes, oliebollen, waffles, donuts etc. +++ Idol: Madonna, I admire her ambition and hard work +++ The Script, Adele, Grace Potter and The Nocturnals +++ The best Dutch tradition is Sinterklaas (making nasty poems about your friends) +++ Where I hope to be in 10 years: living in New York, being Director of Research at the IMF, owning a youth hostel or travelling around the world.

Javid Allahverdiyev

From Azerbaijan(Land of fire) +++ 1st year Bachelor +++ 19 years old +++ Swimming,listening to good music,playing guitar.

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Economics & the World Dope

As a high school student in South Africa, I mountain biked for my school. After class, the team would climb hundreds of meters on mountain trails, battle each other to the top of a steep climb, then descend again at

By Thomas Huigen

about fair play and sportsmanship, it could be the difference which leads to stardom. Doping is also difficult to detect, especially when EPO and growth hormones are used, which are naturally produced by our bodies.

high speeds, all to test one another, to see who was the toughest. The competition was fierce, as pride was at stake. We didn’t have erythropoietin (EPO) or blood transfusions but we probably would have doped if the opportunity arose.

Cycling is one of the most physically demanding sports, and the pros easily need more than 5000 calories per day to race in a stage in the Tour de France (the average man needs around 2500 calories daily). The Tour has 19 race and 2 rest days, in which the cyclists travel an average distance equivalent to that between Lisbon and Kyiv (3200km). The mountain stages usually separate the men from the boys, where they climb some 1600 meters in 26 kilometers, grueling to say the least. The physicality of the sport invariably leads to the question: is there an incentive to dope? If you could gain a small edge over your competitors without worrying too much 12

Economics can teach us something about doping. In game theory, Nash equilibrium is reached when no player can gain by changing his current strategy. In an ideal world for cycling, the payoff for playing by the rules should be greater than the one for doping. And most importantly, even if other players dope, the payoff for fair play must be greater than the payoff for doping. In professional cycling this is clearly not the case.

Nash equilibrium is in dope mode. The difficulty in detecting doping, the development of drugs which have become harder to trace

and the upper hand your doping opponent has on you, mean doping is incentivised. On top of this, the governing body responsible for investigating and charging cyclists for doping (the UCI) has basically condoned it.

The former head of the UCI, Hein Verbruggen, has said that spectators are to blame for widespread doping because they want to watch races with average speeds of 41km/h instead of 25km/h, and so the cyclists need to ‘prepare’. Lance Armstrong had already tested positive for using a banned substance in Most people find cycling too boring to care 1999, the year he won his first Tour de France, if some people were experimenting with syyet the UCI did nothing.

ringes, but what if doping was a common fac-

With the present free fall of Lance Arm- tor in football? What if Messi and Ronaldo strong’s reputation as the greatest cyclist scored their great goals with EPO runever, the question dawns: could it be that ning through their veins? Maradona testevery cyclist in the Tour de France dopes? If ed positive for a banned substance (not recthe greatest cyclist dopes, who doesn’t? If reational drugs this time) and was suspended it were true that all Tour de France cyclists for 18 months. Former Dutch international doped, the winner of the Tour de France isn’t Jaap Stam was also banned for four months the best cyclist in the world, but rather the for taking a banned steroid while apparently best doper in the world. He out-doped his being unaware in doing so. competitors. And if the cycling world’s pay-

Endurance has become more important

off matrix favours doping, why wouldn’t it be in football today as players in the past used more widespread in other sports?

to run an average of 5km per match, while now it’s sometimes 12km. There are also more matches during the season than there used to be. Clearly there is also an incentive to dope in football. So it’s not surprising that some infamous ‘dope doctors’ from the cycling world have been hired by clubs such as Real Madrid and Barcelona for their ‘expertise’. Dr. Eufemiano Fuentes has been 13

Economics & the World

charged a couple of times for doping of- more important in becoming a good football, fences, but that wasn’t enough to scare the tennis or basketball player than mere endurSpanish Football Association from acquiring ance. Yet that doesn’t mean that endurance his services in time for the 2010 World Cup. should be disqualified as a determining facHe has said that “If I would talk, the Spanish tor in becoming a great player. football team would be stripped of the 2010 World Cup.” Maybe the Dutch authorities should pursue this matter. Fuentes has also helped Spanish tennis and basketball players with their training, and has found it strange that only cyclists have been charged for the use of banned substances.

Armstrong will be vilified for doping his way to seven Tour de France titles, and rightfully so. Unfortunately for him, some sports are more equal than others, and for some time he will be seen as the biggest disgrace in sport history. But it’ll only be a matter of time before the record breaking Spanish

Yannick Noah, a French tennis player who football team will win the next world cup and won the French Open in 1983, observed that a random urine sample will be taken after the it is no coincidence that Spanish cyclists, foot- final, filled with dope that hasn’t even been ball, tennis and basketball players have been named yet. Or is this just me being a spiteperforming so well in recent times, while at ful Dutchman two years after the 2010 World the same time Madrid is known as the Doping Cup final?

Capital of the world. There is no doubt that unlike in cycling, skills and vision are much

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Economics & the World

World’s Hippest Economists Matching bachelors and bachelorettes for $1.2 million

By Bolk Julia

Every economist should know John Maynard Keynes, Friedrich Hayek and Paul Samuelson, who have in common a significant contribution to the economic science. What about our current colleagues in the academic field? Who could follow in their steps? Who are the hippest fellas?

Imagine that there would be an ideal eco-

winner, they know which life path to follow).

nomic system that would link students with Though Lloyd Shapley and Alvin Roth schools, husbands with wives, or kidneys won the 2012 Nobel Prize in Economics, with patients, until everyone is satisfied and neither man began their career as an econthe markets function perfectly. It seems high- omist. Shapley started as a mathematician ly unlikely that something like this would ex- and Roth studied operations research; he ist or would be possible in the real world, but was interested in ‘making things work betthe matching theory of Lloyd Shapley and ter’, as he puts it himself. Shapley started Alvin Roth, the winners of the Nobel Prize studying mathematics at Harvard University, in Economics of 2012, comes very close. The graduated here and then received his Ph.D. two economists (even though this is not how at Princeton University. At the moment, he is Shapley would call himself) received this a professor at the University of California, Los prize and $600,000 each for “their theory of Angeles, after working at the RAND Corporastable allocations and the practice of market tion, an American think-tank, for thirty years. design”. Quite a vague sentence and that is He was surprised by the award, commenting, why I will try to clarify their theory. Let me tell “I consider myself a mathematician and the you a little about their careers (in case some- award is for economics. I never, never in my one is interested in becoming a Nobel Prize life took a course in economics.” Roth started

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his career studying at Colombia University, ing in the 1980s. after which he moved to Stanford University for his masters and Ph.D. For most of his career he was a professor at Harvard and Stanford University.

The two men did not win this prize for the research they did together, but for the influence their research had on each other; Shapley’s theory was the basis for Roth’s application to real life problems. But what exactly is the research that they did in the field of game theory? The key word here is ‘matching’; matching without monetary transactions.

The basis of the research by Shapley (and David Gale) was the marriage market, for which they used their Gale-Shapley ‘deferred acceptance’ algorithm: there are ten men who want to propose to each of ten women. The woman rejects the proposal, or defers from accepting it but keeps it as an option, which gives her the chance to change her decision later. Rejected men then propose to their second choice, in which case the women behave the same (they reject or keep it as an option) and this process continues until everyone is ‘satisfied’: no man wants to make any more proposals; everyone is matched. This is called a stable allocation: no individuals perceive any gains from further trade. Eventually, the market cannot improve any further, so the matching is finished. This is quite an unreal, but simple example, therefore Roth applied this theory to more realistic situations, start-

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Economics & the World

The matching theory turned out to be very helpful in matching new doctors (interns) with hospitals. In the 1940s, there was a lot of competition between hospitals for medical students, who were considered a scarce commodity. This forced hospitals to offer internships several years before graduation, which caused problems: matches were made before the student knew in which brand of medicine they would like to work.

When an offer was rejected, it was too late for the hospitals to contact other candidates.

The market was very unstable, so hospitals turned the other way around and decided to make offers really quickly, which also did not work. Students were forced to make early decisions without knowing if a better opportunity would have come along later.

The National Residency Matching Program (NRMP), which used a similar algorithm as Shapley’s, was introduced to find the perfect match for the doctors and hospitals. This program was the main evidence that algorithms like those worked to create stable markets. Still, it did not work perfectly and that is when Roth came into the picture, who improved the program by adding more possibilities (couples could now also apply and be matched together and doctors would be able to chose the hospitals, instead of vice versa). This algorithm works the same as in the ‘marriage market’: doctors choose hos-

Economics & the World

pitals, which then accept or reject. Doctors

schools in the world, such as Harvard, MIT, or

then apply for their second choice, which ac-

Stanford. Something you do not need to do

cepts or rejects. Doctors and hospitals both

is study economics, as you’ve already seen.

make ranking-lists and based on these lists,

Maybe it is not even worth trying. Apparent-

matches are made. Eventually everyone is

ly, the ‘Nobel Prize in Economics’ is not even

matched.

a real Nobel Prize. It was established after

Want to have a shot?

the death of Albert Nobel and is called: The Sveriges Riksbank Prize in Economic Scienc-

So you think this theory is a piece of cake

es in Memory of Alfred Nobel. Nobel did not

and that you can do it better? There are

consider economics as a real science back

some criteria that you have to meet before

then and this is still a subject of discussion

you will even be considered as a possible

these days.

prize winner. The highest chance of winning is when you are an American man around the age of 62, who attended a few of the ten best

Matching doctors and hospitals.

When the doctors make offers, they all first choose hospital a, which accepts doctor 1 (the hospital’s first choice). In a second stage, doctor 2 makes an offer to hospital b, and doctor 3 to hospital c, which gives a stable matching. When the hospitals have the right to make offers, the result is instead that doctor 2 is matched with hospital c and 3 with b. (www.nobelprize.org)

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Tasty waste

Economics & the World

By Kai Strohmeyer What can be an indulgence to our senses is at the same time a major determinant of a healthy life and crucial for our survival. Within my Tasty Trilogy, I will therefore shine a light on the most intriguing issues linked to food. Part one: Food and sustainability.

In recent years, there has been in a change in the mindset of many people. Especially the notion of climate change and its accompanying severe environmental consequences raised public awareness and requests for more sustainable practices and policies –to mitigate its consequences for us and for future generations. Speaking of sustainability, what does this widely used, nowadays politically hip word mean again? The US

EU Emissions Trading Systems (under which the right to emit carbon dioxide (CO2) can be bought in a market of a limited and decreasing number of allowances); the promotion of renewable energies, as well as of energy efficiency of buildings and equipment (e.g. light bulbs); emission requirements for new vehicles; and support of the development of carbon capture and storage technologies.

EU regulations in the food industry, by

Environmental Protection Agency (EPA) de- contrast, address safety, which requires hyfines it as follows: “Sustainability creates giene and certain standards to keep risks of and maintains the conditions under which diseases low. Moreover, certain rules apply humans and nature can exist in productive to additives, labeling, and packaging. In conharmony, that permit fulfilling the social, clusion, EU regulations deal with food safety economic and other requirements of present and consumer protection issues. It is an interand future generations”, and in other words esting fact though that the food sector does “is important to making sure that we have not appear in EU policies to reduce greenand will continue to have, the water, mate- house gas emissions. rials, and resources to protect human health and our environment”. Indeed, a lot has already changed politically, but in which areas?

Let us turn first turn to EU policies aimed at the reduction of greenhouse gas emissions.

These policies embrace among others the European Climate Change Programme; the 18

Figure A from the Intergovernmental Panel on Climate Change (IPCC) depicts that after Energy and Industry, Agriculture is the fourth cause when it comes to annual manmade greenhouse gas emissions (2007). The baddie accounting for most of agriculture-re-

Economics & the World

lated emissions is especially the livestock sector, producing meat and animal products. Following the estimations of the Food and Agriculture Organization of the United Nations (FAO) in 2006, it accounts for 18 percent of total man-made greenhouse gas emissions when summing up its impacts in the five categories energy, industry, waste, land use, land use change and forestry, and agriculture. In the last two sectors alone, the emission’s share of livestock is over 50%, while in the agricultural sector’s contribution to emissions, it amounts to over 80%.

Figure A: Global anthropogenic greenhouse gas emissionby sector in 2004

Figure B shows the composition of anthropogenic greenhouse gas emissions. As for industries above, also these gases can be attributed to the livestock sector. It accounts for 9 per cent of the CO2 slice. They stem partly from fertilizer, seed, herbicides and pesticides production required for growing animal feed, partly from the release of CO2 as a result from deforestation for pasture and arable land for animal feed. At the same time, the livestock industry is the main cause for methane (NH4) emissions, mainly owing

Figure B: Composition of global anthropological greenhouse gas emission 2004

to ruminants’ (like cows and sheep) enteric fermentation, and animal manure.

What?! You think this can’t be it? If you want to know which conclusions I draw from these observations and how one can put a German bratwurst stand into the context, like us on facebook: The Ecunomist. Alternatively, visit ecu92.nl. The whole article is available online.

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Economics & the World

United debts of Europe In 2010, the European Financial Crisis has begun in Greece and enlarged to legion members of the European Union. Greece being the cradle of democracy, it can be said by now that it ended there as well.

By Marco Engler

group, where bigger parties help out the smaller parties. Greece was the first country which needed help but other countries followed. The precarious financial situation is just one problem of these countries since there are many other economic problems,

As a result of the financial crisis in 2008, social difficulties and inefficient governance. banks incurred substantial losses, legion Furthermore, it was investigated that Greece members of the European Union entered financial difficulties and, some of them doubled their government debt. To minimize the losses of the banks, politics was instrumentalized to create a corresponding legal framework enabling banks to pay off their balances with tax money to fix the losses of the financial crisis. The ECB tried to avoid a vast decrease in the economic performance and reduced the interest rate of banks. Although financial institutions could lend money from the ECB at approximately 1% interest, banks lent it out at excessive rates to compensate their losses. In fact, the circumstances of companies to borrow money were aggravated which applied for and obtained its membership for resulted in a fatal situation, which in turn re- the European Currency Union with faked balsulted in an accumulation of insolvencies and ances. hence a decreased gross domestic product.

The supposed remedy, the ESM and fiscal

To get the situation under control, the pact, was initialized on the 27th September members of the European Union had to pay 2012. The fiscal pact is a concept that estaboff the national debts, in sense of a solidary lishes a “treaty on stability, coordination and 20

Economics & the World

governance in the economic and monetary

The volume of the ESM amounts to €700

union between its members”. Both, the ESM billion. This sum was estimated and was and the fiscal pact belong together. Before, planned to pay off expiring bank loans. Howon the 2nd March of 2012, 25 members rati- ever, the real amount of expiring bank loans fied the fiscal pact and are able to participate of the 17 European Monetary Union memin the ESM. The fiscal pact is based on four bers exceeds this volume by over 100%. This major points: The first point: Every country implies that it is sensible to immediately inhas to minimize its national debt till 60% of crease the volume of the ESM (Article 10, § the GDP. Moreover, the expenses may not 1). increase by more than 0.5% of the GDP. The second point: All countries have to establish the debt brake in the national constitutions and they accept that the fiscal pact is irredeemable. If not, the country will receive a penalty of maximal 0.1% of its GDP. The third point: If a member breaks the contract, the country has to find improvements and send it to the EU. The fourth point is just dealing with two annual meetings.

The ESM is a device consisting of the board of governors and the board of directors, like a financial institution. The board of gover-

Why is the ESM used?

If the ESM needs money to pay off bank

nors consists of the ministers of finance of loans, the ESM is allowed to retrieve money the countries which are joining the European from the national budget or from the ECB Monetary Union and the board of directors – unlimited. (Article 9, § 3 and Article 10, § consists of people, who are named by the 1). Of course, that leads to a devaluation of board of governors. The crucial point is that the money and inflation is consequently unthese directors are not accountable (Article avoidable. Therefore, it seems obvious that 32, § 4) for any parliament and enjoy the free- legion members are not able to reach these dom to do as one pleases without having to guidelines of the FP and the ESM. The quinfear any legal consequences (Article 32, § 3). tessence is that the ESM consists of unelectIn other words, the ESM and its employees ed party members: The end of completely are legally immune and no external party is parliamentary budget sovereignty and, naturally, the end of democracy. allowed to investigate (Article 35, § 1).

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Economics & the World

The 700 Billion are solely used to pay off However, it is and was not able to calculate expiring bank loans but nothing will be con- its expected new debts for years. In other structed in these countries. In fact, Greece words, the German government is neither reached the point where the unemployment able to calculate nor to regulate its own govrate grows out of perspective and the gov- ernmental debts but it has to pay the bank ernmental structures and the infrastructure loans of other countries. are not competitive anymore. Nowadays, Greece does not have even enough money to buy school books but the fiscal pact forces the government to save money. This is (mostly) being done through cuts in social national budgets and results in public poverty. Due to the lack of money, Greece is not able to break the vicious cycle; instead, the government has to privatize its public property.

On the 12th September, the Federal Constitutional Court in Karlsruhe, Germany, has judged Germany’s participation in the ESM. Germany is the biggest shareholder of the ESM and has a share of approximately 27%.

The Federal Constitutional Court was agreeing with the ESM as long as the €189 billion, which Germany has already spent, will not be exceeded. In fact Article 10, §1 contradicts the Basic Law (the German constitution). Germany has no international debts, which means that all debts are owed to national banks.

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The mechanism, which is not established to stabilize the European Union but the stability of the money and the banks respectively, procures that whole countries bleed to death, that poverty increases and inflation occurs. This makes sure to end up the sovereignty of the European Union and that elected parliaments have no bearing on national budgets: The end of European democracy.

In the end, the essential question is who is interested in such a system? The number of opponents is increasing and, in all parliaments, the ratification has taken place by a lot of pressure. Most people are not sophisticated enough to grasp a situation of such complexity, there were no national referenda, and yet an increasing amount of people is against this mechanism, another aspect of the end of democracy in Europe.

Economics & the World

History and origins of the financial crisis Financial crisis by its definition is a situation in an economy when financial institutions or assets suddenly lose a large part of their value. Financial crisis is followed by stagnation, unemployment, and the bankruptcy of large corporations as well as small and medium enterprises, and as a result, production in the country falls and it may start to lose its position on the global market. The banking system decays and millions of people lose their savings. In order to manage huge debts, companies start firing people and wages are cut. Government, which has to cope with the crisis and fill holes in the budget, is faced with a dilemma: either raise taxes which could lead to protests; or cut governmental spending.

By Javid Allahverdiyev

boom in the US. Railroads were over-built, with expenses that could not be covered by revenues. New silver mines emerged , and as a result the market was flooded with silver and the price of it fell. Farmers in the wheat and cotton regions were the first who suffered from low prices. After being elected, President Cleveland tried to cope with the ‘treasury crisis’, and convinced Congress to ban ‘Sherman’s Silver Purchase Act’, which he thought was the main cause of the crisis.

As concerns about the economy worsened, people started to withdraw their money from banks which led to a banking sector crisis. Foreign investors started to sell American stocks to get American funds backed by gold. The National Cordage Company also went into receivership; the value of and de-

People ask themselves what the origin of crises is and who is responsible. The causes and repercussions of crises have changed over time. It is impossible to cover all crises in this article, so I would like to focus on the example of the Panic of 1893.

The first sign of trouble was the bankruptcy of Philadelphia and Reading Railroad. The 1880s were remarkable for the economic expansion and rapid railroad construction 23

Economics & the World

mand for silver decreased. One by one, sev- million in gold from Wall Street banker JP eral banks and industries went bankrupt, fol- Morgan to support the gold standard. lowed by several railroad companies as well.

Many of the western silver mines closed

The most severe consequences were seen and a large number were never re-opened. in mills and industrial towns. Farmers who The Republicans blamed the Democrats for produced wheat and crops suffered from low the depression, Democrats lost their popuexport prices and thousands of people lost larity amongst the population and as a result, their jobs. As a result, a number of strikes a Republican candidate won the next electook place in Ohio, Pennsylvania, and several tion. New president William McKinley fought Western states. The Sherman Silver Purchase against the crisis and as a result , the US Act of 1890 and the McKinley Tariff of 1890 economy recovered and the economy began were blamed for the panic. The fall of gold to grow until the next panic in 1907. Financial reserves in the US treasury to a critical lev- crises are clearly nothing new. el forced President Cleveland to borrow $62

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Business & Career

Within or without standards?

Many senior students (and some early birds) are already thinking of what they want to do with their lives once they finish their Bachelor. If you are already frantically looking for the Master programme that suits you best, I commiserate with you, my dear fellow.

In fact, I have a short personal story I would like to share.

By Dea Tusha

The idea behind these tests is to assess students’ level of general knowledge and comprehensive thinking skills. Most of them usually require solid knowledge of high school math, a good understanding of academic texts in English and analytical essay writing skills. That sounds reasonably doable. One might rightfully expect to fare pretty well on the test without much preparation if they’ve

A little more than three years ago, I made mastered these skills during their study years. one of the most important decisions in my And yet, try to ask a question on Google (go life: I decided I wanted to study abroad. Thus ahead, no one will judge you!) about the began a long and tedious process of appli- expected amount of preparation time one cations, deadlines, and preparation. But bu- might need to score relatively high on the reaucratic work is after all a “necessary evil”, test, which you will need if you’re aiming for and although no one likes to fill in piles of a good university. I did that already and condocumentation, everybody goes through it. cluded that most would suggest on averWhile browsing many university websites, I age two to three months of preparation. came across an additional requirement: the Before turning to the comfortable thought completion of some type of internationally that you’re smarter than the average Google recognized standardized test. Some of you user (we cannot help it, it is a cognitive bias), may already be familiar with the concept, allow me to give you a bit of insight on why and maybe GMAT, SAT and GRE already that may be. mean something more than a bunch of letters strung together to you. In my case, they have come to define certain periods of my life.

Standardized testing provided on such a global level is prone to constraints that different educational systems worldwide may 25

Business & Career

bring to the presumed level of knowledge ration phase as well. I am usually of the opinthat every student should be equipped with. ion that buying a book is a good investment Thus, only basic knowledge is usually re- that will stay in your family for generations to quired. However, what is really striking about come, because it never loses value. It is quite these tests is their peculiar format. Questions the contrary for these books: what you learn can hardly be described as reader-friend- from them is how to tackle specific questions ly. Their convoluted, often ambiguous con- that you will only encounter once in your life. struction leaves one puzzled for a while. In- Once you are done with the test, you might stead of trying to find the most appropriate as well forget all about it and throw away answer, students must spend precious time the books (assuming that a better solution struggling with the question itself. The best will have been found when your offspring solution to this is to familiarize yourself with apply to university). And if you were thinkthe format by practicing as much as you can ing of recovering some losses by selling the (after all, practice makes perfect, right?). If books second-hand at a lower price, tough there is one thing you need not worry about, luck! Every year, a revised edition comes out, that is the scarcity of practicing material. Do containing practice tests, new exercises and not fear, for there are countless preparation (one can only imagine from the advertising books, tutorials and simulation software that it receives) everything you’ve wished for in a you can use. You may start to worry about book and more. This, combined with partial the money you are going to spend on them modifications every few years and at times though. As if it were not enough that stu- an overhaul of the entire test, seriously dedents have to pay a lot to take the test (of- values your possession within the year and ten more than once), have the scores deliv- makes it virtually worthless in the longer run. ered to universities etc., they need to spend Spending considerable time and money on a good amount of money during the prepa- something that does not add value sounds 26

Business & Career

particularly wrong to us economics students. place where students develop their individuThat is downright irrational behaviour! And al characters and thrive by thinking innovayet, at one point or another, we all sit down tively and out of the box. However, choosing and do it.

It is not really a matter of choice. Although controversy on their effectiveness and reflection of a student’s potential has been quite strong, most universities still consider scores on standard tests as one of the main filters applicants have to go through. They are not entirely to blame. It would take a whole academic year for the admission board to personally interview every student wishing to attend university. Grade transcripts may be biased by subjectivity and differences among grading systems. The motivation letter may best reveal a student’s goals and potential,

students through standard, intricate questions that they have to answer in four hours does not exactly speak of encouraging diversity. We may be losing out on great things with our need to fall within standards.

It may look quite grim at the moment, but great reform ideas are out there. For example, building a portfolio through the years, with all the activities students have engaged in gives a better view of their formation, constant devotion and originality. If you are interested to know more, you could check out www.rethinkingschools.com.

Going back to my personal story, of all the

but there is always a chance that it was not things I have learned while studying for one genuinely written by the applicant. Some of these tests, this is the quote that has stuck sort of standard is therefore necessary. And with me to this day: “This Standard Test simstudents have no other choice but to oblige.

The most worrisome issue however goes beyond time and money. Universities are seen as institutions that promote diversity and

ply tests how well you take the Standard Test. It is NOT a test of aptitude, how good of a person you are, or how successful you will be in life” ...Remember that!

uniqueness. They are usually considered the

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EI: The key to success

Business & Career

By So�ia Monshouwer

can affect other people. According to Daniel Goleman, an American psychologist who helped make the idea of EI popular, there are five main elements of emotional intelligence: self-awareness, self-regulation, motivation, empathy and social skills. The better you manage each of these areas, the higher your emotional intelligence.

To be self-aware is to know how you feel and how your emotions, and your actions, can affect the people around you. When

Success. That is a strong word desired by al-

you’re in a leadership position it also means having a clear picture of your strengths and

most everyone. But how do we get to be suc- weaknesses. By doing so you will be able to cessful? It is believed that the main path that get the best out of yourself, thereby maximizcould lead to your success is education. Guess ing your work. Self-regulation means rarely what, that is a huge mistake. When it comes verbally attacking others, making rushed or to real life and especially the working place, emotional decisions, stereotyping people, or your education becomes overestimated and compromising their values. Self-regulation is only your emotional intelligence is taken to all about staying in control. This element of account. But what exactly is emotional emotional intelligence will not only help you

intelligence? And more importantly, can to maintain a good relationship with your we improve it? colleagues, but it will also make the enviEmotional intelligence (EI) is the ability to ronment more calm and enjoyable. Another understand and manage both your own emo- important point in EI is motivation. Leaders tions, and those of the people around you. always work towards their goals and have exPeople with a high degree of emotional in- tremely high standards for the quality of their telligence usually know what they’re feeling, work. Moreover, having empathy is critical in what this means, and how their emotions managing a successful team or organization.

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Business & Career

Finally, social skills. This is all about being a good communicator. With good social skill you will be an expert at getting your team/ colleagues to support you no matter what.

Emotional Intelligence is not something you were born with, it is something you develop as you grow up. Because of this, the fact that EI is being modified continuously, the environment and relationships are extremely important. Here is an example of how much the environment a person grows in affects EI. Imagine two people brought up in completely different conditions. One of them has always been around violence and aggression, while the other has had a pretty normal life. Now, would you like to work with someone who cannot control his emotions because control is all he knows? Do you really think someone like this can eventually be successful? Contrast this with someone who knows how to control himself in difficult situations. The answer seems to be quite clear.

tion, Emotional Intelligence is more important when it comes to work. The job market is like a jungle, which means that only the strongest survive. Despite the fact that studies obviously contribute to get a nice job, it doesn’t help you to get through all the possible arguments, stress, confrontation and even molestations. To sum up, education is a key point to start a successful path. However, due to the many challenges and opportunities that arise when working with others, leaders must have a solid understanding of how their emotions and actions affect the people around them. The better a leader relates to and works with others, the more suc-

On the other hand, compared to educa- cessful he or she will be.

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Student Life

Entering the third level

Our cultures and environments greatly influence our lifestyles and the decisions we make throughout our lifetimes. The choice to go into third level education and the reasons behind it are no exception. Each one of us has our own reason for attending university, and to ourselves this personal reason may seem so obvious it need not be discussed. However, as we go on with our lives we often fail to realise that what we take for granted may be completely out of place for the cultures outside of our own. Unfortunately, I cannot mention every single culture in this article.

Instead, I will give an overview of the similarities and differences in the attitudes to third level education of some of the more major areas.

By Natalia Neustroeva

An average of 25.9% of the working age population (25 to 64 years) in the EU has third level education under its belt, with the numbers of students enrolled into universities and technical institutions increasing each year. From a financial point of view, it is not hard to see why. Educational fees are quite manageable, ranging from no tuition fees in countries such as Austria and Finland, to a maximum of 10,941 euro in the UK. As well as that, most European third level institutions offer many grants and special schemes.

For example, the Netherlands offers its students free transportation or transportation discounts. Meanwhile, Ireland has a DARE programme which reduces the amount of points needed to fulfil the universities’ entry requirements for students with disabilities.

Ireland also gives a grant to students who are the first in their immediate family to go to university. As one can see, third level education is very accessible to European students, provided that they put in enough effort to pass their entry requirements.

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But what exactly motivates these students to enrol into third level institutions in the first place? Although there is some presumption (and maybe hope) that students are motivated by the passion for gaining valuable knowledge in the study they choose to major in, this is often not the case.

The students who mainly study out of passion are sadly in the minority. Instead, many of us decide to invest in higher level education for a better chance to get a decently-paying job. This comes as no surprise, as in this day

and age most employers require one to have the course.

The portion of the working age population not only a correct set of skills, but also a de-

gree. The requirement is not unreasonable as in the US with a bachelors’ degree or higher there is high demand for jobs but only a limit- is relatively the same as the one in Europe

ed amount of positions, and employers need – an average of 27%. However, unlike in Euto raise their demands to ease the process of rope, the question of fees contributes little choosing an employee. This is supported by to the explanation of this statistic. Fees of the fact that an average of 1 in 3 people with American private universities and public uni-

a degree in the EU have majored in social versities for non-residents of the state (of sciences, law, and business – fields in which which are many) can range from $15,000 to there has always been a high level of job as high as $50,000. This excludes living exavailability. However, this does have a neg- penses and any extra activities fees asked for

ative effect on people’s attitudes. Instead of by certain universities. Although need-based simply choosing a degree based on our pas- and merit-based financial aid is offered to sions, many of us are stuck between follow- those who severely lack the finances to go ing the heart, or the prospect of a well-pay- to university, or those with a particular talent

ing job and a good lifestyle. Due to this, for or ability, an average student will not fulfil the average student, the school year consists its requirements. So why then are so many of a bumpy ride full of extremes between the students willing to acquire exceptionally fun of networking and parties, and the bat- high student loans, especially when taking

tle with oneself to do well in exams despite into account the opportunity cost of about a complete lack of interest for the content of $84,000 potential income for 4 years of work 31

Student Life

if the student were to start working straight and living costs adding up to around $10,000 after high school? The reason, it seems, is each year. The quality of Japan’s universities not far from that of many European students is internationally recognised, and as such, I explained earlier on. After all, with fees so there is much intense competition for stuhigh, not many will be motivated to simply dents to get an acceptance letter from the acquire knowledge one can easily achieve by university of their choice. Those who do not going to the library or by using the internet succeed have three options: accept an adwithout needing lectures or tutorials. On the mission elsewhere, forgo third level educaother hand, it is not hard to understand how tion, or wait until next year to retake their one can be convinced by the fact that the av- entrance exam. The majority pick the third erage salary of university graduates is above option, deciding once more to go through $51,000; considerably more than the $30,000 countless hours of study. There is a close of those with only a high school diploma. relationship between university education However, this income-based attitude leaves and job opportunities in Japan, but in conroom for error. Although the unemployment trast to Europe and the USA, people in rate for those with tertiary education is only Japan are under much more pressure to 4.9%, those unfortunate enough to fall into find a good job. This is due to many prestithat bracket are left to face not only a mon- gious employers such as the government and strous student load, but also no passion for large corporations limiting their intake to the the job they are now trying to desperately graduates of only the esteemed universities. find.

Therefore, Japanese students are taught from an early age to aim high and value academic success. However, this once again is encouraged more by employment opportunities, and not personal self-development in a university setting. In turn, this creates an “I must go to university if I want a respectable job” attitude, rather than an “I want to go to university to gain knowledge and experience” one. It is interesting to note that absence in classes is extremely high, even more

More than 2.8 million students annually enrol into Japanese universities, with their tuition

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so in the prestigious and expensive universities across Japan. This fascinating pattern may imply that many Japanese stu-

Student Life

dents view university as an end goal, instead enrolment rate for females is now 36.1% of a next step. They put in long hours of hard higher than the 24.7% of males. As well as work to gain a place in a good third level in- that, the link between tertiary education and stitution, focusing so hard on their study employment is much less focused on, which that they forget that just as much work will suggests that Middle-Eastern students place be expected of them in universities. Often, it just as much value on the education itself as seems, students fail to take into account that they do on job opportunities. Take, for examsimply having a place in a university does not ple, upper and wealthy middle class families guarantee you a degree if you do not put in which own land. Children in these families are the effort.

aware that they will inherit this land and will

Many Middle-Eastern countries have ex- be able to live very comfortably renting it out perienced improvements in university enrol- to tenants, without ever needing to attend ment rates. Iran, for example, currently has university. However, they still aim to enrol at 3.7 million university students, while Syria universities with a good reputation. But if not has 2.3 million. This has largely been due to for better employment prospects, then why? educational reforms and more opportuni- Family reputation plays a huge role here. ties for females to study at a higher educa- If one does not attend university, one risks tion level. High female student enrolment being less respected by those around them, rates are an indicator of education acting which directly reflects on one’s family. This as an important benchmark for equality in enforces the idea that in many Middle-Eastmany Middle-eastern countries. Saudi Arabia ern countries, tertiary education in itself is has started paying much more attention to highly-regarded. women’s education and as a result, the gross

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Student Life

Where magic happens...

By Sander Bouw

Don’t we all have a jolly good time being an ECU’92 member? We buy our books with discount, we get to know interesting companies and we dance the night away at the occasional party. However, at the end of the day we all go home again, away from all lectures, books and tutorials and away from ECU’92.

At least, most of us do. When Nik, Fabienne,

would leave, the remaining three would pick a new member, one who naturally studied economics too. Most of the people who have lived here in recent years have also been a member of the Activities Committee. Coincidence or destiny, you tell me! Anyway, if you are looking for a room you could always increase the odds a little by joining the AC.

Lotte and Rutgher go home, they will find After a little stop at their water closet (the each other in their very own kitchen or bath- toilet walls are covered in handwritings by room. As an inspector of our members’ Cribs ECU’92 members) I sat down on the couch I had to check out this full ECU’92 house, in their living room. Living in such a house where these four people live together. When should no doubt automatically imply the exI rang the doorbell Rutgher and Nik greeted istence of some unique traditions or weird me by putting an ECU’92 sticker right on my rules. I wasn’t disappointed. New roomchest. I guess this is their way of labeling their mates would only receive a door to their visitors. Apparently they also felt the need room as soon as they had proven that to label every single piece of furniture with their room was a place where the magthese stickers. Immediately I learned that this ic happens. Only after that it was apparent house did justice to its name. Unfortunately to the others that a door was needed to inthe female residents were not home, so the sure some privacy. Some roommates also guys showed me around the house and told ordered a sweater with the address printed me about its history. Before the current four on the back, 41K. A third tradition was that were housed here, a handful of older ECU’92 the two oldest men in there would need to members had preceded them. Whenever one have a picture taken when both were face to 34

Student Life

face. This picture would end up on the wall, together with loads of others. Too bad there was no photo taken when Rutgher cracked through his chair when he was telling all this, such a picture would probably have looked great upon the wall.

A house full of future economists, maximizing utility and all. They certainly did this and they even took it to the next level, bringing their total household bill from the last few years to a five figure number. Maybe they have taken ‘maximizing’ a little too literal here. It was getting late and there were still a few formalities which we needed to deal with. Time was running out, I thought, but it turned out that the clock consistently showed the wrong time. So there was still enough time to see what was in the fridge and what vehicles could be found in the garage (as is the spirit in Cribs). The fridge contained what you would expect in a house full of students: milk and beer. The garage was much more interesting though. No expensive pimped-up cars, just bicycles. Dozens of them. It was getting late, so off I went to my own house, where I’m the only ECU’92 member. Isn’t that just sad…

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Jouw studievereniging wil het je zo voordelig en makkelijk mogelijk maken.

Dus hebben ze een boekenleverancier die daarbij past.

Jouw studievereniging werkt nauw samen met studystore.

En dat heeft zo z’n voordelen.

Doordat we snugger te werk gaan, kunnen we jouw complete boekenpakket snel aanbieden tegen een scherpe prijs.

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