Applied in: Winter 2013
University Offers: LSE, Durham, Warwick
My strong desire to study Economics at university is founded upon my growing understanding of the development of the subject in the past century. In part, my fascination is with the contrasting responses of the UK government to both the Great Depression of 1929 and the financial crisis of 2008. My perception was that due to present government being in a budget deficit at the start of the present crisis, it would be longer lived and the effects would be worse. However whilst reading Skidelsky's Keynes; Return of the Master I learnt of two reasons why this current crisis will not be as disastrous. Firstly, the will for international cooperation is greater, but more crucially our present policy makers have a Keynesian philosophy rather than that of a Classical Economist. Keynes progressed economics, yet Skidelsky notes, "the present crisis is, to a large extent, the fruit of the intellectual failure of the economics profession". This highlights that the search for economic truth is ongoing and it is this opportunity to progress economic philosophy that attracts me to further study.
I researched the most recent development of monetary policy when entering the Royal Economic Society essay competition. Before answering "Does Quantitative Easing Always End in Inflation" I thought that QE would improve liquidity and so support lower interest rates. However my research persuaded me that even if money is cheaper and banks have more to lend, if there is a crisis of confidence, firms and consumers will not borrow and there will be idle balances in a liquidity trap. To learn more about the crisis I applied and was selected to enter a mentoring scheme at Deutsche Banks with the Chairman of Global Corporate finance, where industry experts confirmed to me that restoring confidence in the banking system is a priority to ensure fiscal recovery. This scheme, along with the CISI Investment award, has given me a fundamental understanding of the financial sector and how it was affected by the fiscal crisis, in terms of debt and unemployment.
My initial interest in Economics was sparked by the appeal of the stock market. Its Siren-type nature gave me a passion to write an Extended Project related to them, entitled "Has the FTSE 100 reflected the UK's economic growth since the year 2000". I argued that the FTSE 100 has not only reflected economic growth, but also that movements in the index preceded economic growth changes and therefore it is possible to predict economic growth fluctuations by looking at the index. This essay gave me an enthusiasm to read Peter L Bernstein's Economist on Wall Street, which helped me to appreciate the concept of 'Animal Spirits' by citing speculation as paramount in the Wall Street crash. In the case of 1929 Bernstein disagreed with my opinion that to stop crashes you must quell speculation, instead arguing that regulation and interventionism must be implemented to stop the market crashes. However my EPQ research into the stock market crashes of 2003 and 2008 showed that no regulation will truly prevent a trough because if confidence dissipates, share prices will tumble irrespective of the barriers in place.
More recently I have taken an interest in how economics affects international relations. Before attending a lecture by China's Western Ambassador, Liu Xiaoming, I thought that China was keeping its exchange rate low purely to boost exports and they were therefore severely harming relations with the US. However the ambassador argued that this meant that raw goods from China were cheaper for American Businesses to purchase and resell, and so also enhanced the American economy. Despite his attempted persuasion, I am still a firm believer that China's sole priority is to boost her own exports, regardless of the effect on the US.
Thus, through my endeavors I have ascertained that testing and refining theories is the first task of a student of economics and something I would enjoy greatly.