Inflation and Stock Returns in Nigeria

Inflation and Stock Returns in Nigeria This study empirically examines the relationship between inflation and stock returns in Nigeria during 1997-2006. The study focuses on different econometric models to investigation this relationship using monthly data of the All Share Price Index from the Nigerian Stock Exchange and Nigerian Consumers Index. The simple OLS regression result suggests that the residuals are stationary, which implies that stock returns and inflation are co integrated. Therefore we can conclude that there is a long run relationship between stock returns (LOGASI) and inflation (LOGCPI).The Engel co-integration results reveals that there is long run relationship between inflation and stock returns .the study further goes on to the determine the causal long run relationship using the Error Correction Model (ECM). This article offers evidence of a positive relationship between stock market returns and inflation. This result confirms that stock returns act as a hedge against inflation. CHAPTER ONE INTRODUCTION 1.1 Background to the Study The advent of oil boom in Nigeria in the early 1970s, has led to the instability of stock prices. This has been attributed to many factors such as: budget deficit monetization, inflow of foreign capital from crude oil sales and financial markets creation of excess private domestic credit. Since early 1970s, inflation rates in Nigeria has been highly unstable; the high inflationary change was in excess of 30 percent. This is evident in the high correlation of money supply growth and high inflation due to the fact that real economic growth is less in real term to money growth. This can be observed from the growth in money supply and some structural factors such as; supply shocks arising from famine, unfavorable terms of trade and devaluation of currency. Furthermore, Structural Adjustment Program (SAP) introduced by the government in the late 1980s also accounted for the increase in price level in the economy. Consequently, inflation in Nigeria has overtime responded to structural changes. These changes can be characterized into four periods based on the pattern and events that occur at that period. The first period of inflationary increase in Nigeria was noticed from 1974 to 1976; inflation increased by 30 percent. This inflationary pressure was as a result of the following: High cost of agricultural produce caused by drought in the Northern part of Nigeria, Excessive oil revenue monetization, increase in wage rate based on the recommendation of the Udoji commission of 1974, Folawewo (2005), and political instability The second period was from 1983 to 1985 when inflation rate reached 40 percent. This period noticed very little economic growth, The Nigerian government was under intense pressure from debtor groups to accept International Monetary Fund conditionalitys of devaluation of domestic currency because government debt has increased above 70 percent while excess money growth was around 41and 43 percent. This period also witnessed poor external trade performance.CBN (, 2006) The third period was from 1987 to 1989 when inflation rate hovered around 35 percent. During this period, the economy experienced high inflationary pressure brought about by fiscal expansion noticed in the 1988 budget, the debt for equity swaps conversion method adopted by the Government of Nigeria and the drastic contraction in monetary policy, all accounted for this change that span through to the early 1990s. Finally, the fourth period occurred between 1993 and 2000, as a result of fiscal deficit expansion which caused a 70 percent increase in money supply with a knock-on effect on domestic credit of the private sector of the economy.CBN, (2006) Overall, inflationary pressure can be largely attributed to structural factors such as; real income reduction caused by fluctuation in oil revenue, high nominal wages and debt obligation in form of expansionary fiscal deficit. These invariably mean that over the years, fluctuation in commodity price is a normal feature of the Nigerian economy. One major commodity considered in this study is the capital market stock, i.e. the Stock market. Stocks listed in Nigeria are traded on the floor of the Nigerian Stock Exchange (NSE) while the Securities and Exchange Commission (SEC) is the apex regulatory body which oversees the activities and affairs of the major players on the floor of the Stock Exchange. The Nigeria Stock Exchange was established in September 15, 1960 but commenced business on June 5, 1961 with 19 securities listed and traded on the Lagos Stock Exchange. Based on the recommendation of the Government Financial System Review Committee in 1976, the Lagos Stock Exchange was renamed and made part of the Nigerian Stock Exchange in December 5, 1977. The Nigerian Stock Exchange has nine branches established in major commercial cities in Nigeria. The main exchange of stocks of large enterprises are traded in the Nigerian Stock Exchange while small and medium scale enterprises are listed and traded in the Second tier Securities Market (SSM). From 1963 to 1990, the Nigerian stock exchange witnessed an overwhelming increase in government stock which exceeded the equities of industrial companies; however this trend changed from 1991. The value of equities of industrial companies increased to billions of Naira, while government stock traded on the Nigerian Stock Exchange was worth millions of Naira this decrease continues till date, a development to the deregulation of the economy. Despite the increase in market capitalization noticed in the economy at that period, the ratio of this amount to the Gross Domestic Product and Gross Fixed Capital Formation was still low. This increase was between 4.8% and 25.4% for gross domestic product while the ratio for gross fixed capital formation is between 28% and 55% from 1963 to 1990 (CBN, 2006). The ratio of market capitalization in the gross domestic product and gross fixed capital formation increased geometrically from 1990 to 1995. Although there was decrease in the share of market capitalization in gross domestic product and gross fixed capital formation, the return on investment did not follow the same pattern. This decrease noticed at that period was caused by a banking crisis in which a total of 26 banks were liquidated in 1998. However, with the recapitalization of the banking sector in 2005, the industry remains the most active participant in Nigerian stock market up till date. The trend in Nigeria Stock Exchang e causes the price and return on stocks to be highly volatile. 1.2 Problem Statement Price stability is essential in determining whether an economy is stable or not. Inflation which is the constant increase in price creates uncertainty in the economy; uncertainty makes both domestic and foreign investors unwilling to invest. In Nigeria inflation has led to increase in nominal interest rates which affect the value of interest payment of banks and financial institutions. Furthermore, determination of the problem caused by inflation depends upon the degree in which inflation is anticipated correctly or not. If inflation is anticipated correctly and the monetary authority is seen to be credible, the fluctuation in price would be managed effectively but if inflation is unanticipated, some economic agents will gain while others will lose. Unanticipated inflation impact negatively on saving ability of the citizens and as a result, low saving leads to a fall in the demand for stocks and equities as financial wealth. This decrease in demand causes the price of equities to fal l thereby reducing returns on equities and stocks. Furthermore, the prices of stock determine how effective and efficient the stock market allocates shares and equities based on preference and availability of market information. Increase or decrease in price of stock create uncertainty for the investors and in turn affect the demand and supply of stocks. Therefore, general increase in price level may affect peoples potential investors investment decision which has negative impact on the total returns on stocks in the economy at large. This situation is prevalent in the Nigerian economy; therefore there is the need to examine the effect of inflation on stock returns and its implication on investment. The Fishers hypothesis (Fishers effect) suggests that stocks or equities hedge or evade inflation, empirical investigation suggest that inflation and stock returns are negatively related. This study will be looking at relationship between inflation and stocks in Nigeria. The study of this relationship is essential in improving and in the understanding of stock markets, thus providing standards for decision-making about asset allocation.This study contributes to the existing literature by providing evidence for whether inflation affects stock returns both in the long run and in the short run. 1.3 Justification for the Study Despite the large number of empirical studies on the relationship between inflation and stock returns, there is no general consensus on the causal direction of this relationship. Empirical works as; Nelson (1976), Shwarts (1977), Fama (1981), Geske and Roll (1983), Gultekin (1983), Marshall (1992), Bakshi Chen, (1996), Zhao (1999), Chatrath et al (1997), Spyrou (2001), Omran and Pointon (2001), Crosby (2001), Gallagher and Taylor (2002) and Floros (2002), suggested a negative relationship between inflation and stocks while Boudoukh and Richardson (1993), Graham (1996) and Choudlery (2001) in different studies take the opposing view, i.e. that there exists positive relationship between inflation and stock returns. However, most of these studies were carried out in industrial nations and some selected developing countries most especially Latin American countries. Specific studies on the exact relationship between inflation and stock returns in Nigeria have not been explored rigorously. Furthermore, considering the negative impact of inflation on prices of commodities in Nigeria coupled with the volatility of stock returns, this study seek to provide a rigorous analysis of the dynamics of inflation and its implication on stock returns in Nigeria using an Error Correction Model to create a parsimonious and encompassing model that would show both short-run and long-run relationship between inflation and stock returns in Nigeria. 1.4 Plan of Study Following the introductory remarks in chapter one, chapter two will review the existing literature on this subject. While chapter three will focus on the theoretical framework, methodology, model specification, estimation technique and sources of data. The summary of result of the empirical analysis is presented in chapter four while the study will be rounded up in chapter five with summary of findings, policy implication and conclusion. CHAPTER TWO LITERATURE REVIEW 2.1 Introduction Section 2.2 of this chapter discusses the underpinning theories of inflation and stock returns. Section 2.3 examines the empirical literature review on inflation and stock returns this is to help identify the link between inflation and stock returns. Finally section 2.4 examines the methodological literature on inflation and stock returns. 2.2 Theoretical Literature Review on Inflation and Stock Returns The Fisher hypothesis suggests that there is a positive relationship between interest rates and inflation. (Berument Jelassi, 2002) Fisher (1930) argues that nominal interest rate is entirely a sign of the existing information in relation to the likely future values of the rate of inflation. This hypothesis has come to be known as ‘‘the Fisher effect in the economic literature; it states that expected nominal rates of interest on financial assets should move one-to-one with expected inflation. Choudhry (2001) Fisher hypothesis, in its strict sense, predicts a positive homogeneous relationship of degree one between stock return and inflation. (Luintel Paudyal, 2008) The proxy-hypothesis was introduced by Fama (1981) to explain the predominance of negative stock return-inflation trend. The main principle on which Famas version of the proxy-effect hypothesis is based on is the observed negative relationship between inflation and stock returns which appears to be spurious since this relationship is a result of the positive relationship that exist between stock returns and expected economic activity and an inverse relationship between expected economic activity and inflation. Inflation simply serves as a proxy for expected economic activity in a statistical relationship between stock returns and inflation. (Lee U. , Monday, June 22 1998) The proxy hypothesis states that the negative relationship between inflation and stock returns is spurious and really only proxies for the positive relationship between stock returns and real variables. Previous testes of the proxy hypothesis have used actual values instead of forecasted values for the real activity variable. (McCarthy, Najand, Seifert, 1990) did not find a support for the proxy hypothesis using only forecasted variables. Gonedes (1981) the failure to use indexation means that real income tax rates will vary directly with rates of inflation. This substantive effect of mere bookkeeping methods is frequently predicted even though it is known to have some adverse implications. This is the tax effects of inflation hypothesis. 2.3 Empirical Literature Review on Inflation and Stock Returns The empirical literature on the impact of inflation on stock returns records major contribution by different scholars over the years. But the empirical evidence provided by most of these studies has been mixed, and a consensus has not yet emerged. While studies like Pierrel and Kwok (1992), Geske and Roll (1983), Floros (2002), Ugur (2005), Yeh and Chi (2009), Pesaran et al (2001), Den Haan (2000), Crosby (2001), Syros (2001), Roohi and Khalid (2002) among others have found a negative relationship between inflation and stock returns; Boudoukh and Richardson (1993), Graham (1996), Choudhry (2001), Patra and Posshakwale (2006) and Lee et al (2000) among others reported positive relationship between these variables. Concerning the review of the approaches of modeling the effect of inflation on stock returns, Pierrel and Kwoks (1992) estimates and tests the alternative versions of hypothesis that explain the relationship between these two variables. The study employs distributed lags in order to empirically arrive at a dynamic structure of inflation. Pierrel and Kwoks concluded that this dynamic structure conform to Fama (1981), Benderly and Zwick (1985), and Geske et al (1983) hypothesis that suggest a negative relationship between inflation and return on stocks. Yeh and Chi (2009) tested the validity of the various Hypotheses that explain this relationship. The empirical result of this study on 12 OECD countries shows that these countries exhibit a short-run negatively significant co-movement between stock returns and inflation. Moreover, countries like Australia, France, Ireland and Netherland do not display a long-run relationship between the two variables in equilibrium. This result is consistent with the hypotheses of Fama (1981), Modigliani et al (1979) and Feldstein (1980) which suggested that an increase in inflation reduces real returns on stock. This result is also in line with Caporale and Jung (1997) and Rapach (2002). They argue respectively that there exist a negative significant effect of inflation on real stock returns after controlling for output shock and that inflationary trends do not erode returns on stocks. The Fishers Hypothesis was tested by Spyros (2002). His results reflect a contrary view that returns on stocks hedges inflation. This study shows that there is negative but not statistically significant relationship between inflation and stock returns in Greece from 1990 to 2000. In this same vein, Floros (2002) carried the same study on Greece economy and concluded that inflation and stocks in Greece should be treated as independent variables because the result of the various test conducted show that there is no relationship between inflation and stock returns in Greece. Crosby (2001) investigates the relationship between inflation and stock returns in Australia from 1875 to 1996 and found out that the Australian economy does not experience permanent changes in inflation or stock returns. The result shows that there exist short-run negative relationships between these two variables that depend on the period of time that is considered. On the contrary, Lee et al (2000) examine the impact of German hyperinflation in the 1920s on stock returns. This result of this study show that the hyperinflation in Germany in early 1920s cointegrates with stock returns. The fundamental relationship between stocks returns and both realized and expected inflation is highly positive. They concluded that common stocks appear to be a hedge against inflation during this period. Choudhry (2001) in his study on the impact of inflation on stock returns in some selected Latin and Central American countries (Argentina, Chile, Mexico and Venezuela) from 1981-1996, reveal that there is one- to-one relationship between the current rate of nominal return and inflation for Argentina and Chile. Their result also reveals that the lag values of inflation affect stock returns and this result infer that stocks act as a hedge against inflation. Patra and poshakwale (2006) conducted a study on the impact of economic variables on market returns in Greece from 1990 to 1999. Empirical results show that some macroeconomic variable like money supply, inflation, volume of trade and exchange have both short-run and long-run relationship with stock price in equilibrium in Greece while there was no short-run or long run relationship noticed between exchange rate and stock prices. Ugur (2005) in a study on the effect of inflation on return on stocks in turkey from 1986 to 2000 reveal that expected inflation and real returns are not correlated. The results suggest there is a negative relationship between inflation and stock returns which may be caused by the negative impact of unexpected inflation on stock returns. This results did not contradict Fisherian hypothesis because of the non correlation of inflation and real returns but the results is in line with the proxy hypothesis since a negative significant relationship exist between the two variables. Aperigis and Eleftheriou (2002) results also concurred that there is negative link between inflation and stock returns in Greece than in interest rate and stock returns. Similar study like Adrangi et al (1999) and sellin (2001) also support the proxy hypothesis. Khil and Lee (2000) in their study on ten pacific-rim countries and the US that all the countries except Malaysia reveal negative relationship between in flation and stock returns. The tax-effects Hypothesis which asserts that there is negative relationship between inflation and stock returns was tested by Geske and Roll (1983). Empirical result from the reveal that random negative or positive real shock affects stock returns which in turn, signal higher or lower unemployment and lower or higher corporate earnings. This has effect on the personal and corporate tax revenue leading to increase or decrease in the treasury through borrowing from the public. The economy paid for this debt by expanding or contracting money growth and this would lead to higher or lower inflation. They concluded that random shocks on stock returns are both fiscal and monetary in nature in the U.S.A. Roohi and Khalid (2002) considered the Efficient Market Hypothesis and Rational Expectation Theory to investigate the effect of inflation on stock returns. Empirical results of the study suggest that the relationship between real stock returns, unexpected inflation and unexpected growth are negatively significant. They concluded that the control of real output growth makes the negative relationship between these two variables to disappear over time. 2.4 Methodological Literature Review on Inflation and Stocks Returns The empirical relation between inflation and stock returns has been investigated through various approaches since the 1970s. Spyros (2001), adopted Vector-Auto regressive (VAR) model and the cointegration test to confirm if there was any relationship between inflation and stock returns in Greece. Pierrel and Kwok (1992) investigated the relationship between stock returns and inflation in the United State between 1962-1992 using Vector- Autoregressive (VAREC) model, and Granger Causality, Crosby (2001), used Vector-Autoregressive (VAR) model, Ordinary Least Square (OLS) and correlation analysis to examine the relationship between inflation and stock returns in Australia from 1875-1996. Floros (2002), investigated the relationship between stock returns and inflation in Greece from 1988-2002 by considering both the lag and lead periods of inflation and stock returns using Ordinary Least Square (OLS), Johansen Cointegration Test and Pairwise Granger Causality Test. In this same vein, Ugur (2005) used the Ordinary Least Square (OLS) and Standard Granger Causality to examine the relationship between inflation, stock returns and real activity in Turkey. Choudhry (2001), estimate the impact of inflation on stock returns in some selected Latin and Central American countries using the Auto-Regressive Integrated Moving Average (ARIMA), unit root test and spectral regression model. Lee et al (2000); and Geske and Roll (1983), also used ARIMA, OLS and unit root test to investigate the effect of German hyperinflation and stock returns, and the impact of inflation on stocks returns in the USA respectively. Patra and Poshakwale (2006) on the other hand, used the Error Correction Model (ECM), Johansen Cointegration Test and Pairwise Granger Causality Test to show if economic variables such as money supply interest rate, exchange rate, volume of trade and stock prices have impact on stock returns. Yeh and Chi (2009) in their study on 12 OECD countries measures correlation at different forecast horizon by using Autoregressive Distributed Lag (ARDL) bound test, unit root test and confidence interval method to investigate the inflation illusion hypothesis that suggest that there is negative relationship between inflation and stock returns. Pesaran et al (2001) and Den Haan (2000) also employ the same technique and arrive at the same result. This study examines the relationship between inflation and stock returns in Nigeria. Furthermore a test is carried out to see if theres a cointegration and causality within these variables. Methods used in this study are explained in chapter three. This study fundamentally aims to analyses the above relationship for a period of 1st of January 1997-31st of December 2006 .monthly values of the Nigerian Stock Exchange (NSE) and Nigerian Consumers Price Index (CPI). CPI was collected from the Central Bank of Nigerian Statistical bulletin (2006), while (ASI) All Share Index was collected from Nigerian Stock Exchange data bank. The reviews of literature above reveal that there are basically four major hypotheses discussing the relationship between inflation and stock returns. These theories are Fisherian hypothesis, proxy hypothesis, tax-effect hypothesis and inflation illusion hypothesis. Considering the level of price stability in Nigeria over the period of our study, the study seeks to adopt Fisherian hypothesis which suggest that stock hedges inflation. This is based on the fact that literature suggests that the price of stock is a major determinant of stock returns which is affected positively by expected or unexpected inflation (consumer price index). CHAPTER THREE MODEL SPECIFICATION AND METHODOLOGY 3.1 Introduction This chapter covers the theoretical framework, specification of the models utilized in the study as well as the methodologies that will be adopted. Accordingly, the estimation procedures, and data requirements; types and sources of data are also discussed in this section. 3.2 Theoretical Framework The reviews of literature in chapter two reveal that there are basically four major hypotheses discussing the relationship between inflation and stock returns. These theories are; 1. Fisherian hypothesis 2. Proxy hypothesis, 3. Tax-effect hypothesis and; 4. Inflation illusion hypothesis. The Fisherian hypothesis is thus specified; Where is the real returns, is the actual inflation which is the combination of the unexpected and expected inflation. While is the error term that is distributed randomly and normally with zero mean and constant variance. This sign of determine if the specification is in line with the fisherian hypothesis. Thus; a significant and positive sign suggest that stock hedges inflation while a negative sign suggest contrary. 3.3 Model specification Based on the outcome of our theoretical framework which attempts to explain the relationship between real stock returns and inflation, we specify the model for estimation. Stock return represented by all share indexes (ASI) is the dependent variable while the explanatory variables are, one-period lagged inflation represented by consumer indexes (CPI) and one-period lagged stock returns (ASI). This is based on the common belief that stock returns (ASI) takes some time to react to inflationary changes (ΔCPI) and changes in all share indexes (ΔASI). In this study, it is assumed that stock returns depend on a set of variables denoted as: Therefore, our empirical specification is stated as: 1 3.4 Methodology and Estimation Procedures This study makes use of Augmented Dickey Fuller (ADF) unit root test to check for the stationarity of the series used in this study, Engle and Johansen cointegration tests is used to confirm if the series have long run relationship while causal long run relationship is determine using an Error correction Model (ECM) which will reveal both the short run and long run relationship between inflation (LOGCPI) and stock returns (LOGASI). 3.4.1 Unit Root Test Assume we have the following AR (1) process: (1) and is a white noise error term. We can manipulate the above expression by subtracting from both sides; Thus: (2) In practice, instead of estimating equation 1, we estimate equation 2 and test the hypothesis that =0. If =0 then that is we have unit root meaning the time series is non-stationary ( for unit root is non-stationary). Thus we can take the first difference of and regress on to see if () is zero or not in order to confirm if the series are stationary or not. Under the null, the estimation for ÃŽ ´ is not distributed T-student, so the Dickey Fuller test is required. We use the Augmented Dickey Fuller (ADF) table to correct for possibility of the error term () been auto correlated. The ADF test is specified in the equation below: 3 Where is a white noise Error Term. 3.4.2 Co integration Tests Trended data can be regarded as potentially a major problem for empirical econometrics. Trends may give rise to spurious regression and uninterpretable t- statistics. The stack reality is that in economics most time series are subject to some type of trend while differencing in series until it becomes stationary is one major solution. This has been shown that differencing can lead to loss of long run properties of a series. Based on this the combination of series that are difference once I(1) will give us a model that is stationary I(0). In achieving this aim this study consider two different co integration tests which are; Engle and Granger co integration test and Johansen co integration test. According to Engle and Granger (1987), a time series and are said to be co integrated of order db where d ≠¥ b ≠¥ 0 written as: CI (db) if: Both series are integrated of order d There exists a linear combination of these variables say; which is integrated of order d-b. The vector and is called a co integrating vector. The Engle and Granger co integration test involve two steps; the first step is conducting an OLS regression on the variables in the model specification. The second step is to conduct an ADF test on the residual from the regression if the residual is stationary, then the series are said to be co integrated. The Johansen co integration test on the other hand involves the use of a VAR model and the different maximum likelihood ratios are used to determine the co integrating vectors. These tests are; trace test and maximum eigen value test. Different information criteria such as Akaike Information Criterion, Schwarz information criteria (SIC), Hannan-Quinn Information Criterion, Final Prediction Error and Sequential Modified test Statistic are used in determining the lag length. 3.4.3 Error Correction Model Co integration analysis provides a test for spurious correlation. Finding co integration between apparently correlated I(1) series validate the regression but failure to find co integration is an indication that spurious correlation maybe present thus invalidating the inferences drawn from such correlation. Co integration analysis also helps in formulating the process of dynamic adjustment. However time series data lose their long run properties when they are differenced; allowing only for conclusions on the short run determinations. Therefore there is a need to construct a model that would combine both the short run and long run properties of the variables in the model. As suggested by Engle-Granger representation theorem that if two series are co integrated then they will be efficiently represented by an error correction mechanism. The Error Correction Model is used to capture both the short run and long run properties of the series. The method involves developing a model from it g eneralized form (over parameterized) to a specific form (parsimonious). In addition if the series are co integrated these dynamic specifications will encompass any other partial adjustment model. The error correction of the Auto regressive distributed lag (ADL) takes the form: where the long run properties are derived from the proportionality between and. The above specification relates the short run change in the dependent variable to the short run change in the explanatory variable.this is called the impact effect () but ties the change to the long run impact through a feed-back mechanism. 3.5 Data The study will utilize monthly time series data from 1997–2006. Data for the variables will be sourced from Central Bank of Nigeria Statistical Bulletin (2006) and the Nigerian Stock Exchange Annual Reports (2006). The variables of interest in this study are all in logs. These variables are; consumer price indexes (CPI) as inflation series and all share indexes (ASI) as stock returns. CHAPTER FOUR SUMMARY OF EMPIRICAL RESULTS The summary of the statistics used in this empirical study is presented in the appendix. As can be observed from the Table, (see pagexx) the mean value of stock returns is 9.359606 while inflation is 8.442205. It is also observed that both LOGCPI and LOGASI are positively skewed. The kurtosis value is positively low and Jarque-Bera (J-B) statistic test value is relatively high. These suggest that the two series are skewed to the right. Figure1below depicts the graphical illustrations of the data that were used in this empirical analysis. The figure reveals that stock return witnessed significant increase within the period of this study. Figure 1: Graphical illustration of statistics used in the analysis Table 1: Stationarity Test Result Variables Levels First Differences ADF 1 ADF 2 ADF 1 ADF 2 LOGASI 0.712327

Developing Ethical Leadership

An ethical leadership means leading with the sense of valuing ethical values or considering the old fashioned ways, beliefs and other values that people considers as valuable. It is the leading with all the sense of altruism, kindness, integrity, loyalty, and trustworthiness which are possessed by a certain leader. In this characteristics and considerations to be considered, a question to the ethical means of leadership rises when we pertain to the historical holocaust. In the Holocaust Museum located at Washington DC, a person who goes on visit inside the building will be able to be enlightened about the real meaning of the holocaust. Every image that certain people could see inside would make them feel the pain and the sufferings which the Nazi victims felt during the holocaust period. An example of an image which could lead a person back to the holocaust is the picture where the Americans felt the cruelness of the Nazi soldiers in some of the Nazi’s concentration camps or bases where Nazi soldiers tend to make their prisoners suffer. While inspecting further, a certain image will take the tourists’ attention wherein the image is a picture of a thin and almost dying man handing an aluminum bowl. This image conveys the period when the Nazi soldiers had their prisoners dying because of malnutrition, thus, it also conveyed the same period when the Nazi soldiers force their prisoners to do hard labors. Inside the museum can be seen a large map which shows how far and wide the conquering of the German leadership did during the holocaust period on the year 1941 until 1942. There’s also a part of the museum where all the countries involved during the world war is painted, in this hallway the painted parts were the glass windows. As the strolling inside the museum continues, there were a lot more figures and pictures which showed the cruelty of the Nazi soldiers led by the considered most cruel man on earth, Hitler. There’s a room inside the museum called â€Å"the tower of faces† wherein all the sides of the room are filled with hundreds of pictures posted. Those people’s pictures which are posted in the walls of the room are those who are involved in the holocaust, some are those who became a Nazi victim and some are those who contributed along the side of the Nazis. There’s another large image in the museum where one could see a group of people with the yellow star patch on their dresses just like on the movie â€Å"Schindler’s list† which is used by the Nazis to easily determine if such a person belonged to the Jewish people. In general, there are 900 artifacts displayed in the museum, 70 video monitors which shows all the cruelty of the Nazis towards the Jewish people, and in the second floor of the museum, a tourist could realize and notice how the non-Jewish people risk their lives by trying to save some of the Jews. For the last destination of the tour, tourists are allowed to watch a film entitled the Testimony wherein those who survived the tragic holocaust narrated their real life story. The film would last for 60 minutes then after that tourists are then led to a hall where they could light their candle for the holocaust victims (Times, 2008). All the artifacts and the videos which are exhibited at the museum showed how the sense of true leadership was ignored and were not present at the period of the holocaust. The cruelness of the Nazi depicted how heartless Hitler is as a leader. The moral responsibilities of the Germans were being taken for granted; a part of their ethical culture considers a mean kind of political values. Because of the continuous reigning of power and territory to the wealth of the Germans, they’ve build up a confidence wherein they exceeded to the extent that they thought they could rule everywhere and that they are the most superior people who exist (Jones, 1999). According to the understanding of ethical leadership, leadership should involve a not coerced relationship between the leader and his people or the people who are under the coverage of his power. In Hitler’s situation, he has violated such an important consideration regarding with how he should have governed his people. The holocaust created a devastating nature of leader-people relationship; lots of Jewish people were forced to work under the supervision of the Nazis and they are also forced to comply with whatever law the leader would implement (Price, 2006). The Jewish people should have been heard with their cries but instead they were oppressed and suppressed by the political system during the holocaust. Since good leadership means both technically and morally benefiting, it is clear that though Hitler technically made a great contribution to Germany, he created an opposite effect to the morality of his being a leader (Price, 2006). An evidence of this statement can be seen at the museum wherein lots of Jewish people are a group exposed without any clothing and are humiliated in front of those non-Jewish aristocrats or politically involved people. A morally and technically good leader aims for the betterment of his country as well as for his people. In this way, the justification of the leadership would be justified under ethically valid leadership but the whole success of Hitler by aiming power and territory altered the evaluation of his leading by simply killing most of the Jews (Price, 2006). Hitler never considered saving even a single child soul but instead he commanded that all Jews must be seized and killed just like Anne Franks who wrote her own diary about the whole holocaust. In the entire world’s history, Hitler made the worst kind of violation of ethical leadership wherein morality is considered as a single pin of needle between million strands of hair. In taking the great responsibility of being a leader, morality is easily recognized, thus, it is the reason why there is a study of ethics in order to justify the true essence of leadership. Adolf Hitler, as a leader, allowed exploitation such as rape and humiliation of Jews during his leadership, he used his position and power to gain the authority over other people and instead of using it in order to command people to widen or do something to develop their territory more, he used his authority to do what he wanted and that is to rule his coverage with an undefeated power wherein all people fear and almost worship him (Ciulla, 2003). The essence of leadership changed through the period of time, though however one may look and analyze the way that Hitler led his people, no one would say that he is a great leader. The positive side of his being a leader such as being a great conqueror who contributed more territories in the history of Germany is overlapped by all the negativities of his other deeds such as killing, exploiting, oppressive and suppressive leadership, and most of being a leader who acted as he does not have a heart at all. Whenever one would walk into the Holocaust Museum which has all the memories of the tragic holocaust inside, a certain person will fell the outburst of pain and sadness empathizing the victims of the holocaust. A horrifying movie which could be directly compared to the event during the holocaust is the Schindler’s list where all Jewish people were cruelly shot without any good reason, raped without the ability to refuse, exploited and humiliated, and forced to work without being provided enough amount of food to gain energy from (Spielberg, 1993). This experience of going to the Holocaust Museum made me realize that a good leader does not much contribute to his/her most way when he/she does not consider the goodness of his/her will towards his/her land and people. Thus, no matter how a leader conquers and rules the whole world under his authority, the true sense of leadership will still be judged on his moral or generally ethical deeds onward his ruling and loyalty to his obligation as a good leader. This reveals the fact that no matter how small or few a leader’s contribution is to his land, he will still be considered a good leader as long as he works for the betterment and sake of his land and people. References Ciulla, J. B. (2003). Ethics and Leadership Effectiveness [Electronic Version]. Retrieved January 13 from http://www.sagepub.com/upm-data/5284_Chapter_13_Antonakis.pdf. Jones, D. H. (1999). Moral Responsibility in the Holocaust: A Study in the Ethics of Character: Rowman & Littlefield. Price, T. L. (2006). Understanding Ethical Failures in Leadership: Cambridge University Press. Spielberg, S. (Writer) (1993). Schindler's List. In Universal (Producer). USA Times, N. Y. (2008). United States Holocaust Memorial Museum [Electronic Version]. Retrieved January 12 from http://travel.nytimes.com/travel/guides/north-america/united-states/washington-dc/attraction-detail.html?vid=1154654609095. ; ; ; ;

The Research Papers Sample Stories

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Racism, By James Lowen - 906 Words

All-American girl books teach little girls one thing; they want to grow up to be Samantha the doll. Growing up, society teaches you everything but the most important thing; social classes, and the true facts about them. All we know growing up is Samantha’s â€Å"perfect† and living the American dream. Through the eyes of society, if we are raised poor we aren’t going to go anywhere; and we learn to hate the top one percent of the population with all of the populations’ money. The girls grew up dreaming of being Samantha, but society pushed us down, and as we became young adults it struck us to dislike the one girl that little girls grew up loving; the All-American girl doll, Samantha. Classism is huge in today’s society, and not many people know what it means, because nobody teaches it anymore. In Land of Opportunity by James Lowen he explains how not many know about classism, and how naà ¯ve freshmen college students are, let alone people in general. People grow up, and in schools they have stopped teaching specific things, such as classism. â€Å"Six of the dozen high school American history textbooks I examined contain no index listing at all for â€Å"social class,† social stratification,† or â€Å"class structure,† â€Å"income distribution,† â€Å"inequality,†Ã¢â‚¬ ¦Ã¢â‚¬  (Lowen 202), this itself proves that people have stopped teaching, because everything is out of the textbooks. â€Å"From womb to tomb† (Lowen 203), this statement means that once your born in a social class, you will be there until you dieShow MoreRelatedIn James Loewen’S Book, Lies My Teacher Told Me, He Talks1011 Words   |  5 PagesIn James Loewen’s book, Lies My Teacher Told Me, he talks about misconceptions in America school textbooks. Are these actually misconceptions though? What is the author saying about American history when details or whole event are untold? Lowen delves into these deep topics head on and gives examples as he goes. This book is not only intended for those who have read an American history book, but for those who have never heard the truth. Lowen wrote this book in order to uncover and educate; furthermoreRead MoreHistory Is Almost Always Written By The Winners1393 Words   |  6 Pagesis almost always written by the winners. As a result, the details of pivotal historical events are often washed as to prevent the dirty, less flattering detai ls to rise to the surface. It is why we need books such as â€Å"Lies My Teacher Told Me.† by James W. Loewen to uncover and expose the propogandic style teachings of high school textbooks. In his book, he has detailed his writings that are intended to elicit a thought-provoking question- is our curriculum geared toward immortalizing the great achievementsRead More The Development of Racism Essay1259 Words   |  6 PagesThe Development of Racism Slaverys twin legacies to the present are the social and economic inferiority it conferred upon blacks and the cultural racism it instilled in whites. Both continue to haunt our society. Therefore, treating slaverys enduring legacy is necessarily controversial. Unlike slavery, racism is not over yet. (Loewen 143) Racism can be defined as any set of beliefs, which classifies humanity into distinct collectives, defined in terms of natural and/or cultural attributesRead More The Lies My Teacher Told Me and People’s History of the United States1462 Words   |  6 Pagesis written and published does not means it is always accurate. Historical facts, similar to words whispered in the child’s game, â€Å"telephone,† are easily transformed into different facts, either adding or subtracting certain details from the story. James Loewen, in The Lies My Teacher Told Me, reveals how much history has been changed by textbook writes so that students studying the textbooks can understand and connect to the information. In Howard Zinn’s, People’s History of the United States, theRead MoreHistorical Memory Of The Memorial1525 Words   |  7 Pagescriticisms that many warped monuments face today, such as heroification. In order to have an effective monument, Loewen believes that the monument needs to be honest in the story that it shows, which includes not omitting any important figures, no racism, and no glorification and heroification of figures or ideas in the monument. Many have agreed that the image depicted in the Memorial is deceiving and creates a misleading historical memory for tourists. Historical memory is the way in which an eventRead MoreSummary Of Lies My Teacher Told Me2933 Words   |  12 PagesIntroduction to Analyzing Arguments 1. What is the topic? The book, Lies My Teacher Told Me, begins with an introduction in which author James W. Loewen empathizes with the students. He discusses how History, specifically American History, is taught incorrectly. Loewen is able to share his understanding of why high school students think history is boring. He begins his argument with facts and numbers by saying that out of all the subjects in school, history is almost every students least favorite