Government Policies

Some persist in the argument that the American Revolution is not really a revolutionary movement. They argue that the American Revolution did not establish a new nation, because the new government was established by the same social elites that held power before the Revolution. They point to the French Revolution, a real revolution by anyones standards, and claim that because the American Revolution does not share some of the same drastic and immediate changes, it is not a real revolution. However, while both statements are arguably true, they miss the fact that there were undeniable changes in American society as a direct effect of the American Revolution. The new ideals for foundation of government, the abolition of slavery in the North, and the shifting of land-ownership to a broader, more middle-class base all carried far-reaching social and political effects. Thus these changes, brought upon by the American Revolution, define the American Revolution as undoubtedly revolutionary. The American government that we know today is a product of the American Revolution. This is because the ideals brought to the surface in the American Revolution were the very ideals that our government was founded on. These ideals include antistatism, egalitarianism, populism, and liberalism. The antistatism of the American Revolution is seen as the rebellion against the powerful, centralized, English government. Fighting against a centralized monarchical state, the founding fathers distrusted a strong unified government.

To them, the centralized English government was tyrannical, and thus antistatism was a prevailing idea of the America Revolution. Following the revolution, antistatism was expressed as a complete lack of centralization in the American government under the . The ideals of antistatism are also expressed in the Constitution, i.e., the elaborate system of checks and balances which scatters power throughout government. Egalitarianism of the American Revolution is most clearly seen in the Declaration of Independence: We hold these truths to be self evident, that all men are created equal, that the are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. This ideal stems from the Enlightenment thoughts of John Locke, and became a fundamental belief of the new nation. This is seen in not only the Declaration of Independence, but also the Bill of Rights of the Constitution, and the Virginia Bill of Rights. These documents have in common the same ideas that all men carry certain natural and unalienable rights. The practice of slavery, however, is in direct conflict with these ideals. How could the founding fathers establish the first real egalitarian government but establish it as a slave society? It was because slavery as a whole was too deeply rooted to be removed by the actions of the American Revolution, although some changes would take place. This point will be discussed later, but it is important to note now that although slavery could not be completely wiped out, egalitarian principles began to chisel at its foundation. Thomas Jefferson felt that the egalitarian ideals in the Declaration of Independence would undermine slavery, and after the ball of equality began to roll so to speak, it would not be stopped. Populism is defined as the political doctrine supporting rights and powers of common people in their struggle with the privileged elite. Therefore, the idea of populism was actually not one held by the founding fathers, who were in fact themselves the privileged elite.

The populist movement is seen in the shift of control in America to the middle class. In a study done examining the wealth of men in state legislatures before and after the Revolution, the wealth of such men was divided into three classes: wealthy, well-to-do, and moderate. Between the years of 1770 and 1784, in New York, New Hampshire, and New Jersey the number of men of moderate wealth rose from 17 to 62 percent, with a concordant loss of well-to-do, and wealthy . Also, the proportion of farmers in state legislatures doubled while the proportion of merchants and lawyers declined. According to R. R. Palmer in his essay The Revolution: In short, the revolt in America meets the external criteria of a true revolution, and of a revolution in a democratic direction, since it was the former upper or aristocratic class that was displaced. Lastly, the ideal of liberalism is seen in the new government in the separation of church and state. Many states abolished a government-supported church in favor of the idea that men should be able to choose their own path of worship. However, this was not to say that discrimination against Catholics, Jews, Deists, and nonbelievers ceased, only that religious liberty for many citizens grew. The Constitution of Maryland stated that: All persons professing the Christian religion, are equally entitled to protection in their religious liberty; note the phrase All persons professing the Christian religion.

While this discrimination existed, the abolishment of a state-supported church was a grand improvement of the rights and liberties of citizens. In 1784, James Madison wrote his Memorial and Remonstrance to the general assembly of Virginia, opposing a bill which in effect made all Christian churches state churches. In his Remonstrance, Madison cites Article 16 of George Masons Declaration of Rights (1776): Because we hold it for a fundamental and undeniable truth, that Religion or the duty which we owe our Creator and the Manner of discharging it, can be directed only by reason and conviction, not by force or violence. The religion then of every man must be left to the conviction and conscience of every man; and it is the right of every man to exercise it as these may dictate. Virginia later passed An Act for establishing Religious Freedom. This document, drafted by Thomas Jefferson in 1777 was passed in 1786 through the efforts of James Madison, George Mason, and John Taylor. In it, Jefferson wrote that no man shall be compelled to frequent or support and religious worship, place or ministry whatsoever. And of course, in 1791, the 1st Amendment in the Bill of Rights stated that Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof. The ideals of antistatism, egalitarianism, populism, and liberalism were not limited to the American Revolution. Some were in part products of Enlightenment thinking, and would have no doubt been present had the American Revolution never taken place. The American Revolution did not create these ideals. It did, however, provide a facet for them to be formed into government. The American Revolution established a new kind of government, based on democracy, equality, and freedom, and that is why it was revolutionary. The abolition of slavery is a defining feature in the revolutionary nature of the American Revolution. Following independence, many northern states began the process of abolishing slavery. This happened because political and economic factors chiseled at the need for slavery while egalitarian and humanitarian ideals of the American Revolution began to be applied to the rights of blacks. In 1777, Vermonts constitution declared that: All men are born equally free and independent.

Therefore, no male person born in the country or brought from over the sea, ought to be holden by law to serve and person as a servant, slave or apprentice after he arrives to the age of twenty-one years, nor female in like manner after she arrives to the age of eighteen years, unless they are found by their own consent after they arrive to such age, or bound by law for the payment of debts, damages, fines, costs or the like. In 1786, the state legislature declared that by the Constitution of this state the idea of slavery is expressly and totally exploded by our free government. In 1780, following extensive lobbying by The Society of Friends and several rejected bills, Pennsylvania passed an Act for the Gradual Abolition of Slavery, making it the first state to pass a law for the gradual abolition of slavery. And in 1788, another law completely wiped out the trade. In 1784 Rhode Island passed the Gradual Emancipation Act which did not prohibit the slave trade, but freed all slaves born after March 1, 1784. Connecticut did likewise in 1784 with a statue making all slave children born after March 1 free at the age of twenty-five. In 1788 though, Connecticut passed an act prohibiting its citizens from taking any part in the slave trade. In Massachusetts, the process was slow and confusing, as opposing interpretations of the constitution and other slave related court cases clashed. Slavery began to wither in this state until finally in 1788 the Massachusetts legislature passed An Act to prevent the Slave-Trade. The complicated process of abolition in the northern states is beyond the scope of this paper. However, this brief overview of how slavery was abolished in the North does relate to the more immediate concern of why. As already shown, there was a great emphasis put on equality and human rights during the Revolution. Yet slavery remained a government condoned institution and a great many blacks were in perpetual bondage. It did not take long for people to see the hypocrisy in this. Asked one English official, How could Americans treat Negroes as a better kind of cattlewhile they are bawling about the Rights of human nature? Another man, Dr. Samuel Johnson asked: How is that we hear the loudest yelps for liberty among the drivers of negroes? There are many numbers of examples of people who noticed and pointed to this inconsistency in American political doctrine.

In 1776, the Declaration of Independence boldly declared that all men are created equal, but it remained unclear as to if this applied to blacks. Because the deleted section of Jeffersons Declaration described the slave trade as violating the most sacred rights of life and liberty in the persons of a distant people, it can be reasonably assumed that when he wrote of unalienable rights, he meant this to apply to blacks too. However, the institution of slavery proved to be more influential then the philosophy of the Revolution, thus humanitarian and egalitarian ideals continued to be juxtaposed with the brutal reality of slavery. In the New Jersey Gazette of September 20, 1780, John Cooper spoke of this contradiction: Whilst we are spilling our blood and exhausting our treasures in the defence of our own liberty, it would not perhaps be amiss to turn our eyes toward those fellowmen who are now groaning in bondage under us. We say, all men are equally entitled to liberty, the pursuit of happiness; but are we willing to grant this liberty to all men?If after we have made such a declaration to the world, we continue to hold our fellow-creatures in slavery, our words must rise up in judgment against us. And by the breath of our own mouths we must stand condemned.  Of course, it was not only Revolutionary ideals which brought about the abolition of slavery in the North. There are other reasons that explain why some states abolished slavery relatively easily through legislation while in other states it would take bloody civil war almost a century later. In some states, slavery was not deeply rooted and not as needed as in other states. The declining need of slavery brought its faults more and more into the open. These included the fear of slave revolt; the desire for white laborers, for what they could give back to society as independents; and the resentment of slave labor among white laborers. These factors made slavery seem less and less desirable, while the humanitarian ideals compounded with the recently ended fight over human rights attacked slaverys fundamentals. The Revolution encouraged abolition by fueling the fire of liberty, and began the process of eroding slavery in our nation.

A final reason the American Revolution was in fact revolutionary lies in the redistribution of land. The new western lands, the confiscation of large Tory estates, and the abolishment of primogeniture served to break down the feudal land-holding aristocracy and redistribute land in small parcels to the middle and lower class. There were in fact, a great many Tory estates confiscated by state legislatures during the Revolution. Twenty-eight estates were confiscated by New Hampshire, in New York, fifty-nine. Massachusetts passed an act which confiscated all the property of every person who fought against the Untied States or resided in places under British rule. Between the states, hundreds of estates were confiscated. It is important to understand here that many of these estates were in fact enormous. The confiscated Penn estate was valued over a million pounds sterling. In Georgia, Sir James Wrights estate was valued $160,000. From Lord Fairfax and Sir John Johnson were confiscated 50,000 acres each. These are just examples of the size of many estates. The states now had an excess of land on their hands and also an excess of debt from the war. So logically, they sold this land. It was sold, however, in small parcels. One New York law discouraged the sale of those lands in parcels larger then 500 acres. Thus the estate of Roger Morris went to 250 persons, and the estate of James DeLancey to 275. This practice allowed large amounts of wealth and land to be redistributed, and contributed to the break up of a land-holding aristocracy. Following the Revolution, western lands played a large role in the development of the nation. First there was unprecedented migration west. The population in 1785 of Kentucky was between twenty and thirty thousand. By 1790, there were seventy-four thousand people there. Most of these people were farmers who bought the land in small parcels for their own use. but by the time the swarms of settlers debouched upon those great western plains the habit of the small farm was in the main already fixed, and the United States was to be a land of peasant proprietors.

Next, the abolishment of primogeniture. The feudal land-holding aristocracy of colonial America was perpetuated as estates passed from generation to generation through the practice of primogeniture. New York, New Jersey, Virginia, North Carolina, and Georgia all had primogeniture laws such as old feudal England (Jameson 37). However, by 1786, all states but two had abolished it, and the two states where the practice continued were states in which entails were rare. And by 1791, primogeniture was completely abolished, freeing an extensive amount of land. In Virginia, with the abolishment of primogeniture in 1776, at least half, and possibly three-quarters of the occupied land in Virginia was released from entail. The fact that all of the states abolished primogeniture at more or less the same time is strong evidence of the revolutionary nature of the American Revolution. The change to a more democratic land policy is proof of strong democratic ideals. And because the abolishment of primogeniture happened so quickly following the Revolution, it is clear that these democratic ideals must have been well established prior to the Revolution. The American Revolution provided a way for these changes to take place by breaking with old English ways. The social change in the Revolution paved the way for democratic ideals to be laid in land policy. If a revolution is the overthrowing of an old system for favor of a new, then the changes in land laws and land distribution during the American Revolution are undoubtedly revolutionary. The American Revolution set the stage for democratic ideas to be expressed in government, in human rights, and in the distribution of land. The Revolution abolished old systems of thought and brought in new ones; it broke with traditional ideas and forged its own. There are undeniable changes that took place during this period, and to look them in the face and still claim that our American Revolution did not represent a real revolution is simply false. The government we have today, the ideas we hold, and the way we live our lives are all products of the American Revolution, and moreover, the changes that took place during the American Revolution. The American Revolution was revolutionary.

Ever since British fleets first landed on Australia, the Aborigines were faced with a problem. The new settlers did not recognise them as owners of the land as they did not develop it, but had instead roamed amongst it. The Aborigines had faced discrimination, oppression and violence. After federation, however, their rights and freedoms began to change dramatically throughout the 20th Century. Through that period of time, the Australian government has created and implemented policies concerning the Indigenous population, decisions which had all been made for their own good.

These policies have included Protection, Assimilation, Integration, Self-determination and finally, Reconciliation. It is now clear that none of these policies have actually made the condition of Australia’s Indigenous people any better than it was prior to the invasion.

Assimilation (1940s -1960s)

In order for Aboriginal peoples to be ‘worthy’ of full citizenship, they had to completely give up their traditional lifestyle and live and think as white people. During the assimilation period some Aboriginal people, who were considered of worthy character, had an appropriate work ethic who were no longer associated with Aboriginal people,were granted exemption from laws that banned them from hotels and cafes, and from being in town after dark. Such people were granted an Exemption Certificate, or ‘Dog Tag’, through few Aboriginal people applied for them. The assimilation policy was intended to raise the standard of housing, health and education for Aboriginal people by allowing them to move into towns and cities, however it did not succeed. Aboriginal people experienced difficulty in finding work and housing due to discrimination, and some set up fringe camps on the outskirts of town.

Protection (1890s-1940s)

The policies of protection were brought in under the pretext of ‘protecting’ the Aboriginal population from violence and harassment. Numbers of Aboriginals had dwindled from an estimated 750,000 at the time of settlement to just 70,0000 within one hundred years. This reduction was mainly a result of disease, murder and poor living conditions.

From 1890 to 1911 all Australian states and territories (except Tasmania) passed their own Protection Acts that made Aboriginal people live in missions, away from towns. Under these acts, Aboriginal people were not allowed in places such as cafes and hotels and were not allowed to be in town after dark. The Acts also made it possible for the state to remove Aboriginal children who had a non- Indigenous parent from their homes.

Integration (1967-1972)

Integration partially acknowledged the mistakes of the past. During this period the Aboriginal population were given some equal rights, and the relationship between the Aboriginal people, and the government began to improve. The Federal Government provided increased funds to the areas of housing, health and education. However, this policy was still seen by the Aboriginals as an extension of assimilation, as their affairs were still mostly controlled by non- Aboriginal people.

Self-determination (1972-1975)

The policy of self-determination recognised that Aboriginal people should control their own affairs and began the movement toward the creation of Aboriginal organisations with the government, run by aboriginal people, for aboriginal people. From now on, black resistance became a nation wide struggle, as Aboriginal people gained a new sense of pride, and began working together towards self-determination. The protection policy gave the government’s ‘Board for the Protection of Aborigines’ extensive powers over the lives of Aboriginal people including regulation of residence, employment and marriage.

The Board’s policy was based on a belief that “protection” of Aborigines would lead to their “advancement” to the point where they would eventually fit into the white community. A source An Australian film Rabbit Proof Fence directed by Philip Noyce is reliable to an historian studying the Protection policies of the Australian Government during the 1930’s in that it tells a true story about three Aboriginal children who were taken away from their families because they were half-castes.

However, it is not reliable in that it only tells us about the effect of Protection policy in Western Australia, not the whole country. This film outlines the experiences three young half-caste Aboriginal girls, who were forcibly taken away by the white Australians, had and recounts their journey back home. Its motive is to increase the awareness of general public, especially white Australians, about life of many Aboriginal people and hardships and sufferings they had to go through in the twentieth century. The film tells a story of great courage and helps the reconciliation process.

The film helps general public of Australia to gain a better knowledge about Australia’s true history. It is also helpful to history students studying Australian history. It tells about removal policies of Western Australian Government and why they were taken. It shows them that girls’ experience in the Moore River Settlement was harsh and that the removal policy was cruel and tragic for the families. It also shows how white people regarded Aboriginal people and half-castes and how they wanted to breed them into whites.

However, it is not useful in that we do not know whether Australian Government had the same policy as Western Australian Government. Also, the film focuses only on half-caste children and it is made from only one person’s story. Therefore, we do not what happened to other Aboriginal people who were not half-castes and we know that not all Aborigines people had the same experience as the particular person in the film.

References

1. http://www. skwirk. com. au/p-u_s-14_u-120/changing-rights-and-freedoms-aboriginal-people/nsw/history
2. http://wps. earsoned. com. au/olms/0,9800,1672391-,00.
3. html http://www. skwirk. com. au/p-c_s-14_u-120_t-329_c-1133/the-1967-referendum/nsw/the-1967-referendum/changing-rights-and-freedoms-aboriginal-people/self-determination
4. www. palgravemacmillan. com. au/site/… nsf/0/… /Ch06wsheets. pdf
5. www. curriculumsupport. education. nsw. gov. au/… /rightsfreedoms. pdf
6. www. macmillan. com. au/site/maconixexch. nsf/0/… /Ch6Assess. pdf
7. http://dl. screenaustralia. gov. au/module/175/ http://www. allfreeessays. com/essays/Write-A-Report-Outlining-Government-Polici

The government has overwhelmingly acknowledged and supported the mushrooming startup ecosystem in India. However, industry experts still believe that there continues to be nuts and bolts that need to be fixed in the ecosystem in order to carry out business at a faster pace.

Initiatives like Startup India being flagged off by the government of India in 2016, has provided enough meat of encouragement to young entrepreneurs to come on board. However, industry experts believe that apart from such encouragement, amendments in policies is also a key requisite to make things simpler for entrepreneurs and investors.

Siva Ramakrishnan, Finance Director at Venture Factory, believes that the need of the hour is to break the dependence of startups on foreign funds. “The government, with support from regulatory bodies, should focus on allowing banks, insurance companies and pension funds to invest a bigger percentage of their corpus in domestic VC funds and incubators. Instead of setting up funds the smarter thing for the government to do would be allow startups access the existing pools of funds in private sector. More tax sops could be provided to these investors to further sweeten the deal,” he said.

In our previous budget, Minister of Finance had sanctioned a tax exemption for startups in the first three years of its inception.

Preference to Indian Product companies

Mohan Kumar, partner at Norwest Venture Partners said, “One is procurement policy for Govt tenders especially software, should give preference to software product startups ( or more broadly Indian product companies ) . This can be done using extra Bonus points in the technical score. Today many of those bids are won by multinational product companies like Oracle, Microsoft or SAP partnering with Indian IT majors like TCS, WIPRO.  Since the multinational product companies have global SI relationship with Indian IT majors, the Indian IT majors are either arm twisted or do not promote an Indian software product company in Govt bids.  We want to be a software product nation in next 10 years, we have to learn from Chinese and not only remove the handicap but actively encourage local companies. Government or Quasi Government departments will be the biggest spender of IT in next 5-10 years.”

Zaheer Adenwala, Co-Founder & CTO at Ketto said, “I think the payments system in India is still extremely flawed. As a crowdfunding platform, our aim is to help as many individuals as possible who are in dire needs of funds. Most of this goes towards medical bills which saves lives. People from all over the world should have the flexibility to help causes close to their heart. However, due to many vague SEBI/RBI guidelines, accepting and disbursement of money collected from outside the country becomes very difficult thus resulting in high transfer charges and poor customer experience”

Apart from these specific terms, experts have also pointed towards tax incentives for foreign investors and lengthy documentation work as other things that are often seen as hurdles by ecosystem.

Abstract:

This report aims to examine two government policy options regarding couples, families with male heads, and families with female heads and their consumption of a basket of food and beverages. The government aims to encourage couples to have children in the future by increasing their standard of living. While this report examines both policy options using the utility maximization technique and the expenditure minimization technique and concepts of consumer theory and price elasticity of demand, this report concludes that neither of the options are optimal in increasing the welfare of the couples and families. Thus, the report suggests that the government should encourage couples and households to save by offering a higher interest rate.

Introduction:

In order to encourage and discourage consumption patterns of various products and to manage consumer policies effectively, governments often design macro and micro economic policies to facilitate the performance of certain behaviour. This report seeks to examine the consumption patterns of different types of households, the first being a household consisting of a couple, and the other households of families with children. The report seeks to analyze the expenditure patterns of a household with a male head and compare it with a household with a female head, along with making comparisons between these families and couples without any children (Nishumura & Shimomura, 2012).

The government’s main aim in the scenario described in the case study is to encourage single couples without any children to begin families and they believe this would be possible if the government encouraged the consumption of other products besides food and beverages. Hence, the government has devised two different policy options to facilitate the performance of such behaviour. The first policy aims to increase the disposable income of all households in order to encourage the consumption of products other than food and beverages. Moreover, the government also wishes to provide monetary benefit to households with children which will also increase their disposable income. The second policy option is to discourage the consumption of food by taxing food products. Thus, this will potentially encourage households to purchase other products except for food. However, the government also wishes to ensure that the households do not become worse off and are as happy as they were previously.

In order to examine this situation in detail, it is important to use the aid of various economic and scientific models. Thus, this report will commence with a methodology which describes the methods used to analyze and solve this situation by choosing the best policy option. The report will then commence with an examination of each of the policies and their consecutive impact upon the welfare of these households in detail. The report will then analyze the different policy options and their social context, thereby arriving at a conclusion regarding whether either of the policy options are suitable or suggesting other policy options which may be more suitable for this scenario.

Methodology:

2.1 Numerical and Theoretical Methodology

In order to analyze the situation described in this scenario, this report will make use of various economic models and theories. The first economic theory and numeric economic model that will be used to analyze these policy options is the Utility Maximization Models and the Expenditure Minimization Models. The first step will be to find the optimal utility bundles of both the goods and the associate level of utility of goods and make comparisons between them in order to determine which bundle is offering the most utility.

The Utility Maximization technique using the Cobb Douglass function will be used in order to find the combination of goods that provide optimal utility for the households. This will then be followed by the expenditure minimization technique to determine which combination of goods will facilitate minimum expenditure and be an optimum and attractive choice for each of the three households. It is also essential to calculate the effect of policy upon the demand for products and to also calculate the demand for the basket of goods without policy. This will be done with the aid of the optimal demand function for each of the households without policy and with policy. Thus the various budget points for each of the options will be determined and the welfare functions of each of the options for the three households will be constructed.

The concepts of consumer theory and price elasticity of demand will also be considered in determining the effectiveness of both policies and determining which policy is the best policy to use in order to encourage the consumption of other goods besides food and beverages.

Graphical Methodology:

The report will make use of the budget points derived in the numerical calculations of the analysis conducted and then construct budget lines and indifference curves in order to determine which options are optimal for the government and provide maximum utility to consumers without decreasing their welfare.

The report will also make use of demand curves and Engel curves to appropriately arrive at a conclusion regarding the two policies mentioned. If neither of the policies seem suitable, the report will offer an alternative policy and provide an explanation of why this policy is more suitable than the ones mentioned in the scenario.

Analysis of Both Policy Options:

3.1 Price Elasticity of Demand:

The concept of price elasticity of demand measures the extent to which the quantity demanded changes with a change in price. There are basically two types of elasticity which includes elastic demand and inelastic demand. It is essential for governments to know the price elasticity of demand to determine whether the implication of taxes will result in the discouragement or encouragement of purchasing certain products. Thus, in order to determine whether policy option 1 or policy option 2 would prove to be more effective, it is essential for the government to know the price elasticity of demand of food and whether imposing a tax upon food products will result in the discouragement of the purchase of food products and encourage consumers to purchase other products (Andreyeva,, Long,, & Brownell,2010).

If the demand for food products is elastic, this means that policy option 2 which is the imposition of a tax upon food products may prove to be effective in encouraging households to purchase other products besides food. However, if the price elasticity of demand for food products is inelastic, this means that policy option 2 may be ineffective in encouraging consumers to demand other products besides food products. However, the government must ensure that the imposition of a tax upon the various households will not decrease their respective welfare and will leave them as happy as they previously were. The imposition of a tax may reduce the welfare of the respective households and may thus prove not to be an optimum policy. Moreover, the demand for food and beverages is likely to be more or less inelastic as food and beverages are necessities which must be consumed (Starr, 2011).

Thus, the concept of price elasticity of demand is applicable in the case of policy option 2 but may not prove to be effective with a 10% tax and possibly not even with the imposition of a 15% tax as if the demand for food and beverages is inelastic, the imposition of a tax will not affect demand to a large extent but may slightly affect demand for all households. However, it will decrease the welfare of male-headed households as they spend a maximum amount of their money upon food and beverages and may also decrease welfare of female headed households. However, the tax may not be as effective upon the expenditure patterns of couples (Bhargava, 2013).

Utility Maximization Principle:

The utility maximizing principle states that consumers should purchase the combination of goods that maximizes utility and ensures that every dollar spent on that good increases their utility instead of resulting in diminishing utility. Consumers are encouraged to purchase a combination of goods which increases their utility in all respects (Chor, 2010). Hence, in order to find the utility maximization function, it is essential to first find the budget constraint of each good. If the income of each household is approximately $600 and a basket of food and beverages costs $15 while a unit of all other products costs $20. The budget constraint for consumers with $600 for a basket of food and beverages is equal to 40 baskets of goods and services (See Appendix A).The budget constraint for purchasing all other products with an income of $600 is 30 units of other items (See Appendix A). Thus, assuming that consumers are currently purchasing at maximum utility, the utility function for the combination of these two products for couples is:

U(x1, x2)= 12/25(x1) 11/4 (x2)

The subsequent utility functions for the other families are shown in the appendix. While plotting the budget constraints and the maximum utility points on the indifference curves, it is obvious that couples are maximizing their utility with their current combination of food and beverages but male headed families can maximize their utility by purchasing more of other products and less of food and beverages (Gertler & Karadi, 2011). Female headed households can also maximize their utility by purchasing other products besides food and beverages. However, looking at this scenario, it is obvious that while increasing the disposable income of families with children by offering them extra benefits, this will consecutively increase their standard of living and may encourage couples to have children in the future. Moreover, increasing the disposable income of couples by $40 will only allow them to purchase two additional units of other products. However, the purchase of two of these additional units may increase their standard of living and may allow the government to achieve their target of encouraging couples to have children (Stavins, 2010).

By taxing food and beverages and adopting policy option 2, the government is decreasing utility for all households as most of the households spend a major proportion of their income upon food and beverages. Thus, policy option 2 is not advisable when considering keeping welfare constant for couples and possibly increasing it for families.

Expenditure Minimization Problem:

The government has two motives when deciding upon a policy option, the first being to maximize or improve welfare and to also minimize their own expenditure upon the policy option that they choose (Refer to Appendix B). Under policy option 1, the government is incurring a heavy expenditure upon offering both families child benefits and also offering an income tax benefit to increase disposable income. This will cause the government sufficient expenditure and will not minimize the government’s expenditure. However, policy option two is increasing the government’s revenue as the government will be imposing a tax upon food and beverages which is a necessity and will thus be reaping revenue from the sale of food and beverages. The government is not incurring expenditure in policy option 2 but is incurring a lot of expenditure in policy option 1 (Tsai et al, 2010).

Thus, according to the expenditure minimization model, policy option 2 is more ideal than policy option 1 as policy option 2 offers the government additional revenue and policy option 1 is incurring the government sufficient costs.

Looking at the scenarios, of utility maximization and expenditure minimization and price elasticity of demand, both policy options do not seem to be optimal as they are both going in opposite directions and are not coinciding in achieving the government’s objectives. Thus, there is a need to look at an alternative policy option to achieve the government’s objectives. The third policy option to encourage couples to have children and to increase their standard of living may be to encourage savings and encourage couples to save some of their income for the future. By doing so, the government will be encouraging higher amounts of investment in businesses and also increasing the income levels of the couples and households by offering them extra income from the gaining of interest payments. This will also make the future for couples more secure and will encourage them to possibly think of beginning their own family. Thus, the government must increase the interest rate on saving in order to encourage couples to save or the government may also offer a decreased interest rate on borrowing which would increase the money supply and encourage further consumption by households and which could be spent upon other goods and services besides food and beverages (Andreyeva, Long, & Brownell, 2010). Thus, the government should decide upon an interest rate which would encourage couples to save and a lower interest rate which would encourage them to borrow and increase their consumption (Mytton, Clarke, & Rayner, 2012). However, the optimal policy is to encourage couples and households to save as it would make their future more secure, the money put in banks could be invested elsewhere and the government would not be incurring unnecessary expenditure. Moreover, it would increase the welfare of the couples and households in the long run (Zheng, McLaughlin, & Kaiser, 2013).

References
Andreyeva, T., Long, M. W., & Brownell, K. D. (2010). The impact of food prices on consumption: a systematic review of research on the price elasticity of demand for food.American journal of public health, 100(2), 216-222.
Bhargava, H. K. (2013). Mixed Bundling of Two Independently Valued Goods.Management Science.
Chor, D. (2010). Unpacking sources of comparative advantage: A quantitative approach.Journal of International Economics, 82(2), 152-167.
Gertler, M., & Karadi, P. (2011). A model of unconventional monetary policy.Journal of Monetary Economics,58(1), 17-34.
Mytton, O. T., Clarke, D., & Rayner, M. (2012). Taxing unhealthy food and drinks to improve health.BMJ: British Medical Journal, 344.
Nishimura, K., & Shimomura, K. (2012). Trade and indeterminacy in a dynamic general equilibrium model. InNonlinear Dynamics in Equilibrium Models (pp. 347-361). Springer Berlin Heidelberg.
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