Celebrating the first year of PPE at Wimbledon High

Ms Suzy Pett, Assistant Head (Teaching and Learning) at WHS, looks back at the end of the first year of the new PPE course studied by Year 10 pupils at WHS.

We are at the end of the inaugural year of our PPE course. We wanted students to look outwards and question the ideologies – political, economic, philosophical – that are influential in shaping our world. One of our school’s key objectives is for each student to “stride out’ and be prepared to “shape the society in which she lives and works’. Our PPE course has certainly helped our Year 10s become savvy and robust thinkers about on important global, national and personal issues.

The course ended with students writing their own articles on a topic of their choice. The array of interests was kaleidoscopic! Articles ranged from Kantianism vs Utilitarianism; to immigration; to beauty; to Plato; to student loans; to voting…to Trump…and everything in the middle (including, of course, the impact of Coronavirus). There is no doubt that students have developed mature, thoughtful and increasingly bold voices on these matters. Their articles were hugely impressive.

Here is a small selection for you to enjoy:

Izzy S – Successes of the language of populism

Jasmine H – Student Loans: Friend or Fraud?

Amy C – ‘If Walls could talk!’ – What we can learn from the first modern artist about the value of isolation to our ability to express ourselves

Bella R – Your President

Marianne K – PPE Project

Did the Great Depression influence the response to the 2008 Financial Crisis?

Lauren, Year 13, discusses whether the Great Depression influenced the response to the 2008 Financial Crisis.

During the Great Depression, wages were cut for workers which led to a reduction in demand. This stemmed in the bankruptcy of thousands, as the stock market went into free fall after the Wall Street Crash.  Between 1929 and 1932 more than 100,000 businesses went bankrupt, and around 11,000 banks stopped trading. When these banks shut down, savers lost all of their money so they could no longer buy consumer goods. This reduction in demand resulted in the redundancy of many workers, ultimately creating a further decline in the level of aggregate demand. Thus, the economy entered a downward spiral.

President Hoover interpreted the Depression as hypothetical notion, a normal business turndown, rather than a solidified and evidenced occurrence.  Consequently, when an attempt to take action was made it was a little too late. Following the Great Depression, regulations were altered, and economic policies restructured all across the world. The economic system was redesigned to avoid a repeat of this disaster and the levels of government spending were increased.

After the Great Depression, it was often assumed that there would not be another economic downturn of such major proportions as it was believed that the lessons that had been learned then could be applied to any future crisis, protecting the future from such economic turmoil. However, perhaps the lessons learned were not enough to ultimately fend off the Financial Crisis of 2008 in which there had been a rise of non-bank institutions which were not regulated to the same extent as commercial banks, concerning loans.

Several measures were put into place in order to alleviate the effects of the crisis. In the USA, loans from the Federal Reserve were enforced, and the US even tried a Keynesian fiscal stimulus in early 2008 to ‘jump-start’ the economy, but this wasn’t successful enough because the stimulus was too small, at only about 1% of GDP.

A matter of interest to many economists is how the crisis was dealt with in the UK under the Labour government, because they continued to spend significantly in the immediate aftermath of the Financial Crisis. This helped to ease the initial impact because it reduced the economic downturn, but the rate at which the national debt was shooting up was dangerous.

The coalition government slashed public spending after 2010, damaging public services and holding back economic recovery after the crisis. Although it would have been wrong to ignore the huge government deficit inherited from Labour, it could be suggested that Osborne should not have cut spending on infrastructure and capital to such a degree, allowing the UK to invest to boost productivity.

In conclusion, had the enormous intervention by governments not happened, the impact of the Financial Crisis would have been significantly greater. This means that it can be argued that the Great Depression did, to some extent, influence the response to the 2008 Financial Crisis as it persuaded governments to intervene quickly and at great expense in order to avoid a repeat of events in the 1930s. However, it can be argued that these policies were not as successful as envisaged due to the complexity of new financial instruments.

China: Should we be worried?

Sofia, Year 13, discusses whether the increasing power of China is something that should be concerning the global community.

China is increasingly becoming a hot topic amongst economists as we see the developing influence it is having on the western world. We are seeing a new form of colonialism – neo-colonialism – whereby China has (by being the second largest economy in the world) significant power over countries. One would expect this to be only over lower income countries; however, China is even beginning to power the West’s markets and economies and even has the power to have political control.

It is evident that many African countries increasingly depend on China as a trading partner as trade was worth $10.5 billion in 2000, $40 billion in 2005 and $166 billion in 2011. China is currently Africa’s largest trading partner, having surpassed the US in 2009. However, dependency on China extends more deeply than trade. China has been seen to be providing many African countries with loans in the form of top-down development projects. Examples such as this can be seen in a $3.2 billion railway in Kenya, trekking 300 miles from Nairobi to Mombasa, which is faster than the equivalent distance of a train journey from Philadelphia to Boston. China has also built a $526 million dam in Guinea and a $475 million light rail system in Ethiopia, which is the first of its kind in sub-Saharan Africa. These infrastructure projects are effectively seen to be loans however these loans are extremely risky, with low or no interest, where often most of the money is not completely paid back. This shows that China is not investing in these projects for economic benefit, but to have leverage over a country. This allows China to have political leverage, especially in votes at UN conferences such as those involving the China/Taiwan governance issues or China’s allies such as North Korea.

In the most recent vote involving condemnation of North Korea, only 12 out of the 54 countries in Africa voted against China’s ally. It has also been found that if a country recognises Taiwan (which is under Chinese governance) as a country in its own right they receive 2.7 fewer Chinese infrastructure loans a year. Furthermore, if an African country voted overwhelmingly along with China in a UN General Assembly they receive 1.8 more infrastructure projects a year. This shows that increasingly in these vulnerable countries China is controlling their economies as well as their political views.

However, this is not only the case in low-income countries such as those in Africa, we have been seeing in recent years China is using a similar technique to have more influence over Europe. China is the EU’s largest provider of imports accounting for 20.3% in 2015. China has also invested a lot into Europe, arguably for profit however, some projects could also be for political influence even though European economies are significantly larger than those in Africa. Greece and Hungary worked together to prevent Europe condemning of a tribunal’s finding against China and its plan in the South China Sea. China has also recently invested half a billion euros into the Greek port of Piraeus and the Belgrade – Budapest railroad. China has also been seen to drive a wedge between the UK and the USA by decreasing trade between the two and siding with Europe on matters concerning Climate change. China has also been seen to exploit links with certain countries to make foreign policy hard in areas such as human rights.

It is clear China is having an increasing influence in countries everywhere, which is increasingly leading to the loss of democracy on the international stage. Countries should be weary of this increasing influence and so should decrease dependency on the super-power.

To what extent can Bitcoin replace Sterling?

Phoebe, Year 13, explores the use of Bitcoin as a currency and its potential to replace Sterling by discussing the limitations of the new currency.

Bitcoin is a cryptocurrency, which is a digital currency that uses cryptography for security, and a worldwide payment system. It is the first decentralized digital currency, meaning the system works without a central bank or single administrator. It is based on a special field of maths called cryptography which is the study of how to secure communications, this being one of the main issues with not having transactions being overseen by a central administrator. Bitcoins are created through the process of mining; where miners use special software to solve mathematical problems and are issued in exchange with bitcoins. So, to what extent does this new unregulated technology have the ability to replace sterling?

Despite the fact that Bitcoin supports the attractive libertarian utopia of a society free from government intervention, where welfare is cheaper and wealth more distributed, in reality Bitcoin currently does not pose a threat to the sterling. One of the major reasons that I will be focusing on is the unsustainable scale of computer computational power that is required in order for miners to verify transactions within the block chain system due to the increasing marginal costs for them. Miners are being imposed with a direct cost as they are forced to require more bandwidth to enable them to solve the increasingly difficult puzzles in the same time frame.

Distributed systems such as Bitcoin’s involve a negative externality that causes over investment in computer hardware as the expected marginal revenue from the individual miners is increasing with the amount of computing power that they individually have. Not only does this increase their own marginal cost but it increases the competition within the system and thus the cost is also increasing across the entire network. “Cetirus paribus” economic theory would suggest that in equilibrium all miners are inefficiently investing in hardware while receiving the same revenue that they would have had they not invested in the extra computing power. This behaviour is irrational as it is increasing the computing power across the entire network making it harder for them to succeed individually.

If the cost of verification for the miners is constantly increasing, then eventually the incentive to secure the network will disappear and lead to the collapse of the system.

Therefore, due to this increasing cost of mining, Bitcoin, in its current state, does not have the potential to replace sterling.