Reflection

This course has helped to understand how world markets work.  I will have the chance to directly apply the knowledge I gained through study abroad to Australia from July to December.  Most importantly, this class has made me consider the effect of the culture of a country on my interactions within and with people from that country.  It is natural to assume that everybody you come in contact with will be a reflection of those who you have already come in contact with.  Largely, this assumption holds, provided you stay immersed within one culture.  This assumption falls greatly when traversing between cultures.

I do not have a specific topic that I'd really like to learn more about after this class. Rather, I'd like to learn by experiencing, letting the situations I encounter guide what I learn.  This class has prepared me to learn from those situations, considering the varying perspectives, and their effect on my interactions.

Adjusting to the entirely new lifestyle in Australia will be quite difficult.  But I think the most difficult thing over the next year for me will be going away from my friends and family.  I am from 20 minutes away from campus, and have not really been truly separated from my family and other people I care about.  I have built up close relationships here at Kalamazoo College, and I will need to find a way to maintain them through thousands of miles and 12 hour time difference.  It will be challenging, but I believe it will also be worthwhile.

Current Event: Reserve Bank leaves interest rates on hold

http://www.abc.net.au/news/2014-06-03/reserve-bank-leaves-interest-rates-on-hold/5497408?section=business

The Reserve Bank of Australia held interest rates at 2.5% for the tenth straight month.  The bank expressed concerns that the value of the Australian dollar has remained high, even though prices of commodities have significantly dropped.  In particular the price of iron ore has fallen dramatically.  Historically, the Australian dollar has been worth less than it has recently.  The Reserve Bank wants a lower exchange rate to assist in balanced economic growth.  The bank hopes to resolve this issue by keeping steady interest rates, but may look to adjust their inflation rate to bring the value of the Australian dollar down.

Perth City Analysis

Perth has a population of about 1.9 million.  On a U.S. scale, this would place it above Philadelphia, but below Houston.  Within Australia, Perth is larger than Adelaide, but smaller than Brisbane.  This makes Perth a rather large city.  It is the capital of, and only major city in, Western Australia.  This isolation makes it the largest gathering place in the western half of Australia.

Being a higher order city, Perth offers quite a bit that smaller cities would not have.  Perth has sporting teams in the major Australian sports leagues.  Perth offers museums, concerts, and other arts which are not offered in any smaller city around.  Perth is missing out on the highly specialized offerings of an even larger city, such as Sydney.  Sydney has an even wider selection, and is the more popular tourist attraction.

Junkyard Planet by Adam Minter

China has an advantage over India to receive US scrap metal because the scrap is shipped on the backhaul to China.  There is a larger demand for goods exported from China compared to India.  Additionally, it costs less to transport the metal from the US to China, since it is geographically closer.

The chapter discusses the great difference in imported versus exported containers in China: 90% of containers are for exports.  This is a stark illustration of how globalization can lead to huge trade imbalances.  Goods are produced where production costs are low.  This concentrates the production.

Jared Diamond's article (reviewed earlier) examined how human history unfolded.  His themes centralized around the ability to adapt and innovate to exploit the resources available.  Modern transportation is a huge adaptation by society to enable further spread and easier exploitation of resources.

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

1)  I found the quote " 'It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.' Before the container, such a statement was unimaginable" quite interesting.  This quote really demonstrates to potency of the shipping container to bring the world together.

2) The author states that the shipping containers contributed to globalization by greatly reducing the time and money spent transporting and transferring goods around the world.  The containers make large scale shipments easy and fast, and support a wide variety of goods.  They also reduce terminal costs by allowing containers to be moved between modes of transportation quickly and easily without unpacking and repacking the supplies.

3)  Smaller businesses who do not have the manufacturing capacity to ship internationally are the largest losers in the shipping container revolution.  Specialty shops which only produce small quantities have no opportunity to fill a shipping container, and thus do not gain from cheap mass shipments.  Large companies that can fill large orders to all corners of the globe benefit the most.  Consumers also gain because prices are driven down since manufacturers can take advantage of the cheapest production costs without sacrificing much for additional transportation costs.  Workers lose for the same reason, since jobs can be shifted away from the demand.

Current Event: Trade Surplus Falls

Trade surplus falls but still bodes well for economic growth

Australia saw an unexpected monthly drop in exports, with imports remaining steady.  Actual exports fell 2% from expected value, corresponding to a 42% drop in trade surplus.  This change was largely caused by drops in prices of common goods, making it less profitable to export.


GDP = C + G + I + (Ex - Im)

Since exports fell, and imports stayed the same, monthly GDP fell as well.  However, Australia only recently has a trade surplus at all, so the GDP is still growing compared to previous years.

Since international prices of goods exported by Australia fell, demand for goods from Australia fell.  This made Australian exporters less likely to export goods.  Australia recently signed free trade agreements, which reduces the cost of international transactions.  This makes it more profitable to export, even if prices dip slightly.

Transportation

Water Transportation:

Inland waterways are unreliable and do not compete with land and air travel.  However, being an island, there are major ports for external water transportation scattered all around the country.  This provides great opportunities for international exchange of goods, as well as transporting goods within Australia.  Most major cities lie on the coast, providing easy access to water transportation.  There are also ferries running between the mainland and Tasmania.

Land Transportation:

Australia is amongst the leaders in per capita car ownership and usage.  There is an extensive network of highways at a federal and state level which facilitate high volume traffic between major cities.  Roads, both paved and unpaved, are the most common way to transport goods within Australia.  Railroads are available, but more commonly goods are shipped using road trains. Road trains are semi tractors towing two or more trailers.

Map of Major Interstate Highways

Railroads are also commonly used to move goods such as ore and sugar cane, in addition to transporting people.  

Within cities, extensive public transit systems of busses, trains, and watercraft provide transportation to locals and visitors.

Air Transportation:

There are over 300 airports with paved runways in Australia, and more than 100 additional with unpaved runways.  The largest of the airports serve the largest cities: Sydney, Melbourne, Brisbane, Perth, and Adelaide.  Australia is home to several airlines including Quantas, Virgin Australia, and Tiger Airways Australia.

International Australia

Australia's primary trading partners are Asian markets nearby, European Union countries, and the United States.

Australia's top 10 export markets (A$ million)
                                       Goods         Services Total       % share Rank
China                             77,973         6,662              84,635    28.1 1
Japan                             46,481         2,101              48,582    16.1 2
Republic of Korea        19,116         1,698              20,814      6.9 3
United States                 9,022          5,507              14,529      4.8 4
India                            11,418         1,844 13,262 4.4 5
New Zealand                 7,309         3,559 10,868 3.6 6
Singapore                      6,420         3,584 10,004 3.3 7
United Kingdom            5,520         3,927 9,447 3.1 8
Taiwan                          7,531         647 8,178      2.7 9
Malaysia                 5,197         1,663 6,860      2.3 10
Total exports                 249,088     52,411 301,499 100.0

Australia's top 10 import sources (A$ million)
                                 Goods      Services Total %      share Rank
China 44,478 1,864 46,342 14.5 1
United States 27,980 11,375         39,355 12.3 2
Japan 18,346          2,302 20,648 6.5 3
Singapore 14,329 4,626 18,955            5.9 4
Thailand                    11,129 2,433 13,562 4.2 5
Germany 10,930 1,465         12,395            3.9 6
United Kingdom 6,365 5,201         11,566 3.6  7
Malaysia                     8,936 1,274 10,210 3.2 8
New Zealand 7,068 2,980 10,048           3.1 9
Republic of Korea 9,214             454           9,668           3.0 10
Total imports 255,391        63,959 319,350 100.0

Australia's top 10 imports, goods and services (A$ million)
Rank Commodity                                             2012-13
1   Personal travel (excl education) services 21,990
2   Crude petroleum                                     20,187
3   Passenger motor vehicles                         17,330
4   Refined petroleum                                       16,854
5   Freight transport services                               9,144
6   Telecom equipment & parts                           8,916
7   Medicaments (incl veterinary)                       8,051
8   Goods vehicles                                             7,698
9   Passenger transport services                          7,151
10   Computers                                                   6,650

Australia's top 10 exports, goods and services, (A$ million)
Rank Commodity                                         2012-13
1 Iron ore & concentrates                              57,082
2 Coal                                                         38,640
3 Gold                                                        15,301
4 Education-related travel services        14,461
5 Natural gas                                               14,271
6 Personal travel (excl education) services 12,583
7 Crude petroleum                                          9,719
8 Wheat                                                        6,750
9 Aluminium ores & conc (incl alumina)         5,565
10 Copper ores & concentrates                        5,352

Source: http://dfat.gov.au/publications/tgs/index.html

The Current exchange rate is $0.93 AUD for $1 USD.  This value has fluctuated between about 0.86 and 1.04 over the last year.

Australia is one of two countries to have over 25% of current residents born outside of its borders.  Immigrants make up 26.8% of the population, at a total of 5,993,945.  Most of the immigrants come from nearby countries like China and New Zealand, but there are a large number of Europeans, especially from the United Kingdom.

Largely, those leaving Australia were born in a different country, and are returning to their country of origin.  In 2012-2013, 91,737 people left Australia. of these, only 43,423 were Australian-born.  Most of these people went to the United Kingdom, United States, and New Zealand.

Australia's main ally is New Zealand, through the ANZAC agreements, with the United States in second.  Australia is also a member of the United Nations.  Economically, Australia has free trade agreements with China, South Korea, the United States, New Zealand, and Chile.  

Australia has had little by way of military conflicts, though they have sent troops to aid in the United States, and other military actions.  

A Fez of the Heart Prologue Response

Locals showed apprehension towards the traditional, now outlawed hat of Turkey.  When asked, one shopkeeper said "'My Boss like me to wear it... He think to bring tourists.'  From his disgruntlement, it was apparent that he was an unwilling fez wearer."  Later he commented that outside of tourist applications, wearing a fez is a big problem in Turkey.  From an American perspective, it is hard to imagine being arrested or killed by the government for a simple article of clothing.  The fez's only offense was being popular in the past, and not being seen as modern.


The text shows a stark example of how economics can rapidly change a culture.  The entirety of the values and customs of the town of Pomegranate changed within one generation.  They went from a highly traditional, agricultural community, where muslim traditions including women hiding their faces ruled the culture to a modern tourist attraction where topless women were a common sight.  These changes were largely because the inhabitants found they could make money from the Europeans who passed through their town.  Economics drove the transition from ploughs and manual work to fax machines and business suits.

Beyond this example, any tourist destination will have some degree of this conflict.  When economics dictates how a culture progresses, parts may be lost or shuttered away.  Tourists have a different perception of the location than the locals, and thus will emphasize or manufacture different parts of the culture.  Older cultures have economics, but do not compete on the scale of modern countries.  The world is constantly becoming smaller, and these old cultures interact with the new.  They meet, see that comparatively they are lesser economically, and seek to compete.  In order to compete, they replicate the new culture, leaving behind their own.

Tourism in Australia

Tourism makes up nearly 3% of Australia's GDP.  Most of this comes from domestic tourists, followed by New Zealand, Great Britain, and the United States.  There are significant numbers of tourists from European Union and various Asian countries as well.  The industry is worth about A$35 billion.

Many are attracted to Australia for their unique wildlife, both land and sea faring creatures.  The Great Barrier Reef lies to the north.  Tourists flock to the cities of Sydney and Melbourne on the east coast.  They are also drawn away from the populated areas to Tasmania and the Outback.

There are over 500 national parks, which hold the wildlife such as kangaroos, koalas, reptiles, and more. There are many species which are poisonous, such as snakes and spiders, which has gained Australia the reputation of being a place where "everything wants to kill you."  But this doesn't stop the thriving tourism industry.

There are many museums in Australia, from the National Museum in Canberra, to the Western Australia Museum in Perth.  There are attractions for culture, art, and even maritime.

Australian Economics

GDP: $1.542 trillion (2012 est.)
GDP per Capita: $67,304 (nominal; 2012)
Life expectancy: 81.2 years
Poverty Rate: 11.8% (2013)
Literacy Rate: 99% (2003)
Unemployment rate: 6.0 % (Feb 2014)
Inflation: 1.8% (2012 est.)

Natural resources:
Australia has a wide variety of natural resources, including minerals and agricultural products.  Wheat and wool are the largest agricultural products. Mined products, such as iron ore, coal, metals, and gold make up the majority of the industrial resources.  Australia's seasonal climate provides rich opportunities for agriculture.  There is a variety of rainfall amounts spread from between 3 and 10 inches in the desert, to 157 inches along the coast.  In total, Australia has the least rainfall of any populated continent.  Typical growing season lasts from April to November.  Rivers span the coastal areas and most of Eastern Australia.

Labor:
There are an estimated 12.15 million people in the labor force, with the largest portion in the services (75%), and industry and agriculture making up the other large portions (21.1% and 3.6%, respectively).  The main industries are mining, industrial equipment, food processing, chemicals, and steel.  Australia's education system is among the best in the world, consistently ranking well in comparative studies.  Literacy is high, and access to tertiary education is widespread, though residents of rural Australia are less likely to attend compared to people in the populated areas.


Capital:
Australia has a high degree of technology and infrastructure.  There is a system of highways and roads.  In all, the western technology and infrastructure are found in Australia.

Current Event: Free trade agreements with Japan and South Korea

Why Consumers are Big Winners in Free Trade Agreements
Farmers 'disappointed' in Japan trade deal

The Prime Minister of Australia, Tony Abbott, recently signed two new Free Trade Agreements with Japan and South Korea.  He is also working on a similar deal with China.  These deals have met some controversy, in particular from rice farmers.  The deal with Japan, which removed or greatly reduced many tariffs on goods traded amongst the countries, retained a tariff on rice imported to Japan.  Farmers of other products were also dissatisfied with the outcome of the negotiations.

Free trade agreements reduce transaction fees for the market exchange of goods between the countries involved.  From a consumers point of view, the free trade agreements will result in shifting the supply curve to the right, resulting in higher quantity at a lower price.  Industries that rely heavily on exports to the countries involved will see a similar shift, but with the demand increasing, allowing them to produce a greater quantity and charge a higher price.  Rice farming is an industry that relies on exports, however they will not see that shift, at least not to as great a degree, because the transaction fees remain high.  Some industries will see increased competition, shifting their demand down, so they will have to lower their price and quantities to stay competitive.  More complex economic interactions could result from these actions, since increased exports will lead to increased jobs, and higher income.

The rice growers and other farmers are upset because they felt the agreements met did not benefit them as much as other industries.  Politically, a deal which they would find agreeable may not have been feasible.  The issue could be solved by further free trade negotiations to protect Australian agriculture.

Australian Culture

Sport:
Popular sports in Australia include Cricket and various forms of forms of football.  These football games come in the form of Australian Rules Football, Rugby, and Soccer.  Cricket is of particular interest to me because I played, although not competitively, during high school.

Music:
There is a wide variety of music produced in Australia.  This ranges from Indigenous music using instruments such as a didgeridoo, to modern popular music, and everything in between.

Religion/Spiritual Beliefs:
Freedom of Religion is a protected constitutional right in Australia.  As such, there is no state religion. Christianity is the dominant religion, with just under two thirds of the most recent census identifying as such.  Nearly twenty percent identified as no religion in the same poll.  Minority religions are also welcomed, and people of those religions have held public office for years.  Aboriginal culture, unique to Australia, includes a spiritual connection to animals and land.

Food:
Seafood and various meats are popular in Australia.  There is a thriving beef and lamb industry, with barbecues of the meats being a widespread tradition.  Kangaroo is also consumed in the country.

National Holidays and customs:
Australia Day: January 26
Celebrates the founding of the British colony in 1788.
Anzac Day: April 25
Commemorates Australian military members.
Labour Day: Varies
Honors workers in Australia.
Western Australia Day: Early June
Formerly called Foundation Day, celebrating the foundation of the Swan River Colony in 1829.
The Queen's Birthday: Mid June, except in Western Australia, where it is celebrated in late September or early October.
Honors the reigning Monarch of the Commonwealth.

TV/Movies:
Australia has a film production industry, but is also a popular destination for US based productions.  There are also quite a few actors in American films who call Australia home.
Both American and British produced TV shows are popular in Australia.  Australia does also produce some original content, which is aired along with the foreign shows.

Online news sources:
News.com.au
Australian Broadcasting Company News
The Australian

Online forums for expatriates:
PomsInOz

Government:
Australia is a member of the British Commonwealth, having the Queen as head of state.  The governing body of Australia is a three chambered system similar to what is found in the United states, including an Executive, the Prime Minister (currently Tony Abbott), bicameral legislature (Senate President John Hogg; House of Representatives Speaker Bronwyn Bishop), and a system of courts (Chief Justice Robert French).  Australia's major political parties consist of the Australian Labor party, a left leaning party centered around social democracy, and the Coalition of right leaning parties aimed at conservatism, economic liberalism, and agrarianism.

Reinventing the Bazaar: The Only Natural Economy

McMillan states that the defining characteristics of a market involve the voluntary exchange of goods and services.  Each party is acting in their own self interest, and will only agree to a contract they believe is in those interests.  McMillan states that a market transaction is defined as "an exchange that is voluntary: each party can veto it, and (subject to the rules of the marketplace) each feely agrees to the terms."  This limited definition refines the definition to the most basic transactions that arise between two interested parties.

McMillan points to the differing opinions of the market system; Some people argue that markets exploit the poor and increase poverty, yet others see markets as the answer of how to be prosperous.  Th truth lies in both of these viewpoints.  A market economy, particularly an unregulated one, does provide pathways for exploitation, but also provides pathways out of the poverty that was caused by the market itself.  Some people distrust the market, because they have fallen on the hard side of deals, found themselves or people they care about at the mercy of others in the market.  Others distrust the government because they feel that without regulation, they could be more prosperous, perhaps at the expense of others.

Rules are important to maintaining a market, ensuring that the market does not take advantage of a majority to help a minority.  Rules are required to protect consumers: quality and safety issues, information to educate on risks of investments.  Rules are also required to protect producers: intellectual property such as patents and trademarks, and antitrust laws encourage competition.

Jared Diamond Response

Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?

Diamond's major themes dealt with why history unfolded in the way that it did, with Europeans colonizing and expanding to control the wealth and power of the world's economy.  He compares the resources and organization of the people, and looks behind them to see how the unbalance came to be. Evolutionary biology backs up his claims, showing why the Eurasians were able to domesticate animals and spread their advancements relatively quickly on their continent.  They had a large enough population and a similar enough climate throughout their landmass to support the rapid advancement.  These advancements, including the political and social growth that was enabled through them, gave them the advantage when they encountered other populations which consisted mainly of stone age hunter/gatherers.

The most important factors of success for the Eurasian society revolve the ability of the society to adapt and innovate, as well as spread those adaptations to neighboring societies.  Size alone, and the variety that comes with it, were a large determining factor.  Geographic alignment, the East-West dominant axis, as opposed to the North-South arrangement of Africa and the Americas, played a role in the ability to spread innovations, such as domesticated flora and fauna.  This orientation allowed for quick travel since the similar longitude of the new territory provided similar climate and length of day for crops and livestock sensitive to changes in those aspects.  Additionally, there were more animals that were suitable for domestication on the Eurasian continent.  These animals alone were a large determining factor in the success of the people.  They transferred sickness to people, so the population evolved to withstand germs that other populations could not handle.  The animals encouraged social change, allowing people to specialize in fields outside of food production.  

In today's world, at least ideally, it is no longer a competition between parts of the world for domination, colonization, or outright superiority.  Some of this competition exists, however, we can use the principles learned from the history described by Diamond to see that even today, our innovations must be shared with other cultures to gain the most progress.  We cannot consider ourselves an isolated system, but rather use the technologies we have to work with our neighboring societies to create new innovations.  However, in this case, neighboring societies does not mean the physical proximity, but rather the entire globe, neighboring through use of high speed transportation, and electronic communication.  We learn from what helped the Eurasians to develop more quickly, in order to develop as a single global society more rapidly than segregated individual societies ever could.