Written Final Exam

Can economic analysis ever be truly objective?  Or are economists actually normative and prescriptive when conducting their analyses?

The economic analysis cannot be absolutely objective because the economic analysis is grounded on certain economic norms and principles which use economic laws. However, the economic development being systematic in its essence is still vulnerable to unpredictable changes. For instance, a scandal or unexpected change in the economic development can provoke the economic crisis, which cannot be forecasted or calculated with the help of the economic analysis. For instance, when the last economic recession occurred, it was impossible to predict when the crisis in the housing market could occur. In fact, the economic analysis could give insights to the possible development of the economy or certain industry or sectors but the economic analysis cannot provide accurate forecast because it is not absolutely objective. The objectivity is impossible because the economic analysis uses subjective data.

If having actual examples helps, then consider one or more of the following examples as you answer the questions.

Proposal ”“ Ban all uses of antibiotics in poultry feed for commercial poultry operations (though producers could still treat poultry with antibiotics if the birds get sick).

Such regulations can deteriorate the situation in the pharmaceutical industry because the demand on antibiotics will drop. At the same time, such ban will create collisions related to the use of antibiotics because they cannot be used in poultry feed for commercial poultry operations but, all the same, they can be used if the birds get sick. Hence, there is a room for manipulations.

Proposal – Eliminate the Florida “ag use” property tax that currently reduces taxes on all agricultural property and land holdings in Florida.

This decision can deteriorate the situation in the state agriculture because farmers will have to pay higher tax. At the same time, the government supports farmers and provides them with subsidies. Hence, the raise of fiscal pressure on farmers will lead to the increase of state subsidies for farmers. Therefore, this measure is ineffective.

Proposal ”“ Require consumers to pay a sales tax on food and beverages to fund support for agricultural and food research and technology development.

The sales tax on food and beverages can provoke the growth of price and inflation, which may undermine the economic stability. In such a situation, the support of agriculture will be extremely difficult.