There are basic factors that lead to economic problems in 2024. Economic problems ruin businesses, organizations and even countries. Here, we list and discuss 8 basic economic problems and their solutions.
In case you interested in learning what economy is in simple term and what are 4 economic problems of production, new post here!
The 8 basic economic problems we are facing globally (in 2024)
Waste
It’s a common habit in human that when there are excesses, people waste. Does it apply to everyone? A question for another day.
But we do acknowledged that the habits of waste, if failed to stop, could negatively impact on country’s economic. How?
The negative effects of waste goes in domino, but it all started with when there are surplus in society.
A society with surplus resources experience drop of prices for the resources and decrease sales all these are due to consumers having excess. That’s not a problem. The problem is waste that followed after having excess.
Consumers consume as much as they can take yet left with excess. And we all know through experience that excess resources leads to spoilage.
The first thing a consumer will do once he found that excess resources have begun spoiling, is disposal.
Guess the cause of environmental pollution? Disposed resources.
Environmenral pollution, a factor of today’s health problems. And we all knew the consequences of human health problems? Declining human productivity.
Government drains out government fund which would have been used for other social amenities.
That fund is then diverted to clearing the pollutions and curing health problems which the pollution had caused. The problem is not only the cost of the two problems, but the domino effect which create another problem, a economic loop hole, where the fund supposed to be used for.
This lead to a seizure in governmental sectors and another economic problem arise from economic loop holes.
Not to talk of the problem of harm to tourism. Pollution due to Waste, leads to disinteresting tourism. What could attracts tourist to a place where everywhere is polluted, harmful to the health?
Decline of tourism lead to lose of job and reduced income.
However, it’s important to note that waste generation can also have positive economic impacts like offering job opportunities to recyclers. Like in the case of Queen of Trash, Zhang Yin, of China. But the underlying negativity are far more greater than the positivity.
Solution: Since waste is a common habit formed due to having excess resources, by controlling the amount of allocated resources to individuals and cooperates will reduce waste to a minimal level. Another proven way to curb waste at its best is for government to establish agent of supervision to supervising home, institutions and factories on waste disposal, and impose heavy fines on those who were found guilty of waste.
Mismanagement
Mismanagenent. Another problem worth discussing is the economic mismanagement. Where money and resources are put to where not needed.
Or where money are put endlessly in a shabish non-solid projects where those executives fully aware that’ll collapse or run-down after years passed. So there be subsequently need to be repaired, creating an endless circle of sinking of national resources.
Economy mismanagement the likes of funds allocated for endless environmental pollution, which we previously discussed, sponsorship of foreign wars as did by USA war in middle east, payment of undue retirement plans of abled men and women as the like of french undue retirement plans, sponsorship of single parenting/guardianship and under-aged parenting, subsidising of private-manufactured domestic goods and services.
Or creating meagre roads, bridges and other physical projects to maintain commissions for awarding and re-awarding projects that aren’t going to last long, all these are grouped under mismanagement of national resources.
Solution: A financial education should be made part of daily colloquium throughout the elementary schools to college and even cooperates, focused on personal and country’s resource management and emphasize on the effect of resource mismanagement. That way will reduce the risk of grooming future leaders who will run things down to zero.
Cartel
Cartel is when companies of similar or different niches unionized to set a common price on their produce or service to destroy competition and to overwhelm free market, while reducing the overall output.
In a cartel world of membership, a member must not change the price of produce except that all members agreed to it as the new price for all. Any business outside the cartel membership, who decided to go with the standard market price is targeted and uprooted from the business.
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While members of the cartel may profit with the union, but such business approach negatively affects consumers because consumers are the ones compelled to pay higher than the market price or forego the good or service as the interest of the market forces are not satisfied.
And when consumers pay higher price than the market price, it create a surge of demands for raise in wages which leads to forcing the government to pay more than necessary, whereby printing more money and increase taxes to cover those expenses, hence, currency inflation and higher tax rate.
Currency Inflation and higher tax rate are two big time bombs that a good government of any country won’t wish for its citizens because it rises the standard of living whereby wiping out the poor and middle classes.
Tell me, What reaction do government expect from such hard life? Public uprising!
Solution: Cartel can be resolved through the creation of competition within each business industry; the process is through establishment of numerous private or government-owned enterprises or both to create heavily competitive market. Besides creating competition, a government policy should be made against any member of cartel where by the right of business will be withdrawn unless paid a huge fine.
Hoarding
Hoarding, is when the flow of goods distribution is restricted by producers in order to create shortage and scarcity, or restricted to be sold at higher price when demands for those goods goes high.
Hoarding is commonly criticized by economists that the phenomenon increases the national price of goods, resulting to consumers pay more for less quality and quantity.
Pay more for less quality and quantity as goods depreciate and spoil due time, there will be little quality goods left in few quantity. If drastic action is not done to curb hoarding of goods, could stir up angry citizen to uprise against the government.
Solution: Hoarding could starved an entire populace in a country; therefore, it’s should not be taken lightly. Any individual or business enterprises found hoarding goods with clear evidences should be criminalized. The rights for business establishment must be withheld from those individuals or members of cooperate for at least four generations. Plus, heavy fines be placed over those involved.
Cost of production
The cost of production is one major factor that leads to economic problems. If enterprises cost of production is consistently higher than the profits it earns, the company may decrease production to stay within budget.
And if cost of production keep increasing, the company has to cease continuation, while this may or may not necessarily affect the company’s investors but will lead to decrease of employment rate, decrease in tax revenue and decrease in customer satisfaction and, above all, decreases country’s GDP.
Solution: To solve high cost of production, elements causing high cost of production must be investigated and uprooted from the chain of production, that is first and most important approach because with them in the system the cost will be on the rise. Another approach equally important is economy diversification to ensure alternatives resources are being put in use for non-stop production, in case where certain raw materials needed for production are rare to harness domestically, and incure high cost to shipping elsewhere.
Finite resources
Economic problems due to finite resources. A country affected with finite resources experience a declining production of goods and services, which leads to the decrease of investors, relocation of business establishments and jobs are loss.
When businesses decline in a place, people find no interest to go to that place and, people who’d lived there will have to relocate to a better resourceful business-friendly place, hence, decreases human population and GDP.
Solution: Finite resources can be sustained through reinforcement of unrefined resources from places where found excess and shipped to where is needed the most. But this approach may have a huge underlying cost that’s why it should be temporary while discovering of new resources in process. No place on earth is without natural resources only that the resources may not be useful now, or the resources may be hard to harness. That’s why early resources discovering and diversification is important to curb beforehand the future challenges of finite resource.
Consumer income
The economic problem of Consumer income affect microeconomics as a result of altering in demand for a good or service caused by an increase or decrease in a consumer’s purchasing power or real income.
Because consumers’ income grows, producers will want to set new high rate. If consumers income decline, producers will adjust to less rate.
Solutions: A standard rate must be set on domestic producers produces where it won’t overrun the amount the standard minimum wage can afford, and the producers could still have their return on investment, being able to pay their tax and have their net income for continuity. This solve the problem of proportional increase and decrease of producers orice rate due consumer income.
Market demands
Market demand is the last of the 8 economic problem. Market demand is the specific quantity of production that consumers can afford and want to buy at the given price of that product or service.
Market demand affects businesses and consumers alike by determining production and helping to guide competition in the market niche.
Solution: To solve uncertainty on market demand as a producer, you must test the water. You must try the uncertainty yet reduce risk of failure. Business owners should start a business with little investment capital, and the capital be invested in varieties of products to sell in a highly populated commercial area, to determine what products people buy more and get to sell more of those.
What are the 8 basic economic problems
Economy is the management of production, distribution and sales of goods and services. Every stage in history has its economic problems though there are economic problems that transcend to the modern times. Here are the recap of the 8 basic economic problems in 2024:
- Waste,
- Mismanagement,
- Cartel,
- Hoarding,
- Cost of production,
- Finite resources,
- Consumer income, and
- Market demand.
Read Why Euro was Introduced?. Also read how to change Naira to Foreign currencies. Further read on interesting topic on world’s money and finance.
