This script is based on study, personal Ideological observation and conclusion.

It is open for analysis and subsequent Development or Disputation.

FORWARD

New development brings about changes in the course of time. These changes are either physical, economical, social and/or political in nature. A critical view shows that these changes are interdependent, that is, each change metamorphosize giving rise to another change: physical change leads to economic changes; economic changes bring about social changes; social changes gives rise to political changes. Hence, these changes are interdependent. Its chain of sequential occurrence depends on the degree of each change for instance, social changes might occur before economic changes in a society/community.

Focus here in is on economic changes considering only a factor each and its significance on three topic in Economics namely Value of money, Taxation and location of industry.

First discourse is on the effect of increasing denomination(s) (unit) of a currency on the value of money in an economy.

Effectivity in respect to taxation is also considered.

Also, an attempt on how monopoly of technology influences the location of an industry is treated.

CONTENT

1. Increasing Denominational (unit) effect on the value of money.

2. Effectivity as a principle/quality of a good tax system.

3. Location of industry: Technological monopoly influence.

1. INCREASING DENOMINATIONAL (UNIT) EFFECT ON THE

VALUE OF MONEY.

The value of money means the quantity of good and services that money can buy at a given period of time. It could also mean the purchasing power of money. In other words, it could also refer to the exchange rate of money for good(s) and services in an economy at a given period of time.

For example, if 10kg of a particular commodity, say sugar cost $2 in 1993, whereas a similar kilogram of sugar in 1999 cost $4, this shows that between 1993 and 1999 the value of dollas has fallen by a half. Another example, a mudu of garri in Nigeria cost N5 in 1991 and in 1993 same quantity of garri, 1 mudu, now cost N10, it would be right to say that, the value of naira has fallen by a half.

On the other hand, a fall in prices means an increase in the value of money. That is, a given sum of money can purchase more goods and services. Take for instance, if a N5 note can now purchase two pairs of shoes, as against one formally, this would equally mean that the value of money has risen. The value of money is thus shown by the level of prices in an economy.

The value of money is primarily indicated by price level which is influence by some determinant factors: velocity of circulation; volume of goods and service; et cet - era:, which are the attributes of the Quantity theory of money as revived by Professor Irving Fisher in the 1920s. The quantity theory of money in its crudest form stated that an increase in the quantity of money would bring about a proportionate rise in price. However, one would see that, there is a connection between the quantity of money and its value in an economy.

In any economy, if the quantity of money in circulation increases with no favourable corresponding increase in the available quantity of goods and services then, surely, larger quantity of money would purchase fewer commodities. That is to say, when the supply of money increases in a certain economy, the desire to hold more money increases and prices also increases. One of the ways by which the quantity of money is increased in an economy is the increasing of domination (unit) of a particular currency.

Increasing denomination (unit) of a currency refers to the creation of higher denomination (unit) of a country’s medium of exchange (money). For example, the highest unit of naira in Nigeria as at 1996 was N50 naira note. In 2002, three new higher denomination (unit) N100, N200 and N500 notes respectively, has already been introduced and in circulation, thereby increasing the quantity of money in the economy. These increases have some effect on the value of money in an economy. This effect are mentioned and viewed below:

- When higher denomination (unit) of a currency is/are introduced in an inflationary and unstable economy, the diminishing value of that particular currency would lead to a gradual phase-out of the least currency. For example, in Nigeria, N1, which is a legal tender, is no longer accepted anywhere and as such, commodities, which are sold/exchanged for that amount, now exchange for N5 instead. This increasing unit of the currency means an increase in the quantity supply of that currency. Taking the situation of Nigeria’s N1 into consideration, one would rightly view that it has lost some qualities as a good medium of exchange. For instance, it has lost acceptability because general acceptability to the members of the community is absent.

- A good medium of exchange must be relatively scarce otherwise it would lose its value. That is, it must have a controllable supply so that it become neither too scarce nor too much in circulation. Regarding the increase in the currency unit, which also means an increase in quantity supply, one would see that it is gradually losing the quality of relative scarcity. An example of this instance is the case of West Germany immediately after the Second World War where cigarettes served as a medium of exchange for a time being.

- Stability in the value of a currency (money) over a period of time, most exist. That is, stability of the money value is related to the ability to adequately control its supply in an economy: Reviewing the instance of West Germany above. When there is too much money in circulation, its value tends to fall.

Although, too much money in circulation may evolve as a result of some positive economic measures; deficit financing to revive an economy form its state of depression or a bid to provide more development projects; increase wages and salaries to encourage higher productivity of labour. These measures are proofed effective in a producing, stable and industrialized economy. Never - the - less, in a grossly consuming and instable economy, these positive measures mentioned above result otherwise.

2. EFFECTIVITY AS A PRINCIPLE/QUALITY OF A GOOD TAX SYSTEM

It is necessary to briefly summarize what tax means before venturing into the elaboration of effectivity as a principle of a good tax system.

Tax is a compulsory sum levied by the government through its agents on individuals, firms, goods and services so as to generate revenue to enable it cover cost of administration, defence, provision of certain services and to further social and economic policy. This tax may be direct or indirect.

A good tax system has certain principles (characteristics), which are closely followed by governments. These principles or canons as enunciated by Adam Smith in the book THE WEALTH OF NATIONS (1776) are basically four in number. These are EQUALITY, ECONOMY, CERTAINTY and CONVENIENCE: The amount people paid in taxes should be equal, that is to say it should be proportional to their incomes. Secondly, economy should be observed so that cost of collection was not excessive in relation to the tax. Thirdly, there should be certainty with regard to the amount to be paid, for it is necessary that a tax payer should be fully aware of the rate of tax he is to pay and also when he is to pay the tax. Fourthly, there should be convenience of payment and collection.

Over the years, economics change has brought about other qualities of good tax system in addition to the four already mentioned above. These include FLEXIBILITY and NEUTRALITY: A tax system should not be rigid but easy to modify so as to be adaptive to changing circumstances in the economy, either to increase or decrease government revenue as desired or to remedy an inflationary or deflationary trend; And, a tax system should interfere very little with the demand and supply of commodities and also should not affect the demand and the supply of the factors of production.

Considering the principles/qualities of good tax system mentioned above, one would see that it would be appropriate to include EFFECTIVITY as a principle/quality of a good tax system.

Now lets try to know what effective means and how it match up as a principle of a good tax system.

Effective means producing the intended result, in other words, producing a successful result. Effectivity in relation to taxation refers to the system whereby a good tax system produce the intended and successful result. That is, its purpose of imposition is attained and accounted for. To further elucidate my point, lets consider this example:

Mr. Smith works in a factory, 20km away from his residential area, and he needs a means to convey him to and fro his place of work and his home. He then decided to pay 50 dollar, a month’s fare, to a taxi driver who then agrees to pick him everyday to and fro his place of work. Now, if the taxi driver fails to fulfill his own part of the agreement then the 50 dollar paid by Mr. Smith is not effective, that is, its purpose is not attained and as such can not be accounted for, but, on the other hand, if the taxi driver picks Mr. Smith is effective, which means that, its purpose is attained and can be accounted for. In this instance, its (50 dollar) effectivity is the benefit derived by Mr. Smith (payer) and the fulfillment of the agreement by the taxi driver (collector). This can be viewed as an attained purpose. That is, the payer and the collector can account for the money (50 dollar) (This example is based on economic implication).

The government imposes tax for certain reason: to cover cost of administration; provision of certain service; defence; furthering social and economic policy; which are either directly or indirectly beneficial to its citizens. The citizen only benefits if and only when the taxes are efficiently utilized and purpose attained, that is, the tax can be accounted for. That is to say, the tax is effective. But on the other hand, if the citizens pay their taxes and the taxes are not utilized positively by the government (collector) and the citizens (payer) do not feel or see any social-infrastructural changes as well as economic and political changes, then it is right to say, the tax is not effective and can not be accounted for. Considering the example of Mr. Smith and the taxi driver above. Now, if the tax is effective, there would be a positive reaction and a good impression towards the government by the citizens: Regular pay of taxes; confidence and trust on the government and its policy; high productivity; improved standards of living; stability (political and economical). Whereas if the tax is not effective, there would be a negative reaction: tax evation and avoidance; instability; low standard of living; lose of confidence and trust on the government and its policy; inequality of wealth as a result of mismanagement and corrupt practices; e.t.c which would negatively affect the country socially, politically and economically.

Everything however, depends on what the government does with the revenue it raises. The more the government does for its people, the greater the amount of taxation they are able to bear and the more the tax system would be affective.

3. LOCATION OF INDUSTRY: TECHNOLOGICAL MONOPOLY INFLUENCE

There are different types/kinds of industry located at different places. These industries; manufacturing industry; mining industry; construction industry; e.t.c; are located as a result of certain different factors. Location of industry is the sitting of an industry in a particular place or area considering the influence of certain factors such as proximity to raw material; accessibility to market; power supply; labour; external economies of scale; government policy; et cet-era. The major objective of a business is profit maximization and as such, these factors are considered to this effect.

As time goes by, some of these factors gradually lose their influence on the location of an industry and new other factors evolve. This is as a result of technological development/advancement.

This brings us to technological monopoly as an influencing factor in the location of industry.

Technological monopoly is the complete control or possession of scientific knowledge used in practical ways in industry. This is as a result of scientific development or progress, which tend to increase wealth, economic development and recognition. An example is the Zeppelins, although Henry Giffard, Frenchman, was the first to combine lift with propulsion using hydrogen gas, instead of hot air, for an airship, but Count Ferdinand von Zeppelin, a German, was the first to design and construct airships (Zeppelin), which serve as the world’s first passenger air service. It is in account that the Zeppelin acquired a design for an aluminum-framed airshop from a Croatian inventor named David Schivarz and also other material from other places but its construction was done in Friedrichshafen, Germany.

This shows that despite the existence of other influencing factors in the location of an industry, technological monopoly was the basis for the establishment of the Zeppelin construction company in Germany by Count Ferdinand von Zeppelin. This invention triggered an improvement in the economy of Germany through trade and transportation and also recognition.

In recent time, the location of industry, within or outside particular geographical area, are basically influenced by technological monopoly rather than other influencing factors.