trade liberalization

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pages: 334 words: 98,950

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Ha-Joon Chang

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affirmative action, Albert Einstein, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, falling living standards, Fellow of the Royal Society, financial deregulation, fixed income, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, labour mobility, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

There are clearly winners and losers involved in changing trade patterns, whether it is due to trade liberalization or to the rise of new, more productive foreign producers. Most free trade economists would accept that there are winners and losers from trade liberalization but argue that their existence cannot be an argument against trade liberalization. Trade liberalization brings overall gains. As the winners gain more than what is lost by the losers, the winners can make up all the latter’s losses and still have something left for themselves. This is known as the ‘compensation principle’ – if the winners from an economic change can fully compensate the losers and still have something left, the change is worth making. The first problem with this line of argument is that trade liberalization does not necessarily bring overall gain. Even if there are winners from the process, their gains may not be as large as the losses suffered by the losers – for example, when trade liberalization reduces the growth rate or even make the economy shrink, as has happened in many developing countries in the past two decades.

During 2001–2005, Mexico’s growth performance has been miserable, with an annual growth rate of per capita income at 0.3% (or a paltry 1. 7% increase in total over five years).4 By contrast, during the ‘bad old days’ of ISI (1955–82), Mexico’s per capita income had grown much faster than during the NAFTA period – at an average of 3.1% per year.5 Mexico is a particularly striking example of the failure of premature wholesale trade liberalization, but there are other examples.6 In Ivory Coast, following tariff cuts of 40% in 1986, the chemical, textile, shoe and automobile industries virtually collapsed. Unemployment soared. In Zimbabwe, following trade liberalization in 1990, the unemployment rate jumped from 10% to 20%. It had been hoped that the capital and labour resources released from the enterprises that went bankrupt due to trade liberalization would be absorbed by new businesses. This simply did not happen on a sufficient scale. It is not surprising that growth evaporated and unemployment soared. Trade liberalization has created other problems, too. It has increased the pressures on government budgets, as it reduced tariff revenues.

Because they lack tax collection capabilities and because tariffs are the easiest tax to collect, they rely heavily on tariffs (which sometimes account for over 50% of total government revenue).7 As a result, the fiscal adjustment that has had to be made following large-scale trade liberalization has been huge in many developing countries – even a recent IMF study shows that, in low-income countries that have limited abilities to collect other taxes, less than 30% of the revenue lost due to trade liberalization over the last 25 years has been made up by other taxes.8 Moreover, lower levels of business activity and higher unemployment resulting from trade liberalization have also reduced income tax revenue.When countries were already under considerable pressure from the IMF to reduce their budget deficits, falling revenue meant severe cuts in spending, often eating into vital areas like education, health and physical infrastructure, damaging long-term growth. It is perfectly possible that some degree of gradual trade liberalization may have been beneficial, and even necessary, for certain developing countries in the 1980s – India and China come to mind.


pages: 347 words: 99,317

Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity by Ha-Joon Chang

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affirmative action, Albert Einstein, banking crisis, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, falling living standards, Fellow of the Royal Society, financial deregulation, fixed income, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, labour mobility, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

There are clearly winners and losers involved in changing trade patterns, whether it is due to trade liberalization or to the rise of new, more productive foreign producers. Most free trade economists would accept that there are winners and losers from trade liberalization but argue that their existence cannot be an argument against trade liberalization. Trade liberalization brings overall gains. As the winners gain more than what is lost by the losers, the winners can make up all the latter’s losses and still have something left for themselves. This is known as the ‘compensation principle’ – if the winners from an economic change can fully compensate the losers and still have something left, the change is worth making. The first problem with this line of argument is that trade liberalization does not necessarily bring overall gain. Even if there are winners from the process, their gains may not be as large as the losses suffered by the losers – for example, when trade liberalization reduces the growth rate or even make the economy shrink, as has happened in many developing countries in the past two decades.

During 2001–2005, Mexico’s growth performance has been miserable, with an annual growth rate of per capita income at 0.3% (or a paltry 1.7% increase in total over five years).4 By contrast, during the ‘bad old days’ of ISI (1955–82), Mexico’s per capita income had grown much faster than during the NAFTA period – at an average of 3.1% per year.5 Mexico is a particularly striking example of the failure of premature wholesale trade liberalization, but there are other examples.6 In Ivory Coast, following tariff cuts of 40% in 1986, the chemical, textile, shoe and automobile industries virtually collapsed. Unemployment soared. In Zimbabwe, following trade liberalization in 1990, the unemployment rate jumped from 10% to 20%. It had been hoped that the capital and labour resources released from the enterprises that went bankrupt due to trade liberalization would be absorbed by new businesses. This simply did not happen on a sufficient scale. It is not surprising that growth evaporated and unemployment soared. Trade liberalization has created other problems, too. It has increased the pressures on government budgets, as it reduced tariff revenues.

Because they lack tax collection capabilities and because tariffs are the easiest tax to collect, they rely heavily on tariffs (which sometimes account for over 50% of total government revenue).7 As a result, the fiscal adjustment that has had to be made following large-scale trade liberalization has been huge in many developing countries – even a recent IMF study shows that, in low-income countries that have limited abilities to collect other taxes, less than 30% of the revenue lost due to trade liberalization over the last 25 years has been made up by other taxes.8 Moreover, lower levels of business activity and higher unemployment resulting from trade liberalization have also reduced income tax revenue. When countries were already under considerable pressure from the IMF to reduce their budget deficits, falling revenue meant severe cuts in spending, often eating into vital areas like education, health and physical infrastructure, damaging long-term growth. It is perfectly possible that some degree of gradual trade liberalization may have been beneficial, and even necessary, for certain developing countries in the 1980s – India and China come to mind.

Making Globalization Work by Joseph E. Stiglitz

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affirmative action, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, Berlin Wall, business process, capital controls, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Gini coefficient, global reserve currency, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Kenneth Arrow, Kenneth Rogoff, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, trickle-down economics, union organizing, Washington Consensus, zero-sum game

To fulfill the promise that more trade will follow from trade liberalization, much else is required, as we shall see. Moreover, trade liberalization exposes countries to more risk, and developing countries (and their workers) are less prepared to bear that risk. Workers in the United States and Europe worry about being thrown out of their jobs as a result of a surge in imports. But workers in these countries have a strong safety net to fall back on: they have the education that makes it easier to move from one job to another; they often have bank accounts and receive severance pay to buffer their transition between jobs. Workers in developing countries have none of these. Finally, even if trade does follow, not everyone is a winner. The theory of trade liberalization (under the assumption of perfect markets, and under the hypothesis that the liberalization is fair) only promises that the country as a whole will benefit.

It is not just those who lose their jobs, and their families, who are affected. Almost everyone is at risk. For example, when local industries shut down because of competition from imports, their suppliers are adversely affected. Increased insecurity is one of the reasons that opposition to trade liberalization is so widespread. Politicians and economists who promise that trade liberalization will make everyone better off are being disingenuous. Economic theory (and historical experience) suggests the contrary: even if trade liberalization may make the country as a whole better off, it results in some groups being worse off " And it suggests that, at least in the advanced industrial countries, it is those at the bottom--unskilled workers— who will be hurt the most." The world of Adam Smith and the free trade advocates, in which free trade will make everyone better off, is not only a mythical world of perfectly working markets with no unemployment; it is also a world in which risk doesn't matter because there are perfect insurance markets to which risk can be shifted, and where competition is always perfect, with no Microsofts or Intels dominating the field.

Unless the direction in which negotiations have been going in recent years is changed dramatically, more and more developing countries are likely to decide that no agreement is better than a bad one. But what are the prospects of a fairer trade regime? Trade liberalization has not lived up to its promise. But the basic logic of trade—its potential to make most, if not all, better off—remains. Trade is not a zero-sum game, in which those who win do so at the cost of others; it is, or least it can be, a positive-sum game, in which everyone can be a winner. If that potential is to be realized, first we must reject two of the long-standing premises of trade liberalization: that trade liberalization automatically leads to more trade and growth, and that growth will mo MAKING GLOBALIZATION WORK automatically "trickle down" to benefit all. Neither is consistent with economic theory or historical experience.


pages: 356 words: 103,944

The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

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affirmative action, Asian financial crisis, bank run, banking crisis, bilateral investment treaty, borderless world, Bretton Woods, British Empire, capital controls, Carmen Reinhart, central bank independence, collective bargaining, colonial rule, Corn Laws, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, Doha Development Round, en.wikipedia.org, endogenous growth, eurozone crisis, financial deregulation, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, George Akerlof, guest worker program, Hernando de Soto, immigration reform, income inequality, income per capita, industrial cluster, information asymmetry, joint-stock company, Kenneth Rogoff, labour market flexibility, labour mobility, land reform, liberal capitalism, light touch regulation, Long Term Capital Management, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, microcredit, Monroe Doctrine, moral hazard, night-watchman state, non-tariff barriers, offshore financial centre, oil shock, open borders, open economy, Paul Samuelson, price stability, profit maximization, race to the bottom, regulatory arbitrage, savings glut, Silicon Valley, special drawing rights, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tobin tax, too big to fail, trade liberalization, trade route, transaction costs, tulip mania, Washington Consensus, World Values Survey

The Comprehensive Immigration Reform Act of 2006 contained provisions that would have expanded a guest worker scheme in the United States, but the bill died an early death in Congress. An enlarged foreign worker presence clearly garners little enthusiasm in the United States or in Europe. In light of this, it would be easy to write such programs off as politically unrealistic. That would be a mistake. Trade liberalization has never had a huge amount of domestic political support either. Imports from developing countries create the same downward pressure on rich country wages as immigration. Yet that has not stopped policy makers from bringing trade barriers down. Trade liberalization succeeded through a combination of political leadership, lobbying by exporters and multinational enterprises, and the ideas of economists. Temporary migration, by contrast, has rarely had a well-defined constituency in the advanced countries. The benefits are no smaller, but the beneficiaries are less clearly identifiable.

Once the Corn Laws were abolished in Britain, the dominant economic power of the day, the pressure was on for other European countries to follow suit. Many perceived the reform as a political and economic success in Britain. Economic commentators on the Continent pointed with awe to the large increase in Britain’s commerce and output since the repeal—although of course it was really the Industrial Revolution that deserved the bulk of the credit. Britain’s apparent success did not necessarily make trade liberalization easier in other countries. As the emperor Louis-Napoléon Bonaparte put it to the British MP and free trade proselytizer Richard Cobden, “I am charmed and flattered at the idea of performing a similar work in my country; but it is very difficult in France to make reforms; we make revolutions in France, not reforms.”2 However, there was one political expedient to which free trade–minded leaders have resorted ever since: reduce trade barriers in exchange for another country doing the same, and then present liberalization to the opposition as a necessary “concession” made to get the other party to open their markets.

Most recent estimates put the “overall” gains to the United States from a global move to free trade in tenths of 1 percent of U.S. gross domestic product.18 No doubt certain export interests would benefit considerably more; but the losses to others would be commensurately large as well. The more open an economy is, the worse the redistribution-to-efficiency ratio gets. The political and social-cost-benefit ratio of trade liberalization looks very different when tariffs are 5 percent instead of 50 percent. It is inherent in the economics of trade that going the last few steps to free trade will be particularly difficult because it generates lots of dislocation but little overall gain. There is nothing similarly self-exhausting in the case of technical progress. So the economist’s triangles and technical progress analogy are conversation starters, not conversation enders.


India's Long Road by Vijay Joshi

Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, Bretton Woods, business climate, capital controls, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, corporate governance, creative destruction, crony capitalism, decarbonisation, deindustrialization, demographic dividend, demographic transition, Doha Development Round, eurozone crisis, facts on the ground, failed state, financial intermediation, financial repression, first-past-the-post, floating exchange rates, full employment, germ theory of disease, Gini coefficient, global supply chain, global value chain, hiring and firing, income inequality, Indoor air pollution, Induced demand, inflation targeting, invisible hand, land reform, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price mechanism, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, race to the bottom, randomized controlled trial, rent-seeking, reserve currency, rising living standards, school choice, school vouchers, secular stagnation, Silicon Valley, smart cities, South China Sea, special drawing rights, The Future of Employment, The Market for Lemons, too big to fail, total factor productivity, trade liberalization, transaction costs, universal basic income, urban sprawl, working-age population

If this is what happens, a huge opportunity will have been squandered, and the GST would become just a ‘name-​changer, not a game-​changer’.25 What about taxes and restrictions specifically on international trade? As seen above, there is little justification for them. Worldwide experience confirms that trade openness is a crucial and necessary condition for rapid growth. Trade liberalization, especially for industrial goods, has been one of the signal achievements of India’s reform programme so far; and it has made a big difference. The economy has become much more open26 (though agriculture still remains highly protected, as in many other countries). Exposure to international competition has improved resource allocation and raised significantly the technological sophistication of the Indian economy. Further trade liberalization would be desirable. Whether this should be done unilaterally or as part of multilateral or regional agreements is a salient issue. Trade policies are discussed at greater length in Chapter 12, and so are policies towards foreign direct investment (FDI), an important channel for competition as well as technology transfer.

India has run a large trade surplus in agricultural products for years; with the right policies, it would have many further significant opportunities in this area.56 Most farmers would gain from trade liberalization since they could more than recoup the loss of subsidies from the gain on higher product prices. However, two groups would be adversely affected. The first group is poor urban and rural consumers of food, including landless labourers, who would suffer, for a time, a loss of real income due to higher food prices. The second group is very small, self-​sufficient farmers, who consume what they produce and do not have a marketable surplus. This means that an essential accompaniment of agricultural trade liberalization is a functioning system of income support for poor people (as strongly advocated in Chapter 10). Needless to say, the role of government in agriculture extends well beyond reducing subsidies and investing in physical rural infrastructure.

Sukhtankar, S. (2015), ‘The Impact of Corruption on Consumer Markets: Evidence from the Allocation of 2G Wireless Spectrum in India’, Journal of Law and Economics, Vol. 58(1), 75–​108. Sukhtankar, S., and M. Vaishnav (2015), ‘Corruption in India: Bridging Research Evidence and Policy Options’, India Policy Forum 2014/​15, Vol. 10, 193–​276. Topalova, P. (2007), ‘Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts’, in A. Harrison (ed.), 291–​336, Globalization and Poverty, University of Chicago Press, Chicago. Topalova, P., and A. Khandelwal (2011), ‘Trade Liberalization and Firm Productivity: The Case of India’, Review of Economics and Statistics, Vol. 93(3), 995–​1009. [ 334 ] References 335 Triffin, R. (1960), Gold and Dollar Crisis: The Future of Convertibility, Yale University Press, New Haven. UNCTAD (2015), World Investment Report. UNDP (United Nations Development Programme) (2015), Human Development Report 2015.


pages: 222 words: 75,561

The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It by Paul Collier

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air freight, Asian financial crisis, Bob Geldof, British Empire, Doha Development Round, failed state, falling living standards, income inequality, mass immigration, out of africa, rent-seeking, Ronald Reagan, structural adjustment programs, trade liberalization, zero-sum game

I am not, however, an enthusiast for “big bang” trade liberalization: where there is some hope that firms can become globally competitive it may be better to draw their feet gradually closer to the fire than to push them into sudden death. Trade liberalization has got parasitic firms off the backs of ordinary people, but it has not enabled other activities to flourish. For that governments need to change a whole range of policies that between them determine firms’ costs. Why do the governments of the bottom billion typically adopt high trade barriers? Partly because they are one of the key sources of corruption. That’s why political reformers such as Marc Ravalomanana in Madagascar, Emmanuel Tumusiime-Mutebile in Uganda, and Ngozi Okonjo-Iweala in Nigeria all made trade liberalization a priority. The corruption generated by trade restrictions works on both grand and petty scales.

If a big increase in aid ruins export competitiveness, then inadvertently it accentuates the very problem that the bottom-billion countries need to put right—making new export activities competitive. Fortunately, trade liberalization is one of the remedies for Dutch disease. Extra aid increases the supply of imports, and so a matching increase in the demand for imports is needed. Only with a matching increase in demand are exporters not disadvantaged by the extra aid. Trade liberalization increases the demand for imports by making them cheaper without the need to appreciate the exchange rate: the taxes imposed on imports are reduced. How much trade liberalization is needed? That depends upon what the aid is used for. If the aid is used to buy foreign expertise, it directly increases the need for foreign exchange, as foreign experts are paid in dollars.

But if the aid is used to pay for local schoolteachers, then it has little direct effect on the need for foreign exchange, as schoolteachers are paid in local currency and probably don’t spend much of their salary on imports. So the sort of social uses that NGOs tend to favor generally require more trade liberalization than the growth-oriented uses such as expertise and infrastructure. Christian Aid should be campaigning for African trade liberalization alongside extra aid. I do not know whether the advocacy people in Christian Aid simply have not understood this connection between aid and trade policy. It is not Christian Aid’s fault if trade liberalization doesn’t sell T-shirts as well as depictions of capitalist pigs do, but profiting from popular misconceptions is their fault. What Are the Answers? Is Fair Trade the Answer? The fair trade campaign attempts to get higher prices for some of the bottom billion’s current exports, such as coffee.


pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

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Asian financial crisis, capital controls, clean water, correlation does not imply causation, creative destruction, Deng Xiaoping, Edward Glaeser, Gini coefficient, half of the world's population has never made a phone call, Hernando de Soto, illegal immigration, income inequality, informal economy, Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, liberal capitalism, manufacturing employment, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, profit motive, race to the bottom, rising living standards, school vouchers, Silicon Valley, Simon Kuznets, structural adjustment programs, The Wealth of Nations by Adam Smith, Tobin tax, trade liberalization, trade route, transaction costs, trickle-down economics, union organizing, zero-sum game

See European Monetary System Enhanced Border Security and Visa Entry Reform Act of 2002, 145–46 Environmental conditions, developing countries, 193–94 Environmental improvements, per capita GDP and, 229–30 Environmental protection, 193–94, 224–38 Environmental regulations, prosperity and, 225–26 Environmentally Significant Consumption, 228 Equality, 84–89 free capital markets and, 244 results in trade-liberalizing countries, 133 Eriko, 78 Eriksen, Thomas Hylland, 283 Estonia, trade liberalization, 144 Ethiopia equality in, 86 starvation, 34 EU. See European Union Europe competition with developing countries, 205 Eastern, inequality, 57 mobility, 145 spread of prosperity, 25 work-related stress and burnout, 206–9 See also specific countries European Commission, cost of EU trade barriers, 160 European Free Trade Association (EFTA), economic differences between countries, 135 European Monetary System (EMS), 261, 267 European Union (EU) Common Agricultural Policy, 158–60 economic differences between countries, 135 employment, 137 Everything-but-Arms initiative, 161 meat subsidies, 237–38 mobility, 145 need for immigrants, 148 subsidies, 158–61, 237–38 summit in Gothenburg, Sweden, 9–10 trade barriers, 125 See also specific countries 314 Everyday actions, globalization consisting of, 12–14 Everything-but-Arms initiative, 161 Exchange rates, 255, 256 fixed or controlled, 260–61, 266–67 Exhausting raw materials, 235 Expenditures, environmental compliance portion, 227 Export-processing zones.

‘‘The goal of this revolution,’’ according to Gray, ‘‘was to insulate neo-liberal policy irreversibly from democratic accountability in political life.’’4 Some pundits—among them Robert Kuttner, editor of The American Prospect, and economist Joseph Stiglitz—even characterize free-market advocacy as a kind of quasireligious cult, which they call ‘‘market fundamentalism.’’ Deregulation, privatization, and trade liberalization, however, were not invented by ultra-liberal ideologues. True, there were political leaders—Reagan and Thatcher, for instance—who had been inspired by economic liberalism. But the biggest reformers were communists in China and the Soviet Union, protectionists in Latin America, and nationalists in Asia. In many other European countries, the progress has been spurred by Social Democrats. In short, the notion of conspiratorial ultra-liberalsmaking a revolution by shock therapy is completely off the mark.

That makes it hard to separate the effects of one policy from the effects of another.8 The problems of measurement are real ones, and results of this kind always have to be taken with a grain of salt, but it remains interesting that, with so very few exceptions, those studies point to great advantages with free trade. All the same, they have to be supplemented with theoretical analysis and case studies of individual countries before and after trade liberalization measures. Such studies also quite clearly bring out the advantages of free trade. The economist Sebastian Edwards maintains that the important thing is not to devise exact, objective measurements but to test many different variables, so as to see whether a pattern emerges. Using 8 different yardsticks of openness, he has made 18 calculations based on several data sets and using a variety of calculation 131 methods.


pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

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Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

(Recall the examples of Roger and Me and The Full Monty from Chapter 10). HOS can present such a positive view of trade liberalization because it assumes that all capital and labour are the same (‘homogeneous’ is the technical term) and thus can be readily redeployed in any activity (technically this is known as the assumption of perfect factor mobility).4 Even the use of the compensation principle cannot quite hide the fact that a lot of people get hurt by trade liberalization Even when they acknowledge that trade liberalization may produce losers, free-trade economists justify trade liberalization by invoking the ‘compensation principle’ (see Chapter 4). They argue that, as trade liberalization makes the whole country better off, the losers from the process can be fully compensated and the winners still have additional income left.

The share of manufacturing in GDP has fallen from 34 per cent in the mid-1980s to 15 per cent today. In Sub-Saharan Africa, the share has fallen from 17–18 per cent during the 1970s and much of the 1980s to 12 per cent today.15 This premature deindustrialization is largely the result of neo-liberal economic policies implemented in these countries since the 1980s (see Chapter 3).16 Sudden trade liberalization has destroyed swathes of manufacturing industries in those countries. Financial liberalization has allowed banks to redirect their loans to (more lucrative) consumers, away from producers. Policies geared towards inflation control, such as high interest rates and over-valued currencies, have added to the agony of manufacturing firms by making loans expensive and exports more difficult. Service-based success stories?

Likewise, even if a country is rubbish at producing everything, it can benefit from trade if it specializes in things which it is least rubbish at. International trade benefits every country involved. The logic behind the theory of comparative advantage is impeccable – given its assumptions Since Ricardo invented it in the early nineteenth century, the theory of comparative advantage has provided a powerful argument in favour of free trade and trade liberalization, that is, reduction in government restrictions on trade. The logic is impeccable – that is, insofar as we accept its underlying assumptions. Once we question those assumptions, its validity becomes much more limited. Let me explain this, focusing on two key assumptions behind the Heckscher-Ohlin-Samuelson version of the theory of comparative advantage (henceforth HOS), which we first encountered in Chapter 4 as lying at the heart of the modern argument for free trade.2 HOS structurally rules out the most important form of beneficial protectionism by assuming that all countries are equally capable The most important assumption underlying HOS is that all countries have equal productive capabilities – that is, they can use any technology they want.3 According to this assumption, the only reason why a country might specialize in one product rather than another is because that product happens to be produced using a technology that is in line with its relative factor endowment – that is, how much capital and labour it has.


pages: 606 words: 87,358

The Great Convergence: Information Technology and the New Globalization by Richard Baldwin

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3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, Commodity Super-Cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

Apart from changing the name, the deal institutionalized the GATT’s judicial role in dispute settlement and added some basic “rules of road” for international investment, regulations, intellectual property, and services. DATA SOURCE: Will Martin and Patrick Messerlin, “Why Is It So Difficult? Trade Liberalization Under the Doha Agenda,” Oxford Review of Economic Policy 23, no. 3 (2007): 347–366. Specifically, three liberalization initiatives were launched in 1986. The United States and Canada started talks on a free trade agreement that finished in 1989 (this eventually turned into the North American Free Trade Agreement, or NAFTA). The year 1986 also saw the Europeans both deepen and widen their trade liberalization club, which was by then called the European Union (EU). Spain and Portugal were admitted as new members, and the EU embarked on a deep liberalization of many other economic barriers in the context of the so-called Single Market program.

GDP shares shifted away from the A7 and toward the G7 quite suddenly in Act I but stagnated in Act II, only to surge ahead even further in Act III. Note that the sum of A7 plus G7 shares remains at approximately 80 percent throughout all three acts. DATA SOURCE: Maddison database (2009 version). Act III: 1946 to 1990. The “resolution” comes in Act III when the trade-cost hero regains her aplomb and triumphs over adversity. For forty years, trade costs are reduced by trade liberalization and transportation innovations. The unbundling of production and consumption advances as never before. This three-act structure is not just an organizational convenience—it is obvious in data, as Figure 16 shows. The technological breakthrough that started this reversal was the steam revolution. Steam power allowed humans to conquer intercontinental distances and reshape the world in ways that were un imaginable with horse, wind, and water power.

Hitler knew he needed goods made outside of Germany, but his solution was to turn international trade into domestic trade by expanding the borders of the Third Reich from the Atlantic to Moscow and from the Arctic Sea to the Black Sea.7 This was the darkest period for trade in modern times—the period when the association between protectionism and really bad things first took hold in policymakers’ minds. Dawn, however, was on the way. Act III: Post–World War II Unbundling The history of post–World War II trade liberalization begins before itself, as so often happens with historical narratives. Regretting the burst of protectionism it sparked in the late 1920s, the United States Congress passed the Reciprocal Trade Agreements Act of 1934. This flipped the United States from a unilateral tariff setter to a reciprocal tariff cutter. To avoid a spaghetti bowl of tariffs, the 1934 Act imposed the concept of “most favored nation” status—known as MFN to experts.


pages: 823 words: 206,070

The Making of Global Capitalism by Leo Panitch, Sam Gindin

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accounting loophole / creative accounting, active measures, airline deregulation, anti-communist, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Basel III, Big bang: deregulation of the City of London, bilateral investment treaty, Branko Milanovic, Bretton Woods, BRICs, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collective bargaining, continuous integration, corporate governance, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, dark matter, Deng Xiaoping, disintermediation, ending welfare as we know it, eurozone crisis, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, full employment, Gini coefficient, global value chain, guest worker program, Hyman Minsky, imperial preference, income inequality, inflation targeting, interchangeable parts, interest rate swap, Kenneth Rogoff, land reform, late capitalism, liberal capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, manufacturing employment, market bubble, market fundamentalism, Martin Wolf, means of production, money market fund, money: store of value / unit of account / medium of exchange, Monroe Doctrine, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, new economy, non-tariff barriers, Northern Rock, oil shock, precariat, price stability, quantitative easing, Ralph Nader, RAND corporation, regulatory arbitrage, reserve currency, risk tolerance, Ronald Reagan, seigniorage, shareholder value, short selling, Silicon Valley, sovereign wealth fund, special drawing rights, special economic zone, structural adjustment programs, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, very high income, Washington Consensus, Works Progress Administration, zero-coupon bond, zero-sum game

The fact that the “major trade laws passed by Congress in the 1970s and 1980s were liberal in their orientation” was a very significant element in the further internationalization of the American state.6With the help of the Treasury’s direct engagement in mobilizing US business behind it, the Trade Act of 1974 centralized trade policy in the hands of a Special Trade Representative (after 1980 called the “Office of the USTR”). In addition to becoming “the primary coordinator of US trade liberalization efforts” inside the American state, the USTR became—especially through thirty-one advisory committees with over 700 members from every industrial and agricultural sector, serving two-year terms—“the principle vehicle for translating capitalist interests into coherent trade policy positions.”7 But no less crucial for the “fast track” passage of trade legislation, and for anticipating and deflecting Congressional opposition despite considerable economic dislocation and rising unemployment, was the increasing juridification of the way domestic political problems arising from trade liberalization were handled. As Chorev has shown, the changes made under the 1974 Trade Act to expedite appeals for “adjustment assistance” for workers and firms affected by increased imports was indicative of “the willingness of the American government to take on itself the cost of trade liberalization rather than imposing it on others”—while the new quasi-judicial procedures established for anti-dumping measures and countervailing duties were designed to “restructure protectionist measures in a way that would limit their negative effects.”

As Chorev has shown, the changes made under the 1974 Trade Act to expedite appeals for “adjustment assistance” for workers and firms affected by increased imports was indicative of “the willingness of the American government to take on itself the cost of trade liberalization rather than imposing it on others”—while the new quasi-judicial procedures established for anti-dumping measures and countervailing duties were designed to “restructure protectionist measures in a way that would limit their negative effects.” These changes allowed for tactical concessions to protectionist forces by making it easier to secure remedies for the costs of free trade. Although this was widely misperceived as a retreat from liberalization, its deliberate aim was in fact to contain protectionism by shifting the focus of political struggles away from trade liberalization itself. As Chorev concluded, “the legalization of the decision-making process would render the political influence of protectionists less determinant of the final outcome.

Not only was it, as Clayton’s biographer put it, “the most sweeping trade agreement—in terms of tariff reduction and the number of goods and countries involved—in the history of the industrial world”;19it also allowed for flexibility in both bilateral and multilateral negotiations, where “the procedures of negotiation preserved the political advantage of the rich countries and permitted American dominance.”20As a commercial trade agreement not encumbered by the proposed charter for the ITO, the GATT set out long-term liberalizing goals, and set ground rules for non-discriminatory treatment of national and international investors while leaving ample scope for the type of temporary trade restrictions that were agreed with the British in the summer of 1947.21 US trade policy, which would henceforth no longer go under the name of the Open Door, remained primarily “shaped by domestic influences” rather than an “embedded” international regime.22But those influences were themselves increasingly structured by the way the American state had been internationalized and the responsibility it took upon itself for developing capitalism on a global scale after World War II. In the postwar period, the institutional restructuring introduced in the 1934 Trade Act was rendered much more significant than it could have been during the Depression, as successive administrations pursued “a general process of trade liberalization with only exceptional treatment to ‘special’ cases” (which were left to the play of “industry-specific pressures” in Congress).23And now that it was recognized, even in the State Department, that accumulation at home was only marginally dependent on exports, trade strategy was determined above all by the commitment to ensuring that what Truman called “the future pattern of economic relations” internationally would be conducive to the expansion of “free enterprise” in ways that would eventually allow for the free movement of capital.


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The Making of an Atlantic Ruling Class by Kees Van der Pijl

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anti-communist, banking crisis, Berlin Wall, Boycotts of Israel, Bretton Woods, British Empire, capital controls, collective bargaining, colonial rule, cuban missile crisis, deindustrialization, deskilling, diversified portfolio, European colonialism, floating exchange rates, full employment, imperial preference, Joseph Schumpeter, liberal capitalism, mass immigration, means of production, North Sea oil, Plutocrats, plutocrats, profit maximization, RAND corporation, strikebreaker, trade liberalization, trade route, union organizing, uranium enrichment, urban renewal, War on Poverty

As far as the American side was concerned, ‘the passage of the Trade Expansion Act of 1962 represent(ed) in many ways a halt and partial reversal of the protectionist trend of the 1950’s’.95 George Ball, Under-Secretary of State and one of the architects of the Trade Expansion programme, in April outlined the notion of an Atlantic Partnership more explicitly. In late 1961, together with Christian Herter and Will Clayton, Ball had proposed to make an Atlantic Partnership the basis for trade liberalization and the coordination of development aid. Now he repeated the advice. Ball stressed the value of the newly-formed OECD for coordinating economic policy between the North Atlantic states and for jointly organizing their intervention in the underdeveloped world via aid programmes. These two goals replaced the trade liberalization objective advanced by the original OEEC and reflected the structural growth of state intervention as well as the projected widening of the international circuit of finance capital beyond the North Atlantic area.96 On 4 July, finally, the President made his famous statement that the United States was ‘ready for a “Declaration of Interdependence” ’ and was ‘prepared to discuss with a United Europe the ways and means of forming a concrete Atlantic partnership.’97 Concentrating the decisive military assets in American hands in the meantime was a crucial aspect of the Partnership concept.

In Link’s words, Wilson in this year ‘became almost a new political creature, and under his leadership a Democratic Congress enacted the most sweeping and significant progressive legislation in the history of the country up to that time’.27 Before the actual election campaign started, rural credits regulation and labour protection were enacted, and the Presidential support for an eight-hour day was secured. Business interests were compensated by a degree of protectionsim, modifying the earlier trade liberalism. Having manoeuvred himself into a strong position by asking for a popular mandate for peace and cementing approval with progressive legislation, Wilson proceeded to translate the results into freedom of manoeuvre in foreign affairs by publicly stressing the ‘popular’ nature of his international proposals. In December, 1916, the President asked the belligerents to define the objectives for which they were fighting.

It was promptly repealed when the Democrats regained control of both houses in the November election.74 The embargoes against Eastern Europe and the relatively weak effort at penetrating the dependencies of European imperialism lent free-trade policy its markedly Atlantic accent. Free trade was an important element in the requirements placed before the recipient Marshall states by Undersecretary Clayton at the Paris conference in September 1947. Clayton’s list, consisting essentially of a promise of regional self-sufficiency in four years, trade liberalization, and steps to achieve monetary and financial stability, which was repeated by the respective US ambassadors to each of the sixteen governments, showed the weight Washington attached to the liberalization aspect. At the same time, it testified to the narrowing of the wartime global scope to Atlantic dimensions. The United Nations agencies, notably the Economic Commission for Europe which had been constituted not long before, had to be by-passed in implementing Clayton’s seventh point: the creation of a permanent organization to execute the plan.75 This requirement in the prevailing context reflected the liberal offensive thrust rather than a wish for European integration in the federalist sense.


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The Locavore's Dilemma by Pierre Desrochers, Hiroko Shimizu

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air freight, back-to-the-land, British Empire, Columbian Exchange, Community Supported Agriculture, creative destruction, edge city, Edward Glaeser, food miles, Food sovereignty, global supply chain, intermodal, invention of agriculture, inventory management, invisible hand, Jane Jacobs, labour mobility, land tenure, megacity, moral hazard, mortgage debt, oil shale / tar sands, oil shock, peak oil, planetary scale, profit motive, refrigerator car, Steven Pinker, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, Upton Sinclair, urban sprawl

As the Austrian economist Ludwig von Mises observed several decades ago: “A warlike nation must aim at autarky in order to be independent of foreign trade. It must foster the production of substitutes irrespective of [economic] considerations. It cannot do without full government control of production because the selfishness of the individual citizens would thwart the plans of the leader. Even in peacetime the commander-in-chief must be entrusted with economic dictatorship.” 52 Many economists otherwise supportive of trade liberalization have also been willing to make an exception to their stance when national security was thought to be at stake. Perhaps the most famous was Adam Smith, who observed, “defence… is of much more importance than opulence.”53 In short, Smith implied, autarkic policies come at a significant price, but it pales in comparison to starvation in time of conflicts. We will now argue, contra Adam Smith himself, that the “autarky for food security” rationale doesn’t stand up to scrutiny.

., as if they had been converted to barley) went from around 27 million tons to no less than 74 million tons during this period.65 By 1938, the British and German markets absorbed more than 76% of Danish exports, which were mostly made up of livestock products such as butter, eggs, lard, and bacon. As Karl Brandt argued in 1945, far from proving the assertions of agricultural protectionists that all trade liberalization “would financially ruin millions of European family farms and reduce the farmers to abject misery and poverty… [or a] general depression of their living standards,” Danish agriculture from the middle of the 19th century to the eve of World War II illustrated that, by embracing free trade, Danish farmers had not only learned to “discover the fields of production in which they had the best opportunity to compete successfully with the farmers of the world, but they also were able to develop their own abilities, their agricultural production and marketing plants to almost functional perfection,” the result being “a most remarkable degree of culture and the art of decent living.”66 The Nazi invasion of Denmark in April 1940, however, quickly cut off the importation of foreign oilseeds and grains along with access to the British market.

As estimated by the authors of a recent report from the Food and Agriculture Organization of the United Nations (FAO) on humanity’s capacity to feed itself in 2050, even if most of today’s less advanced economies are expected to provide for most of their future needs by expanding their own production, they would still need to double their net imports of cereals, from 135 million metric tons in 2008–09 to 300 million by mid-century, and therefore require not only infrastructure improvements, but also a “global trading system that is fair and competitive.”78 Paradoxically, a world where in a few decades 9 billion people could afford to purchase their food from 90 million highly efficient farmers using the planet’s most productive locations would be incredibly more food secure than one in which a few billion farmers feed their neighbors but lack the infrastructure to ship their products over long distances. Food insecurity is mainly due to a lack of income opportunities rather than geography, as poor and hungry people cannot afford to purchase food from the international market. Economic development through trade liberalization is what food security should really be about.79, 80 6 Myth #5: Locavorism Offers Tastier, More Nutritious, and Safer Food Of all the frauds practiced by mercenary dealers, there is none more reprehensible, and at the same time more prevalent, than the sophistication1 of the various articles of food. This unprincipled and nefarious practice, increasing in degree as it has been found difficult of detection, is now applied to almost every commodity which can be classed among either the necessaries or the luxuries of life, and is carried on to a most alarming extent in every part of the United Kingdom.

Falling Behind: Explaining the Development Gap Between Latin America and the United States by Francis Fukuyama

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Andrei Shleifer, Atahualpa, barriers to entry, Berlin Wall, British Empire, business climate, Cass Sunstein, central bank independence, collective bargaining, colonial rule, conceptual framework, creative destruction, crony capitalism, European colonialism, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Hernando de Soto, income inequality, income per capita, labour market flexibility, land reform, land tenure, Monroe Doctrine, moral hazard, New Urbanism, oil shock, open economy, purchasing power parity, rent-seeking, Ronald Reagan, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, upwardly mobile, Washington Consensus, zero-sum game

Academics outside and inside Korea were concerned that Korean cultural values might prove to be an insurmountable obstacle that would impede economic growth. But South Korea, like Taiwan, was able to modify its economic strategy after the 1950s, just as the United States had done after World War II by establishing an international system for the liberalization of trade. While some countries carried out the necessary structural reforms for trade liberalization, Latin American countries opted not to do so. There were, however, two other major areas in which Latin America and East Asia diverged: agrarian reform and human capital development. At the end of World War II, the United States imposed drastic agrarian reform on Japan and its former colony, South Korea; the Nationalist Party government in Taiwan also carried out major agrarian reform. In those three countries of East Asia, the rupture of the old property rights system imposed from abroad fostered equality and served as a vaccine for the future; the inequality issue was removed from the national political agenda.

It is interesting and ironic that it is easier to open a new business in the People’s Republic of China than in Mexico or Argentina, and three times easier in communist China than in Brazil. It should come as no surprise that the countries that facilitate the creation of new businesses, which generate employment and income, grow more. There are, however, some positive cases in Latin America. Mexico’s trade liberalization program, which allowed its subsequent entry to the North American Free Trade Agreement (NAFTA), generated quick growth in the sectors linked to the international economy. Despite table 4.6 Number of Days Required to Start Up a New Firm, 2003 Australia United States Puerto Rico Chile Japan South Korea Thailand People’s Republic of China Mexico Argentina Brazil 2 4 6 28 31 33 42 46 51 68 152 Source: World Development Indicators 2004 ( Washington, DC: World Bank, 2004).

The Brady Plan had reduced the burden of foreign debt, with Mexico securing the first debt reconstruction in 1989, followed by the sale of the controlling interest of the state in Teléfonos de México (TELMEX) to a private consortium. The democratic transitions were nearing completion, with the last in Chile (1990) about to take place. At a conference at the Institute for International Economics in 1989, a group of economists identified 10 key reforms that were essential to restore economic growth.23 The now well-known shopping list dubbed the Washington Consensus included fiscal discipline, trade liberalization, tax reform, a competitive exchange rate regime, privatization, liberalization of foreign direct investment inflows, market-determined interest rates, and deregulation. And there were two additional priorities: one focused on reducing subsidies and redirecting government spending toward education, health, and infrastructure development; the second was the enforcement of property rights. The argument was simple: weak laws and poor judicial systems reduce incentives to save and accumulate wealth.


pages: 488 words: 144,145

Inflated: How Money and Debt Built the American Dream by R. Christopher Whalen

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Albert Einstein, bank run, banking crisis, Black Swan, Bretton Woods, British Empire, California gold rush, Carmen Reinhart, central bank independence, commoditize, conceptual framework, corporate governance, corporate raider, creative destruction, cuban missile crisis, currency peg, debt deflation, falling living standards, fiat currency, financial deregulation, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, global reserve currency, housing crisis, interchangeable parts, invention of radio, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mutually assured destruction, non-tariff barriers, oil shock, Paul Samuelson, payday loans, Plutocrats, plutocrats, price stability, pushing on a string, quantitative easing, rent-seeking, reserve currency, Ronald Reagan, special drawing rights, The Chicago School, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, Upton Sinclair, women in the workforce

Even before the WWII ended, the Roosevelt Administration drafted a document authorizing the ITO and enabling legislation from Congress for broad powers to reduce tariffs at the discretion of the Executive Branch. The support for trade liberalization was consistent with the traditional Democratic opposition to tariffs, which Progressives saw merely as a means of enhancing the monopoly profits of big business for the benefit of the rich. Republicans, on the other hand, were the traditional protectionists and built the government’s limited finances on tariff revenue. But the most important domestic factor behind the broad and largely bipartisan support for trade liberalization was the fact that while much of the world lay in ruins, U.S. industrial capacity had grown to first in the world. The “hegemonic trade and payments position,” to quote Robert Baldwin, of the United States in the world economy required a policy of openness since American industry was the exporter to the world and American banks the lenders.19 From the early 1930s through the Tokyo Round of the GATT in 1974–1979, the United States oversaw a process of trade opening that, in theory at least, reduced tariffs around the globe by almost 80 percent compared to pre-WWII levels.

FDR ran against the budget deficits of Hoover’s years, but ignored the collapse of federal tax revenue caused by the worsening Depression. Like Wilson, he ran against the war, but would involve the United States in assisting the British from the outset of hostilities. FDR subsequently ran even bigger deficits than Hoover and eventually took American back to war. Ever duplicitous, FDR at first campaigned against tariffs in the months leading up to the 1932 election, promising that trade liberalization would be a key part of his administration. Echoing Democratic leaders such as Bryan and Al Smith, FDR made tariff reduction a centerpiece at the start of his campaign against Hoover. By the end of his campaign, FDR was singing from the protectionist gospel of the Republican Party. His flexibility in regard to these serious issues of economic and financial policy evidenced an agenda that was first and foremost political.

Both Baruch and Hoover spoke strongly against the new loan to Britain, insisting that American needs first be reckoned.76 Vinson had not reached Washington by taking risks and in 1947, with Truman down badly in the polls and the American electorate restive, selling Congress on forgiving the Lend Lease loans to Britain, much less make new loans to London, was difficult. Public opinion, led by major media organs like the New York Times, condemned Bretton Woods and the idea of trade liberalization—unless the United Kingdom and other nations of Europe followed suit and dropped their tariffs as well. Eventually, after lengthy negotiations and sometimes difficult exchanges between Keynes and Vinson, the two sides agreed on forgiveness of the lend-lease obligation and low-interest rate loans to finance Britain’s balance of payments deficit. The United States agreed to this formulation in large part to get the United Kingdom to follow up with a multilateral trade agreement removing the prewar tariffs.


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A Splendid Exchange: How Trade Shaped the World by William J. Bernstein

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Admiral Zheng, asset allocation, bank run, Benoit Mandelbrot, British Empire, call centre, clean water, Columbian Exchange, Corn Laws, David Ricardo: comparative advantage, deindustrialization, Doha Development Round, domestication of the camel, double entry bookkeeping, Eratosthenes, financial innovation, Gini coefficient, God and Mammon, ice-free Arctic, imperial preference, income inequality, intermodal, James Hargreaves, John Harrison: Longitude, Khyber Pass, low skilled workers, non-tariff barriers, Paul Samuelson, placebo effect, Port of Oakland, refrigerator car, Silicon Valley, South China Sea, South Sea Bubble, spice trade, spinning jenny, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade liberalization, trade route, transatlantic slave trade, transatlantic slave trade, transcontinental railway, upwardly mobile, working poor, zero-sum game

Almost two centuries after those words were written, and half a century after Cordell Hull and Proposals started the world down the road to free trade, the resultant inequalities and dislocations are again beginning to derail the process. Can free trade, with all its benefits, indeed be saved by compensating the losers? Many American advocates of free trade realize that in order for the current system of relatively free trade to survive, the nation's social safety net needs to be expanded, but lip service, at best, is all that is usually offered. Consider Jagdish Bhagwati, perhaps today's best-known proponent of trade liberalization and a formidable academician who has trained many of today's foremost economists. His book In Defense of Globalization spends three hundred pages living up to its title; it gives the issue of "adjustment assistance" less than two pages. The following passage from this book captures the tone used by many free traders in discussing displaced workers: If a steel mill closes down in Pennsylvania because steel in California has become cheaper, workers tend to accept that as something that happens, and the general unemployment insurance seems to be an adequate way to deal with the bad hand that an unpredictable fate has dealt one.

But the same workers get indignant when the loss is to a steel producer in Korea or Brazil, and they go off agitating for anti-dumping action.... Or they ask for special relief in the form of additional unemployment compensation, with or without retraining benefits and requirements." Professor Bhagwati only grudgingly accepts the need for compensation. Referring to a safety net specifically intended for those put out of work by foreign products, he continues: "This quasi-xenophobia is just a fact of life. If trade liberalization is to occur and be sustained, one or more of these special programs and policies have to be considered."34 Such sentiments not only unnecessarily antagonize workers but also are unfair; American industry has in fact been much more adept than labor at getting protection, particularly in the form of non-tariff barriers: quotas, subsidies, antidumping legislation, and the like.35 Trade economists are slowly beginning to realize that they must stop being their own worst enemies.

Plassey was just one facet of the Seven Years' War, which yielded a particularly rich bounty for England: not only the Bengal, but also Canada and much of the Lesser Antilles. 8. Quoted in J. R. Ward, "The Industrial Revolution and British Imperialism, 1750-1850," Economic History Review 47, no. 1 (February 1994): 47. 9. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Chicago: University of Chicago Press, 1976), I: 82. 10. Ibid., II:33; Barber, 97. 11. Anthony Webster, "The Political Economy of Trade Liberalization: The East India Company Charter Act of 1813," The Economic History Review 43, no. 3 (August 1990): 404-419. 12. Jack Beeching, The Chinese Opium Wars (New York: Harcourt Brace Jovanovich, 1975), 51. 13. W. Travis Hanes III, The Opium Wars (Naperville IL: Sourcebooks, 2002), 13-19. 14. Hsin-pao, 9-10. 15. Greenberg, 86. 16. Ibid., 5. 17. Hsin-pao, 4. 18. Greenberg, 6, 8. 19. Carl Trocki, Opium, Empire, and the Global Political Economy (London: Routledge, 1999), 6, 14-21. 20.

Global Financial Crisis by Noah Berlatsky

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accounting loophole / creative accounting, asset-backed security, banking crisis, Bretton Woods, capital controls, Celtic Tiger, centre right, circulation of elites, collapse of Lehman Brothers, collateralized debt obligation, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, Doha Development Round, energy security, eurozone crisis, financial innovation, Food sovereignty, George Akerlof, God and Mammon, Gordon Gekko, housing crisis, illegal immigration, income inequality, market bubble, market fundamentalism, mass immigration, moral hazard, new economy, Northern Rock, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, South China Sea, structural adjustment programs, too big to fail, trade liberalization, transfer pricing, working poor

Of course, that assumes Obama himself is a free trader. During the campaign, he opposed bilateral free trade agreements (FTAs) with Colombia and Panama and called for renegotiating NAFTA. In his first meeting with Mexican President Felipe Calderón, shortly before Inauguration Day, Obama expressed his desire to “upgrade” NAFTA. The world is now waiting to see whether, as president, Obama will be more skeptical of trade liberalization than Republican George W. Bush or Democrat Bill Clinton, the latter of whom championed NAFTA in the face of intense opposition from his fellow Democrats in Congress. If Obama wishes to maintain U.S. credibility and bolster America’s trade part182 Solutions to the Global Financial Crisis Protectionism in the European Union To revive the economy and curb the rising unemployment rate, leaders of some EU [European Union] member states have begun using protectionist measures at the cost of other member states. . . .

His remarks on the stimulus package have been encouraging. But when push comes to shove, will he risk angering Democratic lawmakers—and powerful Democratic constituencies—in order to defend free trade? The Europeans and Canadians are eager to know. So are political and business leaders in Latin America. Free trade is especially important to Latin America. In countries throughout the region, U.S.-led trade liberalization has improved economic opportunities, fortified market-oriented democracy, and strengthened the rule of law. At a time of major economic turmoil, U.S. leadership on free trade is critical. Obama must provide it. He faces at least three big tests on hemispheric trade: whether he will revisit NAFTA; whether he will endorse (and urge Congress to approve) the Colombia and Panama FTAs; and whether he will pursue new FTAs with countries such as 183 The Global Financial Crisis Brazil and Uruguay.

-Mexico relationship is fundamentally sound, so hopefully any disagreements over NAFTA can be ironed out without upsetting the basic framework of bilateral trade. The Colombia and Panama deals were both signed in late 2006; their approval by Congress is long overdue. Colombia is a key U.S. ally in South America whose government deserves credit for reducing violence and working with the United States to curb drug production. In countries throughout the region, U.S.-led trade liberalization has improved economic opportunities, fortified market-oriented democracy, and strengthened the rule of law. Brazil and Uruguay are both members of Mercosur, the South American trade bloc, which would complicate U.S. efforts to negotiate bilateral FTAs but not necessarily stymie them. In 2006, U.S. and Brazilian officials launched a new U.S.-Brazil Commercial Dialogue designed to enhance their bilateral trade relationship.


pages: 277 words: 80,703

Revolution at Point Zero: Housework, Reproduction, and Feminist Struggle by Silvia Federici

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Community Supported Agriculture, declining real wages, equal pay for equal work, feminist movement, financial independence, fixed income, global village, illegal immigration, informal economy, invisible hand, labor-force participation, land tenure, mass incarceration, means of production, microcredit, neoliberal agenda, new economy, Occupy movement, planetary scale, Scramble for Africa, statistical model, structural adjustment programs, the market place, trade liberalization, UNCLOS, wages for housework, Washington Consensus, women in the workforce, World Values Survey

Moreover, it is in the nature of the present capitalist crisis that no mediation is possible and development planning in the so-called “Third World” gives way to war.3 That the connection between integration in the global economy and warfare is not usually recognized is due to the fact that globalization today, while in essence continuing the nineteenth century imperial project, presents itself primarily as an economic program. Its first and most visible weapons are structural adjustment programs, trade liberalization, privatizations, intellectual property rights. All these policies are responsible for an immense transfer of wealth from the “colonies” to the metropoles, but they do not require territorial conquest, and thus are assumed to work by purely peaceful means.4 Military intervention too is taking new forms, often appearing under the guise of benevolent initiatives, such as “food aid” and “humanitarian relief,” or, in Latin America, the “war against drugs.”

This type of program was imposed by the World Bank and the IMF on most African countries starting in the early 1980s, allegedly to spur economic recovery and help the African governments pay for the debts that they had contracted during the previous decade in order to finance development projects. Among the reforms it prescribes are land privatization (starting with the abolition of communal land tenure), trade liberalization (the elimination of tariffs on imported goods), the deregulation of currency transactions, the downsizing of the public sector, the de-funding of social services, and a system of controls that effectively transfers economic planning from the African governments to the World Bank and non-governmental organizations (NGOs).5 This economic restructuring was presumably meant to boost productivity, eliminate inefficiency and increase Africa’s “competitive edge” on the global market.

They are the ones who, with their struggles, have contributed most to “valorizing” the labor of their children and communities, challenging the sexual hierarchies on which capitalism has thrived and forcing the nation state to expand investment in the reproduction of the workforce.3 They have also been the main supporters of a noncapitalist use of natural resources (lands, waters, forests) and subsistence-oriented agriculture, and therefore have stood in the way of both the full commercialization of “nature” and the destruction of the last remaining commons.4 This is why globalization in all its capitalist forms—structural adjustment, trade liberalization, low intensity warfare—is in essence a war against women, a war that is particularly devastating for women in the “Third World,” but undermines the livelihood and autonomy of proletarian women in every region of the world, including the “advanced” capitalist countries. From this it follows that the economic and social condition of women cannot be improved without a struggle against capitalist globalization and the de-legitimization of the agencies and programs that sustain capital’s global expansion, starting with the IMF and the World Bank, and WTO.


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Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization by Jeff Rubin

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air freight, banking crisis, big-box store, BRICs, carbon footprint, collateralized debt obligation, collective bargaining, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, energy security, food miles, hydrogen economy, illegal immigration, immigration reform, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, Just-in-time delivery, market clearing, megacity, North Sea oil, oil shale / tar sands, oil shock, peak oil, profit maximization, reserve currency, South Sea Bubble, the market place, The Wealth of Nations by Adam Smith, trade liberalization, zero-sum game

In other words, if transport costs double because of soaring fuel prices, we can calculate how much those costs raise the final selling price of the item being shipped and then express that amount as if it were a tariff. So just how high would those tariffs be? We got a glimpse of that between 2004 and 2008, when world oil prices shot up from $30 to almost $150 per barrel. Transoceanic shipping costs tripled over the period. Express that in tariff terms, and the increase offsets all the trade liberalization of the last three decades. That’s one hell of an increase. Back in 2000, when oil prices were $20 per barrel, transport costs associated with shipping cargoes across the Pacific were the equivalent of an average 3 percent US tariff rate. At $100 per barrel, transport costs are equivalent to an average tariff of 8 percent. At $150 per barrel—in the price range seen in the summer of 2008—the tariff equivalent was 13 percent, which basically took us back to the average tariff rates of the 1970s.

Just as soaring transoceanic shipping prices will turn global cost curves on their heads, carbon pricing can induce a 180-degree shift in labor’s attitude toward environmentalism. Armed with the knowledge that a third of China’s carbon emissions comes from its export sector, US steelworkers have every reason now to be at the vanguard of those urging Congress for tougher action on carbon emissions. American labor will soon learn that what has been lost through trade liberalization can be won back through environmental protection. A carbon tariff, just like triple-digit oil prices, will soon be bringing a lot of long-lost jobs back home. [CHAPTER 7] JUST HOW BIG IS CLEVELAND? I NEVER KNEW THAT CLEVELAND WAS THAT BIG. I’m sure it is big enough for the folks who live there. But big enough to blow up the entire world economy? If you listen to the news lately, that is exactly what Cleveland is supposed to be doing.

The infrastructure, the technology, the training, even the work culture will have to undergo a massive overhaul to be anywhere near ready for a local economy. Many people who have not seen a lunch box since middle school, or who haven’t had a callous on their hands since the time they tried to build their own backyard fence, may soon become reacquainted with both. All of a sudden, the globalizing forces of the last three decades will come to a screeching halt. While trade liberalization and technical change have flattened the world, the soaring prices for energy are going to make the world rounder again. And this smaller, rounder world is going to look more like the past than what we are accustomed to expect from the future. EATING OUT There is hardly a sector of the economy that will not be affected by these global shifts. But perhaps nothing will affect our cities and our lives more than the fate of something we take pretty much for granted: our food.

Crisis and Dollarization in Ecuador: Stability, Growth, and Social Equity by Paul Ely Beckerman, Andrés Solimano

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banking crisis, banks create money, barriers to entry, capital controls, Carmen Reinhart, carried interest, central bank independence, centre right, clean water, currency peg, declining real wages, disintermediation, financial intermediation, fixed income, floating exchange rates, Gini coefficient, income inequality, income per capita, labor-force participation, land reform, London Interbank Offered Rate, Mexican peso crisis / tequila crisis, microcredit, money: store of value / unit of account / medium of exchange, offshore financial centre, old-boy network, open economy, pension reform, price stability, rent-seeking, school vouchers, seigniorage, trade liberalization, women in the workforce

Inflation persisted in the range of 50 to 60 percent, and the nonfinancial public-sector deficit remained around 6 to 7 percent of GDP, despite higher oil prices at the time of the Persian Gulf War. Building on the Cordero Government’s reforms, the Borja Government undertook several 30 CRISIS AND DOLLARIZATION IN ECUADOR significant structural-adjustment initiatives, including a partial tax reform, trade liberalization, and progress toward financial-sector liberalization. In the run-up to the mid-1992 elections, however, government expenditure rose sharply, and, although the authorities maintained a relatively appreciated exchange rate, inflation persisted at high rates. In mid-1992, Sixto Durán Ballén was elected president on a platform of stabilization, liberalization, and structural reform. Soon after taking office, his government announced another large policy package, encompassing a devaluation of 20 percent against the dollar and various fiscal measures, including increases in motor-fuel prices and electricity rates, a company-assets tax, expenditure cuts, and a public-employment freeze.

The reliance of public revenue on volatile oil earnings rather than on more stable revenue sources, together with the expenditure commitments deriving from the publicdebt burden, the essentially tenured public-sector labor force, and mandated transfers (required in many instances by revenue earmarking), made the fiscal accounts inherently vulnerable to exogenous shocks. The elected governments of the 1980s and 1990s differed ideologically, but all were persuaded of the practical need for public-sector reform. The Cordero and Borja Governments made significant advances in financial liberalization and trade liberalization, but found substantive public-sector reform difficult to achieve. The Durán Ballén Government made somewhat more progress. Its 1992 Public Budgets Law set a legal basis for mod- LONGER-TERM ORIGINS OF ECUADOR’S “PREDOLLARIZATION” CRISIS 35 ernization of the systems of formulating and implementing public budgets. The Modernization of the State Law (1993) established a ministeriallevel “Modernization of the State Council” (CONAM) to plan and help bring about modernization and privatization.

The Congress then installed an 18-month interim government under President Fabián Alarcón, an anti-Bucaram leader in the Congress. This government had inadequate political support for anything more than caretaking. It made vigorous efforts to persuade the Con- 36 CRISIS AND DOLLARIZATION IN ECUADOR gress to enact tax reform and to advance privatization, but these efforts were largely fruitless. To increase revenue it enacted a tariff surcharge, reversing the long process of trade liberalization. Moreover, in early 1998, with the conclusion of its term close, this government had to deal with the El Niño rains and declining oil-export prices that turned out to be the onset of the predollarization crisis. The core of Ecuador’s public-finance problem was (and indeed remains) that revenue depended too heavily on volatile oil earnings, while inadequate non-oil revenue and overwhelming debt-service and payroll commitments narrowed the scope for developmental expenditure.


pages: 248 words: 57,419

The New Depression: The Breakdown of the Paper Money Economy by Richard Duncan

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asset-backed security, bank run, banking crisis, banks create money, Ben Bernanke: helicopter money, Bretton Woods, currency manipulation / currency intervention, debt deflation, deindustrialization, diversification, diversified portfolio, fiat currency, financial innovation, Flash crash, Fractional reserve banking, income inequality, inflation targeting, Joseph Schumpeter, laissez-faire capitalism, liquidity trap, market bubble, market fundamentalism, mass immigration, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, private sector deleveraging, quantitative easing, reserve currency, Ronald Reagan, savings glut, special drawing rights, The Great Moderation, too big to fail, trade liberalization

The fact is, however, in a world where credit growth drives economic growth, the economy is held hostage by the banking industry. Any regulatory action that damages the interest of the banks—regardless of how justified—has the potential to inflict significant, even fatal, harm on the economy. Until these conflicts are resolved, the banking industry will continue to be a dangerously destabilizing factor within the U.S. economy. Global Imbalances: Still Unresolved In the post–Bretton Woods era, trade liberalization, cross-border capital flows, and currency manipulation combined to produce widespread global imbalances that have destabilized the world economy. In the past, trade between nations had to balance because deficits had to be paid for with gold. Since 1971, however, it has become possible to finance large trade deficits with debt denominated in fiat money. As a result, debt-financed trade generated decades of rapid global economic growth as the countries with trade surpluses lent money to the countries with trade deficits to allow them to consume and import more from one year to the next.

Not only is there no new demand to justify new investment, there is less demand than before, resulting in a tremendous amount of unused industrial capacity around the world. The United States bears the greatest responsibility for allowing the global imbalances to develop. First, President Richard Nixon destroyed the Bretton Woods international monetary system, which had been designed to ensure that international trade did balance. Later, the United States promoted trade liberalization and cross-border capital flows with no concern for the very large U.S. trade deficits that emerged as a result. Finally, it failed to act when many of its trading partners blatantly manipulated the value of their currencies in a way that prevented the trade imbalances from correcting. When the U.S. credit bubble began in earnest in the 1980s, other countries expanded their industrial capacity to satisfy the United States’ rapidly expanding debt-financed demand.


pages: 226 words: 59,080

Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik

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airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, butterfly effect, capital controls, Carmen Reinhart, central bank independence, collective bargaining, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price stability, prisoner's dilemma, profit maximization, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

So the initial Washington Consensus was supplemented by a burgeoning list of additional measures encompassing labor markets, financial standards, governance improvements, central banking rules, and so on.10 The economists behind the Washington Consensus forgot they were operating in an inherently second-best world. As discussed in Chapter 2, in environments where markets are subject to multiple imperfections, the usual intuition on the effects of policies can be quite misleading. Privatization, deregulation, and trade liberalization can all backfire. Market restrictions of a certain sort can be desirable. Policy reforms in these environments require models that explicitly take such second-best complications into account. Consider how opening up to trade—one of the key items of the Washington Consensus—was supposed to work. As barriers to imports were slashed, firms that were unable to compete internationally would shrink or close down, releasing their resources (workers, capital, managers) to be employed in other parts of the economy.

At the height of the Washington Consensus craze, I wrote a paper with a graduate student criticizing the unconditional advocacy of freer trade as a growth engine for developing countries.15 We pointed out that the relationship between trade policy and growth was model- and country-specific. We also showed that there was no strong or uniform evidence one way or another. After circulating and presenting the paper, I got two kinds of reactions. Committed advocates of the Washington Consensus thought I was muddying the waters and undermining the good cause of free trade. But many others expressed their appreciation, complaining that the push for trade liberalization had gone much beyond what economic research was able to support. The second type of reaction was unexpected, since it came from people who had not taken a public stance. They had chosen not to have their voices heard, despite their skepticism. As a result, the public message was not representative of the profession as a whole, where views were, in fact, considerably more hedged. It is certainly true that economists err on the side of markets.


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Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover by Katrina Vanden Heuvel, William Greider

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Asian financial crisis, banking crisis, Bretton Woods, capital controls, carried interest, central bank independence, centre right, collateralized debt obligation, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, declining real wages, deindustrialization, Exxon Valdez, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, full employment, housing crisis, Howard Zinn, Hyman Minsky, income inequality, information asymmetry, John Meriwether, kremlinology, Long Term Capital Management, margin call, market bubble, market fundamentalism, McMansion, money market fund, mortgage debt, Naomi Klein, new economy, offshore financial centre, payday loans, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, pushing on a string, race to the bottom, Ralph Nader, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, sovereign wealth fund, structural adjustment programs, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, wage slave, Washington Consensus, women in the workforce, working poor, Y2K

Born-Again Rubinomics W I L L I A M G R E I D E R July 31, 2006 When robert rubin speaks his mind,his thoughts on economic policy are the gold standard for the Democratic Party. The former Treasury Secretary, now executive co-chair of Citigroup, captured the party’s allegiance in the 1990s as principal architect of Bill Clinton’s governing strategy, the conservative approach known as “Rubinomics” (or less often “Clintonomics”). Balancing the budget and aggressively pushing trade liberalization went hard against liberal intentions and the party’s working-class base. But when Clinton’s second term ended in booming prosperity, full employment and rising wages, most Democrats told themselves, Listen to Bob Rubin and good things happen. So it’s a big deal when Robert Rubin changes the subject and begins to talk about income inequality as “a deeply troubling fact of American economic life” that threatens the trading system, even the stability of “capitalist, democratic society.”

When workers start mobilizing for higher wages, multinationals counter by moving production to the next available cheap labor market. Middle-class wages fall at the top, but the bottom does not rise as rapidly as it should. “But it’s a complicated question,” Rubin responds. Improving the distribution of incomes in poorer countries “is in everybody’s interest,” he agrees. “On the other hand, I’ve had exposure to people who make that argument, and I think they make it as a way to prevent trade liberalization. ... The one hope some of these countries have to take people out of abject poverty is that their labor-cost advantage will result in a shift of production to their countries. ... Would you say the people of Sri Lanka have to stay in abject poverty to keep that from happening?” Labor rights, I counter, do not prevent the very poorest countries from developing on the advantage of their cheap labor, but reform would require all developing countries to operate so that wage levels can rise proportionate to the economy’s rising productivity and profit, however that is measured.


pages: 209 words: 80,086

The Global Auction: The Broken Promises of Education, Jobs, and Incomes by Phillip Brown, Hugh Lauder, David Ashton

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active measures, affirmative action, barriers to entry, Branko Milanovic, BRICs, business process, business process outsourcing, call centre, collective bargaining, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, deindustrialization, deskilling, Frederick Winslow Taylor, full employment, future of work, glass ceiling, global supply chain, immigration reform, income inequality, industrial cluster, industrial robot, intangible asset, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, labour market flexibility, low skilled workers, manufacturing employment, market bubble, market design, neoliberal agenda, new economy, Paul Samuelson, pensions crisis, post-industrial society, profit maximization, purchasing power parity, QWERTY keyboard, race to the bottom, Richard Florida, Ronald Reagan, shareholder value, Silicon Valley, sovereign wealth fund, stem cell, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, transaction costs, trickle-down economics, winner-take-all economy, working poor, zero-sum game

It extends to include the relationship The False Promise 19 between nation-states based on the principles of free trade and comparative advantage. David Ricardo, a nineteenth-century English political economist, argued the case for free trade, believing that rich and poor nations alike could gain from trading with each other as long as they specialized in products for which they had an advantage. The rise of the global knowledge economy was believed to remove much of the source of conflict and strife between nations. Trade liberalization was presented as a “win-win” opportunity for emerging and affluent nations. The territorial disputes that drove nations to war in pursuit of land and material wealth became less important in terms of power, privilege, and wealth. According to Richard Rosecrance of Harvard’s Kennedy School: “In the past, material forces were dominant in national growth, prestige, and power; now products of the mind take precedence.

Quality: From Local Adaptation to Global Markets We have already seen how Western companies have played a key role in the transfer of knowledge in China and India. The opening up of new markets to more than 2 billion potential consumers led them to follow the market. Some of these companies had a presence across Asia decades before the creation of the World Trade Organization in 1995, but trade liberalization in both China and India proved irresistible to many other companies.4 American household brands where among those quick to recognize how the extension of global trade gave them access to new consumer markets and gave them the potential to revolutionize their global operations. This will be examined in a later chapter, but first we need to investigate the role of these companies in moving price competition up the value chain by achieving global quality standards in low-cost locations.


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The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla

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British Empire, carbon footprint, corporate social responsibility, David Ricardo: comparative advantage, deglobalization, Doha Development Round, Food sovereignty, global value chain, illegal immigration, income inequality, income per capita, invisible hand, Joseph Schumpeter, labour mobility, land reform, market fundamentalism, mass immigration, means of production, Mont Pelerin Society, Naomi Klein, non-tariff barriers, offshore financial centre, open economy, Philip Mirowski, Plutocrats, plutocrats, price mechanism, purchasing power parity, Ronald Reagan, Scientific racism, selection bias, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, transatlantic slave trade, trickle-down economics, Washington Consensus, zero-sum game

Bhagwati, Jagdish (2008) Termites in the Trading System: How Preferential Agreements Undermine Free Trade (New York: Oxford University Press). Booth, Philip (2008) ‘The Economics of Fair Trade: A Christian Perspective’, Institute of Economic Affairs (www.iea.org.uk, accessed August 2013). Boris, Jean-Pierre (2005) Commerce inéquitable: le roman noir des matières premières [Unfair Trade: The Dark Story of Raw Materials] (Paris: Hachette littératures). Bouët, Antoine (2008) ‘The Expected Benefits of Trade Liberalization for World Income and Development. Opening the “Black Box” of Global Trade Modelling’, Food Policy Review 8 (Washington, DC: International Food Policy Research Institute). Bowes, John (2011) The Fair Trade Revolution (London: Pluto Press). Brenner, Robert (1977) ‘The Origins of Capitalist Development: a Critique of Neo-Smithian Marxism’, New Left Review 104: 25–92. Brink, Lindsey (2003) ‘Grounds for Complaint?

Brink, Lindsey (2003) ‘Grounds for Complaint? Understanding the “Coffee Crisis”’, Center for Trade Policy Studies, Trade Briefing Paper no. 16, May, Washington, DC: Cato Institute. Brown, Michael B. (1993) Fair Trade: Reform and Realities in the International Trading System (London: Zed Books). Bureau, Jean-Christophe, Jean, Sebastian and Matthews, Alan (2006) ‘The Consequences of Agricultural Trade Liberalization for Developing Countries: Distinguishing Between Genuine Benefits and False Hopes’, World Trade Review 5(2): 225–49. Chang, Ha-Joon (2002) Kicking Away the Ladder: Development Strategy in Historical Perspective (London: Anthem Press). 164 Sylla T02779 01 text 164 28/11/2013 13:04 bibliography Chang, Ha-Joon (2008) Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (New York: Bloomsbury Press).


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Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

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1960s counterculture, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Gunnar Myrdal, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, liberal capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

Volcker and Burns sought to salvage as many of the trees of Bretton Woods as they could. Connally and Nixon, who had neither institutional nor ideological loyalties, were agnostic. Both just wanted to get the job done— reverse the balance of payments, produce prosperity, and reduce unemployment. The bold action, especially the temporary border tax, was the stick to get the Europeans to accept a big shift in exchange rates, trade liberalization, and more help on defense costs. Although publicly the Japanese condemned Nixon’s “shock,” privately government officials acknowledged that America’s trade deficit with Japan was unacceptable and that the president had “in effect ‘lanced the boil’ without singling out Japan as culprit.”87 In December, Japan did revalue the yen by nearly 17 percent, more than any other nation, although movement on trade was snail-paced.

Henry Owen told Carter that “others will look to you to speak to the common interest, to the need for according it priority over more parochial concerns, and to the US willingness to play its full part in mutually reinforcing actions to this end.”69 Those parochial concerns were national interests, like the specialty steel industry. Although Owen thought that the price was worth paying, he understood that it was a price. This was not simply an American conclusion. Two British scholars in 1976 wrote that “postwar trade liberalization has been a beneficial exercise for America’s trade partners, and … if any country could be said to have ‘lost’ within our given time horizon it was the United States itself.”70 But as many more industries were threatened by imports, American elites could not avoid responding to “parochial” industrialists and union leaders. From 1960 through 1968 there were only eleven positive determinations of injury under the Anti-Dumping Act; from 1969 through 1977, there were sixty-five.71 Although the Congress gave the president authority to conduct a new round of trade negotiations in 1974, the price was regular consultation with Congress and private-sector representatives.

The new financial order departed from the gold exchange standard in three fundamental ways: 1) Pegged exchange rates became adjustable, subject to special agreements. 2) Capital controls were permitted to limit the volatility of international capital flows. 3) The IMF could monitor national economic policies and extend balance of payment financing to countries at risk. 22. The British wanted to complement trade liberalization with full employment policies and escape clauses to protect economies from balance of payments pressures and deflation. Instead, the GATT reflected the internationalists in the State Department and took little consideration of domestic concerns. Nitsan Chorev, Remaking U.S. Trade Policy: From Protectionism to Globalization (Ithaca, N.Y.: Cornell University Press, 2007), 50–53. 23. Eichengreen, European Economy Since 1945, 55. 24.


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A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption by Steven Hiatt; John Perkins

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airline deregulation, Andrei Shleifer, Asian financial crisis, Berlin Wall, big-box store, Bob Geldof, Bretton Woods, British Empire, capital controls, centre right, clean water, colonial rule, corporate governance, corporate personhood, deglobalization, deindustrialization, Doha Development Round, energy security, European colonialism, financial deregulation, financial independence, full employment, global village, high net worth, land reform, large denomination, liberal capitalism, Long Term Capital Management, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, Naomi Klein, new economy, North Sea oil, offshore financial centre, oil shock, Ponzi scheme, race to the bottom, reserve currency, Ronald Reagan, Scramble for Africa, statistical model, structural adjustment programs, too big to fail, trade liberalization, transatlantic slave trade, transfer pricing, union organizing, Washington Consensus, working-age population, Yom Kippur War

While studying, I linked up with a network of campaigners associated with Oxfam 2000, a British nongovernmental organization, and started research into how the financial resources of many of the world’s poorest countries drain away into secret banking accounts. This research continued after my graduation, and, while working in India in the early 1980s, I became increasingly aware that the capital market and trade liberalization programs promoted by the International Monetary Fund and the World Bank were making it far easier for wealthy people and corporations to evade taxes. Tax havens were playing a pivotal, but hidden, role in transferring money illicitly into secret bank accounts and offshore trusts—not just benefiting the world’s wealthiest and most powerful individuals and companies but also sapping the prospects for economic development in the world’s poorest nations.

“Labor costs went up, and the costs of imported materials went up, especially with devaluation—that’s the cost side. Now, on the market side, cheap imports of tires came in, and our business competed directly with brand-new tires. Our business was in tire retreading. When old tires get chewed up and abraded, we retreaded them and made them look and function like new. Cheap imported tires came in because of trade liberalization. We lost market share, and we couldn’t raise our prices as much as we should have. Even without the imports, the market was already very competitive here. There were many tire retreading companies—a few big ones, and many small ones. Especially after we joined the WTO in 1995–96, the industry started to have real problems. “Then with the Asian financial crisis of 1997, there was devaluation, and the price of imported goods went up.

., have written about the electoral victories sweeping Central and South America: There is growing consensus that the clear failure of the model—often called “neoliberalism”—to deliver economic growth or better standards of living for most is translating into electoral victories for leaders who have made rejection of this agenda a staple of their platforms. Nowhere is this more evident than in Bolivia, Argentina, and Venezuela, whose economies all have been decimated under previous neoliberal governments. . . . Even Costa Rica, Peru, and Mexico, traditionally neoliberal strongholds, have experienced presidential elections almost entirely dominated by debate over trade liberalization.9 The global justice movement has also matured. For example, under the influence of unions such as Unite! and the Service Employees International Union, organized labor in the U.S. changed from first supporting corporate globalization to then supporting only instances that helped U.S. workers and then to a broader opposition grounded in the reality of the shared sacrifice of workers everywhere.


pages: 389 words: 98,487

The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor, and Why You Can Never Buy a Decent Used Car by Tim Harford

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Albert Einstein, barriers to entry, Berlin Wall, collective bargaining, congestion charging, Corn Laws, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Fall of the Berlin Wall, George Akerlof, information asymmetry, invention of movable type, John Nash: game theory, John von Neumann, Kenneth Arrow, market design, Martin Wolf, moral hazard, new economy, Pearl River Delta, price discrimination, Productivity paradox, race to the bottom, random walk, rent-seeking, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, sealed-bid auction, second-price auction, second-price sealed-bid, Shenzhen was a fishing village, special economic zone, spectrum auction, The Market for Lemons, Thomas Malthus, trade liberalization, Vickrey auction

The policy encourages intensive farming with the obvious results of poor food quality and high use of pesti-cides and fertilizers, and all the while dumps food on the developing world and depresses the prices received by farmers in poor countries. Into the bargain it is helping to derail the current round of world trade liberalization. As Martin Wolf commented in the Financial Times: “This is a multifunctional policy indeed: regressive, wasteful, damaging to food quality and the environment and an obstacle to trade liberalization everywhere.” Other rich nations, especially Japan and Korea, privilege their farmers the same way as the European Union: a third of the typical OECD farm’s revenue comes from government support, and as the second figure on page 217 shows, the more agriculture is subsidized, the more fertilizers it consumes.


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The Wealth of Humans: Work, Power, and Status in the Twenty-First Century by Ryan Avent

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3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, Jacquard loom, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Future of Employment, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, very high income, working-age population

Yet a series of momentous economic changes beginning in the 1970s and carrying through the 1980s boosted the economic importance of social capital. Economic liberalization and deregulation contributed to this process. Britain and America reduced tax rates and liberalized, and privatized, government-dominated sectors in the 1980s; other European economies followed in earnest in the 1990s. The long process of trade liberalization that had begun in the post-war decades continued, and was joined by a push to open up cross-border capital flows. Integration of the world economy accelerated, raising the economic return to social organizations capable of managing the more complex economic environment. At the same time, the digital revolution first registered in a significant way in the public consciousness. Advanced manufacturing techniques were on the rise, leading to the automation of large numbers of jobs in automotive plants, to give but one example.

A California technology company could source component supplies from half a dozen Asian economies, have them all meet together in a Chinese port city for assembly, and then ship the finished package to consumers. This allowed production chains that previously needed to be located within a single firm or country to fragment across an economic archipelago.11 Information technology was not solely responsible for these developments: better shipping technologies and trade liberalization helped. Yet without the ability to coordinate production efficiently and in real time, the system could never have developed. Its effects were profound. Emerging economies no longer needed to slowly and painfully accumulate knowledge and capabilities as they worked their way from production of plastic toys to industrial robots. A country like China could instead immediately get into the advanced electronics export game simply by tapping into global supply chains.


pages: 417 words: 109,367

The End of Doom: Environmental Renewal in the Twenty-First Century by Ronald Bailey

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3D printing, additive manufacturing, agricultural Revolution, Albert Einstein, Asilomar, autonomous vehicles, Cass Sunstein, Climatic Research Unit, Commodity Super-Cycle, conceptual framework, corporate governance, creative destruction, credit crunch, David Attenborough, decarbonisation, dematerialisation, demographic transition, diversified portfolio, double helix, energy security, failed state, financial independence, Gary Taubes, hydraulic fracturing, income inequality, Induced demand, Intergovernmental Panel on Climate Change (IPCC), invisible hand, knowledge economy, meta analysis, meta-analysis, Naomi Klein, oil shale / tar sands, oil shock, pattern recognition, peak oil, phenotype, planetary scale, price stability, profit motive, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, Stewart Brand, Tesla Model S, trade liberalization, University of East Anglia, uranium enrichment, women in the workforce, yield curve

In addition, Doces cites a 2006 study analyzing the effects on globalization on women in 180 countries that shows “increasing international exchange and communication create new opportunities for income-generating work and expose countries to norms that, in recent decades, have promoted equality for women.”46 As a result, trade-induced demand for human capital expands to include women, further cutting fertility rates in poor countries. This conclusion is further bolstered by a 2005 study by University of Helsinki economists Ulla Lehmijoki and Tapio Palokangas; according to this study, in the short run trade liberalization boosts birth rates, but in the long run it cuts fertility. Again, this is true largely because trade liberalization encourages the development of women’s human capital (education), which makes childbearing relatively more costly. The Invisible Hand of Population Control In 2002, Seth Norton, an economics professor at Wheaton College in Illinois, published a remarkably interesting study, “Population Growth, Economic Freedom, and the Rule of Law,” on the inverse relationship between prosperity and fertility.


pages: 421 words: 120,332

The World in 2050: Four Forces Shaping Civilization's Northern Future by Laurence C. Smith

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Bretton Woods, BRICs, clean water, Climategate, colonial rule, deglobalization, demographic transition, Deng Xiaoping, energy security, flex fuel, global supply chain, Google Earth, guest worker program, Hans Island, hydrogen economy, ice-free Arctic, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, land tenure, Martin Wolf, megacity, Mikhail Gorbachev, New Urbanism, oil shale / tar sands, oil shock, peak oil, Pearl River Delta, purchasing power parity, Ronald Reagan, Ronald Reagan: Tear down this wall, side project, Silicon Valley, smart grid, sovereign wealth fund, special economic zone, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, trade route, UNCLOS, UNCLOS, urban planning, Washington Consensus, Y2K

Rather than dissect the merits or agendas of each index, I simply provide rank-based scores from all of them.432 Each uses a different scoring system, so they are presented as percentiles for easy comparison. A score of 86, for example, means a country ranked higher than 86% of all of the countries in the world that are measured by that particular index. Also shown is a single composite score for each country, averaged across the five numeric indices. A remarkable story leaps from these numbers. With the exception of Russia, the NORC countries are the most stable, trade-liberal, rapidly globalizing players on the planet. Who knew that Denmark and Canada are even more open to free trade than Japan, Germany, or the United States? Of particular relevance to energy production is that this openness also pervades the oil and gas industry, in contrast to the worldwide trend toward nationalization described in Chapter 3.433 Civil and political freedoms run remarkably high except in Russia.

., 2004), 466 pp. 431 This table was constructed using data from the following sources: 2009 Index of Economic Freedom, Heritage Foundation and Wall Street Journal (179 countries, www.heritage.org); 2008 Economic Freedom of the World Index (141 countries, http://www.freetheworld.com/2008/EconomicFreedomoftheWorld2008.pdf); 2009 KOF Index of Globalization (208 countries, http://globalization.kof.ethz.ch/); 2009 Global Peace Index (144 countries, http://www.visionofhumanity.org/gpi/results/rankings.php); 2008 Economist Intelligence Unit Democracy Index (167 countries, http://graphics.eiu.com/PDF/Democracy%20Index%202008.pdf); 2009 Freedom in the World Country Rankings (193 countries, http://www.freedomhouse.org). To allow comparison between these indices, numeric index data were converted to percentile country rank. Taking an average of these percentile rankings provides the composite score in the right-most column of the table. 432 Each index has its own agenda, which is why I prefer to look at all of them. Jeffrey Sachs, for example, questions the contention in Index of Economic Freedom that trade liberalization necessarily leads to GDP growth, citing examples, like China, which have very strong economic growth despite low scores on the index. J. Sachs, The End of Poverty: Economic Possibilities for Our Time (New York: Penguin Group, 2005), 416 pp. 433 Most oil and gas outfits operating in the northern high latitudes are private multinational companies, except in the Russian Federation, where the industry is increasingly returning to state control. 434 The 2010 Economist Intelligence Unit assessed 140 countries in their global livability index.

Hopes and Prospects by Noam Chomsky

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Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, British Empire, capital controls, colonial rule, corporate personhood, Credit Default Swap, cuban missile crisis, David Ricardo: comparative advantage, deskilling, en.wikipedia.org, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, Howard Zinn, Hyman Minsky, invisible hand, liberation theology, market fundamentalism, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, moral hazard, new economy, nuremberg principles, one-state solution, open borders, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ralph Waldo Emerson, RAND corporation, Ronald Reagan, structural adjustment programs, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, trade liberalization, uranium enrichment, Washington Consensus

One prominent economic historian, Paul Bairoch, argues that protectionism, paradoxically, has commonly increased trade. The reason, he suggests, is that protectionism tends to stimulate growth, and growth leads to trade; while imposed liberalization, since the eighteenth century, has fairly consistently had harmful economic effects. The historical record provides substantial evidence that “historically, trade liberalization has been the outcome rather than the cause of economic development” (Ha-Joon Chang), apart from the “development” of narrow sectors of great wealth and privilege who benefit from resource extraction.1 From an extensive review, Bairoch concludes that “It is difficult to find another case where the facts so contradict a dominant theory [as the theory] concerning the negative impact of protectionism.”

See also East Germany Soviet Union, 90 Spanish conquerors and colonies, 20–22 “special interests,” 98 Status of Forces Agreement (SOFA), 235–37, 239 Steele, Jonathan, 129 Stevens, John Paul, 33–34 Stiglitz, Joseph, 86, 220 Stimson, Henry, 118 Story, Joseph, 19 STRATCOM, 165–66 structural adjustment, 106 Suharto, 43 Summers, Lawrence, 219–21 Supreme Court, 34 corporate personhood and, 31–35 Syria, 139, 144, 239 Iraq and, 125–26, 239 Obama and, 239, 249 U.S. raid of, 239 Taiwan, 9 Talabani, Jalal, 239 Taliban, 141, 243, 246 Afghanistan and, 141, 238, 242 public opinion regarding, 141, 243 tariffs. See “free trade” Taylor, Lance, 107 technology, 87–89, 93 terrorism, 26–29, 249 war on, 42, 60–61, 267–68 See also specific topics Texas, annexation of, 17 Thailand, 90 Thucydides, 37 Tiedeman, Christopher, 30 Timor Gap Treaty, 184–85 Torricelli, Robert, 51–52 Torture Convention, UN, 262 torture memos, 259–68 “trade,” concept of, 90 trade liberalization, 76 and third world, 80 See also “free trade” Trujillo, Rafael, 47 Turkey, 44 Turner, Mark, 100 “unholy trinity,” 72 Union of South American Nations (UNASUR), 59–60, 104, 115 United Nations (UN), 128–29, 163 Charter, 136, 150, 195, 200, 250 Committee on Disarmament, 167 Human Development Index, 175 Israel-Arab conflict and, 195, 252–53 R2P and, 20, 185, 278 Security Council, 129, 146, 148, 149, 169, 179, 195, 249, 278 Resolution 242 (UN 242), 161, 179 Resolution 687, 136, 170 Resolution 1887, 195, 200 Torture Convention, 262 World Food Program, 12 United Nations Relief and Works Agency (UNRWA), 151 United States characterizations of, 21 early history, 17–20 Fourth Fleet, 57 Liberal Illiberalism, 40–42 mega-embassies, 63, 203 “national identity,” 40 “national purpose,” 39–40 political ideals, 40–41, 46–47, 97, 122, 131–32 (See also “democracy promotion”; idealism) popular attitudes toward social democratic (welfare state) programs, 208–9 “transcendent purpose,” 39 See also specific topics Universal Declaration on Human Rights (UDHR), 38, 99 Uttar Pradesh, 213 Valenzuela, Arturo, 68 van Alstyne, R.


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Let Them In: The Case for Open Borders by Jason L. Riley

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affirmative action, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, desegregation, guest worker program, hiring and firing, illegal immigration, immigration reform, income inequality, labor-force participation, labour market flexibility, low skilled workers, lump of labour, mass immigration, open borders, RAND corporation, Ronald Reagan, school choice, Silicon Valley, trade liberalization, War on Poverty, working poor, working-age population, zero-sum game

Even liberals can see this, and they didn’t hesitate to critique Heritage’s scare mongering by employing a dynamic approach to the readily available fiscal data. Ultimately, the think tank was hoisted by its own analytic petard. But first, some background. Along with other conservative outfits like the National Center for Policy Analysis and the Institute for Policy Innovation, Heritage helped pioneer the use of dynamic analysis. Whether the issue was trade liberalization or tax policy, free-market conservatives regularly mocked economic studies that took into account only static impacts. “[No] matter how many times a ‘static’ analysis is disproved,” Heritage Foundation president Ed Feulner once wrote, “Congress keeps doing business in the same wrongheaded way.” When President Bush’s 2007 budget proposal included a plan to create a Dynamic Analysis division inside the Treasury Department to assess how tax laws affect economic activity, William Beach, Heritage’s top numbers cruncher, praised the move.


pages: 225 words: 61,388

Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa by Dambisa Moyo

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affirmative action, Asian financial crisis, Bob Geldof, Bretton Woods, colonial rule, correlation does not imply causation, credit crunch, diversification, diversified portfolio, en.wikipedia.org, European colonialism, failed state, financial innovation, financial intermediation, Hernando de Soto, income inequality, information asymmetry, invisible hand, Live Aid, M-Pesa, market fundamentalism, Mexican peso crisis / tequila crisis, microcredit, moral hazard, Ponzi scheme, rent-seeking, Ronald Reagan, sovereign wealth fund, The Chicago School, trade liberalization, transaction costs, trickle-down economics, Washington Consensus, Yom Kippur War

In Africa, as with other parts of the developing world, this economic overhaul necessitated two new aid-based programmes: first, stabilization, and then structural adjustment. Stabilization meant reducing a country’s imbalances to reasonable levels – for example, the government’s fiscal position and the country’s import–export ratio. Meanwhile structural adjustment was aimed at encouraging greater trade liberalization and reducing price and structural rigidities by such means as removing subsidies. Both the World Bank and the IMF launched aggressive aid programmes to institute these two initiatives; the IMF’s Structural Adjustment and Enhanced Structural Adjustment Facilities are examples of these. Poor governments received cash in the form of budgetary support, and in return agreed to embrace the free-market solutions to development.


pages: 256 words: 76,433

Overdressed: The Shockingly High Cost of Cheap Fashion by Elizabeth L. Cline

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big-box store, clean water, East Village, feminist movement, income inequality, informal economy, Maui Hawaii, McMansion, megacity, race to the bottom, Skype, special economic zone, trade liberalization, Triangle Shirtwaist Factory, upwardly mobile, Veblen good

., a California brand that once sourced all of its clothes in Los Angeles–based factories, dropped 40 percent of their domestic production in one six-month period in the late 1990s.19 Levi’s was one of the last major garment manufacturers to give in and source from overseas, closing their last factory in San Antonio, Texas, in 2004. Like a massive engine grinding to a halt and then slowly turning in the opposite direction, import barriers on clothing to the United States began to be deftly wiped out in the midnineties. Job loss in the clothing production trades was heaviest during these years of aggressive trade liberalization and quota removal.20 The first big hit to the L.A. garment industry came in the form of the North American Free Trade Agreement, ratified in 1994, which removed duties on exports to Mexico. The effect of NAFTA was many American companies moving cut-and-sew operations just over the Mexican border to maquiladoras, where garments could be slapped together under much lower minimum wages. Metchek recalls, “Whole factories, machines and everything, moved to Mexico.”


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

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Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamonds, Bob Geldof, borderless world, BRICs, British Empire, call centre, carbon footprint, charter city, clean water, cleantech, cloud computing, commoditize, continuation of politics by other means, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, facts on the ground, failed state, friendly fire, global village, Google Earth, high net worth, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, labour mobility, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, microcredit, mutually assured destruction, Naomi Klein, New Urbanism, off grid, offshore financial centre, oil shock, open economy, out of africa, Parag Khanna, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

All top figures in their fields, they were convened by the World Economic Forum (WEF) for a “Summit on the Global Agenda,” lending their minds to what the BBC’s Nik Gowing dubbed a “fundamental reboot” of global problem solving. But rather than formulating extravagant proposals, they huddled in “Global Agenda Councils” to perform mental brain dumps, sharing the latest thinking on alternative energy, food security, Mideast peace, financial risk, social entrepreneurship, biodiversity, trade liberalization, and dozens of other issues. No oversized groupthink here: Each expert group appointed ambassadors to fan out like intellectual hunter-gatherers, identifying linkage points: How can more efficient construction and transportation cut emissions while also creating jobs? How can skill-building centers be used to mitigate interfaith tensions? Even in the wake of the worst economic crisis since the Great Depression, win-win solutions are still possible.


pages: 859 words: 204,092

When China Rules the World: The End of the Western World and the Rise of the Middle Kingdom by Martin Jacques

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Admiral Zheng, Asian financial crisis, Berlin Wall, Bob Geldof, Bretton Woods, BRICs, British Empire, credit crunch, Dava Sobel, deindustrialization, Deng Xiaoping, deskilling, discovery of the americas, Doha Development Round, energy security, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, illegal immigration, income per capita, invention of gunpowder, James Watt: steam engine, joint-stock company, Kenneth Rogoff, land reform, land tenure, Malacca Straits, Martin Wolf, Naomi Klein, new economy, New Urbanism, one-China policy, open economy, Pearl River Delta, pension reform, price stability, purchasing power parity, reserve currency, rising living standards, Ronald Reagan, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, spinning jenny, Spread Networks laid a new fibre optics cable between New York and Chicago, the scientific method, Thomas L Friedman, trade liberalization, urban planning, Washington Consensus, Westphalian system, Xiaogang Anhui farmers, zero-sum game

As China’s financial power expands, its ability to make loans and give aid will increase dramatically, as we have seen in the case of Africa, where Chinese loans already exceed those made by the World Bank; in time, Chinese aid and loans could dwarf those made by the World Bank on a global basis as well.176 Meanwhile the WTO , with the demise of the Doha round - effectively torpedoed by China and India177 - together with the growing popularity of bilateral trade agreements, presently looks rather less important than it did a decade ago when trade liberalization was in full swing. The process of trade liberalization in East Asia since 2000, indeed, has largely bypassed the WTO, with China playing a key role through bilateral trade agreements. Another institution of the present international economic system, the G8, acts as a kind of metaphor for the way in which the international system might come to look increasingly less relevant. Bizarrely, China, as of 2009, had still not been admitted as a member - and with the G8 being clearly unrepresentative of the global economy, it now suffers from a chronic lack of legitimacy.178 This was explicitly recognized in autumn 2008 when the world was faced with the prospect of the worst global recession since 1945: pride of place was taken not by a meeting of the G8, but a gathering convened by President Bush of a previously obscure entity called the G20, which included not only the rich countries but also China, India, Brazil, South Africa, Indonesia and other developing countries.


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

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affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, London Interbank Offered Rate, lone genius, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

There is another reason why globalization may lower overall output; it typically increases the risks that countries face.27 Opening up a country can expose it to all kinds of risks, from the volatility of capital markets to that of commodity markets. Greater volatility will induce firms to move to less risky activities, and these safer activities often have a lower return. In some cases, the risk-avoidance effect can be so large that everyone is made worse-off.28 But even if trade liberalization leads to a higher overall output for a given economy, large groups in the population can still be worse off. Consider for a moment what a fully integrated global economy (with both knowledge and capital moving freely around the world) would entail: all workers (of a given skill) would get the same wage everywhere in the world. America’s unskilled workers would get the same wage that an unskilled worker gets in China.

If they were, they would be a few pages long, with each side agreeing to eliminate its tariffs, its nontariff barriers, and its subsidies. But the agreements go to hundreds of pages, because they are in fact managed-trade agreements, and managed for the benefit of special interests. They are agreements in which hosts of industries insist on one form of favorable treatment or another. Companies’ focus is naturally on rules that increase their profits. When trade liberalization helps their profits, then they’re in favor of it; but when it works the other way, they oppose it. And for the most part, the U.S. trade representative and trade ministers from other advanced industrial countries represent the interests of the country’s companies. Opening up trade is, however, only one part of the focus of trade negotiations. Today much attention is centered on inducing other countries to open up their markets to foreign investment and protecting the investments that are made there—that is, providing conditions that enhance the movement of jobs overseas.


pages: 851 words: 247,711

The Atlantic and Its Enemies: A History of the Cold War by Norman Stone

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affirmative action, anti-communist, Ayatollah Khomeini, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, British Empire, central bank independence, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, European colonialism, facts on the ground, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, Gunnar Myrdal, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, illegal immigration, income per capita, interchangeable parts, Jane Jacobs, Joseph Schumpeter, labour mobility, land reform, long peace, mass immigration, means of production, Mikhail Gorbachev, new economy, Norman Mailer, North Sea oil, oil shock, Paul Samuelson, Ponzi scheme, popular capitalism, price mechanism, price stability, RAND corporation, rent-seeking, Ronald Reagan, Silicon Valley, special drawing rights, Steve Jobs, strikebreaker, The Death and Life of Great American Cities, trade liberalization, trickle-down economics, V2 rocket, War on Poverty, Washington Consensus, Yom Kippur War, éminence grise

Marshall money also saved the French Plan, which, again, required German coal and steel. The British, still attempting to refloat their empire as a bloc, were much less intimately involved. They used the dollars just to pay off debts. It was on continental western Europe that the Marshall Planners concentrated, and its unity, in that sense, came in the (considerable) logistics trains of the American army. The essential was trade liberalization, and that could not be managed unless there were some means of payment, i.e. recognition of the various paper currencies. The old Bank for International Settlements at Basle in Switzerland - originally set up to handle the Reparations payments of the First World War - was revitalized, with a European Payments Union (in 1950). This again followed an Atlantic example. In 1944, at Bretton Woods in New Hampshire, the Americans and British had developed institutions that were meant to stop the collapse of world trade that had occurred in the Great Slump of the 1930s.

But Britain, with still strong imperial or ex-imperial connections, with exports booming, with an important position in Atlantic affairs and a sizeable force fighting in Korea, had solid interests elsewhere, and in 1951 very few people took developments in Europe with the seriousness that they, in hindsight, merited. No-one in 1950 foresaw the rapidity with which England would decline. In practice the ECSC was not particularly successful. In a world of trade liberalization, it was at the mercy of imports, and, of all paradoxes, American coal imports were needed in Germany because the speed of her recovery meant that she needed all of her own coal. Much the same happened with metal: there was a ‘scrap mountain’ because it could not be sold at the cheap rates on offer elsewhere. The Korean War brought a boom for steel: 50 per cent of Belgian output was exported and, as the historian Alan Milward says, the ECSC ‘virtually collapsed’; without the formal creation of a European Economic Community later on, it ‘would probably have been unable to find a common course of action’.


pages: 708 words: 176,708

The WikiLeaks Files: The World According to US Empire by Wikileaks

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affirmative action, anti-communist, banking crisis, battle of ideas, Boycotts of Israel, Bretton Woods, British Empire, capital controls, central bank independence, Chelsea Manning, colonial exploitation, colonial rule, corporate social responsibility, credit crunch, cuban missile crisis, Deng Xiaoping, drone strike, Edward Snowden, energy security, energy transition, European colonialism, eurozone crisis, experimental subject, F. W. de Klerk, facts on the ground, failed state, financial innovation, Food sovereignty, Francis Fukuyama: the end of history, full employment, future of journalism, high net worth, invisible hand, Julian Assange, liberal world order, Mikhail Gorbachev, millennium bug, Mohammed Bouazizi, Monroe Doctrine, Naomi Klein, Northern Rock, Philip Mirowski, RAND corporation, Ronald Reagan, Silicon Valley, South China Sea, statistical model, structural adjustment programs, too big to fail, trade liberalization, trade route, UNCLOS, UNCLOS, uranium enrichment, Washington Consensus, WikiLeaks, zero-sum game, éminence grise

The protests over the measure converged with a rising arc of mobilization by the country’s indigenous population and formed part of the basis for the popular movements that later brought Correa to power. Already in 2005, when Correa was minister for the economy in a populist administration, the US embassy in Quito had noted that he was “a strong critic of the FTA negotiations.” Correa favored abandoning the tight fiscal policy of the former administration that had aligned closely with the US and using oil revenues to invest in public-sector wages and development. He was critical of “trade liberalization in general … of the IMF, and of any orthodox economic reform.”23 A further cable noted that “Correa made public statements on April 21 that foreign debt needed to be renegotiated, that Ecuador’s oil revenue needed to be spent on social programs, that Ecuador would be completely sovereign in its relations with the IMF, and that any free trade agreement would be submitted to a referendum (where it would most likely be voted down).”

W. 479–80 Delare, Thomas 189–90 democracy promotion 28–9, 39–40, 46–7, 60, 162, 176, 312, 374, 493–4, 496, 518–22 Deng Xiaoping 444, 451 Deniau, Jean-François 341 Denmark 245 Derham, James 535–7, 542–3 Dermer, Ron 271, 274, 283 Der Spiegel (newspaper) 197 De Sutter, Paula 222–3 Detainee Treatment Act (DTA) 386 Diaz, Dave 86 Dictatorships, American relationship to 23–31 Digital Millennium Copyright Act 135 Digital Rights Management technology (DRM) 133–4, 135 Diskin, Yuval 273, 276–7, 285 documents: classification level 6–8, 149, 150–1; numbers published 1–2 dollar diplomacy 44, 126 dollar, the, importance of 121 Dominican Republic 56 Dostum, Ahmad Rashid 393–4 drone strikes 88–89 Duddy, Patrick 531 Duvalier, François “Papa Doc” 53, 62 Duvalier, Jean-Claude “Baby Doc” 53, 58, 62–3, 63, 64 economic liberalization 47–9, 122, 137–40 economic power 112, 112–41, 352–3; capital flight 131, 138; dominance of Wall Street 139–41; exchange rates 120; exercise of 123–32; exposing 113–17; free trade imperialism 117–23, 132–6; importance of the dollar 121; and market-dependency 125–32; money flows 120, 137–8 Economic Support Funds (ESF) 162 Economist 83, 113 Ecuador 18, 497–503, 516; Article 98 agreements 173–6; CIA involvement 501–2; Constituent Assembly 500–1; Correa presidency 498–503; corruption 174–5; democracy promotion 176; ICC-related sanctions 173–7; International Visitor program 174; market-dependency 125–32; oil revenue 127, 128; pharmaceutical licenses 502–3; public spending 130; trade liberalization 127; US ambassador expelled, 2011 503 Edelman, Eric 253–4, 258–9, 261 Egypt 27, 45, 46, 299; coup, 1952 42, 44; coup against the Muslim Brotherhood 41, 48; democracy assistance 30; economic crisis 45; economic reform 47–9; fall of Mubarak 32, 36–40; nationalization of Suez Canal 43; patronage 38; poverty 37; strategic importance 237–8; US aid 30 Eisenhower Doctrine, 44 ElBaradei, Mohamed 248, 339–48, 459–60 Ellsberg, Daniel 18–19 el-Masri, Khaled 201–6 El Salvador 18, 29, 30, 57, 58, 485, 486–92, 537, 538 el-Sisi, Abdel Fattah 48 embassies 3–4 empires 2–3 Erdoğan, Recep Tayyip 17, 31, 244–5, 250, 253–4, 258–9, 260–1, 262 Espionage Act, 1917 7 EU Council, and Article 98 agreements 163 European cables 181–211; and GMOs 187–95; Plan 2015 185–7; and trade relations 184–5, 187–95 European Commission 194 European Court of Justice 206 European Food Safety Authority 195 European Phased Adaptive Approach 331 European Union: collusion with CIA 14; court dealings 200–210; and GMOs 188, 189–90, 194, 194–5; Independent International Fact-Finding Mission on the Conflict in Georgia 220; resistance to American power 210; and the Ukraine crisis 210; and the war on terror 195–200 Europe, US missile defense 219, 223–30, 330–4 Eurozone, sovereign debt crisis 141 extraordinary rendition 75, 239–40, 261 Fackler, Martin 424–5 Facussé Barjum, Miguel 70, 71 Fallows, James 439 Farabundo Martí National Liberation Front (FMLN) 486–7, 490–2 FARC 125 Fatah 276–7, 278, 280–1, 293 Fayyad, Salam 271, 272 FBI 4 Federal Reserve 120, 127, 139 Fein, Ashden 9 Feith, Douglas 207–10 Fernández, Leopoldo 508–9 Fidan, Hakan 259 Financial Crisis Inquiry Commission 139 financial regulation 136–41 Financial Services Agreement 137 Financial Times 218 Flores, Javier 508 Flourney, Michelle 409–11, 412 Foltz, William J. 27 Forbes magazine 114, 187 Ford, Charles 536, 537 Ford, Robert Stephen 166 Foreign Affairs 217–18 Foreign Military Financing assistance program 166 Foreign Policy 226 Foreign Terrorist Organization list 464 Forgeard, Noel 185 FRAGO 242 protocol 76, 104–5 Fraker, Ford 301–2 France 27, 42, 194–6, 251–2 Frattini, Franco 329 Freedom Agenda 39–40 free market, the 83, 116–17 free trade 12, 40, 73; imperialism 11–12, 117–23, 132–6 Free Trade Area of the Americas (FTAA) 73, 125, 127, 175 French, Philip 521 Friedman, Milton 69, 122 Friedman, Thomas 112 Fukushima nuclear crisis 425, 427 Fukuyama, Francis 444 Funes, Mauricio 490–2 G8, summit, 2011 47 Gaddafi, Muammar 31, 44, 178 Gaidar, Yegor 218 Galant, Yoav 285 Gangotena, Raul 173 Gantz, Benny 272–3, 295–6 Garlasco, Marc 86 Garzón, Baltazar 209–10 Gates, Robert 41, 206–7, 213, 328–9, 331 GATT negotiations, the Uruguay Round 121 Gaza Strip 39, 180, 266, 276–85, 293 General Agreement on Tariffs and Services 137, 140 genetically modified agricultural products (GMOs) 187–95, 210 Geneva conventions 108–9, 270, 385, 393 Georgia: Rose Revolution 212, 220; and South Ossetia 219–22 Germany: ANA Trust Fund contributions 196–7; and the el-Masri case 202–3, 204–6; and the invasion of Iraq 195–6; reunification 212 Ghani, Ashraf 394 Gilad, Amos 274–5, 276, 279, 295–6 Gitmo Files, the 75, 80, 94, 97–101 Giuliani, Rudy 311 Glazer, Charles 489–90 global financial crisis, 2008 113, 136–41, 447, 452, 453 globalization 46, 83, 118, 123, 133 Global Policy Forum 92 Godec, Robert 33–4, 35 Goldberg, Philip 509 Goldstone Report 179, 274–5, 281–3, 285 Goldstone, Richard 281–2 Gonzales, Alberto R. 108, 207–10 Good Neighbor doctrine 50, 53, 54–8 Google Maps 222–3 Gorbachev, Mikhail 212, 223–4, 231 Gordon, Philip 248–51 Gottemoeller, Rose E. 232, 233 Gramsci, Antonio 440 Grandin, Greg 96, 484 Great Britain 182–3, 188; loss of empire 27, 28, 42, 44, 433 Greenlee, David 505–6, 541 Greenwald, Glenn 159–60, 178 Grenada 57, 123 Guam 417 Guam International Agreement 409–10 Guantánamo Bay 75, 75–6, 97–101; military prison opened 99; prisoner numbers 99; prisoner releases 100; use of torture 96, 99; validation 101 Guardian (newspaper) 105, 115, 179, 250 Guatemala 55, 164, 484, 535–6, 542–3 Gülen, Fethullah 17, 254–5, 259–60 Gülen schools 254–8 Gulf War, 1991 45, 46 Guriev, Sergey 214 Gutiérrez, Lucio 174, 175, 497, 498 Hague, William 183 Haiti 18, 26, 30, 49, 50, 58, 486; American involvement 60–5, 510–14; CIA involvement 64; coup, 2004 512; Group of 184 64–5; human rights 64; Lavalas movement 63–4; military intervention 62–3; neoliberal reform 59, 64; occupation, 1915 52–3; Petrocaribe program in 533–4; repression 61–2; UN occupation 65; wages 61, 64 al-Hajj, Sami 75–6, 79 al-Hakim, Muhammad Baqir 84 Hamada, Yasukazu 407 Hamas 265, 266, 276–8, 279–80, 281, 282–3, 284–5, 293 al-Hasani, Muhanad 318 Hatoyama, Yukio 398, 425–6 Hebb, Donald 101 Heinonen, Olli 346–7 Heleno, Augusto 514 Helms, Richard 66 Hersh, Seymour 76 Hezbollah 284 Hill, James 541 Hinchey Report 66 Ho Chi Minh 27 Hodges, Heather 501, 502, 503 Holbrooke, Richard 337–8 Honduras 49, 52, 57, 536–7, 543–4; Article 98 agreements 162; constitution 72; coup, 2009 70–3, 537, 544; US aid 71, 72 Hudson, William 34, 35 Hu Jintao 453–4 human rights 29, 30, 58, 74–111, 475; Afghanistan 78; brutality 76–7; Chile 68–9; Haiti 64; and labeling 78–81; Syria 297–8, 314; and torture 94–111; Tunisia 33–4; US abuses 74–8 Human Rights Watch 282, 357, 364, 366–7 Hurlburt, Heather 216–17 Hussein, Abbas Ali 358 Inamine, Susumu 428–30 India 27 Indochina 27 Indonesia 27, 28, 446, 450, 451–2, 453, 458–9, 463 Institute of International Finance 47 intellectual property 133–4, 135, 467–8 Intermediate-Range Nuclear Forces Treaty 224 International Atomic Energy Agency (IAEA) 291–2, 323, 339–48, 459–60 International Centre for Settlement of Investment Disputes 130 International Court of Justice 263, 270 International Criminal Court (ICC) 13, 281; engagement with 177–80; establishment 160; jurisdiction 160–1; related sanctions 169–77; US avoidance of sanctions 162–9; US opposition to 161–2 International Development Bank (IDB) 504, 505–6 International Military Education Training (IMET) program 166 International Monetary Fund 45, 48, 50, 51, 59, 118, 121, 123, 129, 130, 504 International Republican Institute (IRI) 29, 40, 519–20 International Security Assistance Force for Afghanistan” (ISAF) 385 International Studies Association (ISA), 10–11 10 International Studies Quarterly (ISQ) 10 International Trade Union Confederation 136 Iran 23, 28, 238, 321, 322–49, 458; armed confrontation threat 337–9; demonization of 248–51; and France 251–2; ICBM development 225, 226, 229, 230, 330–4; and Israel 251, 286–93, 323–9, 337–9, 348; nuclear program 15, 248–9, 281, 286–93, 294–5, 323, 335–6, 339–48, 348–9, 458–60; and Saudi Arabia 301–2; and Syria 299, 301–2; and Turkey 245–6, 246–53, 329–30; Venezuela’s relationship with 522 Iran-Contra scandal 492 Iraq 28, 42, 44, 350–67; economic warfare 352–3; embargo of 242; invasion of Kuwait 45; sectarianism 84, 85–6, 353–60, 361–3 Iraq Body Count 159 Iraqi Army (IA) 358–9 Iraq, invasion and occupation of 12, 23, 46, 83–6, 239, 288, 300, 369; Baghdad massacre 86–7; civilian casualties 88; collateral murder 350–2; counterinsurgency 84–6, 355; death squads 354–5; drone strikes 88–9; Europe and 195–6; Fallujah siege 88, 90–3, 254, 354, 357–60; human rights abuses 76; Iraqi insurgency 76–8, 362; Operation Phantom Fury 91–2; paramilitary strategy 84–5; reconnaissance by fire policy 353; resistance to 354–5; Sahwa movement 15, 360–3; sectarian divisions 15; Special Police Commandos (SPC) 84–5, 105, 110; use of torture 85, 103–5, 352, 363–7; US surge 360; US terrorism 82; war crimes prosecutions 159–60; war logs 15, 82, 103–4, 363–4 Ireland, Republic of 197–200 Ishak, Bassam 313 ISIS.


pages: 710 words: 164,527

The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steil

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activist fund / activist shareholder / activist investor, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, capital controls, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, margin call, means of production, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, open economy, Paul Samuelson, Potemkin village, price mechanism, price stability, psychological pricing, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, The Great Moderation, the market place, trade liberalization, Works Progress Administration

Over the next three months, Clayton worked doggedly on three fronts of what he saw as the same battle: extracting a compelling Marshall Plan assistance request from the Paris delegates, achieving a breakthrough on global trade liberalization, and encouraging the formation of a “European federation” to coordinate Europe’s economic efforts and implement a customs union. On the Marshall Plan front, the eponymous author had rebuffed Clayton’s repeated pleadings throughout the summer for interim assistance to the increasingly desperate and frustrated Europeans. In September Marshall relented; on the tenth he publicly pressed Congress for quick appropriations to mitigate “hunger and cold this winter.” This had a profound effect on the Paris discussions, and on the twenty-second the Europeans finally submitted an “initial” report and assistance request that satisfied American expectations. Clayton immediately left Paris for London to press his case on trade liberalization, which he saw as an essential complement to American aid.


pages: 319 words: 89,477

The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion by John Hagel Iii, John Seely Brown

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Albert Einstein, Andrew Keen, barriers to entry, Black Swan, business process, call centre, Clayton Christensen, cleantech, cloud computing, commoditize, corporate governance, creative destruction, Elon Musk, en.wikipedia.org, future of work, game design, George Gilder, intangible asset, Isaac Newton, job satisfaction, knowledge economy, knowledge worker, loose coupling, Louis Pasteur, Malcom McLean invented shipping containers, Maui Hawaii, medical residency, Network effects, old-boy network, packet switching, pattern recognition, peer-to-peer, pre–internet, profit motive, recommendation engine, Ronald Coase, shareholder value, Silicon Valley, Skype, smart transportation, software as a service, supply-chain management, The Nature of the Firm, the new new thing, too big to fail, trade liberalization, transaction costs

First, during the Depression in the 1930s, business leaders in major developed economies around the world were motivated to exploit the capabilities of new communication and transportation infrastructures more effectively to harness scalable efficiency and compete during a period of stagnant or declining demand. Second, during the 1950s, another generation of business leaders broadened their horizons to scale push programs beyond national boundaries to take advantage of trade liberalization and to serve global markets. It is no coincidence that the famous British economist Ronald Coase wrote his path-breaking essay, “The Nature of the Firm,” in 1937.4 He effectively captured the primary thrust of institution-building during this period, arguing that firms existed to reduce the transaction costs that made coordinating activity across independent entities difficult. For this insight, he won the Nobel Prize in Economics.


pages: 372 words: 107,587

The End of Growth: Adapting to Our New Economic Reality by Richard Heinberg

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3D printing, agricultural Revolution, back-to-the-land, banking crisis, banks create money, Bretton Woods, carbon footprint, Carmen Reinhart, clean water, cloud computing, collateralized debt obligation, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, dematerialisation, demographic dividend, Deng Xiaoping, Elliott wave, en.wikipedia.org, energy transition, falling living standards, financial deregulation, financial innovation, Fractional reserve banking, full employment, Gini coefficient, global village, happiness index / gross national happiness, I think there is a world market for maybe five computers, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Kenneth Rogoff, late fees, liberal capitalism, mega-rich, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, naked short selling, Naomi Klein, Negawatt, new economy, Nixon shock, offshore financial centre, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, post-oil, price stability, private military company, quantitative easing, reserve currency, ride hailing / ride sharing, Ronald Reagan, short selling, special drawing rights, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, tulip mania, working poor, zero-sum game

Within Latin America, the Bolivarian Alliance for the Americas was initiated in 2004 with bilateral agreements between Venezuela and Cuba; the Alliance now numbers eight nations — including Ecuador, Nicaragua, and Bolivia — which are in the process of introducing a new regional currency, the sucre, to be used in place of the US dollar. The –sucre is intended to serve as the common virtual currency of the Alliance for now, and eventually to become a hard currency. The Alliance aims for social welfare, bartering, and mutual economic aid rather than trade liberalization led by Washington. Bolivia’s nationalization of its hydrocarbon assets and Ecuador’s declaration of the illegitimacy of its national debt (because it was contracted by prior corrupt and despotic regimes) can be interpreted as expressions of these nations’ rejection of the “shock doctrine” of the global economic elites. Meanwhile, as we saw in Chapter 2, several European countries are seeing increasingly vocal popular opposition to the austerity plans being imposed by the EU and the International Monetary Fund in response to sovereign debt crises.


pages: 387 words: 110,820

Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

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barriers to entry, Berlin Wall, big-box store, cognitive dissonance, computer age, creative destruction, Daniel Kahneman / Amos Tversky, delayed gratification, deskilling, Donald Trump, Edward Glaeser, fear of failure, Ford paid five dollars a day, Frederick Winslow Taylor, George Akerlof, global supply chain, global village, greed is good, Howard Zinn, income inequality, interchangeable parts, inventory management, invisible hand, James Watt: steam engine, Joseph Schumpeter, Just-in-time delivery, knowledge economy, loss aversion, market design, means of production, mental accounting, Pearl River Delta, Ponzi scheme, price anchoring, price discrimination, race to the bottom, Richard Thaler, Ronald Reagan, side project, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, traveling salesman, ultimatum game, Victor Gruen, washing machines reduced drudgery, working poor, yield management, zero-sum game

Labor unions were surprisingly sanguine. Confident of the superiority of American products, United Steelworkers Union president David McDonald actually approved of the importation of steel from Japan. Years earlier he had testified before Congress, saying, “If I had the slightest feeling that increased trade, particularly imports, would be injurious to the American working man, I wouldn’t be supporting a policy of trade liberalization.” McDonald could not imagine that Japanese imports might pose a threat to his constituency. But even a tinny-sounding radio is a radio, after all, and American teenagers were happy to put up with static for the opportunity to enjoy the Beatles in private rather than huddle with their parents around a bulky American-made vacuum tube set. Gradually, America grew accustomed to the compromises embedded in low price and showed a growing willingness to trade cost for quality.


pages: 311 words: 17,232

Living in a Material World: The Commodity Connection by Kevin Morrison

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barriers to entry, Berlin Wall, carbon footprint, clean water, commoditize, commodity trading advisor, computerized trading, diversified portfolio, Doha Development Round, Elon Musk, energy security, European colonialism, flex fuel, food miles, Hernando de Soto, Hugh Fearnley-Whittingstall, hydrogen economy, Intergovernmental Panel on Climate Change (IPCC), Long Term Capital Management, new economy, North Sea oil, oil rush, oil shale / tar sands, oil shock, out of africa, Paul Samuelson, peak oil, price mechanism, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, the payments system, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, uranium enrichment, young professional

The demand for raw materials has not only increased because of higher living standards in the world’s two most populous countries, China and India. The Middle East and Russia have also boosted economic growth on the back of the high oil price, while Brazil’s improving economy is primarily due to its emergence as a global agriculturalexport superpower. The rise in living standards has come at a time of unparalleled population growth, technological and scientific breakthroughs, political upheaval and economic and trade liberalization. Economic growth in developing countries has accelerated global growth at a faster pace than at any time since the 1960s. In the 1950s and 1960s, the world economy rose by 5 % due to the reconstruction of Europe and Japan, as well as the economic competition between the US and the Soviet Union. The two oil shocks in the 1970s slowed growth to about 4 %, and then to 3 %, which became the average economic growth rate of the 1980s and 1990s.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

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affirmative action, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Bretton Woods, capital controls, Cass Sunstein, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial innovation, floating exchange rates, full employment, Gini coefficient, global reserve currency, global village, high net worth, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Just-in-time delivery, Kenneth Rogoff, labour market flexibility, labour mobility, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, price stability, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, sovereign wealth fund, special drawing rights, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Washington Consensus, Westphalian system, women in the workforce, yield curve

And although Australia’s political cycles have not always mirrored those in the United States and Britain (indeed, it is striking how Australian and British electorates have swung in opposite directions since the 1980s), Australian policymakers have been significantly influenced by political and intellectual fashions and trends emanating from Britain and America. In particular, since the 1980s Australian government have for the most part been committed to the so-called Washington consensus of trade liberalization, privatization, and deregulation of financial and other markets. Moreover, most of Australia’s major financial institutions have been managed by executives originally from, or with substantial experience gained in, the American or British markets for at least part of the 1990s or early 2000s. And there are other parallels. Australian households have substantially increased their borrowing since the early 1990s—much more rapidly than their British or American peers.


pages: 537 words: 99,778

Dreaming in Public: Building the Occupy Movement by Amy Lang, Daniel Lang/levitsky

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Bay Area Rapid Transit, bonus culture, British Empire, clean water, cognitive dissonance, collective bargaining, corporate governance, corporate personhood, crowdsourcing, David Graeber, deindustrialization, facts on the ground, glass ceiling, housing crisis, Kibera, late capitalism, mass incarceration, Naomi Klein, Occupy movement, oil shale / tar sands, out of africa, Plutocrats, plutocrats, Port of Oakland, Rosa Parks, Saturday Night Live, Slavoj Žižek, structural adjustment programs, the medium is the message, too big to fail, trade liberalization, union organizing, upwardly mobile, urban renewal, War on Poverty, We are Anonymous. We are Legion, We are the 99%, white flight, working poor

And in order to perpetuate this myth, the real and unignorable problems (like homelessness in Hungary) get thrown into a seemingly lively, but blind debate – inevitably resulting in botched ‘solutions’ which almost always have the victim as culprit. Stop paying Johnny Foreigner This morning’s news cycle was full of the idea that provision of overseas aid should be attached to conditions on the country receiving the aid – such as privatization, trade liberalization, oh and human rights.3 A plethora of eager comments and calls in, crying out: ‘We should be spending this money at home’ and ‘Why are we paying for those mad mullahs to hate us?’ Of course, anyone who had the chance to pick up a book on the matter of overseas aid would know that, once again, this is victim blaming with no context. This idea is as old as aid. In fact, after the colonial period (let’s pretend for a moment it ended) the IMF and World Bank were established to provide ‘crisis’ loans and loans for ‘reconstruction and development’.


pages: 339 words: 105,938

The Skeptical Economist: Revealing the Ethics Inside Economics by Jonathan Aldred

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airport security, Berlin Wall, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, endogenous growth, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, greed is good, happiness index / gross national happiness, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, new economy, Pareto efficiency, pension reform, positional goods, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, spectrum auction, Thomas Bayes, trade liberalization, ultimatum game

In the last paragraph I wrote that there will be both winners and losers in almost all cases. But what if everyone gains? Surely that would effectively count as an objective improvement - an unambiguous gain for everyone. Consider the common argument that free trade makes the economy more efficient. Some economists argue that, at least in the long run, everyone will be better off from freer global trade. Suppose this is true. A sympathetic reading of the evidence on recent trade liberalization suggests that, roughly, rich countries have gained moderately, recently industrialized countries such as China have gained the most, while very poor countries have gained the least. And within countries, the gains are very uneven too, with the poorest in India and China gaining much less than others in their countries. Even though ‘everyone’s a winner’, it is clearly reasonable to regard this outcome as not representing an objective, unambiguous improvement, because inequality has increased.


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The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

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Andrei Shleifer, business climate, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, Gini coefficient, Gunnar Myrdal, Hernando de Soto, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, manufacturing employment, Network effects, New Urbanism, open economy, Productivity paradox, purchasing power parity, rent-seeking, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

Easterly, William, Norman Loayza, and Peter Montiel. 1997. “Has Latin America’s Post-Reform Growth Been Disappointing?” Journal of International Economics 43 (November): 287-311. Easterly, W., and S. Rebelo. 1993. ”Fiscal Policy and Economic Growth: An Empirical Investigation.” Journal of Monetary Economics 32, no. 3 (December). Economist Intelligence Unit. 1999. CBte d’Ivoire Country Report, Fourth Quarter. Edwards, Sebastian. 1993. “Openness, Trade Liberalization, and Growth in Developing Countries.” Journal of Economic Literature 31 (September). Edwards, Sebastian. 1995. Crisis and Reformin Latin America: From Despair to Hope. New York: Oxford University Press for the World Bank. Edwards, Sebastian. 1998. ”Openness, Productivity, and Growth What Do We Really Know.” Economic Journal 108 (March): 383-398. Ehrlich, Paul R. 1968. The Population Bomb.


pages: 273 words: 34,920

Free Market Missionaries: The Corporate Manipulation of Community Values by Sharon Beder

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anti-communist, battle of ideas, business climate, corporate governance, en.wikipedia.org, full employment, income inequality, invisible hand, liquidationism / Banker’s doctrine / the Treasury view, minimum wage unemployment, Mont Pelerin Society, new economy, old-boy network, popular capitalism, Powell Memorandum, price mechanism, profit motive, Ralph Nader, rent control, risk/return, road to serfdom, Ronald Reagan, school vouchers, shareholder value, spread of share-ownership, structural adjustment programs, The Chicago School, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, Torches of Freedom, trade liberalization, traveling salesman, trickle-down economics, Upton Sinclair, Washington Consensus, wealth creators, young professional

. • Tax Reform: Broadening the tax base and cutting marginal tax rates to provide more incentive to high income earners to invest their money. • Financial Liberalization: Aiming towards market-determined interest rates and the abolition of preferential interest rates for privileged borrowers. • Exchange Rates: Setting exchange ‘to induce a rapid growth in nontraditional exports’, as well as to ensure exporters remain competitive. • Trade Liberalization: Reduction of tariffs and trade restrictions. • Foreign Direct Investment: Abolition of barriers to investment by foreign firms and foreign firms to be treated on the same basis as local firms. • Privatization: Privatizing government businesses and assets. • Deregulation: Abolition of regulations that impede investment or restrict competition, and requirement that all regulations be justified ‘by such criteria as safety, environmental protection, or prudential supervision of financial institutions’. • Property Rights: Securing property rights without excessive costs.15 ECONOMIC ADVISERS 149 These measures, a codified version of the Chicago School prescriptions, were measures that would expand business opportunities, reduce the cost of doing business and minimize the regulations that business would have to abide by.


pages: 350 words: 103,988

Reinventing the Bazaar: A Natural History of Markets by John McMillan

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accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, Deng Xiaoping, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Ronald Coase, Ronald Reagan, sealed-bid auction, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, Xiaogang Anhui farmers, yield management

“Competitive Bidding with Disparate Information.” Management Science 15, 446–448. ————. 1977. “A Bidding Model of Perfect Competition.” Review of Economic Studies 44, 511–518. ————. 1999. “Market Architecture.” Presidential address to the Econometric Society. Wood, Ellen Meiksins. 1999, The Origin of Capitalism. New York, Monthly Review Press. Woodruff, Christopher. 1998. “Contract Enforcement and Trade Liberalization in Mexico’s Footwear Industry.” World Development 26, 979–991. Wrong, Michela. 2000. In the Footsteps of Mr Kurtz: Living on the Brink of Disaster in the Congo. London, Fourth Estate. Wurgler, Jeffrey. 2000. “Financial Markets and the Allocation of Capital.” Journal of Financial Economics 58, 187–214. Yang, Dali L. 1996. Calamity and Reform in China. Stanford, Stanford University Press.


pages: 357 words: 94,852

No Is Not Enough: Resisting Trump’s Shock Politics and Winning the World We Need by Naomi Klein

Airbnb, basic income, battle of ideas, Berlin Wall, Bernie Sanders, Brewster Kahle, Celebration, Florida, clean water, collective bargaining, Corrections Corporation of America, desegregation, Donald Trump, drone strike, Edward Snowden, Elon Musk, energy transition, financial deregulation, greed is good, high net worth, Howard Zinn, illegal immigration, income inequality, Internet Archive, late capitalism, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, Mikhail Gorbachev, moral panic, Naomi Klein, Nate Silver, new economy, Occupy movement, offshore financial centre, oil shale / tar sands, open borders, Peter Thiel, Plutocrats, plutocrats, private military company, profit motive, race to the bottom, Ralph Nader, Ronald Reagan, Saturday Night Live, sexual politics, sharing economy, Silicon Valley, too big to fail, trade liberalization, transatlantic slave trade, transatlantic slave trade, Triangle Shirtwaist Factory, trickle-down economics, Upton Sinclair, urban decay, women in the workforce, working poor

Another key development in this period was the notion that, since the true product was the brand, it could be projected onto any number of seemingly unconnected physical commodities. Ralph Lauren launched a line of paints, Virgin went into wedding dresses and colas, Starbucks had a line of jazz CDs. The possibilities seemed endless. Many of these highly branded companies made the (then) bold claim that producing goods was only an incidental part of their operations, and that, thanks to recent victories in trade liberalization and labor law reform, they could have their products produced for them at bargain-basement prices by contractors and subcontractors, many of them overseas. It didn’t really matter who did the physical work, because the real value lay not in manufacturing but in design, innovation, and of course marketing. A consensus soon emerged at the management level that a great many corporations that did not embrace this model were bloated, oversized; they owned too much, employed too many people, and were weighed down with too many things.


pages: 354 words: 92,470

Grave New World: The End of Globalization, the Return of History by Stephen D. King

9 dash line, Admiral Zheng, air freight, Albert Einstein, Asian financial crisis, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Sanders, bilateral investment treaty, bitcoin, blockchain, Bonfire of the Vanities, borderless world, Bretton Woods, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collateralized debt obligation, colonial rule, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, debt deflation, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Snowden, eurozone crisis, facts on the ground, failed state, Fall of the Berlin Wall, falling living standards, floating exchange rates, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, global value chain, hydraulic fracturing, Hyman Minsky, imperial preference, income inequality, income per capita, incomplete markets, inflation targeting, information asymmetry, Internet of things, invisible hand, joint-stock company, Long Term Capital Management, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, moral hazard, Nixon shock, offshore financial centre, oil shock, old age dependency ratio, paradox of thrift, Peace of Westphalia, Plutocrats, plutocrats, price stability, profit maximization, quantitative easing, race to the bottom, rent-seeking, reserve currency, reshoring, rising living standards, Ronald Reagan, Scramble for Africa, Second Machine Age, Skype, South China Sea, special drawing rights, technology bubble, The Great Moderation, The Market for Lemons, the market place, trade liberalization, trade route, Washington Consensus, WikiLeaks, Yom Kippur War, zero-sum game

Elsewhere in the world, free-market philosophies were seemingly contributing to financial instability: most striking was the Asian Crisis of 1997/98 – which hit Thailand, South Korea, Indonesia, Malaysia and Hong Kong hard, even as communist China emerged relatively unscathed – and the broader emerging-market upheavals that followed. The phrase ‘Washington Consensus’ – which originally referred to a ten-point plan involving, inter alia, fiscal discipline, tax reform, trade liberalization, open cross-border capital markets, property rights and privatization3 – was reinterpreted pejoratively as a symbol of US ‘neo-liberalism’, leading to huge criticism of the post-war Washington-based institutions that, in earlier decades, had done so much to foster economic stability. Multilateral trade talks stalled. The GATT Uruguay Round was the last to be completed, back in 1994. The World Trade Organization (WTO), GATT’s successor, failed to complete a single multilateral trade agreement, with the doomed Doha Round – Uruguay’s successor – seemingly preserved in aspic, a relic of an earlier, more optimistic age.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

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accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, centre right, circulation of elites, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, German hyperinflation, Gini coefficient, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

After 1980, moreover, the new ultraliberal wave emanating from the developed countries forced the poor countries to cut their public sectors and lower the priority of developing a tax system suitable to fostering economic development. Recent research has shown that the decline in government receipts in the poorest countries in 1980–1990 was due to a large extent to a decrease in customs duties, which had brought in revenues equivalent to about 5 percent of national income in the 1970s. Trade liberalization is not necessarily a bad thing, but only if it is not peremptorily imposed from without and only if the lost revenue can gradually be replaced by a strong tax authority capable of collecting new taxes and other substitute sources of revenue. Today’s developed countries reduced their tariffs over the course of the nineteenth and twentieth centuries at a pace they judged to be reasonable and with clear alternatives in mind.

It is also possible to imagine a unified retirement scheme that would offer, in addition to a PAYGO plan, an opportunity to earn a guaranteed return on modest savings. As I showed in the previous chapter, it is often quite difficult for people of modest means to achieve the average return on capital (or even just a positive return). In some respects, this what the Swedish system offers in the (small) part that it devotes to capitalized funding. 48. Here I am summarizing the main results of Julia Cagé and Lucie Gadenne, “The Fiscal Cost of Trade Liberalization,” Harvard University and Paris School of Economics Working Paper no. 2012–27 (see esp. figure 1). 49. Some of the problems of health and education the poor countries face today are specific to their situation and cannot really be addressed by drawing on the past experience of today’s developed countries (think of the problem of AIDS, for example). Hence new experiments, perhaps in the form of randomized controlled trials, may be justified.


pages: 468 words: 145,998

On the Brink: Inside the Race to Stop the Collapse of the Global Financial System by Henry M. Paulson

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asset-backed security, bank run, banking crisis, break the buck, Bretton Woods, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Doha Development Round, fear of failure, financial innovation, fixed income, housing crisis, income inequality, London Interbank Offered Rate, Long Term Capital Management, margin call, money market fund, moral hazard, Northern Rock, price discovery process, price mechanism, regulatory arbitrage, Ronald Reagan, Saturday Night Live, short selling, sovereign wealth fund, technology bubble, too big to fail, trade liberalization, young professional

None of this takes away from the preeminent role of the U.S. in the world economy, but simply recognizes the vital fact of our interdependence. While much progress has been made, real risks remain, including those of trade and financial protectionism. At each G-20 summit, the leaders condemn protectionism, but they do so against the backdrop of increasing political pressures at home that have resulted in a variety of measures that are inconsistent with their repeated pledges. The U.S.’s own commitment to trade liberalization remains in question. As I complete this book, no action has been taken on pending free-trade agreements, and no progress has been made on completing the World Trade Organization’s Doha round of multilateral trade talks. In a world where virtually everyone agrees we have had inadequate regulation of banks and capital markets, there is a very real danger that financial regulation will become a wolf in sheep’s clothing, rivaling tariffs as the protectionist measure of choice for those nations that want to limit or eliminate competition not only in financial services but also in any other sector of their economy.


pages: 487 words: 147,891

McMafia: A Journey Through the Global Criminal Underworld by Misha Glenny

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anti-communist, Anton Chekhov, Berlin Wall, blood diamonds, BRICs, colonial rule, crony capitalism, Deng Xiaoping, Doha Development Round, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, forensic accounting, friendly fire, glass ceiling, illegal immigration, joint-stock company, market bubble, Mikhail Gorbachev, Nick Leeson, offshore financial centre, Pearl River Delta, place-making, rising living standards, Ronald Reagan, Skype, special economic zone, Stephen Hawking, trade liberalization, trade route, Transnistria, unemployed young men, upwardly mobile

They built their success as traders on other foundations—proximity to the sea; access to valued commodities; exclusion from ruling structures and low economic development; proximity to major geographical and political borders. An inherent aspect of their trading is risk taking and the scavenging of new markets—places that lie on the edge of organized trading networks, of states and of systems of moral values. And on the whole, these traders do not judge a commodity by its social function in its place of origin or consumption. They judge it by its profit margin. As trade liberalization was hailed in the late 1980s and early 1990s as a cornerstone of the complex new worldwide network of relations known as globalization, traders started traveling farther and in greater numbers than ever before in search of new opportunities to buy and sell. In the forefront were those peoples, often minority communities, who had centuries of tradition in trading and living on their wits along the farthest frontiers of global commerce: the Lebanese, the Chinese of Canton and Fujian provinces, the Balkan peoples, the Jews, the Muslims of India, the Sicilians, the Vietnamese.


pages: 522 words: 144,511

Sugar: A Bittersweet History by Elizabeth Abbott

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agricultural Revolution, Bartolomé de las Casas, British Empire, flex fuel, land tenure, liberation theology, Mason jar, Ralph Waldo Emerson, spinning jenny, strikebreaker, trade liberalization, trade route, transatlantic slave trade, women in the workforce, working poor

Child labor is widespread in El Salvador, where sugar became an important crop only after World War II, and in Brazil’s northeast Bahia region, where the legacy of four centuries of cane culture is illiteracy, poor health standards and high child mortality rates. In adulthood, cane workers remain underpaid, overworked and indifferently treated. Fears about irreconcilably different labor conditions and other issues pit beet against cane grower, ex-colony against ex-colony, and the entire developing, less and least developed world against former imperialists. Rival ideologies of free trade, liberalized trade and protectionism enter the fray as they vie for recognition, as do consumer advocates clamoring for cheaper prices and social justice advocates demanding fair trade. A series of international agreements formalize these changes in traditional sugar trade relationships. The Central American Free Trade Agreement, for instance, nudges American sugar producers into competition with five Central American nations plus the Dominican Republic, though just 1 percent of U.S. production is involved.


pages: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

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accounting loophole / creative accounting, agricultural Revolution, barriers to entry, cognitive bias, creative destruction, David Ricardo: comparative advantage, Dean Kamen, Donald Trump, double entry bookkeeping, en.wikipedia.org, endogenous growth, Ernest Rutherford, experimental economics, financial innovation, informal economy, interchangeable parts, invention of radio, invention of the printing press, invisible hand, James Watt: steam engine, Jean Tirole, John Harrison: Longitude, Joseph Schumpeter, Kenneth Arrow, linear programming, market bubble, market design, mutually assured destruction, Nash equilibrium, new economy, open economy, peer-to-peer, pirate software, placebo effect, price discrimination, profit maximization, rent-seeking, Richard Stallman, Silicon Valley, Skype, slashdot, software patent, the market place, total factor productivity, trade liberalization, transaction costs, Y2K

Evidence has accumulated during the past fifty years leaving little doubt about the damaging effects of current intellectual property laws. At the same time, legal, economic, and business know-how has also accumulated about how markets for innovation operate without intellectual monopoly. To rule out abolition a priori would be as silly now as it would have been to rule out the abolition of tariffs and trade barriers fifty years ago, when the trade liberalization process that has given us prosperity and globalization began. For a long time, the individuals and firms that profited from trade barriers argued that these increased the wealth of the nation and defended homeland companies and jobs, and that abolishing them would lead to a disaster for many sectors of our economy. It took a while to realize that this was not true, and that trade barriers were nothing more than rent-seeking devices, favoring a minority and dramatically hurting the overall economy and everyone else, beginning with low-income consumers.


pages: 464 words: 121,983

Disaster Capitalism: Making a Killing Out of Catastrophe by Antony Loewenstein

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activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-communist, Asian financial crisis, British Empire, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, clean water, collective bargaining, colonial rule, corporate social responsibility, Corrections Corporation of America, Edward Snowden, facts on the ground, failed state, falling living standards, Ferguson, Missouri, financial independence, full employment, G4S, Goldman Sachs: Vampire Squid, housing crisis, illegal immigration, immigration reform, income inequality, Julian Assange, mandatory minimum, market fundamentalism, mass incarceration, Naomi Klein, neoliberal agenda, obamacare, Occupy movement, offshore financial centre, open borders, private military company, profit motive, Ralph Nader, Ronald Reagan, Satyajit Das, Scramble for Africa, Slavoj Žižek, stem cell, the medium is the message, trade liberalization, WikiLeaks

Far too often, policies that have been tried and failed in poor nations are applied in wealthier nations in a time of profound weakness. In the wake of the 2011 earthquake and tsunami in Japan, it did not take long for commentators to start calling for “reform”—code for mass privatization that would allow big business a free hand in redeveloping the devastated areas with the help of generous tax breaks. Murray McLean, Australia’s former ambassador to Japan, argued that trade liberalization was one viable solution, but he was worried that leaders would remain “bogged down in policymaking malaise.”25 His suggestions sounded benign, but they were remarkably similar to the prescriptions described by Klein in The Shock Doctrine in relation to the tsunami that bore down on Sri Lanka, among other countries, on December 26, 2004. These included “public-private partnerships,” “flexible labor laws,” and the opening up of the economy to privatization.26 For this book, I visited places that provide unique insights into the cashed-up world of disaster profiteers, resource hunters, war contractors, and aid leeches.

Year 501 by Noam Chomsky

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anti-communist, Bartolomé de las Casas, Berlin Wall, Bolshevik threat, Bretton Woods, British Empire, capital controls, colonial rule, corporate governance, cuban missile crisis, declining real wages, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, European colonialism, experimental subject, Fall of the Berlin Wall, Howard Zinn, invisible hand, land reform, land tenure, long peace, mass incarceration, means of production, Monroe Doctrine, non-tariff barriers, offshore financial centre, Plutocrats, plutocrats, price stability, Ralph Nader, Ralph Waldo Emerson, RAND corporation, Ronald Reagan, Simon Kuznets, strikebreaker, structural adjustment programs, the scientific method, The Wealth of Nations by Adam Smith, trade liberalization, trickle-down economics, union organizing, War on Poverty, working poor

The most extensive comparative study concludes that “periods of significant export expansion are almost always preceded by periods of strong import substitution”—measures of state intervention in violation of the market (Chenery, et al.). The comparison of Brazil and the East Asian NICs is telling. Until 1980, they developed in parallel, with “active industrial and export polities” and import substitution. But the debt crisis compelled Brazil to adopt IMF-World Bank New Orthodoxy, elevating “trade liberalization over domestic growth objectives” and turning to the export of primary products, with grim consequences. The NICs, with much more powerful state controls, prevented the market disaster, barring capital flight and directing capital to investment.4 Meanwhile China, the one “Communist” country that has kept the Western experts at arms length, remains the only one with rapid economic development (along with vigorous repression and no pretense of democracy).


pages: 437 words: 113,173

Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance by Ian Goldin, Chris Kutarna

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Airbnb, Albert Einstein, AltaVista, Asian financial crisis, asset-backed security, autonomous vehicles, banking crisis, barriers to entry, battle of ideas, Berlin Wall, bioinformatics, bitcoin, Bonfire of the Vanities, clean water, collective bargaining, Colonization of Mars, Credit Default Swap, crowdsourcing, cryptocurrency, Dava Sobel, demographic dividend, Deng Xiaoping, Doha Development Round, double helix, Edward Snowden, Elon Musk, en.wikipedia.org, epigenetics, experimental economics, failed state, Fall of the Berlin Wall, financial innovation, full employment, Galaxy Zoo, global supply chain, Hyperloop, immigration reform, income inequality, indoor plumbing, industrial cluster, industrial robot, information retrieval, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invention of the printing press, Isaac Newton, Islamic Golden Age, Khan Academy, Kickstarter, labour market flexibility, low cost carrier, low skilled workers, Lyft, Malacca Straits, mass immigration, megacity, Mikhail Gorbachev, moral hazard, Network effects, New Urbanism, non-tariff barriers, Occupy movement, On the Revolutions of the Heavenly Spheres, open economy, Panamax, Pearl River Delta, personalized medicine, Peter Thiel, post-Panamax, profit motive, rent-seeking, reshoring, Robert Gordon, Robert Metcalfe, Search for Extraterrestrial Intelligence, Second Machine Age, self-driving car, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, smart grid, Snapchat, special economic zone, spice trade, statistical model, Stephen Hawking, Steve Jobs, Stuxnet, TaskRabbit, The Future of Employment, too big to fail, trade liberalization, trade route, transaction costs, transatlantic slave trade, uranium enrichment, We are the 99%, We wanted flying cars, instead we got 140 characters, working poor, working-age population, zero day

The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It Divided Nations: Why Global Governance Is Failing, and What We Can Do About It Exceptional People: How Migration Shaped Our World and Will Define Our Future Globalization for Development: Meeting New Challenges The Case for Aid The Economics of Sustainable Development Economic Reform, Trade and Agricultural Development Modelling Economy-wide Reforms Trade Liberalization: Global Economic Implications Open Economies The Future of Agriculture Economic Crisis: Lessons from Brazil Making Race About the Authors IAN GOLDIN is Professor of Globalization and Director of the Oxford Martin School at the University of Oxford. He was Vice President of the World Bank, Chief Executive of the Development Bank of Southern Africa and an adviser to President Nelson Mandela.


pages: 566 words: 163,322

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

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3D printing, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, Commodity Super-Cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labor-force participation, liberal capitalism, Malacca Straits, Mark Zuckerberg, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, working-age population

As Indonesia’s former finance minister Muhamad Chatib Basri notes, Indonesia had turned inward during the 1970s but was forced to reform in the 1980s following the collapse in the price of oil, then Indonesia’s leading export. Falling oil prices led to a drop in the value of the Indonesian rupiah, which had the effect of reducing the revenues earned by exporters, and transformed them into supporters of trade liberalization. The Indonesian leader Suharto put economic policy in the hands of technocrats, who began cutting tariffs and taxes. They opened doors to foreign investment and instituted an unusually creative answer to corruption among customs agents, by replacing the customs department with a private Swiss inspection company, SGS. At a time when Indonesia was aggressively opening to the world, Basri argues, the rupiah devaluation was one element of a broader reform program that helped set off a manufacturing boom in Indonesia.7 One way to think about this rule is that the less developed an economy is, the more sensitive it is to “cheap is good.”


pages: 411 words: 114,717

Breakout Nations: In Pursuit of the Next Economic Miracles by Ruchir Sharma

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3D printing, affirmative action, Albert Einstein, American energy revolution, anti-communist, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, business climate, business process, business process outsourcing, call centre, capital controls, Carmen Reinhart, central bank independence, centre right, cloud computing, collective bargaining, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, demographic dividend, Deng Xiaoping, eurozone crisis, Gini coefficient, global supply chain, housing crisis, income inequality, indoor plumbing, inflation targeting, informal economy, Kenneth Rogoff, knowledge economy, labor-force participation, labour market flexibility, land reform, M-Pesa, Mahatma Gandhi, Marc Andreessen, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, new economy, oil shale / tar sands, oil shock, open economy, Peter Thiel, planetary scale, quantitative easing, reserve currency, Robert Gordon, Shenzhen was a fishing village, Silicon Valley, software is eating the world, sovereign wealth fund, The Great Moderation, Thomas L Friedman, trade liberalization, Watson beat the top human players on Jeopardy!, working-age population, zero-sum game

Indian socialist ideals heavily influenced the founders of independent Sri Lanka, and state spending came to be seen as a tool to deliver economic justice to Sinhalese. At its peak in the 1970s, state spending accounted for 59 percent of GDP, and four in ten Sri Lankans worked for the government, an extraordinarily high number. But by the late 1990s even the main left-leaning party, the SLFP, was moving toward a more modern development model built on an open economy and trade liberalization. State spending has fallen to about 30 percent of GDP today, and most parties agree this is movement in the right direction. Ultimately, the economic impact of Sri Lanka’s civil war was relatively mild despite the personal suffering of the people it swept up. According to USAID research, a typical civil war of fifteen-year duration reduces national GDP by around 30 percent, and it typically takes a decade just to recover the prewar levels of income.


pages: 538 words: 138,544

The Story of Stuff: The Impact of Overconsumption on the Planet, Our Communities, and Our Health-And How We Can Make It Better by Annie Leonard

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air freight, banking crisis, big-box store, blood diamonds, Bretton Woods, California gold rush, carbon footprint, clean water, Community Supported Agriculture, dematerialisation, employer provided health coverage, energy security, European colonialism, Firefox, Food sovereignty, Ford paid five dollars a day, full employment, global supply chain, income inequality, Indoor air pollution, intermodal, Jeff Bezos, job satisfaction, liberation theology, McMansion, new economy, oil shale / tar sands, peak oil, Ralph Nader, renewable energy credits, Silicon Valley, special economic zone, supply-chain management, the built environment, trade liberalization, trickle-down economics, union organizing, Wall-E, Whole Earth Review, Zipcar

House of Representatives and the Senate Foreign Relations Committee but didn’t make it to the full Senate for a vote.112 Even while waiting for the Jubilee Act to move forward, there are other signs of hope, such as the April 2009 promise by the Obama administration to provide $20 million to cancel Haiti’s absolutely crippling debt payments to the World Bank and its regional ally, the Inter-American Development Bank.113 The last of the big three is the World Trade Organization. The WTO was created in 1995 as the successor to the General Agreement on Tariffs and Trade (or GATT). First aimed at reducing trade tariffs, it later turned to “trade liberalization”—that is, removing obstacles to increased trade. Now, I am not against trade, which has been happening since the beginning of time and has brought many good things. But trade should take place when it supports a thriving environment, good jobs, healthy communities, and cultural diversity. Trade can support all those things when those things are the end, and trade is one (just one) means by which to achieve them.


The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

accounting loophole / creative accounting, Ada Lovelace, Airbnb, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, Ben Bernanke: helicopter money, bitcoin, blockchain, Bretton Woods, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, David Graeber, deskilling, Diane Coyle, discrete time, distributed ledger, diversification, double entry bookkeeping, ethereum blockchain, fiat currency, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, labour market flexibility, large denomination, liquidity trap, London Whale, low skilled workers, M-Pesa, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, Satoshi Nakamoto, Satyajit Das, savings glut, seigniorage, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Von Neumann architecture, Washington Consensus

To gain a better insight into the role of technology, offshoring, and globalization in accentuating inequality, studies such as those done by Jaumotte et al (2008), have examined survey data of the subcomponents of trade and financial globalization, including comparative analysis of exports of manufacturing versus agriculture, and portfolio debt and equity flows versus foreign direct investment (FDI). They found that while trade liberalization and export growth are associated with income inequality, increased financial openness was associated with higher inequality. ---------------------------------------------------------------------------------------*(An economic hypothesis which states that as an economy develops, market forces first increase and then decrease economic inequality, following a bell curve trajectory.) However, the main finding of this line of research has been that the combined contribution of these factors towards income inequality was much lower than that 86 Chapter 3 ■ Innovating Capitalism of technological change, both in developed and developing countries.


pages: 403 words: 132,736

In Spite of the Gods: The Rise of Modern India by Edward Luce

affirmative action, Albert Einstein, Bretton Woods, call centre, centre right, clean water, colonial rule, crony capitalism, cuban missile crisis, demographic dividend, energy security, financial independence, friendly fire, Gini coefficient, Haight Ashbury, informal economy, job-hopping, land reform, Mahatma Gandhi, Martin Wolf, megacity, new economy, Plutocrats, plutocrats, profit motive, purchasing power parity, Silicon Valley, trade liberalization, upwardly mobile, uranium enrichment, urban planning, women in the workforce, working-age population, Y2K

China is ahead of India, but the latter is catching up. Both countries have concluded trade agreements with the Association of South East Asian Nations. And India is hoping to emulate China’s growing trade relations with South America. At the global level, China, India, Brazil, and South Africa lead the G20, a block of twenty developing countries that has become a weighty player at world trade liberalization talks in Geneva. There is also a proposal for a bilateral trade deal between India and China, although this would take years to negotiate. Does all this mean China and India have entered on a genuine era of friendship? Proponents of free trade are fond of the saying “When countries start trading goods, they stop trading blows.” This might be an overstatement. But clearly, as economic links strengthen and as more and more Indians visit China and vice versa, disagreements over the exact position of the international boundary or the precise status of the Dalai Lama become progressively easier to manage.


pages: 614 words: 176,458

Meat: A Benign Extravagance by Simon Fairlie

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agricultural Revolution, Albert Einstein, back-to-the-land, call centre, carbon footprint, Community Supported Agriculture, deindustrialization, en.wikipedia.org, food miles, Food sovereignty, Haber-Bosch Process, Hugh Fearnley-Whittingstall, informal economy, Intergovernmental Panel on Climate Change (IPCC), Just-in-time delivery, land reform, Mahatma Gandhi, Martin Wolf, megacity, Northern Rock, Panamax, peak oil, refrigerator car, scientific mainstream, sexual politics, stem cell, The Wealth of Nations by Adam Smith, trade liberalization, University of East Anglia, upwardly mobile, women in the workforce, zero-sum game

In it he provided figures showing that only 33 per cent of UK compound pig food consisted of grains fit for human consumption; 22 per cent was oil seed residues and the remainder consisted mainly of various other kinds of animal and vegetable food residues.4 However, he warned that the pig’s role as recycler of waste food was under threat from a number of factors, including: (i) Changing animal feed legislation (ii) The concentration of the animal feed industry into national corporations too large to cope with intrinsically variable raw materials or those only available in small quantities. (iii) Lower cereal prices as a result of EU policies and trade liberalization. (iv) The influence of the supermarkets who were ‘increasingly dictating methods of production … and imposing limits on the range of raw materials and dietary inclusions’. Brooks concluded: the Pig must not be allowed to become a competitor with Man for food products but must remain a converter of that which Man cannot eat, or rejects, into a product which he can and will eat. Fifteen years later, Professor Brooks’ fears have been fulfilled.


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

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accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, David Graeber, debt deflation, dematerialisation, disintermediation, eurozone crisis, fiat currency, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, German hyperinflation, Goldman Sachs: Vampire Squid, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, mobile money, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, negative equity, new economy, Nixon shock, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Satoshi Nakamoto, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

The European recipients had to repay the monies in local currency, which was then deposited by the local government in a counterpart fund. The Marshall Plan was significant for the development of the international monetary system. It was instrumental in the establishment of the European Payments Union (EPU) in 1950, lifting the majority of capital controls in Europe while encouraging a system of fixed exchange rates and a degree of trade liberalization. Moreover, drawing rights connected to the EPU were supported by ECA funds and facilitated the process of establishing full convertibility under the Bretton Woods Agreement. Describing it as “an investment in the world’s interest,” Bataille saw the Marshall Plan as an answer to the fundamental problem of general economy, namely, excess. He characterized its payments as “condemned wealth” (Bataille 1991: 182) that had been generated by an economy “so developed that the needs of growth are having a hard time absorbing its excess resources” (Bataille 1991: 179).


pages: 762 words: 206,865

Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth by Frederick Kempe

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Berlin Wall, cuban missile crisis, Deng Xiaoping, desegregation, Fall of the Berlin Wall, full employment, index card, Kitchen Debate, Mikhail Gorbachev, open borders, Ronald Reagan, trade liberalization, traveling salesman, zero-sum game

Playing devil’s advocate, Thompson responded that even if West Berlin were unimportant to the Soviets, “Ulbricht was very much interested,” and would be unlikely to endorse Khrushchev’s guarantee for its democratic, capitalist system. With a dismissive wave of the hand, as if swatting away a troublesome gnat, Khrushchev said he could compel Ulbricht to approve whatever he and Kennedy would decide. In an effort to find safer ground than Berlin, Thompson changed the subject to U.S.–Soviet trade liberalization. On that matter, he did have an offer he hoped would mollify Khrushchev. He said the U.S. was hoping to lift all restrictions on Soviet crabmeat imports to the United States. Instead of embracing the gesture, Khrushchev shot back his outrage at a recent U.S. decision to cancel, on national security grounds, the sale to Moscow of advanced grinding machine tools. “The USSR can fly its rockets without U.S. machines!”


pages: 618 words: 180,430

The Making of Modern Britain by Andrew Marr

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anti-communist, banking crisis, Bernie Madoff, British Empire, business climate, Corn Laws, Etonian, garden city movement, illegal immigration, imperial preference, New Journalism, New Urbanism, Plutocrats, plutocrats, Red Clydeside, rent control, strikebreaker, trade liberalization, V2 rocket, wage slave, women in the workforce

So the City would have a double effect on Britain, pressing for a financial straitjacket the country was too weak to wear comfortably, and failing to provide the capital her ageing industries needed. When the economic storm finally arrived, Montagu Norman would find himself in the middle of it; neither his famous cloak nor his alleged propensity for walking through walls would provide any hiding place. By the early 1920s in politics, the old battle line between protectionist Tories and free-trade Liberals was being replaced. Now it was pro-capitalist Conservatives against socialists. This would squeeze the Liberals into near oblivion. Before it did, Britain went through volatile three-party elections. After capitalizing on his war leadership in 1918 Lloyd George had been hammered in 1922. When Stanley Baldwin became Conservative prime minister, replacing the dying Bonar Law, he decided to call another general election for late 1923.


pages: 843 words: 223,858

The Rise of the Network Society by Manuel Castells

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Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, capital controls, complexity theory, computer age, computerized trading, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, financial deregulation, financial independence, floating exchange rates, future of work, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, James Watt: steam engine, job automation, job-hopping, John Markoff, knowledge economy, knowledge worker, labor-force participation, labour market flexibility, labour mobility, laissez-faire capitalism, Leonard Kleinrock, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-industrial society, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Robert Gordon, Robert Metcalfe, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Ted Nelson, the built environment, the medium is the message, the new new thing, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl, zero-sum game

So doing, they contributed to stimulating competition in international trade, when both the US and the European Community took measures to respond to the Pacific challenge to their previously uncontested economic hegemony. The European Community extended its membership to southern and northern Europe, and accelerated its process of economic integration to expand its internal market, while presenting a united customs front vis-à-vis Japanese and American competitors. The US, building on its superior technology and business flexibility, increased its pressures for trade liberalization and open markets, while keeping, as a bargaining chip, its own protectionist barriers. Capital markets increased their global circulation on the basis of the eurodollars market, largely created to allow US multinationals to lend and borrow outside the US, circumventing American regulations. Financial flows substantially expanded in the 1970s to recycle the petro-dollars from OPEC countries and oil companies.

The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

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air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business process, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, labour market flexibility, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, new economy, North Sea oil, oil shock, open economy, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, Right to Buy, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K, zero-sum game

Ironically, capitalism now seems to be held in greater favor in the many parts of the developing world where growth is rapid—China, part of India, and much of Eastern Europe—than where it originated, in slower-growing Western Europe. A "fully globalized" world is one in which unfettered production, trade, and finance are driven by profit seeking and risk taking that are wholly indifferent to distance and national borders. That state will never be achieved. People's inherent aversion to risk, and the home bias that is a manifestation of that aversion, mean that globalization has limits. Trade liberalization in recent decades has brought about a major lowering of barriers to movement in goods, services, and capital flows. But further progress will come with increasing difficulty, as the stalemate in the Doha round of trade negotiations demonstrated. Because so much of our recent experience has little precedent, it is dif365 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright.


pages: 695 words: 194,693

Money Changes Everything: How Finance Made Civilization Possible by William N. Goetzmann

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Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, banking crisis, Benoit Mandelbrot, Black Swan, Black-Scholes formula, Bretton Woods, Brownian motion, capital asset pricing model, Cass Sunstein, collective bargaining, colonial exploitation, compound rate of return, conceptual framework, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, delayed gratification, Detroit bankruptcy, disintermediation, diversified portfolio, double entry bookkeeping, Edmond Halley, en.wikipedia.org, equity premium, financial independence, financial innovation, financial intermediation, fixed income, frictionless, frictionless market, full employment, high net worth, income inequality, index fund, invention of the steam engine, invention of writing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, laissez-faire capitalism, Louis Bachelier, mandelbrot fractal, market bubble, means of production, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, new economy, passive investing, Paul Lévy, Ponzi scheme, price stability, principal–agent problem, profit maximization, profit motive, quantitative trading / quantitative finance, random walk, Richard Thaler, Robert Shiller, Robert Shiller, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, spice trade, stochastic process, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, time value of money, too big to fail, trade liberalization, trade route, transatlantic slave trade, transatlantic slave trade, tulip mania, wage slave

No longer, for example, would a region like the Ruhr be held as security to force payments. No longer would import duties or canal revenues be seized by another country for direct debt service. Instead, the IMF set macroeconomic benchmarks as conditions for future loans and required structural adjustments to an economy that got itself into serious debt. These ranged from austerity measures to currency devaluation, to increased exports and trade liberalization, to introduction of free market policies and privatization: a toolkit of solutions designed by macroeconomists, as opposed to self-interested bondholders or bank lenders. Countries with these IMF-imposed conditions sometimes complain about the hardships they impose and the failure of the prescription. Look, for example, at the IMF bailouts of Greece in recent times. Austerity conditions imposed by the IMF and the European Union did not turn the Greek economy around, but instead were associated with deeper unemployment and hardship.


pages: 964 words: 296,182

Karl Marx: Greatness and Illusion by Gareth Stedman Jones

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anti-communist, battle of ideas, Berlin Wall, British Empire, colonial rule, Corn Laws, deindustrialization, Fall of the Berlin Wall, feminist movement, fixed income, joint-stock company, land reform, land tenure, means of production, New Journalism, New Urbanism, night-watchman state, On the Economy of Machinery and Manufactures, The Wealth of Nations by Adam Smith, trade liberalization, unemployed young men, wage slave

Social revolution was the only means by which the oppressed peoples of Europe would achieve emancipation. It went without saying, as he had emphasized up to 1864, that the freedom of Europe required the breakup of the military despotisms of Austria, Prussia and Russia. But it had also become clear that national unification by no means necessarily brought with it social or political liberation. In early 1864, Bakunin had moved to Italy, where disillusion, particularly in the south, with trade liberalization and Piedmontese taxation had grown apace. In Italy, he became one of the first to respond to this disenchantment by criticizing Mazzini’s idea of the moderate political republic.246 In 1867, having moved from Italy to Switzerland, he attended the inaugural Congress of the League of Peace and Freedom, based in Geneva. By that time, he was famous across Europe. As he rose to speak, ‘The cry passed from mouth to mouth: “Bakunin!”


pages: 1,242 words: 317,903

The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby

airline deregulation, airport security, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Benoit Mandelbrot, Bretton Woods, central bank independence, centralized clearinghouse, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, energy security, equity premium, fiat currency, financial deregulation, financial innovation, fixed income, Flash crash, forward guidance, full employment, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, Kenneth Rogoff, Kitchen Debate, laissez-faire capitalism, Long Term Capital Management, low skilled workers, market bubble, market clearing, Martin Wolf, money market fund, moral hazard, mortgage debt, Myron Scholes, new economy, Nixon shock, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, Plutocrats, plutocrats, popular capitalism, price stability, RAND corporation, rent-seeking, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, Saturday Night Live, savings glut, secular stagnation, short selling, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game

A few FOMC members felt that productivity might be accelerating, even if official data did not capture it. Buoyed by sizzling growth and a hot stock market, business executives were brimming with anecdotes about efficiency gains—gains that resulted from information technology; from innovations such as just-in-time inventory management; and from the multiple opportunities presented by deregulation, de-unionization, trade liberalization, and globalization. “Mike, I agree with your characterization of the productivity data,” Gary Stern, the president of the Minneapolis Fed, exclaimed during the August FOMC meeting. “But I think the business community would take sharp exception to it. Everywhere I go, they talk about the tremendous productivity improvements that they are achieving.”25 Greenspan was on both sides of this debate.