The Effects of Fear on the Society Essay

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The Effects of Fear on the Society

Economics of population is, at its simplest, the study of a distribution of resources. As demographic and environmental factors change, the careful balance of supply and demand becomes altered. This change in the distribution of resources is usually a slow developing process, as rising fertility rates or environmental waste can decade by decade create a greater imbalance between what is available for consumption and what is needed for survival. Still, sudden unexpected events sometimes arise that greatly disrupt the environmental balance. Such was the case on
September eleventh. On that morning, a hijacked airplane collided with one of the two towers that make up the World Trade Center.
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Clearly, the most debilitating effect of these terrorist acts was not the loss of thousands of floors of office space or four large aircrafts, but rather was the creation of fear in American society. Simply put, Americans do not know what will happen tomorrow. With the threat of a long impending war as well as the frightening possibility of more terrorist attacks to come, Americans are very unclear about their future. This fear can have a devastating effect on the economy, as businesses are less willing to invest and citizens are less willing to spend.

The Economic Effects of Fear

A disaster can hurt the economy in two ways. It can reduce supply, that is, it can interfere with the economy’s ability to produce or it can reduce demand, as it makes people unwilling to buy the economy’s products. Clearly the latter is the case today. The Conference Board, a New York business research group, announced that the index of consumer sentiment, a key measure of consumer confidence, dropped to
97.6 in September from a revised 114 in August, the biggest one-month decline since the 1990 recession (US Confidence 1). Indeed, U.S. consumer confidence is at a fiveyear low (Despeignes 1). As Morgan Stanley market strategist Peter Canelo articulated, “It’s no longer about earnings or the economy or interest rates anymore.
It’s about fear (Pethokoukis 4).” As BusinessWeek wrote, “Uncertainties about war, its impact, personal safety, and the
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