Philosophy and Economics
The ECU’nomist
Ukraine, Russia and the Rest of “US” DLC Student-Teacher Debate Making a Meaningful Living Economic Impact of Casinos
March 2015, YEAR 24, ISSUE 3
Understanding Economics Debates and discussions that help us get it right
Letter from the Editor Dear fellow U.S.E. students, As you can see from the front cover, the Adam Smith building stands tall and great, just like the man who it was named after. This building is home to all of us. This is where we have classes, where we gather for group meetings, where our teachers are based, and most importantly, where we nurture our minds into being the successful minds for tomorrow. Adam Smith is well known to be the father of economics. But some of us may not be fully aware of his work beyond that of the “invisible hand”. In this issue, you can find out about the extensive and diverse works of Adam Smith in David Ortan’s article, something that today’s economists should be mindful of. In addition, in his other article, David also reviews “The Idea of Justice”, the book by Nobel Prize winner Amartya Sen. In the section of current affairs, Filippo Ricci combines law and economics in his article as he breaks down the situation in Russia and Ukraine. Our new member, Linda Kunertova, writes another current affairs article where she gives you a historical insight about the immigration situation in France, which received increased attention after the incident with Charlie Hebdo. Also a new member, Marouschka Blahetek will give us a lighter read and for her debut article she will enlighten you with why being born rich does not necessarily make one happy. A lot may be happening in the world but these past couple of months have also been eventful for us here in U.S.E. In the past two issues, we wrote about the topics and the speakers involved in the U.S.E. Academy events organised by U.S.E. In this issue, we included two of ECU’92’s events, namely the 2015 Economic Conference, with the theme of “Sustainable Growth” and the DLC Student-Teacher Debate. Jola Danaj contributes an article for this issue, giving a comprehensive summary of what happened during the economic conference. If you missed out on the DLC lecture, find out in my article what the debate was like and what the spectators said about it too. Bringing talks of events on an international scale, two of our members, Filippo and Marouschka along with their teammates, participated in a challenge initiated by Thought For Food, a movement dedicated to tackling the global challenge of feeding 9 billion people. In their article, they explain the project they have been working on for the past few months, including the concluding conference trip to Portugal (all expenses covered, mind you) to meet with the other participants in this conquest of finding solutions to eradicate world hunger, especially in developing nations. It is good to reflect back on the endless amount of events that both U.S.E. and ECU’92 have prepared for us so far. These take a lot of time and effort, especially when it involves inviting external speakers like in the Sustainability Conference, where the previous Deputy Prime Minister of the Netherlands, Maxime Verhagen, attended as a speaker. Coming up in the near future, there is one event on June 15th that you all need to keep your eyes on. President of the Eurogroup and Dutch Finance Minister, Jeroen Dijsselbloem, has agreed to attend the conference organised by second-year Honours students of U.S.E. titled “Turning Wounds Into Wisdom, the Future of the Euro”. Jeroen Dijsselbloem will inaugurate this conference and this is followed by a panel that will deepen the discussion of the day. So make sure you keep tabs on future updates of this conference to find out who else will be the speakers of the panel. But for now, be sure to mark the dates in your calendars. Finally, Vladislav Lyadkov is once again our guest writer for this issue and he explores the motives behind decision making in his article on the economic impact of casinos in the US. To aspiring writers out there, don’t forget that your ideas are most welcome and if you’re itching to contribute with a piece, be aware that next issue is the fourth and last issue of this academic year! I hope you continue to enjoy reading our articles and with that, happy reading! Yours sincerely,
Annette Aprilana
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Letter from the Board
Dear Reader, It is time for celebration! On the 24th of March, ECU’92 is turning 23 and this calls for a party. Actually, not just one party, but a whole week of birthday activities. Do you still remember the beercantus of the introduction weekend or the one in October? I would not be too surprised if you do not… looking at the amount of beer that was consumed. However, after some good training (parties) during this year, you can do better and we are going to drink even more this time. Then, if you feel like eating some cake on the day after, you can drop by our weekly coffee hour. Cookies are already hard to say no to but I can promise you, you will not be able to say no to this cake. No birthday goes by without a cake, just like that it does not go by without a real party. Which means that on Thursday 26th March at the Dies Party, it is time to get dressed and show your dance moves. This may also include drinking some beers, wine and shots. After a night of drinking there is a great chance that you feel a little hungover. We have the solution for you, tosti’s and juice! We will serve these to you at the ‘brakke brunch’ on Friday 27th March. The fact that we are celebrating the birthday of ECU’92 means that we are already halfway through our board year. Even though we definitely do not want our board year to be over any time soon, we are looking for successors who will take over our tasks in September. Would you be up for this challenge? Would you like to be in the board of a study association with almost 2000 members? If you are or think you might be, do not hesitate to send me an email, visit our website for more information or pass by the ECU’92 room! See you soon!
Rian van Groningen Chairman of the Board
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Table of Contents
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Rethinking Adam Smith
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Interview with Jessica Krom
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Law and Economics
A Point for Today’s Economists Working for the ACM
Ukraine, Russia and the Rest of “US”
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Economic Conference 2015
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DLC Student-Teacher Debate
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Making a Meaningful Living
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Exchange Abroad
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Philosophy and Economics
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A Troubled History
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Economics of Casinos
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The Thought for Food Challenge
Sustainable growth
Capitalism vs. socialism Income and Happiness Packing Off to Peru
A review of the “Idea of Justice” Immigration in France
Risk, uncertainty and gambling Feeding 9 billion people by 2050
The ECU’nomist is published every quarter online, as well as printed in a circulation of 500 for members, patrons and external contacts of ECU’92 Annette Aprilana | David Ortan | Filippo Ricci | Mithra Madhavan | Marouschka Blahetek | Linda Kunertova Study Association ECU’92 Campusplein Utrecht T 030-2539680
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www.ecu92.nl editorial2@ecu92.nl Published by Issuu
Rethinking Adam Smith: A point for Today’s Economists1 By David Ortan
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or a few months now, the students of Utrecht School of Economics have benefited from a renovated Adam Smith Hall. These days everywhere on the inside walls of the hall, one can read short quotes from the work of the “father of economics”. Hence, this might be the perfect moment to remember the life and work of Adam Smith. And yet, my purpose here is a bit more specific. I want to show by analysing a few examples that the theories of Smith were much broader and complex than the famous “invisible hand”. Most of us learned about his theory by reference to a famous quote “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”. The problem is that most readers stop right there or do not go much further in reading Smith. So in the public arena, Smith’s theories are basically known for worshipping the free market and the specialization of labour. It is true that it is not only people’s fault in the way they perceive Smith. The Scottish philosopher has been exploited by the neo-liberal right on many occasions. The message is more or less along these lines: our theories, they say, are the theories of Adam Smith, so we must be right. Resorting to intellectual authority is an old strategy for making your arguments sound stronger. However, we are not obliged to be tricked by it. In order to analyse Smith’s ideas, we ought to shortly look into his biography. After all, nobody lives in a vacuum. Our lives are profoundly influenced by the set of ideas around us. Smith was born in 1723 in Kirkcaldy, a town not far from Edinburgh, on the coast of Scotland. He attended the local school there and then moved on to the University of Glasgow. Scotland was back then one of the centres of the Enlightenment. Philosophers like David Hume, inventors such as James Watt and other important Scottish scholars brought their contribution to the world of ideas. After Glasgow, Smith went to study in Oxford. However, this was a disappointing experience. Compared to the
Enlightened Glasgow, Oxford seemed uninteresting for the young philosopher. He came back to Scotland and got a professorship in Glasgow. He would resign his position there in 1764 to embark on a journey to France as a private tutor of a nobleman, the Duke of Buccleuch. He died in 1790, after having briefly served in administration, as commissioner of customs. What is of interest to us though is his work. The first of his work was The Theory of Moral Sentiments, published in 1759. This was basically a philosophy work. However, his analysis is based on observations of the world around him: “This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition […] is, at the same time, the great and most universal cause of the corruption of our moral sentiments.” This is indeed very far away from what we usually know about Smith’s theories. He criticizes prestige earned by the virtue of being rich only and in a way he describes the characteristics of the commercial society, which he saw coming. The Enlightened ideals of autonomy [the capacity to govern oneself] and kindness to ones’ fellow humans are supported by deep philosophical analysis all throughout the book. Now, one could say that the above mentioned example suffers from, what economists like to call, “selection bias”. Let us go to his second book, the one that is of greatest interest to economists, “The Wealth of Nations”, published in 1776. Some economists call it the first real economics book. But this writing is also claimed by anthropologists and sociologists alike to be a groundwork in their respective fields. The book is a fascinating collection of real world examples and indepth social analysis. Of course, he talks about specialization and the institution of the market, nobody denies that. But there is so much more to the book than just that. To illustrate, Smith talks about the possibility of employers to keep wages down, in an artificial, cartel-like method: “Masters, too, sometimes enter into par-
ticular combinations to sink the wages of labour even below this rate [market rate]. These are always conducted with the utmost silence and secrecy…” Moreover, he talks about the way the colonies of India are administered by the British: “The difference between the genius of the British constitution which protects and governs North America, and that of the mercantile company which oppresses and domineers in the East Indies, cannot be better illustrated than by the different state of those countries.” The latter not only shows Smith’s moral concerns about the situation, but also calls for stable government in India. It must be said that the colony was ruled at the time through the East India Company, whose main purpose there was to exploit India’s raw materials and resources. Hence, we see that even if Smith is usually invoked by people who favour very little government involvement and privatisation, his writings warn us against the danger of being governed by a commercial company and the abuses that can take place in that situation. It becomes clear that there are some tasks in our society which simply cannot be left to the private sector. Smith’s work is very diverse and impossible to analyse in such limited space. This is certainly an encouragement to read his writings and observe his style for yourselves. However, some conclusions can be drawn even from this short account of his contributions. We must, I think, distinguish between the positivist elements of Smith’s work, the ones that have the role of explaining society and the normative analysis, where he talks about how the world ought to be. As a general point concerning social sciences, we must not let positive theories become normative and start presenting them as being the right thing to do. It might be the case that the “invisible hand” and “self-love” explain a lot from people’s behaviour (although certainly not everything), but there is a very long way from here to making normative statements about how things ought to be. Careful analysis, observation and reasoning are needed. Of this point, Smith was surely aware. Is it still also our case?
All quotes from this article were taken from Smith, A. (2010). The Theory of Moral Sentiments. Penguin. And Smith, A. (1999). The Wealth of Nations (Book I-III).Penguin 1
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Regulating Markets and Giving the Best for Consumers An Interview with Jessica Krom By Annette Aprilana
market, for example internet for consumers, and see which companies are active, what services they offer and then define the market. As soon as the market is defined, I see whether the active parties are competing with each other or whether one party has a dominant position in the market. My official job title or job description is Enforcement Official. I work with that title but of course everybody here uses their backgrounds to perform the same job but looks at it form different perspectives. We have people who studied law, economics, and we also have people with technical backgrounds. We have multidisciplinary teams in order to make decisions and to write analyses, so it’s mostly teamwork. The Authority for Consumers & Markets (ACM) is the Dutch governmental authority that regulates markets and stimulates competition in such a way that provides an optimal outcome for consumers. One of our U.S.E. alumni is currently working there now in the Department for Telecommunications, Transportation and Postal Services. Jessica Krom, a 2012 U.S.E. graduate who also used to be an ECU’92 board member shared some of her experiences working for the ACM and how she is enjoying her time there.
How do you gather your information on other businesses? We actually have the authority to ask for data from companies and they are obligated to give it to us. We interact frequently with these telecommunication companies and we also periodically receive a lot of data from them about how many connections they sell to their consumers and competitors, and their most recent activities.
What and where did you previously study? I studied at U.S.E. for both my bachelor and master degrees. I started my bachelor in 2007 and graduated with my master’s degree in Economics of Competition and Regulation in September 2012.
How long have you worked at ACM? It’s been two years and four months already. It’s been quite a long time but I still feel relatively new here. All the knowledge needed to perform the job is really technical and complicated. There are lots of new people but many of them have worked here for eight or nine years and they know so much. It takes a lot of time to know everything there is to know about telecommunications regulation.
What responsibilities do you hold at ACM? Right now I mostly do the regulation and the oversight of the telecommunications sector. One of the things I do is write market analyses. I look at a certain
Which subjects/courses from your studies are particularly relevant now for your job? A lot of them are relevant because I took courses on competition, regulation and industrial economics. The knowledge
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from those courses is really useful when you think about certain cases and market situations. You need to think about how these companies will compete in a specific situation. There was also one course that focused a lot on the definition of relevant markets and that’s also something that you really use here. The general economic knowledge is something you use everyday but it’s mostly microeconomics. Could you describe a typical day at work? There isn’t really a typical day but I can give an example of a day. In the morning I come and check my e-mail. Almost everyday I also check if there’s any news on the telecommunications sector. An example is when there are two parties who want to merge or there’s a new company in the market with a new business model. I also check whether there are signals in the news about a possible violation of some of our laws. Naturally, we need to look for that as a regulator. There’s usually a team meeting every day about one of the projects and these are content focused meetings discussing the decisions that need to be made. We also have meetings with telecommunication companies once or twice a week. I’ve also started taking on transportation projects and this means I talk to companies like NS and Schiphol too. Since you have lots of contact with businesses and consumers and you are also a public authority, what is the trend between consumers and producers that you personally see occurring in the real world? It looks like consumers are getting more powerful because of the internet and increased transparency. They have better ways to find the best deal for them. However, there is a segment of consumers that don’t go through all the effort. We have a consumer department and they really try to convince consumers
Interview to do so. We’re really trying to help those consumers and to empower them to do even more than what they’re doing right now because this is what promotes competition in the market. We study in textbooks that the market works best when it is left alone. Since, as a regulator, your organisation has the power to enact some laws, do you see that this hinders competition between businesses? In the telecommunications sector, regulation is really necessary for competition to exist. Without regulation, there are only about three parties who can provide services to customers and to business users, and KPN for example would have so much power that it wouldn’t be a competitive situation. In other markets we only enforce the law. When we see some parties deviating or violating competition law, then we will interfere. However, most of the times we really try to let the market work on its own. Specifically for the telecommunications market, regulations are designed in a way that it will no longer be needed in the future. The current regulations stimulate alternative operators to invest in their own networks, thereby promoting infrastructure competition. Now that you are where you are, what does the future look like for you? Right now I like it a lot here because the work is really nice and there’s a lot of variation. I don’t think I’ll be leaving my department in the near future because it’s still so challenging and fun that I think staying here would be better. If I leave now, I would feel like I haven’t finished all there is to do and to know. There’s always the option to work in a different department, such as the department for competition or the energy department. It has always been my dream to work at the competition authority and I’m really happy now that I am actually here. Do you have any tips or advices for our young economists here in U.S.E? One thing that I see is that when people come in and apply for a job here, it’s really important that you know what you want. If you want something then you really need to show it. I feel that when someone is highly motivated, it’s not very difficult to get the job. So be enthusiastic about something and show that you really want to do it.
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Ukraine, Russia and the Rest of US By Filippo Ricci
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ollowing the events in Kyiv and the collapse of Yanukovych’s regime, the Russian Federation seized the now former Ukrainian region of Crimea and annexed it into the Russian Federation. The actions taken by Russia are now source of great controversy in international law. This affected the notion of sovereignty, as not only was Ukraine’s sovereignty violated via the occupation of Crimea, but also Russian claims that the occupation worked under the notion of “responsible sovereignty,” i.e. defending the interests and safeguarding of the Russian population of Crimea. As for the current status of sovereignty and international law, it has become clear that the actions taken by the Russian Federation were a clear breach of these laws and principles. However, the current state of affairs and the notion of sovereignty following Russian intervention are to a degree shielded by past actions from the Bush administration in 2003, in the “occupation” of Iraq. The notion of sovereignty is subject to constant change arising from actions taken by countries; prominently the Iraq and Crimean occupation by the United States and the Russian Federation respectively. Russia’s effective conquest and annexation of Crimea is unlawful. The region is now suffering from not only potential conflict, but also economic turmoil: two very serious currency depreciations along with trade disruptions and restrictions have exposed Ukraine and Russia to great danger. Since their conceptions, international law and sovereignty have always been subject to controversy. With the emergence of international human rights, the classical notion of sovereignty–which grants the sovereign absolute legal authority over its territory and citizens–has been challenged. The challenger commonly referred to as responsible sovereignty, pushed for the promotion and protection of human rights–sometimes beyond the sovereign’s own territory–has also been widely accepted by the international community. The aftermath of the events in Kyiv and the annexation of the Crimean region into the Russian Federation posed a challenge to the international community and the legal notions sustaining it. However, to better understand the status quo we must first go back in time
and explore the legal and political history surrounding the Russian-Ukrainian relationship and the Crimean peninsula. After the collapse of Czarist Russia in WWI, countless civil wars and a lost war against Poland–under the control of a young commissar named Joseph Stalin– eventually led to the creation of the Soviet Union in 1922. At the time, Ukraine was valuable for a multitude of geopolitical and practical reasons. Ukraine’s wheat fields served to feed the Soviet Union, however, Ukrainian people opposed. The USSR responded by causing famines in what today is referred to as hunger extermination–an estimated 2.5 to 7.5 million were killed in 1932-1933. However, it wasn’t only Ukraine’s wheat fields that Russia was after, but also its Black Sea ports in Crimea. The ports provided strategic access to the Eastern Mediterranean, the Balkans and Middle East. Historically, the southern coast of Crimea was sought after by many empires of the greater region. We fast forward to the 1950s, the end of Stalin’s regime and the beginning of Nikita Khrushchev’s. In an attempt to relieve Ukraine of the damage done by Soviet ruling, Crimea was ‘given’ to Ukraine. What Khrushchev did not predict was the collapse of the Soviet Union in 1991. At this point, Ukraine and 14 other former Soviet republics became independent. But it wasn’t over, Russia called for Ukraine to give up its nuclear arsenal which led to the Budapest Memorandum of Assurances. To this day, most of the people living in Crimea are Russian by ethnicity. It’s important to realize that the late conflict over Crimea wasn’t only about the peninsula itself. The whole conflict had deep roots embedded since the times anteceeding the USSR–Crimea was conquered once before by Catherine the Great. For the sake of simplicity, this article will only explore USSR history. It is simply impossible to understand the conflict in Ukraine and Crimea without having a basis of this important period in Russo-Ukrainian relations. Following the collapse of Yanukovych’s government, the Russian Federation sent troops to occupy Crimea, home to a naval base which Ukraine formerly leased to Russia. The occupation was justified by Putin by the pretext that Russia was responsible for protecting Crimea’s Russian population. What is evident is that at that point the situation didn’t differ much from the US’ actions in Iraq and further
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in the Middle-East. Russia took actions similar to the pre-emptive strike philosophy laid down by the Bush administration following the events of September 9th, 2001. These notions stem from the responsibility to protect, a well-known concept in international law. In essence, Russian claims stem from notions of the responsibility to protect and safeguard its population, following the long-lasting riots across western Ukraine. The occupation continued until Russia’s Black Sea Fleet allegedly issued an ultimatum for “Ukrainian forces in Crimea to surrender by 5 a.m. (0300 GMT) on Tuesday [March 4th, 2014] or face a military assault.” Not only did Russia threaten with the use of force, but it also ignored the rights of Ukraine as a sovereign state. By acting under the responsibility to protect, Russia violated Ukraine’s sovereignty. The main flaw in Russia’s justification is that the Russian population of Crimea was never harmed in such a way to excuse Russia’s invasion. There were no terrorist attacks or crimes against humanity–a lack of motivation also present in Iraq and Afghanistan. Russia acted on loaded assumptions. The international community was in disapproval of these actions, but only few NATO members– notably Poland–explicitly ‘covered’ Ukraine’s back in case events would escalate. Despite this, Ukraine, even if backed by few important NATO countries was forced to comply with Russia’s ultimatum. It simply didn’t have the arsenal to fight Russia. Had Ukraine called war, some speculate that the event could have marked the beginning a third world war. This was not in anyone’s interest. Conquest is “taking possession of enemy territory by military force in time of war.” While an effective ‘war’ hasn’t taken place, both countries had their armies mobilized for battle. Additionally, the Russian government later released a statement with the intent to annex Crimea as a state of the Federation. Today however, there are rules restricting a state’s use of force. No territorial acquisition resulting from the threat or use of force will be recognised as legal. It is clear that international law provides an environment where conquest is deemed outright unlawful. This is the reason why the events surrounding Crimea are a bit more complicated. “On 11 March, the Crimean parliament voted and approved a declaration on the independence of the Autonomous Republic of Crimea and the city of Sevastopol from Ukraine, as the Repub-
lic of Crimea, with 78 votes out of 100 in favour.” Although Crimea’s claim to independence had no legal grounds to secession in international law–as it did not appeal to the Ukrainian parliament’s decisions to not grant Crimea secession–the act worked as a final measure to ensure the pseudo-legal annexation. “Crimeans voted in a referendum to re-join Russia on 16 March.” The referendum showed a great majority of the population being in favour of the annexation; Russia recognized Crimea as a state, and a few days later, President Vladimir Putin signed several treaties finalizing Crimea’s annexation. The significant strategic advantage of Crimea is that its ports provide quick naval access to the Balkans, the Mediterranean, and the Middle East. Following the turmoil that shook Ukraine–long protests, rioting and a coup d’état–the Russian Federation saw an opportunity and seized it. The events unfolded in the course of a week, starting with the unlawful secession of Crimea and ending with annexation of Crimea to the Russian Federation. The justifications provided by Russia entailed the responsibility to protect and safeguard the interests of the
Russian population in Crimea. This notion is strikingly similar to the notion of pre-emptive strike; actions taken by the Bush Administration in 2003 with the invasion of Iraq–the famous ‘war on terror.’ The international community still criticizes Russia for the actions taken and refuses to recognize the annexation as lawful. Though it wasn’t immediately clear, the Russian Federation had the intent to conquer and annex Crimea. Dismissing the unlawful attempt to ease the annexation–i.e. Crimea’s ‘secession’–the actions taken by the Russian Federation should be considered as an act of conquest; a notion denounced by international law. The past 15 years left a protrusion in our conception of sovereignty. Whilst the international community is taking a more progressive approach rather than the classicist view, examples like Afghanistan and Iraq should have been enough for us to understand what was truly happening in Ukraine. A lot has happened since March 2014. The Russo-Ukrainian
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Current Affairs relationship is shrouded in a thick and grim fog of war. There’s little we can know and there’s little sense to speculate. We’ve all assisted to the biggest casualties arising from this conflicts, the victims of Malaysian Airlines MH17, brutally shot down because of a pro-Russian separatist being a little bit too trigger happy. Russia should be held accountable for the actions that these separatist groups have taken. Currently, the conflict arises from the pro-Russian separatists and Ukraine’s own military/guerrilla forces. Along with the recent economic downturn–both countries have had (and still have) a plummeting currency, probably because of overinvestment in foreign assets. And then there’s the rest of ¨us.¨
A Conference on the Future Outlook: Economics and Sustainability By Jola Danaj
As the clock ticked closer to 12:00, the gentlemen in suits entering the Academiegebow are gathering speed by the minute. Most of them are expecting the delivery of great speeches about how to sustain this economy that our ancestors left us crumbling with (is it too soon for this joke?). There were three speakers each highlighting different aspects of economic sustainability that help us get a better view on how we, as students, can approach this matter. We had a board member of the FNV who spoke about the implications of the youth labour market and its impact on the economy as we progress, later to be followed by a high personality in the Dutch parliament who made us familiar on how sustainability is reflected in every area of our life, with a focus on real estate and construction business. The day was wrapped up by an intense talk on financial sustainability, the holy ground where our economics students felt right at home, which was later followed by drinks and discussions about the day. Youth labour market Bernard Koekoek came forward representing one of the student labour unions, FNV, and the political aspects of trade unions and governments. He emphasised how inequality in the labour market is becoming more burdensome to the young generation, indicating the new student loan quota of €28,000 (noting that before this, not only was it free, but the government also gave ‘’gifts’’ to students as financial means to support themselves in their academic pursuits). He then continued in his endeavour to increase the audience’s awareness on this topic by saying that such forms of exploitation (including the decreasing minimum wage for the young) do not
Professor Hans Schenk (left) and Bernard Koekoek (right)
promote sustainability but only worsen the consequences of the generation gap. An Industrial Perspective The former deputy Prime Minister, Maxime Verhagen decided to draw the attention on the construction industry and how people can help build a self-sufficient future, starting from their own environment. The priority is to build a sustainable home, literally and metaphorically. After more than 70,000 jobs being lost due to the crisis in the real estate industry, it is necessary to set the foundations for more innovative and viable construction methods, meaning less maintenance and a more sustainable environment. The Netherlands is one of the countries that have been supporting such culture to the point of gaining competitive advantage in sustainable resources and investments. Financial Sustainability Rens van Tilburg, the director of the Sustainable Finance lab, gave more insight on how sensible investing is a responsibility that has recently been integrated into people’s mentalities. As going further into how financial derivatives and instru-
ments could help sustain the economy by not falling into the spiral of the credit crisis, it was also noted that there are times when investors have also very little power over the course of the exchange market. Since financial markets tend to be short sighted at the expense of risks, it is the investor’s responsibility to calculate the risks that the financial sector bears along with the help of technological change. The workshops were an important part of the agenda. Prestigious lecturers at U.S.E. such as Prof. dr. Stephanie Rosenkranz, Prof. dr. Wolter Hassink, Dr. Mark Sanders and Dr. Marc Schramm took the opportunity to have a close interaction with the attendees and give valuable insights into topics such as the implications of behavioural economics, cost-benefit analysis and other important matters that relate to the prevailing economic situation in the world. The day ended with drinks, photographs to capture the moments and an overall great atmosphere with students and professors discussing the topics and questions that this busy, yet fulfilling day brought. Maxime Verhagen on smart buildings and sustainable practices
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“This house believes that capitalism is better than socialism”
A debate by the Discussion and Lecture Committee By Annette Aprilana
From left to right: Sergei Hoxha, David Ortan, Stephanie Rosenkranz, Loek Groot, Hein Roefelsma, Leonie Sanders, Bojken Gjoleka and Elena Micajkova
This year, the Discussion and Lecture Committee (DLC) prepared a very exciting debate between teachers and students. On February 10, the Auditorium filled up with people, both participants and spectators, who were more than ready to enjoy the evening watching a debate about capitalism and socialism. The debate started off with an opening speech by Jesse Boeve, the Chairman of the DLC. Not long after, the atmosphere was buzzing and tense at the same time, as debaters from both sides were on edge and eager to get their arguments across. The debate followed the British Parliamentary style with eight speeches, one from every participant, each lasting 7 minutes; this formed the first part of the evening. The second part was opened for audience participation after which the person with the best question received a gift. Leonie opened up the debate arguing why we need capitalism, listing several reasons such as product differentiation, efficient markets and overall increases in wealth. Next from the opposition Elena countered saying that the major flaw of capitalism is that it makes people think only of profit. However, Professor Hein didn’t quite agree and indicated that incentives aren’t necessarily bad as they can trigger good things too. Sergei wasn’t too keen on that statement as he reminded us all that there is a gap between the poor and the rich that is now bigger than it was before. On the contrary, Professor Stephanie argued by saying that we’re
not all risk takers or entrepreneurs who innovate, as it is those very people that end up holding the big bulk of the wealth. She further argued about the efficiency of the price system. After that, Professor Loek took the floor on a tougher tone by introducing a communist argument into the debate. But David picked up the pace again to promote capitalism saying that with property rights, firms internalise externalities and thus have the freedom/possibility to improve their situation and hence that of everyone. However, Bojken rounded up the first half of the evening claiming that capitalism has failed and that socialism, a meritocratic system is a better system, offering equality and rewarding people based on effort. The evening was no doubt entertaining as the debate wasn’t only intense but also produced laughs from the audience as the debaters shushed and refused to accept questions from other participants. But af-
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ECU’92 ter counting the votes from the audience, the winning team of the debate was that of David Ortan and Stephanie Rosenkranz. I asked David about his experience on the debate and his thoughts on winning. He said: “We prepared something completely different. We had in mind competitive debating, so we prepared very analytical arguments with no data because in competitive debating presenting data is not feasible. They cannot be checked on the spot in the 15 minutes during which judging takes place. But it was fun of course, debating is always fun and the topic is interesting too.” I also asked for comments and opinions from the audience. Bryn Watkins, a second-year spectator, said that “there were some interesting opinions but overall [the debate] could’ve been better organised”. Jola Danaj, also a second-year spectator, noted that “people [in the audience] were a bit biased when voting for their favourite teams”. She wasn’t the only one in the room who thought that, Chris De Zilva, a first-year spectator, also had similar thoughts. He said “you have to make sure the entire audience comes in with a blank slate in their mind. I feel that too many people came to the debate having already decided on a side.” Indeed, that seemed to be the case, but nonetheless most of us who attended can still agree with Chris that “in general it was good, all the participants prepared very well and the format was nice.” Finally, I also asked the DLC chairman, Jesse Boeve, about the preparation of the event and his thoughts on how it turned out. He told me that it’s been a while since ECU’92 organised this type of event, which means that they couldn’t seek the wisdom of the people from recent years who have previously done it. “We put a lot of time into it and I was really excited for it because we planned everything as well as we could. I enjoyed the debate although there are of course things that we would do differently next time.” I couldn’t agree more. The debate was a fun, informative and engaging experience for all of us. Team 1 (C): Leonie Sanders and Hein Roefelsma Team 2 (S): Elena Micajkova and Sergei Hoxha Team 3(C): David Ortan and Stephanie Rosenkranz Team 4 (S): Bojken Gjoleka and Loek Groot (S: Socialiasm, C: Capitalism)
“Dutch Angle.” Photo by Filippo Ricci Taken from the Oude Gracht, in Utrecht.
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Making a meaningful
living By Marouschka Blahetek
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s students of U.S.E., we study hard to get good grades in the hope of finding a great job later on in life, possibly even a career. Whilst some of us may have noble intentions motivating them, many of us see a university degree as an opportunity to make the big bucks. From a very young age the mantra seems clear: study hard, work hard, make money and live a happy and comfortable life. But what if you start your life with an endless supply of money making it unnecessary to study and work? Having money certainly does not make you happy instantly and it appears that many of the ‘filthy’ rich young heirs and heiresses are not much happier than your average Joe. A 2010 research from Princeton University’s Woodrow Wilson School concerns itself with answering this age-old question of whether having money equals happiness. It appears that the old saying ‘money does not buy you happiness’ is only slightly true. The research, conducted by Nobel Prize winning psychologist Daniel Kahneman and economist Angus Deaton, analyses 450,000 responses of American citizens on questions regarding their feelings about previous days, whether they were living life to the fullest and their income. The study concludes that money buys you happiness up to an income of $75,000 (€59,000 in average exchange rate of 2010) a year. Earning less than $75,000 a year makes you more prone to sadness, but anything above the benchmark does not increase happiness. A lower income does not in itself make you unhappy, but decreases the capability of dealing with life’s problems. The $75,000 income is a benchmark at which people are able to live life more on their own terms, making it easier to deal with adversities and to do things they deem enjoyable, such as spending quality time with friends and family.
Seligman divides the pursuit of happiness in five elements: positive emotions, engagement (a state of flow when participating mindfully in activities), relationships, meaning and achievement. According to Seligman, meaning is the feeling of participating in something that is bigger than oneself and achievement, in other words, the strive to better oneself. The last two elements make it increasingly clearer, that easy access to money does not necessarily make you happy. Jamie Johnson, heir to the Johnson & Johnson pharmaceutical fortune, interviews children who are heirs of great family fortunes and follows their search for happiness and fulfillment in the documentary Born Rich. The documentary shows shots of endless champagne towers and plates full of oysters served in massive mansions, but besides the fact that the interviewees have all their materialistic needs met, many of the kids still have the same struggles that many of us are currently facing as young-adults; how do we spend our time and live a meaningful life? Studying at university and having a job can give a sense of purpose and a feeling of achievement, but without the need to earn money later in life many of the rich kids are encouraged to fill their time with seemingly meaningless hobbies - one of the kids collects antique phones and Jamie is encouraged to collect old maps. Another thing possibly standing in the way of the happiness of rich kids is the
From the research it seems easy to conclude that heirs and heiresses of great family fortunes are not necessarily happier than anyone earning around $75,000 a year. It might even be that some of the rich kids are less happy. The book Flourish published by psychologist Martin
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concept of ‘learned helplessness’. Seligman found that humans and animals stop acting in a constructive manner, when given arbitrary punishments and rewards. “We found that even when good things occurred that weren’t earned, like nickels coming out of slot machines, it did not increase people’s well-being.” This experiment identifies another possible explanation for a lack of happiness in the life of rich kids; they have not earned a penny of their fortune. A billion dollar inheritance surpasses the $75,000 benchmark of happiness by miles, but it seems easy to forget that this benchmark indicates an annual income. An inheritance cannot be compared to income from direct labour, since in general no work was required to have access to money. Studying and working to earn money is a way to give meaning to the balance on your bank account and increase happiness. Many of us may not be excited by the foresight of years of study and work ahead, but besides securing a future income we are also laying the foundations for a more sustainable form of happiness; meaningfulness. Agreed, the idea of growing up incredibly wealthy with the world at your feet may sound terribly enticing, but the different starting positions in life may be of no difference to your happiness if you are able to find a great job or career. Having money matters to a certain degree, but studying and working may help you find something more in life than just money.
Packing off to Peru
An exchange full of fun, adventures and new experiences by Joris Moerenhout
country ensures a very rich exchange.
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f one wants to understand Peru as a country, a good starting point is having a look at the menu in one of the numerous restaurants in Lima. Besides a delicious source of national pride (Lima has several top-class restaurants), the Peruvian cuisine is the best metaphor for its diversity. In a typical Peruvian restaurant you can order specialities from the coast (ceviche), the Andes (guinea pig and alpaca) and the Amazons (fruits). This represents the first type of diversity in this South American country; its landscape. Peru has it all: dry deserts, beautiful beaches, extremely high Andes summits and the impervious Amazons. After this introduction to the Peruvian
diversity, one could zoom in on Lima continuing its culinary tour. Whilst strolling through the streets of the capital, you will immediately notice all the different types of restaurants. Besides the traditional Peruvian ones, you might end up eating Chinese Chifa, Japanese Nikkei (not the index) or African Criolla. The roots of all these distinctive dishes lay in the historical migration flows. In particular, the settlement of Spaniards, Africans, Chinese and Japanese in Lima, gave birth to what is now called the Peruvian fusion cuisine. Moreover, national and international migration created a city of 10 million Limeños of which 87% have immigrant roots. Such a diverse
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For many people, Lima might not seem like a very attractive place to spend your semester abroad. Why would you go studying in a developing country, which is famous for its Inca ruins, but not for its tremendous educational system nor for its safety? I have to admit that my motives for getting on a plane to SouthAmerica for the second time in my life were not very academic. The most important reason for me was quite obvious: adventure. Yet, when I started thinking about my academic reasons whilst writing my motivation letter I discovered I had several educational related reasons. Not surprisingly I wanted to improve my Spanish. But why would one cross the ocean to develop his Spanish? Well, first of all I was very curious about nonwestern education and how different it would be. Next to this I was wondering how I would react to studying in such a different cultural environment. Lastly, I was interested in the Latin American emerging economies and I couldn’t think of any better way to learn about these countries than by going there myself. Now that I’m back in Utrecht, I can say that the Universidad del Pacífico did not disappoint me. Of course the inefficiency and bureaucracy frustrated me sometimes. I accustomed rather quickly to waiting in (or for) a bus or queue, which is in its own way rather relaxing. Inefficiency and bureaucracy at a university however, is less relaxing. There were quite some time consuming weekly assignments,
Exchange of which I didn’t really see the purpose. And before starting with a group work, I needed at least one day to chat about everyone’s relatives and friends. Nevertheless, it was an enriching educational experience to perform in a totally different educational and cultural environment. The university itself is one of the best and most expensive (even for western standards) private universities. Therefore, it had outstanding teachers. I followed a very interesting course taught by a Harvard professor and two more courses that were taught by inspiring teachers who were travelling all over the world whilst teaching. Moreover, the board had more than sufficient funds to hire a full army of Lidermen who were not only protecting the students, but were also very friendly, welcoming each student every morning. The biggest drawback of the university for me was that the Peruvian diversity hardly existed on the campus. Most students did not take the amusing and shaking one-hour bus ride (with live reggaeton ‘music’) like me to get home, but instead
took their fairly decent cars or a cab. This illustrates that the majority of the students come from wealthier families, which is not all that representative of Peruvian society. Partly due to this (and partly due to the fact that I did not spend that much time on the campus), I did not make that many Peruvian friends at the university; I wanted to meet the real Peruvians. Luckily this was not a problem at all as Latinos and Latinas tend to be very open people and most of them are interested in meeting foreigners. The people and the food make Lima a very pleasant place to live despite the clouds that are covering Lima 9 months a year. From the moment I arrived, I was introduced to a new lifestyle in which surfing and salsa became the norm. Living only 10 minutes from the coast, a typical day would include walking down to catch some waves before class and ending in the bohemian district of Barranco, enjoying the vibrant nightlife of salsa, which seems rather easy after a few cocktails. If at some point you feel
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overwhelmed by Lima and its busy traffic, you just hop on a bus heading to the sun, mountains, desert or jungle. In these areas outside the big city you are immediately engulfed into the more traditional Peruvian cultures. It is not unusual to bump into a Chaman (Peruvian ‘wizards’) or catch some phrases in ancient languages. Whether you are climbing the famous heights to Machu Picchu, swimming in the Amazon River, visiting floating islands on a huge lake 4000 meters above sea level or just having spontaneous conversations with locals, you are sure to be continuously astonished by this country. Not to mention the girls, whose beauty will delight you in the morning, when you unexplainably wake up beside one after a hazy night of salsa dancing. So if you are looking for an exchange that has more to offer besides good education and new friends, Peru has all this and more. It will teach you to adapt to a completely different environment and give you the opportunity to learn a lot of new skills. Consider it.
Philosophy and Economics A review of “The Idea of Justice”1 By David Ortan
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E
conomists have for a long time tried to keep their theories free of value judgements. Most of them hate the idea that their theories could be attacked from a moral perspective. Hence, they avoid engaging with political and moral philosophers on issues that are usually of great importance to people in all societies. Economists try to separate questions of efficiency from moral questions even in cases where efficiency already entails adherence to a certain set of moral values. Yet, there are exceptions to this phenomenon. Amartya Sen is one of them. Known among economists for his contribution to social choice theory, Sen, a Nobel Prize winner in Economics, is also a fervent philosopher who is concerned with a broad range of philosophical questions, most of them linked in one way or another with the concept of (social) justice. His 2009 book, “The Idea of Justice”, brings Sen’s say on the matter to the readers’ attention. Sen takes a very practical perspective from the beginning. His objective is to make the world less unjust, rather than to describe what a just world looks like. To use the philosophical jargon: he takes a comparative approach, not a transcendental one. In that sense, one could say that he is opposed to the method of philosophers like Locke, Kant and Rawls, leaning more towards the methods of Bentham, Mill or Marx. Sen illustrates the point by a powerful analogy: it is useless to know that the Mona Lisa is the best painting in the world when your aim is to compare Dali and Picasso. The comparative approach is thus preferred to the transcendental one even if the former could lead to incomplete and unworkable society-wide orderings (see for example Kenneth Arrow’s Impossibility Theorem), problems that Sen is very well aware of, as his work build upon Arrow’s analysis. Moreover, Sen distinguishes upfront between caring about having just institutions, without looking at the injustices that can result from human interaction, and caring about both process and result to satisfy the requirements of justice. Here, two concepts from Sanskrit legal thinking are used to systematize the discussion: niti to denote institutional correctness
Review and nyanya to stand for “a comprehensive concept of realized justice” (Sen, 2009, p. 20) that also looks at the situation that results from specific institutional arrangements. In this respect, a point against Rawls is again made, as his veil of ignorance2 is seen as a narrow institutionalist approach that can lead to perverse outcomes. This is because, once institutions are established and the guiding principles for society are made, human interaction is no longer guided by anything else. A third point of criticism of Rawlsian philosophy is made by Sen because the decisions in the initial position suffer from what is called closed impartiality. What this means is that the people who decide upon the guiding principles for society from behind the veil of ignorance, are also the people who will be influenced by these decisions. Sen says that this can lead to unjust or at least perverse outcomes because the group that decides does not benefit from views other than its own. He prefers a situation of open impartiality, where opinions benefit from the perspective of an impartial spectator. This notion is borrowed from Adam Smith’s work, The Theory of Moral Sentiments. It is only with this condition that one can proceed to reasoned scrutiny, a democratic and objective method of assessment that Sen thinks fit for deciding on issues of justice.
tive tastes and conceptions of the good life. This is called the problem of expensive tastes. Trying to equalize happiness or other measures similar to that would mean that we would have to compensate those who have higher standards of life more than those who can live with less goods. Hence, this approach proves unworkable. For Sen “capability is, in fact, no more than a perspective in terms of which the advantages and disadvantages of a person can be reasonably assessed” (Sen, 2009, pp. 296-297).
So far, so good. However, one could ask whether Sen has anything substantive to say regarding his idea of justice besides a mere critique of previous theories. The answer to that contention is complicated. Even if the previous three points can be seen as a rebuttal of the contractarian approach in general, and of Rawls in particular, they bring quite some material to the debate on justice. Nonetheless, even admitting that the process of ranking is incomplete, one could still wonder how exactly, given the conditions presented above (comparative approach, realization focused, open impartiality), alternative situations are ordered and judged as being more or less just. Here, Sen refers to the idea of capability in ranking social alternatives. He disagrees with using utility and happiness as a measurement, as that would basically entail compensation that is dependent upon one’s subjec-
However hard we try to look for a definitive answer on the idea of justice, the book leaves the question quite open. Then again, that is one of the characteristics of the comparative approach taken in the book, along with the acknowledgement and credit that Sen gives to very different claims that people make regarding justice. The message of the book is deeply embedded in social choice theory, with all its counterintuitive results, therefore the fact that one will not find an unambiguous answer to the topic is not strange at all. At least, the book provides a powerful framework for thinking about questions of justice and gives us the possibility of democratic debate and careful reasoning to improve our world and make it more just. If it is within our power to do so, then we even have a duty to get involved, according to Sen. Otherwise, who else can we expect to take the matter seriously?
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I want to thank Charlie Panhuyzen for her insights and opinions on the topic, which proved to be extremely helpful when writing this review. The veil of ignorance is an imaginary initial situation where people, unaware of their future circumstances and situation in life (income, family situation, social class etc.), decide on the principles of the society they want to live in. 1 2
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A Troubled History
Immigration Takes a Right-Wing Swing in France By Linda Kunertova
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t’s been a few weeks since the Charlie Hebdo shooting in Paris paralyzed the whole world. The journalists’ violent death did not only raise a huge wave of solidarity, but also invoked discussions concerning the concept of freedom of speech and religion in today’s world, and questioned our society’s values. The compassionate slogan ’Je Suis Charlie’ spread across the entire world within just a couple of hours. It was not only a question of freedom of speech that arose; people started arguing about what exactly defines our freedom, where are its borders and to what extent we are entitled to preserve it. Anyhow, the debate ’Je Suis Charlie’ or ‘Je Ne Suis Pas Charlie’ is off topic now. Through time the discussion has expanded and is now aiming towards a more crucial and substantial point, namely, immigration. This topic has been
a long-simmering issue causing a divide in society in general for quite a while already. In the last couple of decades, the public has been made to believe that the presence of ethnic minorities and immigrants represents the greatest problem in the country, posing a threat to France’s identity. However, the truth is, France without immigrants would not be France as we know it today. Its culture has been significantly influenced by the diversity of ethnic groups, even though, unlike the United States and their ‘melting pot’, France traditionally emphasizes the homogeneity and the mantra ‘France to the French’. Let’s look at how it all started. The French nation recorded three huge waves of immigration. The first major one roots back to the 18th and 19th century when France opened their doors to foreigners for the first time due to labor
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shortages. It was the expansion of industrialization that created the need for workforce, a need that could not be met with France’s population alone. Without any policies regulating the flow of labor into France, unskilled workers from neighboring countries like Belgium and Italy, who were attracted by the opportunities in manufacturing, construction work and agriculture, moved freely to France. The immigrants were welcomed with the hope that one day they will return to their place of origin, and in a lot of cases, they actually did. But on August 3rd 1914, history interfered. Germany declared war on France and over the next four years, the First World War claimed the lives of more than one million French citizens. In the post-war period, the government was faced with a hard challenge – the whole French economy had to be rebuilt. This time again, the government turned to foreign workers and continued to actively recruit them as a solution to the labor shortage. This began the second major wave of immigration to France. In those days, with over 3 million immigrants, France became the country with the highest proportion of foreigners, outstripping even the United States. Until then, immigration was viewed as a constructive phenomenon with positive economic impacts, but in the 1930s
Current Affairs when the Great Depression shocked and consequentially slowed down the French economy, the perception of immigration altered and suddenly, the same workers who used to be greeted as the savers of the economy, became undesirable. The first laws regulating immigration were passed, the number of foreign workers in France decreased and many jobs were no longer available for immigrants. French exclusivity and integrity became the new policy. However, that did not last for long. History intervened one more time and after the Second World War, France faced the same situation – a devastated economy, a decreasing population and a need to keep the country competitive against its European neighbors. This time though, the government tried to be selective when recruiting foreigners and a strict selective process was imposed on immigrants coming to France. Criteria like health or moral conduct determined who could and who could not enter and live in the country. Although no ethnical quotas were set, the newly-established Office National d’Immigration only opened its recruitment offices in Italy. Nevertheless, because the selection process was rather lengthy, the enormous demand for labor again overgrew the supply and there was a shortage of labor, mainly for low-paid jobs that French nationals were reluctant to accept. Therefore, the high number of immigrants entering France illegally was silently overlooked by officials, as they were happy to see the labor shortage problem being solved. As a result, a relatively small percentage of non-French occupants turned out to be legal. In 1975 there were about 3.4 million immigrants in France, 40 per cent of whom came from non-European countries, whereas immigration from other European countries was dominated by the Portuguese. The post-war economic boom wasn’t the only reason for immigration in those days though. The process of decolonization after WW2 triggered a huge number of immigrants not only into France, but also into the whole of Europe. Between 1954 and 1964, France recorded an entry of 1.8 million immigrants from its former colonies in North Africa and Indochina, of whom 1 million had Algerian origins. The Algerians dominated because of the size of their country and social diversity. Being called Pieds Noirs (black feet), the Algerians settled mostly in the south
of France, despite the government’s efforts to distribute them across the country. Immigrants from the Caribbean also constituted a non-negligible part of the after-decolonization migration flow. In 1975, there were over 100,000 migrants from overseas departments recorded living in multi-cultural France. In the eyes of the French officials, the Caribbean migrants were more desirable than those from Maghreb and tropical Africa, but despite that, North Africans comprised by far the largest community of non-European occupants in France. Their preference for France over other European countries relates to the colonial past of the country. Algeria had been part of France between 1848 and 1962 and during this period, the Algerians (altogether with a majority of Berbers and Arabs) were granted French citizenship. Due to the traumatic and savage decolonization of Algeria, it was France who first experienced anti-Muslim resistance within the fields of both politics
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and society. Even though a large number of migrants from Algeria had already been French citizens, their integration within the French society was very difficult. Moreover, about 35 per cent of the male immigrants and around 45 per cent of the female immigrants had never attended school and thus unemployment rates among immigrants were very high. That caused French officials to fear an ethnic imbalance and the related social tensions that might accompany. The growing anxiety was reflected in politics as right-wing parties came to power and new immigration policies were adopted. The intake of foreigners was restricted and it was set that every immigrant occupying the land illegally is to be deported in short order. This period marked a crucial change in the way immigration was perceived by the public – from a marginal phenomenon, it turned into an important social issue that previously remained like a worm in an apple until surfacing only recently.
Economic Impact of the Casinos in the United States By Vladislav Vlyadkov
E
ver thought of betting your entire fortune on “zero” in Roulette or dreamt of spending last month’s salary playing poker? To most of us, these ideas seem completely irrational and unjustified. This is in fact one of the reasons why most of the neoclassical economic models, in an effort to explain motives behind our decisions, assume either risk neutrality (a neutral attitude towards risk) or risk aversion (a tendency to prefer situations that offer more certainty at a cost of a lower payoff). Playing in a casino definitely does not describe either a risk-averse behavior or a risk-neutral behavior. Instead, casinos facilitate gambling. The main idea behind gambling is a complete uncertainty about the value of the possible outcomes. Hence, in principle, the only people who will engage in gambling are the risk-lovers: ones who get utility from putting themselves into dangerous and risky situations.
The above does not imply that people who gamble have been risk lovers for their whole life. In fact, quite the opposite holds: people tend to be risk lovers only in certain situations. Hence, before considering the economic impact of casinos, as a way to encourage an active engagement into gambling, perhaps it is worth asking ourselves: “What makes people gamble in the first place?” A popular explanation, known to most, is as follows: we tend to overvalue the prospect of large gains with a small probability of a win, such as that of a lottery ticket win. The casino fits into this explanation fairly well. We think that we will end up going out of a casino with a million euros in our pocket, yet it is most probably the casino, which does that. Another well-known view, cited especially often in American newspapers and journals, is that after a tiring 40 hour
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working week people are looking for a way to relax and escape the routinized reality of everyday life. Other people find this to be a place for families and friends to socialize. This is not very surprising considering that most of the times casinos are either located near or merged with other often-visited locations, such as restaurants, tourist attractions or hotels. Perhaps of the most interest to the article is the other motive: some people have no other reason to play but winning money. Now, whether a person does it out of a financial need or in order to gain some extra income on top of his regular earnings is extremely important to determine, as this will very much give an answer to the question of how far should the government try to regulate casino activities. Researchers used to support the latter position in the past, but now a majority switched their position to the former. According to statistics on gaming industry, published by PwC in 2014, the major casino market in terms of revenues is located in the US and makes up for over 50% of the of the global market. Hence, in studying the economic impacts, it is worth to pay particular attention to this region.
Guest Article the economy. On the other hand, a study by NOCR (National Opinion Research Center) finds that an opening of casino in a state resulted in about 1% reduction in the unemployment rate. The same study however claims that the opening of a casino has a negative effect on the welfare state and the level of unemployment benefits, so even in the fortunate case scenario there seems to be a trade-off. Interesting enough, only 20 states in the US have, one way or another, actually legalized the casino activities. This raises a question about the negative economic influences resulting from casinos, in the form of gambling. After all, why else have the other states (of which there are 31 currently) not taken advantage of casinos profits?
In 2013, for the first time, the American Gaming Association (AGA) published an official report about the national economic impact of casino entertainment in US. Three consecutive years of growth in the gaming industry completely restored the confidence in casinos seen as lucrative businesses. The perverse effects of the 2008 financial crisis have been dealt with. Hence this explains why AGA considered publishing an economic impact report suggesting strong marketing move. Two important things can be emphasized from the report. First, casinos are huge taxpayers – US$8.60 billion in direct gaming taxes in 2012. Most of the tax revenues, according to the Federal Reserve Bank of St. Louis, go to public education. Hence, experts suggest that it is especially in the interest of governments with large budget deficits to keep the casinos going. Second, casinos are a large job provider – 332,000 people were employed in Commercial Casino industry by the end of 2012 with the mean annual salary being US$42,000, slightly above the average national US salary of US$40,000. On the one hand, evidence suggests that the local unemployment was unaffected by casino openings. It may very well be the case that the new casino jobs drive other jobs out of
It is not the private costs that really create a problem in this case. Instead, there are numerous social costs involved. A study by Alan Mallach (2010) on the economic and social impacts of introducing casino gambling identifies three types of social costs: costs borne by individuals exhibiting gambling behavior, costs borne by the individual’s family and friends and costs borne by society in general. The second and third categories can also be considered as externalities. So what are these social costs? One of them is crime. The problem is that a lot of casino players tend to get obsessed with gambling – this phenomenon is known as pathological gambling. Hence, there are a good number of reasons to suggest that the pathological gambling problem will make a person engage in illegal activities in order to finance the gambling addiction. The reason for this is the impaired decision-making of a “hard gambler”. In the US and Asia-Pacific region, most reported forms of crime resulting from casino gambling include: forgery, theft and embezzlement. It has also been found that gamblers are more likely to be arrested than non-gamblers, hence suggesting that crime is indeed an important issue. The second important social cost is production-associated. After all, most of the people who go to casinos usually have a job. It would of course not be in the interest of a company to keep an employee whose efforts and productivity are negatively affected by his “love for risk”. Moreover, as it was shown by Collins and Lapsley (2003), workers who
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tend to gamble very often are more likely to find themselves involved in counterproductive practices, such as corruption and strikes. It goes without saying that these types of workers will also be more often absent from their workplace. Finally, the last important social cost comes in the form of health and counseling. It is very likely that a gambler will need some form of psychological assistance and help in his fight against gambling addiction. It goes without saying that the victims of gamblers’ crimes will definitely need medical assistance. Another hard-to-exclude possibility is that poor families of gamblers may need some form of support and guidance. What about measuring the social costs of the commercial casino industry in the US? This has always been a highly debated issue. Annual social cost per gambler varies from as low as $560 to as high as $52,000. Such a huge discrepancy in the results is largely attributable to the different methodologies used in the studies and to the variation in productivity, crime rates and health costs between states. For example, it seems to be the case that most gamblers in Las Vegas are foreigners. Hence, their addiction would probably not result in as many social costs for the US, compared to the addiction existing among the inhabitants of Ohio, who have their jobs and families in the US.
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interesting. Their topics ranged from rethinking food systems to discussing the pros and cons of growing meat in laboratories. We then proceeded to connect with our peers and gain a broader perspective on these issues. The second day was about finding solutions to these problems. The top 10 teams took to the stage to present their promising concepts to the jury in a five minute pitch.
By Filippo Ricci and Marouschka Blahetek
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any important questions cross a student’s mind every day; sometimes it can get to the point where it’s a ¨day in, day out¨ cycle. What to eat, what to study, whether to study or whether to go out. Seldom do we ask ourselves how to feed 9 billion people by 2050. This is what the Thought For Food (TFF) Challenge asked us in September 2014. Thirteen-hundred university students from across the globe get together and attempt to find solutions to the UN’s first millennium development goal, to eradicate world hunger. The winning team that finds an appropriate solution will receive $10,000 from TFF, so that they can further develop their concept. Representing U.S.E. and UCU in this great endeavor, we, Marouschka Blahetek and Filippo Ricci, got together
with Julia Ertl and Miriam Amend-Straif. and formed team ‘Recipe4Change’. Our team developed a concept video game that teaches children how to reduce food waste. After a lot of hard work, meetings, and pasta servings, we finalized our concept and pitched it to the organization. Unfortunately, we did not make it to the finals of this year’s TFF Challenge, but we were in the top 20 out of the 336 competing teams from 51 countries. Much to our joy, we were granted a consolation prize of sorts: a fully funded four day trip to the TFF Global Summit in Lisbon, Portugal. The first day of the conference was all about raising questions concerning food-related problems. Participants were asked to attend workshops they found
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After the conferences we would also get time to explore Lisbon and attend the parties TFF organized. The first party was a fantastic way to wake up in the morning. We joined in for music and dancing as a real jump-starter for our day. The second party was more orthodox and started during night hours. It created a great balance between work and social activities, allowing everyone to socialize rather than superficially network. At the summit, we had the amazing opportunity to socialize with scientists, entrepreneurs and enthusiastic peers, all determined to bring about positive change in the world. Of the many inspiring talks at the convention, one stood out the most. For the past 25 years, the keynote speaker Nicholas Haan has worked at the intersection of science, technology, social challenges, and innovation. Haan currently works as the Director of Global Grand Challenges and Team Project Leader at Singularity University, in Silicon Valley, California. His presentation focused on the importance of exponential technology, i.e. the exponential increase in the power of computing since the dawn of the processor. His philosophy is that we must take full advantage of the current and potential technologies and assimilate them into our concept of sustainability. As there is no ‘one-size-fits-all’ solution to eradicating poverty or hunger, one thing is for sure: technology is more than just tools, but becomes a means to
an end. He stressed the need to develop technology and our responsibility of continuously investing time, knowledge and money into producing new and exciting technologies. We all need to look beyond what we think we are capable of, always aiming for the moonshot when we innovate just as the U.S. and Russia did during the Space race. Haan inspired us with an anecdote about the man on the moon.
¨We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that
The winners
we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.¨ J.F. Kennedy After the inspiring weekend in Lisbon, our team decided to continue our pursuit to better the world by creating innovative ideas and technologies. As we were told over and over by successful entrepreneurs and other speakers: failure is part of the process. We made it to the top 20, but maybe in another time or place our idea will be considered good enough for a top 10 placement. Luckily, we encountered quite a few opportunities to help us reach this goal. Firstly, we enrolled in the Future Food Challenge organized by Utrecht University. The contest has the exact same objective as the Thought For Food challenge, which is feeding 9 billion people by 2050. We are currently undecided whether we want to use our original idea or create an updated version, but we are sure we can figure it out over a few more dinners. Secondly, the Thought For Food Challenge will be held again next year and we are eager to join with an even better concept. If you
have become interested in the Thought for Food Challenge, we invite you to sign up for next year’s challenge, since we are convinced that you will not regret it. The message of the challenge is “small people, big change”. The most valuable thing we have taken back from the conference was the inspiration to change. The Thought For Food Challenge went beyond trying to solve world hunger, it taught us to dream like our parents did when they saw the Apollo accelerating towards the skies. And now we can also take that moonshot and make it ours.
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In warm countries such as Bangladesh it is hard to preserve fruits and vegetables. Just one day in the blaring sun and not much is left for market vendors to sell. Regular fridges are of no use, since access to electricity is hard to come by in most marketplaces. As an act of desperation, market vendors invest in chemicals such as formaldehyde to stop their profits from rotting away. Formaldehyde is a highly toxic preservative, most commonly used to preserve bodies in morgues. This incredibly dangerous practice has to be stopped, and Team Innovision’s solution to this problem was awarded the grand price of $10,000 dollar. Team Innovision, a team consisting of four Bangladeshi young-women, created a mini-refrigerator which is cooled by a solarpowered fan for a highly competitive price in comparison to the toxic formaldehyde. The two runner-ups were FoPo Food Powder and Team Ahaar. FoPo Food Powder is a Swedish team that developed a concept that freeze-dries almost expired produce into a nutritious powder. Team Ahaar, a team from India, created a system that links producers of fresh produce with food-transport trucks. By reducing the time needed to transport produce from producer to consumer through their application, less food is wasted in the process. The Kirchner Food Fellowship was impressed by Team Ahaar’s concept and awarded them $5,000 dollars to further develop their idea. To get more information on the pitches and the challenge in general, please visit: www.tffchallenge.org/teams
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