Welcome to the 90th edition of our Newsletter EdGenie's 📜 Sunday Scroll...

Every Sunday I send out actionable tips, tricks and real-world application insights from my 15 year experience coaching students to achieve As and A*s in their Economics A Levels via EdGenie.

Hey Genies, 👋

I hope you're doing well and taking some time to reflect on your recent end-of-year exams.

I want to know: how did they go? 🤔

Did it turn out as you expected, or did things not go to plan? 📉📈

If it didn’t go to plan, this could lead to two major issues:

Your teachers' perception of your capabilities might be affected. 🧑‍🏫

Your predicted grades could take a hit. 📉

So, guess what I'm going to say...

You need to make a change...NOW!!! 🚀

Not after the summer holidays. That’s too late. NOW!!!

Trust me on this one!

Doing the same thing and expecting a different result does not work!

You must switch up your mainframe if you want to be great.

It's what you do from here that matters.

So, the first thing and the only thing right now is to acknowledge what went well and what went wrong. 🧐

Was it your Analysis, Evaluation, timing, exam technique, or did you simply not know the content well enough to answer the exam questions?

Was it a lack of exam practice? Were you unfamiliar with the structure? The type of questions asked? How to apply your knowledge and application to the questions? 📝

Did you not receive the proper guidance and help throughout Year 12, so you weren’t prepared for the exam you faced? 🎓

Just hit reply to this email and let me know how you did and what you think you did well and what went wrong. 📧

And I'll respond to each of you personally.

That’s all I’m asking you to do right now: develop that self-awareness. 🧠

Next week, after receiving your responses, I will give you my crucial tips on how to improve between now and September. 🌟

So that after the summer holidays - you can provide that undeniable proof that you are an A or A* student

See you on EdGenie​

  Emre 🧞‍♂️

🌱 What is Creative Destruction?: Coined by Joseph Schumpeter, it describes how economic growth depends on creation of new ideas and businesses and destruction of outdated ones. Based on an Eastern triad (creation, destruction, preservation) – balance is key.

📉 Signs of Slowing Dynamism: Falling business dynamism: firm formation and job reallocation rates have steadily declined since the 1970s in the US; the UK has seen a 1/3 drop in job churn over two decades.

🏢 Preservative Forces at Play: Large incumbents hold increasing market power: the top 10 US firms represent ~⅓ of S&P 500; in Europe, the top 4 firms’ share rose ~5 ppt from 2000–2019. Innovation shifts into big firms, but may slow overall growth: inventors gravitate to large organizations for higher pay, but deliver fewer breakthroughs.

🧩 Political & Corporate Defences: Tactics like start-up acquisitions, defensive patents, talent poaching and heavy lobbying insulate incumbents. US lobbying grew by +$1.7 bn (real) since 1998; EU lobbyist numbers have doubled since 2012.

 🌐 Protectionism & Policy Shields: Tariffs, non-tariff barriers, foreign investment and immigration restrictions slow new entrants and shield failing companies. Research shows high tariffs in the 1970s favored rent-seeking over innovation.

 💸 Easy Money & Bailout Culture: Cheap finance and bailouts during crises (GFC, COVID, energy shocks) kept unproductive firms alive. Small-cap firms: unprofitable Russell 2000 companies rose from 15% to ~40% over 30 years.

🤝 Social Risk-Aversion: Individuals, firms, communities resist change due to fear of losing what they have. Effects seen in NIMBYism, anti-automation politics, and growing “anti-growth” sentiment in G7 party platforms.

 ⚖️ Eastern Wisdom: Finding Balance: Like the Hindu triad, economies need a balance among creation, destruction, and preservation.This isn't about ruthless disruption—but smart moderation and targeted support.

 🛠️ Policy Remedies : Protect people—not jobs: retraining and support rather than shielding failing firms.Reduce market barriers: enhance antitrust, cut protectionist red tape, curb lobbying excess.

 🤔 Final Take: Preservative policies may provide comfort—but unchecked, they risk long-term stagnation. AI, tighter credit, and well-designed policy could reinvigorate creative destruction—but only if we resist letting preservation override progress.

Q. Explain how protectionist policies may reduce the process of creative destruction in an economy.
A. Protectionist measures such as tariffs, quotas, and regulatory barriers shield domestic firms from foreign competition. This reduces the incentive for innovation and efficiency improvements, as inefficient firms face lower threats of displacement. Creative destruction relies on market contestability and the entry of disruptive firms that displace incumbents. However, policies that protect 'failing' firms distort price signals and allow resources to remain in unproductive sectors. This leads to allocative and dynamic inefficiency. Over time, protectionism may prevent technological advancement, reduce productivity growth, and stifle long-term economic dynamism.

Q. Explain how low interest rates and excessive bailouts can create inefficiencies in market resource allocation.
A. Persistently low interest rates reduce the cost of borrowing, enabling even inefficient firms to survive by taking on cheap debt. This fosters “zombie firms” that fail to cover their costs or innovate. Excessive bailouts create moral hazard—firms may expect government support and take excessive risks. In both cases, capital and labour remain tied to unproductive uses instead of reallocating to dynamic, high-growth sectors. This inhibits creative destruction, reduces productivity, and weakens Schumpeterian competition. In the long run, it undermines the allocative efficiency of markets.

Q. Evaluate the extent to which economic dynamism is necessary for long-term productivity growth in advanced economies.
A. Economic dynamism—characterised by firm entry/exit, innovation, and labour mobility—reallocates resources to their most productive uses, enhancing total factor productivity. According to Schumpeter, creative destruction ensures outdated technologies are replaced by better alternatives. In the long run, this underpins sustainable growth. However, excessive disruption may cause structural unemployment and inequality, particularly if labour markets are rigid. Moreover, some stability (e.g. regulation, infant industry protection) can support long-term investment. Thus, dynamism is crucial, but must be supported by social safety nets and retraining policies to avoid negative externalities.

Q. Discuss whether AI-induced disruption is likely to revive or suppress the forces of creative destruction in developed economies.
A. AI has the potential to revive creative destruction by enabling disruptive innovations, increasing productivity, and automating routine tasks. This can lead to new industries and products while displacing outdated models. However, AI may also reinforce incumbency if large firms consolidate data and talent advantages, reducing contestability. Job losses may fuel political resistance and protectionist backlash, weakening economic dynamism. The outcome depends on complementary policies—such as antitrust enforcement, labour retraining, and open data standards—that ensure AI disruption supports competition and reallocation rather than entrenching the status quo.

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