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

affirmative action, Albert Einstein, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, 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, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, 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

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, business cycle, 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, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, 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

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, Jones Act, Kenneth Arrow, Kenneth Rogoff, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, new economy, 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.

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 automatically “trickle down” to benefit all. Neither is consistent with economic theory or historical experience.

It is not in the United States’ interests to have a poor, unstable country on its southern border, and NAFTA supporters hoped the pact would bring Mexico’s economy forward and help this country, rich with art and history and culture, prosper. Instead, more than ten years later, it is clear that NAFTA has not succeeded. While it has not been the disaster that its critics predicted, neither has it brought all the benefits that were claimed by its advocates. Advocates of trade liberalization believe it will bring unprecedented prosperity. They want developed countries to open themselves up to exports from developing countries, liberalize their markets, take away man-made barriers to the flows of goods and services, and let globalization work its wonders. But trade liberalization is also among the most controversial aspects of globalization; many see the alleged costs—lower wages, growing unemployment, loss of national soveignty—as outweighing the purported benefits of greater efficiency and increased growth. In part, free trade has not worked because we have not tried it: trade agreements of the past have been neither free nor fair.


pages: 356 words: 103,944

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

affirmative action, Asian financial crisis, bank run, banking crisis, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, 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, 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: 470 words: 148,730

Good Economics for Hard Times: Better Answers to Our Biggest Problems by Abhijit V. Banerjee, Esther Duflo

"Robert Solow", 3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, basic income, Bernie Sanders, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, charter city, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, endowment effect, energy transition, Erik Brynjolfsson, experimental economics, experimental subject, facts on the ground, fear of failure, financial innovation, George Akerlof, high net worth, immigration reform, income inequality, Indoor air pollution, industrial cluster, industrial robot, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jean Tirole, Jeff Bezos, job automation, Joseph Schumpeter, labor-force participation, land reform, loss aversion, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, Network effects, new economy, New Urbanism, non-tariff barriers, obamacare, offshore financial centre, open economy, Paul Samuelson, place-making, price stability, profit maximization, purchasing power parity, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Robert Gordon, Ronald Reagan, school choice, Second Machine Age, secular stagnation, self-driving car, shareholder value, short selling, Silicon Valley, smart meter, social graph, spinning jenny, Steve Jobs, technology bubble, The Chicago School, The Future of Employment, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, trickle-down economics, universal basic income, urban sprawl, very high income, War on Poverty, women in the workforce, working-age population, Y2K

In other words, was it growth (or the potential for growth) that caused trade liberalization, and not the other way around? Second, omitted causal factors. Liberalization in India was part of a much bigger set of changes. Among them was the fact that the government essentially stopped trying to tell business owners what they should produce and where. There was also a more nebulous but perhaps equally important shift in the attitude of the bureaucracy and the political system toward the business sector: the idea that business was a legitimate pursuit of honest people, something that could even be “cool.” It is essentially impossible to separate the effects of all these changes from that of trade liberalization. Third, it is hard to know what in the data constitutes trade liberalization. When the tariffs are 350 percent, there are no imports, so cutting them quite a bit might change very little.

Goldberg, Amit Khandelwal, Nina Pavcnik, and Petia Topalova, “Trade Liberalization and New Imported Inputs,” American Economic Review 99, no. 2 (2009): 494–500. 25 Abhijit Vinayak Banerjee, “Globalization and All That,” in Understanding Poverty, ed. Abhijit Vinayak Banerjee, Roland Bénabou, and Dilip Mookherjee (New York: Oxford University Press, 2006). 26 Topalova, “Factor Immobility and Regional Impacts of Trade Liberalization.” 27 Abhijit Banerjee and Esther Duflo, “Growth Theory Through the Lens of Development Economics,” ch. 7, in The Handbook of Economic Growth, eds. Philippe Aghion and Stephen Durlauf (Amsterdam: North Holland, 2005), vol. 1, part A: 473–552. 28 Topalova, “Factor Immobility and Regional Impacts of Trade Liberalization.” 29 Pinelopi K. Goldberg, Amit K. Khandelwal, Nina Pavcnik, and Petia Topalova, “Multiproduct Firms and Product Turnover in the Developing World: Evidence from India,” Review of Economics and Statistics 92, no. 4 (2010): 1042–49. 30 Robert Grundke and Cristoph Moser, “Hidden Protectionism?

By 2015, the top 10 percent received 41 percent of Chinese income, while the bottom 50 percent received 15 percent.19 Of course, correlation is not causation. Perhaps globalization per se did not cause the increase in inequality. Trade liberalizations almost never take place in a vacuum; in all these countries, trade reforms were part of a broader reform package. For example, the most drastic trade policy liberalization in Colombia in 1990 and 1991 coincided with changes in labor market regulation meant to substantially increase labor market flexibility. Mexico’s 1985 trade reform took place amid privatization, labor market reform, and deregulation. As we mentioned, India’s 1991 trade reform was accompanied by the removal of the industrial licensing regime, capital market reforms, and a general shift of power and influence to the private sector. China’s trade liberalization was of course the capstone of the massive economic reform undertaken by Deng Xiaoping, which legitimized private enterprise in an economy where it had been almost forbidden for thirty years.


pages: 222 words: 75,561

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

air freight, Asian financial crisis, Bob Geldof, British Empire, business cycle, 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: 606 words: 87,358

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

"Robert Solow", 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, Kickstarter, 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: 385 words: 111,807

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

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, Nelson Mandela, 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: 408 words: 108,985

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity by Joseph E. Stiglitz

Airbnb, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, basic income, Berlin Wall, bilateral investment treaty, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, deindustrialization, discovery of DNA, diversified portfolio, Donald Trump, eurozone crisis, Fall of the Berlin Wall, financial intermediation, Francis Fukuyama: the end of history, full employment, gender pay gap, George Akerlof, gig economy, Gini coefficient, hiring and firing, housing crisis, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, investor state dispute settlement, invisible hand, Isaac Newton, labor-force participation, liberal capitalism, low skilled workers, market fundamentalism, mini-job, moral hazard, non-tariff barriers, offshore financial centre, open economy, patent troll, pension reform, price mechanism, price stability, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Robert Shiller, Ronald Reagan, selection bias, shareholder value, Silicon Valley, sovereign wealth fund, TaskRabbit, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, tulip mania, universal basic income, unorthodox policies, zero-sum game

The presumption that free trade is welfare-enhancing is simply less true than had been realized. Examining the effects of trade liberalization in an economy that was based on the notion of perfect markets provided less insight into the world as it exists than advocates of globalization had assumed. In short, a limited and well-structured agenda of trade liberalization can enhance societal well-being, but it will do so only if the government takes an active role in ensuring that the benefits of globalization are equitably shared. But many of the same advocates of trade liberalization sought to scale back government, limiting its ability to do what had to be done to make sure that globalization would benefit most of society. Globalization’s advocates liked to pick and choose their theories. They liked results that said trade liberalization could be of benefit to both countries.

The advanced countries, including those of the EU, fell prey to this version of globalization, in large part because of a belief that if the national pie were larger, everyone would be better off. It has long been known that trade liberalization carries the risk of creating distinct groups of winners and losers, and over the last few decades, economists have further developed theories and compiled evidence to fortify this view. Markets for risk (insurance markets) are almost always imperfect, so individuals cannot buy insurance to guard against the most important risks they face, such as job loss. Moreover, trade liberalization often confronts firms with new risks, again against which they cannot buy insurance. Capital markets are also imperfect, so that new enterprises that seek to take advantage of new export opportunities that have opened up as a result of a trade agreement often cannot get the capital they need.

The hope at the founding of the WTO was that convergence to a shared set of values would lead to less friction over economic policy. Although problems would remain—the GMO example tells us that—they would be small and isolated. But if differences in underlying economic, political, and social models persist, as appears to be the case, how will the global economic system be able to work? The principle that trade is desirable is still valid, though not necessarily the kind of trade liberalization that was imagined a quarter century ago when the WTO began. The world will have to work toward a set of fewer rules, with more discretion, than if all countries subscribed to the same economic and value system. Europe will have to take the lead in forging these new rules. China, it seems, is also attempting to create or expand rifts within the EU. A relatively new Chinese diplomatic initiative, aimed at central and eastern Europe, is based on the idea that Brussels—and the United States—can no longer boost the economic dynamism in this part of Europe.


pages: 193 words: 48,066

The European Union by John Pinder, Simon Usherwood

Berlin Wall, BRICs, central bank independence, centre right, collective bargaining, Doha Development Round, eurozone crisis, failed state, illegal immigration, labour market flexibility, mass immigration, Neil Kinnock, Nelson Mandela, new economy, non-tariff barriers, open borders, price stability, trade liberalization, zero-sum game

Wielding the common instrument of the external tariff, the Community was becoming, in the field of trade, a power comparable to the United States. President Kennedy had reacted by proposing multilateral negotiations for major tariff cuts. Skilfully led by the Commission, the Community responded positively; and the outcome was cuts averaging one-third, initiating an era in which it was to become the major force for international trade liberalization. Alongside the ups and downs of Community politics, the Court of Justice made steady progress in establishing the rule of law. Based on its treaty obligation to ensure that ‘the law is observed’, in judgments in 1963 and 1964 the Court established the principles of the primacy and the direct effect of Community law, so that it would be consistently applied in all the member states. Though without the means of enforcement proper to a state, respect for the law, based on the treaties and on legislation enacted by its institutions, provided cement that has bound the Community together.

As a federalist in Monnet’s tradition, his short-list contained projects—single market, single currency, common defence policy, institutional reform—that could be seen as steps in a federal direction. But Thatcher, whose view of federalism was akin to de Gaulle’s, and so was hostile to the currency, defence, and institutional projects, was at the same time a militant economic liberal who saw the single market as an important measure of trade liberalization. European economies had lost momentum during the hard times of the 1970s and all the governments accepted the single market project as a way to break out of what was then called eurosclerosis. The project was strongly backed by the more dynamic firms and the main business associations, especially since the Luxembourg ‘compromise’ had served to let non-tariff barriers to trade build up during the period.

The cost of the CAP remained a heavy burden for the Community, with half the budget going to support a sector that employs less than 5 per cent of the working population, much of it for a small minority of the bigger and richer farmers. By the end of the 1990s, moreover, the twin pressures of enlargement to the East and negotiations in the newly established World Trade Organization (WTO) were forcing the EU into a more structural reform process. New member states, with their large agricultural sectors, were set to drive up costs very significantly, while the need to secure agreement in WTO trade liberalization negotiations was placing increasing pressure on reductions in levels of agricultural support. Consequently, the Union agreed substantial cuts for some products in 1999, as part of wider budgetary negotiations, as well as introducing the notion of a multifunctional CAP, i.e. one that extends into the social and environmental dimensions that surround farming. This recasting of the CAP as a ‘rural’ policy—confirmed by the 2008 ‘health check’—was an important step in helping to unblock the reforms that some states, notably France, had put on hold.


pages: 823 words: 206,070

The Making of Global Capitalism by Leo Panitch, Sam Gindin

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, business cycle, 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, Kickstarter, 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.


pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

anti-globalists, 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, income per capita, informal economy, Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, liberal capitalism, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, prediction markets, profit motive, race to the bottom, rising living standards, 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

‘‘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-liberals making 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 methods.

We see this difference between liberalizing Vietnam and nonliberalizing Burma, between Bangladesh and Pakistan, between Costa Rica and Honduras, between Uganda and Kenya, between Chile and its neighbors in Latin America, and so on. What about trade and inequality? There does not seem to be any strong and unambiguous connection between increased trade and changes in equality—except, possibly, a slightly positive connection. Certain groups lose out by free trade, but they are as likely to be the protected rich as the poor. Changes in equality depend primarily on overall policy. Results in trade-liberalizing countries varied during the 1990s: in China, inequality increased, in Costa Rica and Vietnam it remained constant, and in countries like Ghana and Thailand it diminished. After many years of a communist-planned economy and deepest poverty, Vietnam since the end of the 1980s has introduced free trade reforms and measures of domestic liberalization. Those changes have made possible a substantial growth in exports of such labor-intensive products as shoes, and of rice, which is produced by poor farmers.


pages: 303 words: 75,192

10% Less Democracy: Why You Should Trust Elites a Little More and the Masses a Little Less by Garett Jones

"Robert Solow", Andrei Shleifer, Asian financial crisis, business cycle, central bank independence, clean water, corporate governance, correlation does not imply causation, creative destruction, Edward Glaeser, financial independence, game design, German hyperinflation, hive mind, invisible hand, Jean Tirole, Kenneth Rogoff, Mark Zuckerberg, mass incarceration, minimum wage unemployment, Mohammed Bouazizi, open economy, Pareto efficiency, Paul Samuelson, price stability, rent control, The Wealth of Nations by Adam Smith, trade liberalization

Federal Reserve, 4, 41, 55, 59, 62; Blinder on, 63–64, 92, 93; foreign economists at, 72; independence of, 45–47, 48, 64, 90, 94; interest rates controlled by, 42, 79; vs. judiciary, 64; terms of appointees to, 64; vs. White House, 63–64 U.S. House of Representatives: vs. European Union, 151; vs. Senate, 33–34, 110; votes on trade liberalization, 33 U.S. presidents: and election year economy, 30–31, 194n5; term of, 188; and trade disputes, 34, 194n12 U.S. Senate, 109–10, 141, 180; backloading the pork in, 29–30; vs. European Union, 151; vs. House of Representatives, 33–34, 110; impact of looming elections on Senators, 3–4, 29–30, 31, 33, 35; six-year terms, 146–47; staggered elections for, 146–47, 179; unanimous consent in, 159–60; votes on trade liberalization, 33 U.S. state senators: legislative productivity among, 38–39 U.S. Supreme Court: lifetime tenure of members, 64, 65; as undemocratic, 64 Vanhanen, Tatu: Index of Democratization, 19 Van Prooijen, Jan-Willem, 98–100 Venezuela: health care in, 104 Verba, Sidney: on education, 109 voters: attitudes regarding cheap money, 53, 56; attitudes regarding currency devaluation, 36; attitudes regarding inflation, 30, 52, 53; attitudes regarding recent past, 4, 29–30; educational level of, 95–98, 100, 105–8, 110–12, 114–17, 188; elite control vs. control by, 1, 5, 42–43, 44–45, 52, 53, 56, 63–64, 65–66, 72, 76, 78–79, 80, 83, 84–85, 86–91, 93–94, 110, 119, 127, 136, 148–49, 152–53, 154–56, 167–68, 173, 177–79, 181–83, 186; forgetfulness among, 29–31; as informed, 6–7, 14, 96–98, 102, 103, 112, 179; and labor market policies, 35; older vs. younger, 106–7; as protectionist, 33; public credit with, 28–29; and real per capita GDP, 30; relations with judges, 66–68; restrictions on right to vote, 95–98, 101–2, 104–12, 113–17; short memories of, 29–30; women as, 105 Wagner, W.

When a senator is in cycle, she’s 10 percentage points less likely to vote for a trade deal. Economist Paola Conconi of the Université Libre de Bruxelles and her coauthors established this fact in an aptly titled paper published in 2014: “Policymakers’ Horizon and Trade Reforms: The Protectionist Effect of Elections.” They provide anecdotal evidence for their case in a footnote: “For example, during her first [term] as senator from New York state, Hillary Clinton voted on six trade liberalization bills, four times in favor (during the first four years) and twice against (during the last two years).”⁹ Politicians act differently when the election looms. They don’t just show up to more county fairs and church services; they also are more reluctant to support one policy reform that experts overwhelmingly agree on: freer international trade. Conconi reports another important finding: senators who are in cycle act just like House members.

The second statement is closer to a question about whether the reforms would help those lower in the economic spectrum, since high unemployment rates in Europe tend to hurt those with less human capital and experience. On the productivity statement, two-thirds agreed or strongly agreed, and on unemployment rates, half agreed and many abstained or were uncertain, but in neither case did more than 5% of respondents disagree with the statement.¹⁵ The economists’ consensus on labor market reforms isn’t as overwhelming as with trade liberalization, but almost all the weight is on one side—the side of market-friendly, liberal economics. So how do looming elections fit into this? Rickard and Caraway checked to see if the IMF imposed fewer labor market liberalization reforms when an election was looming. Financial crises are somewhat random, so if they happen when elections are years away, does the IMF demand lots of pie-growing, productivity-increasing reforms?


pages: 329 words: 85,471

The Locavore's Dilemma by Pierre Desrochers, Hiroko Shimizu

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, 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.


pages: 572 words: 134,335

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

anti-communist, banking crisis, Berlin Wall, Boycotts of Israel, Bretton Woods, British Empire, business cycle, 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.


pages: 470 words: 130,269

The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas by Janek Wasserman

Albert Einstein, American Legislative Exchange Council, anti-communist, battle of ideas, Berlin Wall, Bretton Woods, business cycle, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, different worldview, Donald Trump, experimental economics, Fall of the Berlin Wall, floating exchange rates, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, housing crisis, Internet Archive, invisible hand, John von Neumann, Joseph Schumpeter, laissez-faire capitalism, liberal capitalism, market fundamentalism, mass immigration, means of production, Menlo Park, Mont Pelerin Society, New Journalism, New Urbanism, old-boy network, Paul Samuelson, Philip Mirowski, price mechanism, price stability, RAND corporation, random walk, rent control, road to serfdom, Robert Bork, rolodex, Ronald Coase, Ronald Reagan, Silicon Valley, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, union organizing, urban planning, Vilfredo Pareto, Washington Consensus, zero-sum game, éminence grise

Moving beyond the idea of limiting an already-existing state, neoliberals like the Austrians imagined how to create a state that protected economic freedom from government planners, international governing institutions, and democratic polities alike.20 The Austrians thus helped build postwar neoliberalism, which, in the name of freedom, prioritized the creation of a market-based society sustained by a strong state, the rule of law, and limited democratic involvement. They also contributed to the formation of a number of transnational epistemic communities that advocated trade liberalization, floating exchange rates, state deregulation, and privatization. Austrians played instrumental roles in these communities by persuading institutional actors, state and nonstate, to follow their prescriptions in times of uncertainty and crisis. Through GATT, the Bellagio Group, the RAND Corporation, and others, Haberler, Machlup, and Morgenstern proved adept at behind-the-scenes policy interventions that shaped economic liberalization and Cold War reasoning in the 1960s and 1970s.

Hayek’s time at the University of Chicago demonstrated possibilities for collaboration with conservatives, but it also pointed to the difficulties of re-creating Viennese culture in the United States. Meanwhile in New York City, Mises faced similar challenges. He had to wait nearly a decade to establish a stable circle. When he did, the Mises-Kreis little resembled its predecessor, producing a different, more dogmatic “Austrian economics.” Haberler and Machlup took on leadership roles in incipient debates on globalization and trade liberalization by spearheading new policy initiatives. Haberler’s recasting of international trade signaled the beginning of a new “liberal international economic order.” Machlup starred in “reforming the world monetary system,” propelling the international monetary debates that overturned the Bretton Woods order. In the first decades after World War II, the Austrians shifted their attention to developing new thought collectives and epistemic communities, modifying and adapting earlier Austrian School traditions along the way.6 The Creation of the MPS The MPS was the most enduring postwar Austrian institution, drawing much of its appeal from the earlier ideas, interaction rituals, and ideological views of the school.

Despite concerns about financing, Hayek and the founders remained optimistic. The fund-raising efforts of Hunold and Luhnow ensured continued viability by providing the cash to make all-expenses-paid meetings possible.9 In recent years, the MPS has become associated with a neoliberalism that advocates “market fundamentalism” predicated on neoclassical economics, limited government, international trade liberalization, and globalization. In its formative years, it looked less single-minded and dogmatic. Within the society, there were staunch antistatists like Mises. There were also German ordoliberals like Röpke and Rüstow, who saw the state serving a central role in the creation of markets and the maintenance of law, order, and prosperity. The early Chicago School economists constituted a third major tributary.


pages: 322 words: 87,181

Straight Talk on Trade: Ideas for a Sane World Economy by Dani Rodrik

3D printing, airline deregulation, Asian financial crisis, bank run, barriers to entry, Berlin Wall, Bernie Sanders, blue-collar work, Bretton Woods, BRICs, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, central bank independence, centre right, collective bargaining, conceptual framework, continuous integration, corporate governance, corporate social responsibility, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Donald Trump, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, financial deregulation, financial innovation, financial intermediation, financial repression, floating exchange rates, full employment, future of work, George Akerlof, global value chain, income inequality, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Jean Tirole, Kenneth Rogoff, low skilled workers, manufacturing employment, market clearing, market fundamentalism, meta analysis, meta-analysis, moral hazard, Nelson Mandela, new economy, offshore financial centre, open borders, open economy, Pareto efficiency, postindustrial economy, price stability, pushing on a string, race to the bottom, randomized controlled trial, regulatory arbitrage, rent control, rent-seeking, Richard Thaler, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Sam Peltzman, Silicon Valley, special economic zone, spectrum auction, Steven Pinker, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, total factor productivity, trade liberalization, transaction costs, unorthodox policies, Washington Consensus, World Values Survey, zero-sum game, éminence grise

The guiding philosophy behind the Bretton Woods regime, which governed the world economy until the 1970s, was that nations—not only the advanced nations but also the newly independent ones—needed the policy space within which they could manage their economies and protect their social contracts. Capital controls, restricting the free flow of finance between countries, were viewed as an inherent element of the global financial system. Trade liberalization remained limited to manufactured goods and to industrialized nations; when imports of textiles and clothing from low-cost countries threatened domestic social bargains by causing job losses in affected industries and regions, these, too, were carved out as special regimes. Yet trade and investment flows grew by leaps and bounds, in no small part because the Bretton Woods recipe made for healthy domestic policy environments.

Unfortunately, their paper does a poor job of explaining how their model works, and the particulars of their simulation are somewhat murky. The Petri-Plummer model is squarely rooted in decades of academic trade modeling, which makes a sharp distinction between effects that are microeconomic (that shape resource allocation across sectors) and those that are macroeconomic (that relate to overall levels of demand and employment). In this tradition, trade liberalization is a microeconomic “shock” that affects the composition of employment, but not its overall level. Trade economists tend to analyze trade agreements in such terms, which renders the Petri-Plummer model more congenial to them. By comparison, the Capaldo framework lacks sectoral and country detail; its behavioral assumptions remain opaque; and its extreme Keynesian assumptions sit ill at ease with its medium-term perspective.

Therefore, trade deals unambiguously enhance national well-being only to the extent that winners compensate losers. Compensation also ensures buy-in from broader constituencies and should be good politics. Prior to the welfare state, the tension between openness and redistribution was resolved either by large-scale emigration of workers or by reimposing trade protection, especially in agriculture.2 With the rise of the welfare state, the constraint became less binding, allowing for more trade liberalization. Today the advanced countries that are the most exposed to the international economy are also those where safety nets and social insurance programs—welfare states—are the most extensive.3 Research in Europe has shown that losers from globalization within countries tend to favor more active social programs and labor-market interventions.4 If opposition to trade has not become politically salient in Europe today, it is in some part because such social protections remain strong there, despite having weakened in recent years.


pages: 192

Kicking Awaythe Ladder by Ha-Joon Chang

Asian financial crisis, business cycle, central bank independence, clean water, colonial rule, Corn Laws, corporate governance, creative destruction, David Ricardo: comparative advantage, fear of failure, income inequality, income per capita, joint-stock company, joint-stock limited liability company, land reform, liberal world order, moral hazard, open economy, purchasing power parity, rent-seeking, short selling, Simon Kuznets, The Wealth of Nations by Adam Smith, trade liberalization, Washington Consensus

It was only after Gladstone's budgets of the 1850s, and especially that of 1860, in conjunction with the Anglo-French free trade treaty (the so-called Cobden-Chevalier Treaty) signed that year, that most tariffs were eliminated. The following passage succinctly describes the magnitude of trade liberalization that happened in Britain during the 1850s. 'In 1848, Britain had 1,146 dutiable articles; by 1860 she had forty-eight, all but twelve being revenue duties on luxuries or semi-luxuries. Once the most complex in Europe, the British tariff could now be printed "on half a page of Whitaker's Almanack" It is important to note here that Britain's technological lead that enabled this shift to a free trade regime had been achieved 'behind high and long-lasting tariff barriers'.47 It is also important to note that the overall liberalization of the British economy that occurred during the mid-nineteenth century, of which trade liberalization was just a part, was a highly controlled affair overseen by the state, and not achieved through a laissez-faire approach.48 It should also be pointed out that Britain 'adopted Free Trade painfully slowly: eighty-four years from The Wealth of Nations to Gladstone's 1860 budget; thirty-one from Waterloo to the ritual victory of 1846'.49 Moreover, the free-trade regime did not last long.

Nowadays, some economists even believe that the Great Depression was caused primarily by these tariffs'. 3 The likes of Germany and Japan erected high trade barriers and also started creating powerful cartels, which were closely linked with fascism and these countries' external aggression in the following decades.4 The world free trade system finally ended in 1932, when Britain, hitherto its champion, succumbed to temptation and reintroduced tariffs. The resulting contraction and instability in the world economy, and then the Second World War, destroyed the last remnants of the first Liberal world order. After the Second World War, so the story goes, some significant progress was made in trade liberalization through the early GATT (General Agreement on Trade and Tariffs) talks. However, dirigiste approaches to economic management dominated the policy-making scene until the 1970s in the developed world, and until the early 1980s in developing countries (as well as the Communist world until its collapse in 1989). According to Sachs and Warner, a number of factors contributed to the pursuit of protectionism and interventionism in developing countries.5 'Wrong' theories, such as the infant industry argument, the 'big push' theory of Rosensetin-Rodan (1943), and Latin American structuralism, not to speak of various Marxist theories, prevailed.

It also contributed to the modernization of the country's financial sector by granting limited liability to, investment in and overseeing of modern, large-scale financial institutions like Credit Mobilier, Credit Fonder (the Land Bank) and Credit Lyonnais.u3 On the trade policy front, Napoleon III signed the famous Anglo-French trade treaty (the Cobden-Chevalier treaty) of 1860, which reduced French tariffs quite substantially and heralded a period of trade liberalism on the Continent that lasted until 1879.134 However, as we can see from Table 2.2, the degree of protectionism in France was already quite low on the eve of the treaty (lower than in Britain at the time), and therefore the reduction in protectionism that resulted from this treaty was relatively minor. The treaty was allowed to lapse in 1892 and many tariff rates, especially the ones on manufacturing, were subsequently raised.


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

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, 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: 7,371 words: 186,208

The Long Twentieth Century: Money, Power, and the Origins of Our Times by Giovanni Arrighi

anti-communist, Asian financial crisis, barriers to entry, Bretton Woods, British Empire, business climate, business process, colonial rule, commoditize, Corn Laws, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, declining real wages, deindustrialization, double entry bookkeeping, European colonialism, financial independence, financial intermediation, floating exchange rates, income inequality, informal economy, invisible hand, joint-stock company, Joseph Schumpeter, late capitalism, London Interbank Offered Rate, means of production, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, oil shock, Peace of Westphalia, profit maximization, Project for a New American Century, RAND corporation, reserve currency, spice trade, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, trade route, transaction costs, transatlantic slave trade, transcontinental railway, upwardly mobile, Yom Kippur War

The free trade ideologized and practiced by the US government throughout the period of its hegemonic ascendancy has been, rather, a strategy of bilateral and multilateral intergovernmental negotiation of trade liberalization, aimed primarily at opening up other states to US commodities and enterprise. Nineteenth-century beliefs in the “selfregulating market” — in Polanyi’s (1957) sense — became the official ideology of the US government only in the 1980s under the Reagan and Bush administrations in response to the hegemonic crisis of the 1970s. Even then, however, the unilateral measures of trade liberalization actually undertaken by the US government were very limited. In any event, free trade played no role in the formation of the Cold War world order. Far from being the policy that brought the US and Western Europe together, [free trade] was the issue that divided them. . ..

Similarly, the chief instrument of world market formation under US hegemony, the General Agreement on Trade and Tariffs (GATT), left in the hands of governments in general, and of the US government in particular, control over the pace and direction of trade liberalization. By unilaterally liberalizing its foreign trade in the nineteenth century, Britain had ipso facto forgone the possibility of using the prospect of such a liberalization as a weapon in forcing other governments to liberalize their own trade. By never renouncing the use of this weapon through unilateral free trade, the United States instituted a trade regime that was far less “generous” towards the rest of the world than the British regime. But as Krasner (1979) has pointed out, as long as the United States operated at a higher level in the hierarchy of needs than its allies — as it did throughout the 1950s and 1960s — it could afford to give priority to Cold War objectives and be generous in the negotiation of successive rounds of trade liberalization. A far more extensive degree of multilateral free trade was thereby attained under US hegemony compared with British hegemony.

Congress simply refused to surrender sovereignty on trade issues even to a body that for the foreseeable future was bound to be controlled by US personnel, interests, and ideology. As previously noted, what eventually came into being — the General Agreement on Tariffs and Trade (GATT) created in 1948 — was no more than a forum for the bilateral and multilateral negotiation of reductions in tariffs and of other restrictions on international trade. It left the pace of trade liberalization in the hands of national governments. Although the GATT no doubt helped in reconstituting a multilateral trading system, trade liberalization followed rather than led the world economic expansion of the 1950s and 1960s, in sharp contrast to Britain’s unilateral adoption of free trade which preceded and contributed decisively to the mid-nineteenth-century expansion of world trade and production. Even if international trade had been liberalized more speedily through a unilateral adoption of free trade by the United States or through the action of the stillborn ITO, the extreme centralization of world liquidity, productive capacity, and purchasing power within the jurisdiction of the United States would have constituted a far more serious obstacle to world economic expansion than tariff walls and other governmentally imposed trade restrictions.


pages: 414 words: 101,285

The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It by Ian Goldin, Mike Mariathasan

"Robert Solow", air freight, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bretton Woods, BRICs, business cycle, butterfly effect, clean water, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, connected car, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, discovery of penicillin, diversification, diversified portfolio, Douglas Engelbart, Douglas Engelbart, Edward Lorenz: Chaos theory, energy security, eurozone crisis, failed state, Fellow of the Royal Society, financial deregulation, financial innovation, financial intermediation, fixed income, Gini coefficient, global pandemic, global supply chain, global value chain, global village, income inequality, information asymmetry, Jean Tirole, John Snow's cholera map, Kenneth Rogoff, light touch regulation, Long Term Capital Management, market bubble, mass immigration, megacity, moral hazard, Occupy movement, offshore financial centre, open economy, profit maximization, purchasing power parity, race to the bottom, RAND corporation, regulatory arbitrage, reshoring, Silicon Valley, six sigma, Stuxnet, supply-chain management, The Great Moderation, too big to fail, Toyota Production System, trade liberalization, transaction costs, uranium enrichment

THE BUTTERFLY DEFECT Previous books by Ian Goldin Is the Planet Full? Divided Nations: Why Global Governance Is Failing, and What We Can Do about It Globalization for Development: Meeting New Challenges Exceptional People: How Migration Shaped Our World and Will Define Our Future 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 THE BUTTERFLY DEFECT How Globalization Creates Systemic Risks, and What to Do about It IAN GOLDIN AND MIKE MARIATHASAN PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD Copyright © 2014 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 6 Oxford Street, Woodstock, Oxfordshire OX20 1TW press.princeton.edu All Rights Reserved Library of Congress Cataloging-in-Publication Data Goldin, Ian, 1955– The butterfly defect : how globalization creates systemic risks, and what to do about it / Ian Goldin, Mike Mariathasan.

Antweiler, Copeland, and Taylor’s landmark study, referred to previously, also suggests that economic growth “drives concentrations down by 1.25–1.5 percent via a technique effect.”37 The authors concluded that “trade-induced technique and scale effects imply a net reduction in pollution from these sources,” meaning that “freer trade appears to be good for the environment.”38 Ian Goldin and Alan Winters, on the other hand, along with Cole and Elliott, stress that the net effect can be different depending on the characteristics of the pollutant: in addition to the detrimental net effects of nitrogen oxide and carbon dioxide, Cole and Elliott report that “technique effects are dominating scale effects for SO2 and BOD.”39 Thus we see that in the case of some pollutants, “pollution declines with per capita income,” though the authors stress that this is not universal.40 In the same spirit, and in contrast to his findings with respect to air pollutants, Junyi Shen observes that “for water pollutants (COD, arsenic, and cadmium) trade liberalization decreases emissions.”41 Using an instrumental variables approach to address estimation issues related to the endogeneity of trade, Jeffrey Frankel and Andrew Rose show “that trade tends to reduce three measures of air pollution” and, more precisely, that “statistical significance is high for concentrations of SO2, moderate for NO2, and lacking for particulate matter.”42 Like Antweiler, Copeland, and Taylor, they conclude that “there is little evidence that trade has a detrimental effect on the environment.”43 Arriving at a similar conclusion, André Dua and Daniel Esty report that, for the Asia–Pacific region, “economic expansion and environmental protection can, in fact, be made mutually supportive.”44 This is an example of the scale effect and relates to what economists term the intensive margin.

The general presumption is that trade opening will increase economic activity and hence energy use. Everything else being equal, this increase in the scale of economic activity and energy use will lead to higher levels of greenhouse gas emissions.” See WTO, 2013c, “The Multilateral Trading System and Climate Change,” World Trade Organization, accessed 1 December 2013, http://www.wto.org/english/tratop_e/envir_e/climate_change_e.pdf. 31. Junyi Shen, 2008, “Trade Liberalization and Environmental Degradation in China,” Applied Economics 40: 997–1004, quote on 997. 32. Pongsiri et al., 2009, 945. 33. Ibid. 34. L. Philip Lounibos, 2001, “Invasions by Insect: Vectors of Human Disease,” Annual Review of Entomology 47: 233–266, quote on 233. 35. Ibid. 36. Authors’ calculation using producer support estimates for OECD countries relating to 2007–11. See OECD, 2013, “2012 Producer Support Estimates by Country,” OECD.Stat Extracts, accessed 6 February, http://stats.oecd.org/. 37.


pages: 453 words: 117,893

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems by Linda Yueh

"Robert Solow", 3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, Fall of the Berlin Wall, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, Gini coefficient, global supply chain, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low-wage service sector, manufacturing employment, market bubble, means of production, mittelstand, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

The Corn Laws imposed significant tariffs on agricultural goods, while the Navigation Acts protected shipping by requiring all English trade to use English ships. Since the reign of William and Mary, the British government had offered financial support to its prime constituency, namely landowners. British cereals were among the most expensive in Europe, yet until 1760 Britain was able to be a major grain exporter owing to government subsidies.15 In the late eighteenth century there was a brief period of trade liberalization between Britain and France, but this ended with the Napoleonic Wars. This was followed by the reinstatement of the Corn Laws in 1815. Trade was not very free for much of the first half of the nineteenth century. Adam Smith had excluded food in his defence of free trade. Ricardo, by contrast, was not too concerned about depending on foreign countries for food, noting that even during the Napoleonic Wars, France had continued to export corn to Britain after lobbying by French exporters.

There are also ‘manu-services’, such as the output of firms in the engineering and software sectors that produce both goods and services, and these are easily misclassified by statisticians. If services were measured more accurately, perhaps we could worry a bit less about the trade deficit. There is also huge scope for growth in the export of services. Unlike in manufacturing, post-war global trade liberalization has not progressed much in services. Nearly all of the global trade in goods is covered by a wide-reaching multilateral agreement overseen by the World Trade Organization (WTO). By contrast, services haven’t seen the same degree of opening up of markets. Service-sector liberalization would help ameliorate Britain’s and America’s trade deficits since they are among the largest services economies.

By 1910 it was 50 per cent and it’s since fallen to less than 2 per cent of the government budget.27 But, even as trade barriers persist in services and agriculture, the World Trade Organization’s liberalization agenda has stalled in the twenty-first century. So, in an imperfect global trade regime, America’s and Britain’s comparative advantage hasn’t been able to deliver all of the benefits postulated by Ricardo. He would also be concerned about the lack of a level playing field in international trade. Ricardo would have pushed harder for the opening of global markets, particularly the relatively closed services sector. Services trade liberalization would help both America’s and the UK’s trade position and the global economy too, since over 70 per cent of world GDP consists of services. With greater opening of trade and investment in services, Britain’s deficit position may improve if its dominant sector can gain greater traction in world markets. In the meantime, Ricardo would not have been excessively concerned about Britain buying more from the rest of the world than it sells.


pages: 374 words: 113,126

The Great Economists: How Their Ideas Can Help Us Today by Linda Yueh

"Robert Solow", 3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, Fall of the Berlin Wall, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, Gini coefficient, global supply chain, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, manufacturing employment, market bubble, means of production, mittelstand, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

The Corn Laws imposed significant tariffs on agricultural goods, while the Navigation Acts protected shipping by requiring all English trade to use English ships. Since the reign of William and Mary, the British government had offered financial support to its prime constituency, namely landowners. British cereals were among the most expensive in Europe, yet until 1760 Britain was able to be a major grain exporter owing to government subsidies.15 In the late eighteenth century there was a brief period of trade liberalization between Britain and France, but this ended with the Napoleonic Wars. This was followed by the reinstatement of the Corn Laws in 1815. Trade was not very free for much of the first half of the nineteenth century. Adam Smith had excluded food in his defence of free trade. Ricardo, by contrast, was not too concerned about depending on foreign countries for food, noting that even during the Napoleonic Wars, France had continued to export corn to Britain after lobbying by French exporters.

There are also ‘manu-services’, such as the output of firms in the engineering and software sectors that produce both goods and services, and these are easily misclassified by statisticians. If services were measured more accurately, perhaps we could worry a bit less about the trade deficit. There is also huge scope for growth in the export of services. Unlike in manufacturing, post-war global trade liberalization has not progressed much in services. Nearly all of the global trade in goods is covered by a wide-reaching multilateral agreement overseen by the World Trade Organization (WTO). By contrast, services haven’t seen the same degree of opening up of markets. Service-sector liberalization would help ameliorate Britain’s and America’s trade deficits since they are among the largest services economies.

By 1910 it was 50 per cent and it’s since fallen to less than 2 per cent of the government budget.27 But, even as trade barriers persist in services and agriculture, the World Trade Organization’s liberalization agenda has stalled in the twenty-first century. So, in an imperfect global trade regime, America’s and Britain’s comparative advantage hasn’t been able to deliver all of the benefits postulated by Ricardo. He would also be concerned about the lack of a level playing field in international trade. Ricardo would have pushed harder for the opening of global markets, particularly the relatively closed services sector. Services trade liberalization would help both America’s and the UK’s trade position and the global economy too, since over 70 per cent of world GDP consists of services. With greater opening of trade and investment in services, Britain’s deficit position may improve if its dominant sector can gain greater traction in world markets. In the meantime, Ricardo would not have been excessively concerned about Britain buying more from the rest of the world than it sells.


pages: 488 words: 144,145

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

Albert Einstein, bank run, banking crisis, Black Swan, Bretton Woods, British Empire, business cycle, buy and hold, 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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The Levelling: What’s Next After Globalization by Michael O’sullivan

"Robert Solow", 3D printing, Airbnb, algorithmic trading, bank run, banking crisis, barriers to entry, Bernie Sanders, bitcoin, Black Swan, blockchain, Boris Johnson, Branko Milanovic, Bretton Woods, British Empire, business cycle, business process, capital controls, Celtic Tiger, central bank independence, cloud computing, continuation of politics by other means, corporate governance, credit crunch, cryptocurrency, deglobalization, deindustrialization, disruptive innovation, distributed ledger, Donald Trump, eurozone crisis, financial innovation, first-past-the-post, fixed income, Geoffrey West, Santa Fe Institute, Gini coefficient, global value chain, housing crisis, income inequality, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, liberal world order, Long Term Capital Management, longitudinal study, market bubble, minimum wage unemployment, new economy, Northern Rock, offshore financial centre, open economy, pattern recognition, Peace of Westphalia, performance metric, private military company, quantitative easing, race to the bottom, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Scramble for Africa, secular stagnation, Silicon Valley, Sinatra Doctrine, South China Sea, South Sea Bubble, special drawing rights, supply-chain management, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, tulip mania, Valery Gerasimov, Washington Consensus

One of the authorities on the matter, the Global Trade Alert center, launched in 2009 to monitor the extent to which cross-government policies liberalize and restrict trade in the aftermath of the global financial crisis, notes that trade-defense measures and bailouts or state aid are by far the most popular measures implemented to “protect” trade, followed by import tariffs and trade finance.8 Trade liberalization has been declining since 2009 and is now at its lowest level since then (for example, in 2018 there were over three times as many trade-discriminatory as trade-liberalizing measures announced internationally). Interestingly, it is the United States that implements the greatest number of trade-protectionist measures (outnumbering trade-liberalizing measures by a factor of nearly nine to one), followed by Russia and India. It is also worth commenting that the United Kingdom, Spain, Germany, and France have each implemented more traditional trade-protection measures than China, though China does have more discreet ways of tipping trade relations in its favor.

“Rising Morbidity and Mortality in Midlife among White Non-Hispanic Americans in the 21st Century.” Proceedings of the National Academy of Sciences 112, no. 49 (December 8, 2015): 15078–15083. Case, S. The Third Wave. Simon and Schuster, 2016. Chambers, D., E. Dimson, and J. Foo. “Keynes the Stock Market Investor.” Journal of Financial and Quantitative Analysis (JFQA) 50, no. 4 (2015): 431–449. Che, Y., Y. Lu, J. Pierce, and P. Schott. “Does Trade Liberalization with China Affect US Elections?” Finance and Economics Discussion Series, Divisions of Research and Statistics and Monetary Affairs, 2016-039, Federal Reserve Board, Washington, DC, 2016. Chen, S., and J. S. Kang. “Credit Booms: Is China Different?” IMF Working Paper 18/2, January 2018. https://www.imf.org/en/Publications/WP/Issues/2018/01/05/Credit-Booms-Is-China-Different-45537. Chen, S., L.

Facchini, and M. Zanardi, “Policy Makers Horizon and Trade Votes,” CEPR Discussion Paper DP 8561, September 2011. 8. S. J. Evenett and J. Fritz, “Global Trade Plateaus,” Nineteenth Global Trade Alert Report, July 13, 2016, Global Trade Alert, https://www.globaltradealert.org/reports/15. 9. Autor, Dorn, Hanson, and Majlesi, “Importing Political Polarization?” 10. Che, Lu, Pierce, and Schott, “Does Trade Liberalization with China Affect US Elections?” 11. Lang and Mendes, “The Distribution of Gains from Globalization.” 12. R. Dobbs, A. Madgavkar, J. Manyika et al., “Poorer Than Their Parents?” 13. Jeff Desjardins and Visual Capitalist, “This Is What Countries around the World Think about Globalization,” World Economic Forum, November 13, 2017, https://www.weforum.org/agenda/2017/11/what-your-country-thinks-of-globalization. 14.


Global Financial Crisis by Noah Berlatsky

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.


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

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, 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.


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Superclass: The Global Power Elite and the World They Are Making by David Rothkopf

airport security, anti-communist, asset allocation, Ayatollah Khomeini, bank run, barriers to entry, Berlin Wall, Bob Geldof, Branko Milanovic, Bretton Woods, BRICs, business cycle, carried interest, clean water, corporate governance, creative destruction, crony capitalism, David Brooks, Doha Development Round, Donald Trump, financial innovation, fixed income, Francis Fukuyama: the end of history, Gini coefficient, global village, high net worth, income inequality, industrial cluster, informal economy, Internet Archive, Jeff Bezos, jimmy wales, joint-stock company, knowledge economy, liberal capitalism, Live Aid, Long Term Capital Management, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, mass immigration, means of production, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, Nelson Mandela, old-boy network, open borders, plutocrats, Plutocrats, Ponzi scheme, price mechanism, shareholder value, Skype, special economic zone, Steve Jobs, Thorstein Veblen, too big to fail, trade liberalization, trickle-down economics, upwardly mobile, Vilfredo Pareto, Washington Consensus, William Langewiesche

AND AFTER THE EASY PART… The following day, I met with Chile’s former minister of the economy, Jorge Marshall, in his roomy but dimly lit office. At the time the number two man at Chile’s central bank, Marshall tackled the issue another way. “We have come a long way, here in Chile,” he said. “We stabilized the economy. Controlled inflation. And we then opened up. We embraced privatization and trade liberalization. But the secret is that we did those things because they were, comparatively speaking, the easy things for us to do politically. Fixing the core problems within our society—like the inequality issue and finding new ways to stimulate growth—those are much harder.” The necessary reforms, in other words, may not be politically possible, let alone popular. Chile has achieved a level of economic stability and growth far and above that of many other countries in which inequality remains a huge issue.

They welcomed market opening because, as owners of large entities, they were the most likely to benefit from new capital flows and the increased trade opportunities. But when it came time to address ownership structures that favored—sometimes grotesquely favored—majority shareholders and diminished the rights of minority shareholders, or that produced more competition, those in power dragged their feet. And as trade liberalization connected them to the world, they began to recognize that keeping labor costs down in their countries would help them attract investment capital. Their interests actually grew less and less aligned with those of their workers and more tied to those of the investment bankers and others who could offer them big paydays or accelerated growth (read: wealth creation) for their companies. This was possible largely because the term “free market”—a bumper sticker description of the complex ideas described among those of Williamson’s Washington consensus—is typically a misnomer.

It is the seventh-biggest military contractor in the United States—the only foreign Pentagon supplier to make the top ten—and as The New York Times reported, the company has special access to some of the Defense Department’s most highly classified programs. (Of course, that privileged position may change following revelations that BAE allegedly bribed Saudi Prince Bandar bin Sultan to facilitate a $54 billion arms deal.) Britain’s defense industry is an exemplar of globalization and trade liberalization: The most open defense market in the world, it buys three-quarters of its arms through open competition, forcing British firms to compete with U.S. and European companies. Turner has consistently protested the system, saying it hurts Britain’s indigenous industry, and has openly floated the possibility of merging with a U.S. firm. “If you add up what is spent on defense in Europe and the United States it’s clear where our future is,” he observed in 2003.


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

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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Open: The Progressive Case for Free Trade, Immigration, and Global Capital by Kimberly Clausing

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, active measures, Affordable Care Act / Obamacare, agricultural Revolution, battle of ideas, Bernie Sanders, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, corporate social responsibility, creative destruction, currency manipulation / currency intervention, David Ricardo: comparative advantage, Donald Trump, floating exchange rates, full employment, gig economy, global supply chain, global value chain, guest worker program, illegal immigration, immigration reform, income inequality, index fund, investor state dispute settlement, knowledge worker, labor-force participation, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, meta analysis, meta-analysis, offshore financial centre, open economy, Paul Samuelson, profit motive, purchasing power parity, race to the bottom, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transfer pricing, uber lyft, winner-take-all economy, working-age population, zero-sum game

Researchers have found that, across many countries, poorer consumers consume a higher fraction of traded goods relative to non-traded services than do richer consumers, and this pattern is particularly stark for Americans.5 In the United States, tariffs take a bite out of the after-tax incomes of the poorest 20 percent of the population three times larger, in percentage terms, than they take from the top 20 percent.6 Consumers have a lot to gain from international trade, but consumers are often politically disorganized, and they are unlikely to form a vocal constituency in favor of open international trade. Instead, trade liberalization often proceeds based on other considerations. Export-oriented business interests, and globally oriented multinational companies, provide constituencies in favor of an open trading system. And policy-makers also pursue trade agreements toward political ends. Back When Tariffs Paid for Government Tariffs have played an important role in our nation’s tax history, and indeed were the primary source of revenue to the US federal government until the early twentieth century.

Gallup Politics, “Americans Split on Whether NAFTA Is Good or Bad for US” February 24, 2017, http://www.gallup.com/poll/204269/americans-split-whether-nafta-good-bad.aspx. 2.  N. Gregory Mankiw, “Why Voters Don’t Buy It When Economists Say Global Trade Is Good,” The Upshot, July 29, 2016; Edward D. Mansfield and Diana C. Mutz, “Support for Free Trade.” This political problem is daunting, but the case against protectionism remains strong. Giving up trade, or even reducing trade by instituting a 30 percent tariff or shutting down the trade-liberalizing components of international agreements, would create large costs for the US economy and US workers. In particular: Tariffs would harm consumers, with particularly harmful effects for low- or middle-income workers. Export industries would be hurt by the higher costs of intermediate products and the likely retaliatory actions of our trading partners, hurting workers in those sectors. To replace the goods that would have been imported from low-income countries, labor would need to switch from other sectors, contracting other industries.

See, for example, Luther Lowe, “It’s Time to Bust the Online Trusts,” Wall Street Journal, October 31, 2017. 4. The International Trade Organization itself never came into being. Instead, the General Agreement on Tariffs and Trade (GATT) liberalized trade, and nations worked together as contracting parties to the agreement. Eventually, the GATT evolved into the World Trade Organization in 1995, after the Uruguay Round of trade liberalization. 5. This process began with the Treaty of Rome in 1957. Originally the European Economic Community, the European Union was established in 1993. 6. See Max Roser, “War and Peace,” Our World in Data, 2016, https://ourworldindata.org/war-and-peace/. 7. At a recent World Economic Forum in Davos, Xi Jinping said: “Pursuing protectionism is like locking oneself in a dark room. Wind and rain may be kept outside, but so are light and air.” 8.


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

addicted to oil, air freight, banking crisis, big-box store, BRICs, business cycle, 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

banking crisis, banks create money, barriers to entry, business cycle, 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: 462 words: 129,022

People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, battle of ideas, Berlin Wall, Bernie Madoff, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, central bank independence, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, deglobalization, deindustrialization, disintermediation, diversified portfolio, Donald Trump, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, global supply chain, greed is good, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta analysis, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Jobs, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population

If there is to be full employment, wages for low-skilled workers—adjusted for inflation—have to fall.4 And if wages don’t fall enough, unemployment increases. It’s really that simple. Anybody who believes in the law of supply and demand should understand why globalization (in the absence of government programs to ameliorate its effects) hurts low-skilled workers. The same goes for labor more generally: the US imports labor-intensive goods, and thus trade liberalization (opening up US markets to foreign goods by reducing tariffs or other trade barriers) reduces the overall demand for labor, and thereby also reduces (real) wages in equilibrium. Again, if wages don’t fall, employment will. Trade advocates similarly stress that trade increases the country’s GDP, as it takes advantage of its comparative advantage (whether a result of specialization or resource endowments), and somehow, mystically, everyone will be better off—another instance of the belief in trickle-down economics.

TRIPS was really about increasing profits of Big Pharma and firms in a few other industries.25 It was about ensuring a flow of money from poor developing countries and emerging markets to the US.26 Not surprisingly, then, it wasn’t a balanced agreement, even within the domain of intellectual property; it didn’t recognize the intellectual property of developing countries, either that of the genetic resources that resided in their rich biodiversity that so many were working so hard to preserve, or in traditional knowledge.27 Protectionism Is Not the Answer While globalization, and especially poorly managed trade liberalization, has contributed to deindustrialization, unemployment, and inequality, Donald Trump’s protectionist policies won’t solve any of these problems. Indeed, his mindless undoing of the global rules-based system may make some of them worse. Renegotiating trade agreements will neither reduce the trade deficit nor lead to a return of manufacturing jobs. This is because the trade deficit is determined largely by macroeconomic factors, not by trade agreements.

Economy and on Specific Industry Sectors” (United States Trade International Commission, Investigation No. TPA-105-001, USITC Publication 4607, 2016). Another study found negative effects for growth of the US economy. Jeronim Capaldo, Alex Izurieta, and Jomo Kwame Sundaram, “Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement” (Global Development and Environment Institute working paper 16-01, Tufts University, 2016). The usual champions of trade liberalization found, perhaps not surprisingly, somewhat larger positive effects than the US government did, at least by 2030: Peter A. Petri and Michael G. Plummer (Peterson Institute for International Economics) and the World Bank both estimated that the TPP would increase annual GDP by 0.5 by 2030. See World Bank Group, Global Economic Prospects: Spillovers amid Weak Growth. A World Bank Group Flagship Report (Washington, DC: World Bank, 2016), 219–34. 24.It is worth noting the use of language: by referring to intellectual property rights, it gave to these provisions a standing similar to that of human rights—even as the consequence of IPR, by raising prices of life-saving medicines to a level that made them unaffordable to many in the developing world and emerging markets, was to deny the most fundamental right, the right to live.


The Rise and Fall of the British Nation: A Twentieth-Century History by David Edgerton

active measures, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, British Empire, business cycle, call centre, centre right, collective bargaining, colonial exploitation, Corn Laws, corporate governance, deglobalization, deindustrialization, dematerialisation, deskilling, Donald Davies, double helix, endogenous growth, Etonian, European colonialism, feminist movement, first-past-the-post, full employment, imperial preference, James Dyson, knowledge economy, labour mobility, land reform, land value tax, manufacturing employment, means of production, Mikhail Gorbachev, Neil Kinnock, new economy, non-tariff barriers, North Sea oil, offshore financial centre, old-boy network, packet switching, Philip Mirowski, Piper Alpha, plutocrats, Plutocrats, post-industrial society, rising living standards, road to serfdom, Ronald Reagan, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, trade liberalization, union organizing, very high income, wages for housework, wealth creators, Winter of Discontent, women in the workforce, working poor

Imperial Germany, which did so, was seen by free traders not only as nationalistic and militaristic, but as a place where wages were low, bread was brown, and meat came from horses and dogs.7 The Conservative campaign failed. The free-trading Liberal Party won the election of 1906, fought on this issue, with a huge majority. Under Sir Henry Campbell-Bannerman and Herbert Asquith the New Liberalism set in train the development of the welfare state, and faced down the still powerful House of Lords in order to pass the People’s Budget which funded it. That is the usual story, but as we shall see, it misses out much. The 1906 election was not the end of the matter with respect to free trade. The Great War led to measures which free-trading liberals regarded with distaste. The wartime coalition, formed in 1915, when Conservatives joined the existing Liberal government, introduced what some liberals regarded as Prussian measures: conscription and some economic nationalism.

The various parties in the National government stood in a general election soon after, but each on their own manifesto. The dominant Conservatives called for ‘Empire Economic Unity’, which meant tariffs, and quotas for cereals. Indeed, the need for protection was practically the only point their manifesto made. Their minor partners, MacDonald’s National Labour and the Liberal Nationals, were confused on this key issue. The free-trading Liberals also supported the National government. The main opposition – the Labour Party and the Lloyd George Independent Liberals – were, however, firmly in favour of free trade. Labour was categorical: The Labour Party has no confidence in any attempt to bolster up a bankrupt Capitalism by a system of tariffs. Tariffs would artificially increase the cost of living. They would enrich private interests at the expense of the Nation.

Most people, when they had a vote, voted not only for parties of the elite, but for members of parliament drawn from the upper reaches of society. Furthermore, politics was fundamentally about what happened in parliament and the elite public sphere, rather than a matter for the electorate. Only rarely did the electorate and electoral system give unambiguous instructions. In 1906 the electorate returned a free trade Liberal government. In 1918 the electorate endorsed a coalition, as it was to do in 1931, with protection the likely result. The 1945 general election brought a Labour majority government, with a distinct programme and parliamentary candidates. The politics of party and the politics of parliament were usually more important than the votes of the electorate. Politicians decided on governments. Indeed, minority and coalition governments predominated.


America in the World by Robert B. Zoellick

Albert Einstein, anti-communist, banking crisis, battle of ideas, Berlin Wall, Bretton Woods, British Empire, Corn Laws, coronavirus, cuban missile crisis, defense in depth, Deng Xiaoping, Donald Trump, Douglas Engelbart, Douglas Engelbart, energy security, European colonialism, facts on the ground, Fall of the Berlin Wall, hypertext link, illegal immigration, immigration reform, imperial preference, Isaac Newton, Joseph Schumpeter, land reform, Mikhail Gorbachev, MITM: man-in-the-middle, Monroe Doctrine, mutually assured destruction, Norbert Wiener, Paul Samuelson, RAND corporation, reserve currency, Ronald Reagan, Ronald Reagan: Tear down this wall, Scramble for Africa, Silicon Valley, The Wealth of Nations by Adam Smith, trade liberalization, transcontinental railway, undersea cable, Vannevar Bush, War on Poverty

But the president had too many other priorities with Britain in 1947, and the United States agreed to launch GATT even with Britain’s imperial preferences.113 This first multilateral trading round, with twenty-three participants, proved that cooperation on trade liberalization was possible. The parties cut tariffs on forty-five thousand items, covering about half of world trade. The process stimulated world trade even as economies were struggling to recover and remove foreign exchange controls. Some in Congress complained about a trade “giveaway,” but the new trade diplomacy helped unleash unparalleled economic growth in the United States and the world for decades. The engine of the American economy that eventually overwhelmed the USSR relied on a trading system imagined by Hull and Clayton.114 For Clayton, the launch of the GATT dovetailed with his mission to prod the Europeans to develop their Marshall Plan proposal. His economic diplomacy interconnected trade liberalization, the revival of Europe’s internal “division of labor,” European economic integration, stable money, and U.S. aid.

The United States would not dominate, as in the Caribbean. But Mahan wanted the United States to sail powerfully in Pacific waters. Mahan’s strategic vision incorporated other diplomatic elements. He wanted to boost trade, including imports as well as exports. Tariffs, Mahan wrote in 1890, were like “a modern ironclad that has heavy armor, but inferior engines and guns; mighty for defence, weak for offence.” Trade liberalization would extend American influence. He observed how Seward’s trade reciprocity treaty with Hawaii had pulled the islands into the U.S. orbit. Mahan further believed that America’s “moral influence”—its values—would gradually encourage political liberalization and indigenous republican institutions that would contribute to a more secure international order.6 In 1900, Mahan published a series of essays in The Problem of Asia.

Therefore, Hull and his associates “agreed that we should try to secure the enactment of the next best method of reducing trade barriers, that is by bilateral trade agreements which embraced the most-favored-nation policy in its unconditional form—meaning a policy of nondiscrimination and equality of treatment.”36 When I became the U.S. trade representative in 2001, I recalled Hull’s experience. A number of countries had thwarted an effort to launch a new round of trade liberalization in the World Trade Organization. Many capitals were reluctant to devise new rules for sectors—such as services and technologies—that had become huge in the world economy. In the spirit of Hull, we decided on a strategy of “competitive liberalization”—negotiating multilaterally, regionally, and bilaterally. If some countries were not ready or willing, the United States would proceed with those that were.


pages: 248 words: 57,419

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

asset-backed security, bank run, banking crisis, banks create money, Ben Bernanke: helicopter money, Bretton Woods, business cycle, 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

airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, business cycle, 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.


pages: 281 words: 69,107

Belt and Road: A Chinese World Order by Bruno Maçães

active measures, Admiral Zheng, autonomous vehicles, Branko Milanovic, BRICs, cloud computing, deindustrialization, demographic dividend, Deng Xiaoping, different worldview, Donald Trump, energy security, European colonialism, eurozone crisis, Francis Fukuyama: the end of history, global supply chain, global value chain, industrial cluster, industrial robot, Internet of things, Kenneth Rogoff, land reform, liberal world order, Malacca Straits, one-China policy, Pearl River Delta, smart cities, South China Sea, sovereign wealth fund, special economic zone, trade liberalization, trade route, zero-sum game

The passages refer to several railways and highway trunk lines from Islamabad to Karachi and Gwadar. The orderly flow of economic factors in both countries “will significantly improve the resource allocation efficiency and bring into full play the comparative advantage of each country.”14 China and Pakistan are expected to strengthen cooperation in trade and industrial areas, expand bilateral economic and trade relations, and enhance the level of bilateral trade liberalization. They should cooperate in key areas, enhance the effectiveness of cooperation and strive to achieve synchronization, coordination and reciprocity of economic development. Specific sectors to be actively promoted include textiles, the production of parts and components for industry, and agriculture. There is a plan to extract coal in the Thar desert at one of the world’s biggest known deposits of lignite, a lower-grade brown version of the fuel.

Domestic firms therefore need reliable access to imports of world-class goods and service inputs to improve their productivity and ability to export. In this new age, it pays to think across national borders. The global economy has a Tianxia feel. When intermediate inputs tend to cross borders many times, even small tariffs and border bottlenecks have a cumulative effect, and protective measures against imports increase the costs of production and reduce a country’s export competitiveness. These are all good arguments for trade liberalization—and it should therefore not surprise us that China has started vocally to defend the removal of barriers to cross-border flows of goods and services—but consider what happens to a country’s ability to organize production along the most efficient lines. If goods are produced entirely in one country, that country has full control over the whole process. Once goods are produced in several countries as the combined result of an intricate division of labor in each value chain, things become more difficult.


pages: 247 words: 68,918

The End of the Free Market: Who Wins the War Between States and Corporations? by Ian Bremmer

affirmative action, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, centre right, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, cuban missile crisis, Deng Xiaoping, diversified portfolio, Doha Development Round, Exxon Valdez, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, invisible hand, joint-stock company, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, low skilled workers, mass immigration, means of production, megacity, Mikhail Gorbachev, mutually assured destruction, Naomi Klein, Nelson Mandela, new economy, offshore financial centre, open economy, race to the bottom, reserve currency, risk tolerance, shareholder value, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, trade route, tulip mania, uranium enrichment, Washington Consensus, Yom Kippur War, zero-sum game

The growth of emerging-market countries and their export markets has cut America’s total share of the global merchandise export market in half over the past sixty years, from 28 percent to about 14 percent.20 In other words, many more countries have embraced capitalism in recent years, and most of the world’s international financial institutions reflect the change.21 Mercantilism is dead, but its influence continues. Governments are again intervening in their economies to promote declared national interests, and they have found subtler and more effective ways to practice protectionism. Even states considered among the world’s foremost advocates of trade liberalization and free-market capitalism refuse to yield ground on especially sensitive trade issues. The European Union, the world’s largest trading bloc, continues to use import tariffs to protect its farmers against products that European consumers could buy for less from the developing world.22 The EU’s agricultural policies are in some ways a legacy of extreme wartime food shortages. But decades later, local farmers and food remain powerful symbols of a nation’s heritage.

In other words, the conflict had enormous and lasting consequences for international politics and the global economy. The Second Wave—Fast-Emerging Markets The second wave of state capitalism made landfall during the 1980s and early 1990s with the liberalization and economic expansion of the so-called emerging markets—China, Russia, India, Brazil, South Korea, Mexico, Turkey, and others. Trade liberalization produced a surge in consumer demand in dozens of countries, the global economy has since gained hundreds of millions of new participants, and most of the emerging markets have a history of relatively direct state involvement in economic decision making. China and Russia depended for decades on command economies. In some of the others, large enterprises—often run by wealthy, well-established families—enjoyed virtual monopolies in certain economic sectors.


pages: 497 words: 123,718

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

addicted to oil, 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: 409 words: 125,611

The Great Divide: Unequal Societies and What We Can Do About Them by Joseph E. Stiglitz

"Robert Solow", accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Asian financial crisis, banking crisis, Berlin Wall, Bernie Madoff, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, clean water, collapse of Lehman Brothers, collective bargaining, computer age, corporate governance, credit crunch, Credit Default Swap, deindustrialization, Detroit bankruptcy, discovery of DNA, Doha Development Round, everywhere but in the productivity statistics, Fall of the Berlin Wall, financial deregulation, financial innovation, full employment, George Akerlof, ghettoisation, Gini coefficient, glass ceiling, global supply chain, Home mortgage interest deduction, housing crisis, income inequality, income per capita, information asymmetry, job automation, Kenneth Rogoff, Kickstarter, labor-force participation, light touch regulation, Long Term Capital Management, manufacturing employment, market fundamentalism, mass incarceration, moral hazard, mortgage debt, mortgage tax deduction, new economy, obamacare, offshore financial centre, oil shale / tar sands, Paul Samuelson, plutocrats, Plutocrats, purchasing power parity, quantitative easing, race to the bottom, rent-seeking, rising living standards, Ronald Reagan, school vouchers, secular stagnation, Silicon Valley, Simon Kuznets, The Chicago School, the payments system, Tim Cook: Apple, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Turing machine, unpaid internship, upwardly mobile, urban renewal, urban sprawl, very high income, War on Poverty, Washington Consensus, We are the 99%, white flight, winner-take-all economy, working poor, working-age population

And the level of that wage would almost surely be closer to that of India and China than to that of the United States. The big insight of modern economics was that trade in goods and services was effectively a substitute for the free movement of labor and capital: when China sells labor-intensive goods to the United States, it increases the demand for China’s labor and lowers the demand for that in America, raising wages there and lowering them here. Trade liberalization moves the wages of unskilled labor in the two countries closer together. And the wages of our workers is likely to go down more than theirs is likely to go up. While economists have long debated the relative importance of this effect—compared with others that increase income inequality—there is a growing consensus that today the impact of trade on wages and inequality can be significant.

Bush’s steep tax cuts in 2001 and 2003 and his multitrillion-dollar wars in Iraq and Afghanistan emptied the piggy bank while exacerbating the great divide. His party’s new-found commitment to fiscal discipline—in the form of insisting on low taxes for the rich while slashing services for the poor—is the height of hypocrisy. There are all kinds of excuses for inequality. Some say it’s beyond our control, pointing to market forces like globalization, trade liberalization, the technological revolution, the “rise of the rest.” Others assert that doing anything about it would make us all worse off, by stifling our already sputtering economic engine. These are self-serving, ignorant falsehoods. Market forces don’t exist in a vacuum—we shape them. Other countries, like fast-growing Brazil, have shaped them in ways that have lowered inequality while creating more opportunity and higher growth.

They also extended the policy of lowering taxes at the top, to the point where today, the richest 1 percent of Americans pay only around 15 percent of their income in taxes, far lower than those with more moderate incomes. Reagan’s breaking of the air-traffic controllers’ strike is often cited as a critical juncture in the weakening of unions, one of the factors explaining why workers have done so badly in recent decades. But there are other factors as well. Reagan promoted trade liberalization, and some of the growth in inequality is due to globalization and the replacement of semiskilled jobs with new technologies and outsourced labor. Some of the increase in inequality common to both Europe and America can be ascribed to that. But what’s different about America is the remarkable growth in incomes of the very top—especially the top 0.1 percent. This is orders of magnitude greater than in most of Europe and comes partly out of Reagan’s deregulatory fervor, particularly in finance, partly out of inadequate enforcement of competition laws, partly out of America’s greater willingness to take advantage of inadequate corporate governance laws.


pages: 550 words: 124,073

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century by Torben Iversen, David Soskice

Andrei Shleifer, assortative mating, augmented reality, barriers to entry, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, centre right, cleantech, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, deskilling, Donald Trump, first-past-the-post, full employment, Gini coefficient, hiring and firing, implied volatility, income inequality, industrial cluster, inflation targeting, invisible hand, knowledge economy, labor-force participation, liberal capitalism, low skilled workers, low-wage service sector, means of production, mittelstand, Network effects, New Economic Geography, new economy, New Urbanism, non-tariff barriers, Occupy movement, offshore financial centre, open borders, open economy, passive investing, precariat, race to the bottom, rent-seeking, RFID, road to serfdom, Robert Bork, Robert Gordon, Silicon Valley, smart cities, speech recognition, The Future of Employment, The Great Moderation, The Rise and Fall of American Growth, too big to fail, trade liberalization, union organizing, urban decay, Washington Consensus, winner-take-all economy, working-age population, World Values Survey, young professional, zero-sum game

Source: Hofmann, Claudia; Alberto Osnago, and Michele Ruta. 2017. “Horizontal Depth: A New Database on the Content of Preferential Trade Agreements.” Policy Research Working Paper, No. 7981. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/26148. License: CC BY 3.0 IGO. Across-the-board trade liberalization, although it is no longer sufficient to guarantee competition, makes it harder for companies to establish entrenched monopolistic or oligopolistic market positions. Trade liberalization is a global phenomenon, as illustrated in figure 4.6, but the agreements with the most extensive free-trade provisions and greatest impact have been between advanced democracies, especially in Europe (the creation of the internal market) and in North America (NAFTA). Complaints by the current US administration notwithstanding, all of these agreements are still in force, and the Trans-Pacific Partnership Agreement (TPP) has been substantially retained (now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) even without formal US participation (but with Trump hinting that the United States may rejoin).

They are also directed at the cities and cosmopolitan elites, but policy demands are mostly diffuse and symbolic. We do believe that the homophobic, sexist, and generally intolerant views associated with populism are incompatible with the way modern cities work. But rarely are such policies adopted and implemented in a manner that seriously interfere with the live-and-let-live ethos of modern urban life. The same is generally true of more radical proposals to restrict international trade. Trade liberalization has been revisited politically, but, on the whole, open world trade has not been seriously threatened. It is true that Brexit was a blow to the principle of a Europe without borders, but few seriously think that the UK will shut its borders to trade and investment with the EU, or vice versa. This brings us to the second reason: populists are unlikely to make up a sustained majority. Over time, support for populist parties has risen, but rarely do these parties made up more than a third of the vote, and the mean performance is no better than ten to fifteen percent (depending on the sample).


pages: 209 words: 80,086

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

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, disruptive innovation, 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, 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, shared worldview, 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.


pages: 193 words: 63,618

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

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

"Robert Solow", 1960s counterculture, activist lawyer, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, 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.


Super Continent: The Logic of Eurasian Integration by Kent E. Calder

3D printing, air freight, Asian financial crisis, Berlin Wall, blockchain, Bretton Woods, business intelligence, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, colonial rule, Credit Default Swap, cuban missile crisis, deindustrialization, demographic transition, Deng Xiaoping, disruptive innovation, Doha Development Round, Donald Trump, energy transition, European colonialism, failed state, Fall of the Berlin Wall, Gini coefficient, housing crisis, income inequality, industrial cluster, industrial robot, interest rate swap, intermodal, Internet of things, invention of movable type, inventory management, John Markoff, liberal world order, Malacca Straits, Mikhail Gorbachev, mittelstand, money market fund, moral hazard, new economy, oil shale / tar sands, oil shock, purchasing power parity, quantitative easing, reserve currency, Ronald Reagan, seigniorage, smart cities, smart grid, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, supply-chain management, Thomas L Friedman, trade liberalization, trade route, transcontinental railway, UNCLOS, UNCLOS, union organizing, Washington Consensus, working-age population, zero-sum game

Europe’s steady march toward economic integration, from the Treaty of Rome (1957) to Maastricht (1992) and the advent of the common currency (1999), naturally encouraged such logistical advances as well. The rich geography of European transport, involving complex transfers among rail, road, river, and sometimes air, made intermodal transport innovation a high priority. Digitalization has synergistically amplified the potential efficiency gains available through trade liberalization. These gains showed up first within the European Community early in the twenty-first century. They spawned the dynamic expansion of new logistics providers such as Deutsche Post DHL, formed by Deutsche Post’s acquisition of DHL in 2002 and Airborne Express in 2003. By 2013 this postal-based European firm was drawing 53 percent of its total revenue from logistics alone.41 China is the world’s largest manufacturer and naturally, like other large manufacturers such as Germany, is preoccupied with improving transporta- The Logic of Integration 87 tion efficiencies for physical goods.

Third, NATO’s expansion mutes the ambivalence of the United States about expanding Sino-European ties, due to the felicitous impact that such ties have on NATO’s deterrence capabilities vis-à-vis Russia. Rising Chinese Trade and Investment in Europe The deepening Sino-European relationship flows both from developments within China as well as the historic changes in Europe outlined above. On the trade side, China’s explosive growth of the past four decades, coupled with a degree of trade liberalization after China joined the WTO in December 2001, have naturally made China a larger and larger market for European firms, as indicated in Figure 8.1. The pace of expansion in trade reliance on China has flattened since 2010, however, as China’s growth has slackened and penetrating the Chinese market has grown more difficult, for a variety of reasons. The most dynamic element of recent Sino-European economic relations has been Chinese investment in Europe.

Yet they now face increasing challenge in maintaining both prosperity and stability within a changing, increasingly mobile Chinese society, ever more interdependent with the world, that features both a rising middle class and growing economic inequality. The BRI, it is argued, helps to sustain the role of established political institutions and industries, therefore serving a central and predictable foreign policy function under President Xi Jinping. How financial or trade liberalization might impact the stability of this system is a critical uncertainty that will profoundly shape China’s—and Eurasia’s—future. Shadows and Critical Uncertainties 205 Predictable shadows on the Eurasian future include demographic change (the graying of Asian society), globalization, ethno-religious conflict, weapons of mass destruction, and possible conflict over natural resources, especially under high-growth scenarios.


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

Asian financial crisis, banking crisis, Bretton Woods, business cycle, buy and hold, 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.


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23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

"Robert Solow", affirmative action, Asian financial crisis, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, borderless world, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, deskilling, ending welfare as we know it, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, full employment, German hyperinflation, Gini coefficient, hiring and firing, Hyman Minsky, income inequality, income per capita, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market fundamentalism, means of production, Mexican peso crisis / tequila crisis, microcredit, Myron Scholes, North Sea oil, offshore financial centre, old-boy network, post-industrial society, price stability, profit maximization, profit motive, purchasing power parity, rent control, shareholder value, short selling, Skype, structural adjustment programs, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, Toyota Production System, trade liberalization, trickle-down economics, women in the workforce, working poor, zero-sum game

The ratio then briefly fell to zero for a few years in the mid 2000s, but went up again to 35 per cent following the 2008 global financial crisis (and is likely to rise even further at the time of writing, that is, early 2010).6 Another sense in which the world has become more unstable during the last three decades is that job insecurity has increased for many people during this period. Job security has always been low in developing countries, but the share of insecure jobs in the so-called ‘informal sector’ – the collection of unregistered firms which do not pay taxes or observe laws, including those providing job security – has increased in many developing countries during the period, due to premature trade liberalization that destroyed a lot of secure ‘formal’ jobs in their industries. In the rich countries, job insecurity increased during the 1980s too, due to rising (compared to the 1950s–70s) unemployment, which was in large part a result of restrictive macroeconomic policies that put inflation control above everything else. Since the 1990s, unemployment has fallen, but job insecurity has still risen, compared to the pre-1980s period.

Financial deregulation has created huge opportunities for speculative gains as well as astronomical paycheques for top managers and financiers (see Things 2 and 22). Deregulation in other areas has also allowed companies to make bigger profits, not least because they were more able to exploit their monopoly powers, more freely pollute the environment and more readily sack workers. Increased trade liberalization and increased foreign investment – or at least the threat of them – have also put downward pressure on wages. As a result, income inequality has increased in most rich countries. For example, according to the ILO (International Labour Organization) report The World of Work 2008, of the twenty advanced economies for which data was available, between 1990 and 2000 income inequality rose in sixteen countries, with only Switzerland among the remaining four experiencing a significant fall.1 During this period, income inequality in the US, already by far the highest in the rich world, rose to a level comparable to that of some Latin American countries such as Uruguay and Venezuela.


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Tailspin: The People and Forces Behind America's Fifty-Year Fall--And Those Fighting to Reverse It by Steven Brill

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, airport security, American Society of Civil Engineers: Report Card, asset allocation, Bernie Madoff, Bernie Sanders, Blythe Masters, Bretton Woods, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, collapse of Lehman Brothers, collective bargaining, computerized trading, corporate governance, corporate raider, corporate social responsibility, Credit Default Swap, currency manipulation / currency intervention, Donald Trump, ending welfare as we know it, failed state, financial deregulation, financial innovation, future of work, ghettoisation, Gordon Gekko, hiring and firing, Home mortgage interest deduction, immigration reform, income inequality, invention of radio, job automation, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, Mahatma Gandhi, Mark Zuckerberg, mortgage tax deduction, new economy, obamacare, old-boy network, paper trading, performance metric, post-work, Potemkin village, Powell Memorandum, quantitative hedge fund, Ralph Nader, ride hailing / ride sharing, Robert Bork, Robert Gordon, Robert Mercer, Ronald Reagan, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, telemarketer, too big to fail, trade liberalization, union organizing, Unsafe at Any Speed, War on Poverty, women in the workforce, working poor

There were some holdouts, particularly the longshoremen’s union, whose workers unloaded the ships bringing in the growing imports of textiles, footwear, machine tools, appliances, consumer electronics, cars, and other goods. However, by 1970—the year before the U.S. would fall into what would become a perpetual and growing trade deficit—the unions’ position had jelled into outright opposition to the Kennedy Round of trade liberalization. In May 1970, the AFL-CIO circulated a paper around Washington that read like a 2016 Donald Trump or Bernie Sanders speech. “The United States position on world trade deteriorated in the 1960’s, with an adverse impact on American workers, communities, and industries,” the union paper declared. Citing “managed [foreign] national economies with direct and indirect government barriers to imports and aid to exports,” a “skyrocketing rise of investments by U.S. companies in foreign subsidiaries and the spread of U.S.

“I thought training and retraining was our biggest challenge,” Peterson recalled. “But Nixon and everyone else just paid lip service to it. Nothing really happened. * * * — The Nixon administration was not the first to pay that kind of lip service to the idea of training American workers to be more competitive. It started in the Kennedy years. When Kennedy proposed global trade liberalization in 1962, he tacked on a program called Trade Adjustment Assistance, or TAA. He justified it with the same argument to Congress that Peterson would make nine years later about not forcing a small group to pay the cost of a beneficial change in national policy. “When considerations of national policy make it desirable to avoid higher tariffs, those injured by that competition should not be required to bear the full brunt of the impact,” Kennedy urged.

Mendel Rivers, a Democratic congressman from South Carolina, attacked the Kennedy plan in a home-state newspaper column, arguing, “Such adjustment assistance would mean Federal subsidy. More subsidy would mean greater Federal control and ultimately higher taxes for such subsidies….The only logical conclusion I can draw from the present trade bill is that socialization of industry must be the inevitable result if we embark on this avenue.” Others opposed TAA because the subsidies would give special treatment for those affected by trade liberalization. It was a position that might logically have led to the kind of overall job-training initiatives that would be advocated fruitlessly by Peterson in 1971. Instead, those making the argument used it as a rationale to block all subsidies. “Particularly objectionable is the treatment accorded workers dis-employed by imports under the bill,” said Prescott Bush, a Republican senator from Connecticut (and father and grandfather of the future presidents Bush).


Globalists: The End of Empire and the Birth of Neoliberalism by Quinn Slobodian

Asian financial crisis, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, collective bargaining, David Ricardo: comparative advantage, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, full employment, Gunnar Myrdal, Hernando de Soto, invisible hand, liberal capitalism, liberal world order, market fundamentalism, Martin Wolf, Mercator projection, Mont Pelerin Society, Norbert Wiener, offshore financial centre, oil shock, open economy, pattern recognition, Paul Samuelson, Pearl River Delta, Philip Mirowski, price mechanism, quantitative easing, random walk, rent control, rent-seeking, road to serfdom, Ronald Reagan, special economic zone, statistical model, The Chicago School, the market place, The Wealth of Nations by Adam Smith, theory of mind, Thomas L Friedman, trade liberalization, urban renewal, Washington Consensus, Wolfgang Streeck, zero-sum game

In a piece written in a festschrift for Erhard the same year, Haberler spoke similarly about the outsiders, including “Latin American countries, which are much poorer than Eu­rope,” that ­will be injured by Eu­ro­pean trade discrimination “and had no reason to accept this injury calmly.”124 Eu­rope itself may profit, Haberler argued, “but the world economy as a w ­ hole loses.”125 “The question about an alternative to discriminatory integration policy is easy to answer. The alternative is: overall trade liberalization [as advocated by GATT].”126 Even against Haberler’s precise intentions, his report launched a new era at the GATT. As a follow-up to the Haberler Report, the contracting parties at their thirteenth session in November 1958 deci­ded to establish three committees to examine vari­ous types of action to promote an expansion of international trade.127 The working group called “Committee III” initiated a “permanent shift” in the GATT relationship to developing countries in ­favor of their demands for market access.128 For the next two de­cades, the developing countries w ­ ere able to use GATT successfully to lobby for exemptions from “disciplines” of nondiscrimination and for permission to deviate from the strictures of the treaty.129 One scholar notes that Haberler openly opposed the interpretation of the report’s finding as proof for the theory of the declining terms of trade, arguing instead that “more trade” would solve the prob­lem in the long run.130 In 1964 he declared confidently that “the less developed countries have greatly benefited from the expansion of world trade and that the prosperity in ‘the industrial centers’ has spread to ‘the less developed periphery.’ ” Failure to grow more quickly was the fault of their own protectionism.131 In a notable irony, the Geneva School attempt to lock in liberal trade policy through the Haberler Report ended up 204 GLOBALISTS creating the conditions for the precise opposite: ammunition for a Global South argument against a one-­size-­fits-­all application of trade rules.

Petersmann, “Internationales Recht und Neue Internationale Wirtschaftsordnung,” 21. 354 NOTES TO PAGES 248–251 172. Ibid., 20. He used other cybernetic terms elsewhere, including “closed cir­cuit feedback loops,” “circular causality,” “spill-­over,” and “spill-­back mechanisms.” Petersmann, “Die Dritte Welt und das Wirtschaftsvölkerrecht,” 513. 173. Petersmann, “Völkerrecht und Entwicklung,” 161. 174. Richard Blackhurst, Nicolas Marian, and Jan Tumlir, Trade Liberalization, Protectionism, and Interdependence (Geneva: GATT, 1977), 5. 175. Tumlir, “National Sovereignty, Power and Interest,” 21. 176. Jan Tumlir, “How the West Can Pay the New Arab Oil Bill,” Sunday Times (London), February 3, 1974. 177. Tumlir, “National Sovereignty, Power and Interest,” 2. 178. Ibid. 179. Jan Tumlir, “International Economic Order and Demo­cratic Constitutionalism,” Ordo 34 (1983): 72. 180.

Jan Tumlir, “Notes on the Theory and Pres­ent State of International Economic Order,” paper presented at the International Conference on the ­Free Trade Movement in Latin Amer­i­ca, June 21–24 [1981], Haus Rissen, Hamburg, Hayek Papers, Duke, box 53, folder 28. 181. Ibid. 182. Tumlir, “National Sovereignty, Power and Interest,” 24. 183. Richard Blackhurst, Nicolas Marian, and Jan Tumlir, Adjustment, Trade and Growth in Developed and Developing Countries (Geneva: GATT, 1978), 1. 184. Blackhurst, Marian, and Tumlir, Trade Liberalization, Protectionism, and Interdependence, 49. 185. Tumlir, “International Economic Order and Demo­cratic Constitutionalism,” 72. 186. Ibid., 80. 187. Tumlir, “Need for an Open Multilateral Trading System,” 403. 188. Ibid.; emphasis in the original. The field of public choice and so-­called constitutional economics (a term coined by Richard MacKenzie in 1982) is the s­ilent partner in much of the discussion in this chapter, but it is not included for reasons of space.


Not Working by Blanchflower, David G.

active measures, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, Boris Johnson, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clapham omnibus, collective bargaining, correlation does not imply causation, credit crunch, declining real wages, deindustrialization, Donald Trump, estate planning, Fall of the Berlin Wall, full employment, George Akerlof, gig economy, Gini coefficient, Growth in a Time of Debt, illegal immigration, income inequality, indoor plumbing, inflation targeting, job satisfaction, John Bercow, Kenneth Rogoff, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, mass incarceration, meta analysis, meta-analysis, moral hazard, Nate Silver, negative equity, new economy, Northern Rock, obamacare, oil shock, open borders, Own Your Own Home, p-value, Panamax, pension reform, plutocrats, Plutocrats, post-materialism, price stability, prisoner's dilemma, quantitative easing, rent control, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, selection bias, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, South Sea Bubble, Thorstein Veblen, trade liberalization, universal basic income, University of East Anglia, urban planning, working poor, working-age population, yield curve

Apparently mental health episodes are more likely to occur at holiday times as well.44 In addition, Case and Deaton (2015) find that the prevalence of pain, which is increasing in middle-aged Americans, is strongly predictive of suicides. A recent study explored the relationship between mortality and a plausibly exogenous change in U.S. trade policy in October 2000: granting Permanent Normal Trade Relations (PNTR) to China that differentially exposed U.S. counties to increased international competition via their industry structure.45 The authors of the study found that counties more exposed to trade liberalization exhibit higher rates of suicide among whites and especially white men. Case and Deaton argue that the rise in mortality of prime-age, less-educated whites in the United States is explained by cumulative disadvantage, which they suggest is “rooted in the steady deterioration in job opportunities for people with low education. Ultimately, we see our story as about the collapse of the white, high school educated, working class after its heyday in the early 1970s, and the pathologies that accompany that decline” (2017b, 438–39).

“Austerity in 2009–2013.” NBER Working Paper #20827. Alesina, A., R. Di Tella, and R. MacCulloch. 2004. “Inequality and Happiness: Are Europeans and Americans Different?” Journal of Public Economics 88 (9–10): 2009–42. Algan, Y., and P. Cahuc. 2013. “Trust, Well-Being and Growth: New Evidence and Policy Implications.” IZA Discussion Paper No. 7464, Bonn. Amiti, M., and J. Konings. 2007. “Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia.” American Economic Review 97 (5): 1611–38. Anderson, S. A., C. S. Russell, and W. R. Schumm. 1983. “Perceived Marital Quality and Family LifeCycle Categories: A Further Analysis.” Journal of Marriage and the Family 45: 127–39. Andrews, D., and A. C. Sánchez. 2011. “Drivers of Homeownership Rates in Selected OECD Countries.” OECD Economics Department Working Paper No. 849.

McIntosh, C. N. Lokey, A. T. Trudeau, B. Bartholow, and F. Luo. 2018. “Suicide Rates by Major Occupational Group—17 States, 2012 and 2015.” Morbidity and Mortality Weekly Report 67 (45): 1253–60. Phillips, A. W. 1958. “The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957.” Economica 25 (100): 283–99. Pierce, J. R., and P. K. Schott. 2016. “Trade Liberalization and Mortality: Evidence from U.S. Counties.” Paper #2016- 094. Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, DC. Pike, A., D. MacKinnon, M. Coombes, T. Champion, D. Bradley, A. Cumbers, L. Robson, and C. Wymer. 2016. “Uneven Growth: Tackling City Decline.” York: Joseph Rowntree Foundation. Piketty, T. 2014.


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The Dawn of Eurasia: On the Trail of the New World Order by Bruno Macaes

active measures, Berlin Wall, British Empire, computer vision, Deng Xiaoping, different worldview, digital map, Donald Trump, energy security, European colonialism, eurozone crisis, failed state, Francis Fukuyama: the end of history, global value chain, illegal immigration, intermodal, iterative process, land reform, liberal world order, Malacca Straits, mass immigration, megacity, open borders, Parag Khanna, savings glut, scientific worldview, Silicon Valley, South China Sea, speech recognition, trade liberalization, trade route, Transnistria, young professional, zero-sum game, éminence grise

Domestic firms therefore need reliable access to imports of world-class goods and service inputs to improve their productivity and ability to export. In this new age it pays to think across national borders. When intermediate inputs tend to cross borders many times, even small tariffs and border bottlenecks have a cumulative effect and protective measures against imports increase the costs of production and reduce your export competitiveness. These are all good arguments for trade liberalization, but what happens to your ability to organize production along the most efficient lines? If goods are produced entirely within one country, you have full control over the whole process. Once they are produced in the world, the combined result of an intricate division of labour within each value chain, then things get rather tricky. What you want is to pick and choose the best segments within each value chain.

European openness and commitment to globalization is very much predicated on a specific historic experience during which globalization was led and defined by European countries and later by the United States, still very much in accordance with European ideas and interests. What happens when globalization starts to be perceived as not necessarily advantageous and congenial to Europeans? Unsurprisingly, the commitment to an open global order starts to wobble. As we have witnessed over the last two years, it has become difficult if not impossible to defend further trade liberalization in most European countries, and a number of initiatives have been put forward to limit the impact of Chinese imports and investment acquisitions. Comfort with the world outside is of course much increased if one has the ability to shape or at least influence that world. By historical standards, the European ability to project its power outwards has suffered a precipitous decline, throwing Europeans back to a time when the world seemed a strange and chaotic place, with the not-insignificant difference that there is nothing left of the old ‘civilizing mission’, the impulse to organize far-away places along familiar lines.


pages: 323 words: 90,868

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

"Robert Solow", 3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, business cycle, 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, disruptive innovation, 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, 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, post-work, 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 Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, uber lyft, 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: 98 words: 27,201

Are Chief Executives Overpaid? by Deborah Hargreaves

banking crisis, Big bang: deregulation of the City of London, bonus culture, business climate, corporate governance, Donald Trump, G4S, Jeff Bezos, loadsamoney, Mark Zuckerberg, Martin Wolf, performance metric, principal–agent problem, profit maximization, Ronald Reagan, shareholder value, Snapchat, trade liberalization, trickle-down economics, wealth creators

However, in the past thirty years, the opposite has happened, exacerbating inequality within countries and threatening to unravel the social contract. The absence of trickle down, the growing feeling that business leaders are in it for themselves and the damage to the economy from short-term management incentives, would all indicate that change is required in the way we pay our top bosses. The deep influence of the business sector has imposed globalization and trade liberalization on a populace that finds it hard to discern the benefits. At the same time, they see the corporate elite hand in glove with governments around the world to ensure there is little challenge to the current set-up. This reinforces the impression among the public that the system is rigged and the powerful are not just greedy but corrupt as well. These feelings endanger the corporate sector’s license to operate, as public faith in business and even capitalism itself is eroded, and support begins to grow for all sorts of anti-business initiatives.


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

Albert Einstein, barriers to entry, Berlin Wall, business cycle, 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, Kickstarter, 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.


The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities by Mancur Olson

"Robert Solow", barriers to entry, British Empire, business cycle, California gold rush, collective bargaining, correlation coefficient, David Ricardo: comparative advantage, full employment, income per capita, Kenneth Arrow, market clearing, Norman Macrae, Pareto efficiency, price discrimination, profit maximization, rent-seeking, Sam Peltzman, selection bias, Simon Kuznets, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, urban decay, working poor

Consider Sweden and Switzerland, which have enjoyed somewhat higher per capita incomes than most European countries. As table 5.2 reveals, Sweden and Switzerland, and especially the latter, have had unusually low levels of protection. Note also that the Japanese economy grew more rapidly in the 1960s than in the 1950s, despite the fact that Japan could gain more from catching up by borrowing foreign technology in the earlier decade than the later. As Alfred Ho emphasizes in Japan's Trade Liberalization in the 1960's, is between 1960 and 1965 the Organization for Economic Cooperation and Development (OECD) "liberalization rate" measure for Japan improved from 41 percent to 93 percent. Finally, note that Germany, which considerably liberalized its economic policies before entering the Common Market, grew more rapidly in the 1950s than in the 1960s, in contrast to EEC partners like Belgium, France, and the Netherlands.

X The paradox arising from the frequent association of freer trade (whether obtained through jurisdictional integration or by cutting tariff levels) and faster growth, and the skillful calculations suggesting that the gains from trade creation are relatively small, remains. Indeed, since we now have a wider array of cases where freer trade is associated with more rapid growth and several aspects of the patterns of growth suggest that the freer trade is connected with the growth, the paradox is heightened. If freer trade leads to more rapid growth, why does it not show up in the measures of the gains from the transactions that the trade liberalization allows to take place? The reason is that there is a further advantage of freer trade that escapes the usual comparative-static measurements. It escapes these measurements because the gains are not direct gains of those who take part in the international transactions that the liberalization permitted, but other gains from increases in efficiency in the importing countryincreases that are distinct from and additional to any that arise because of comparative advantage.


pages: 417 words: 109,367

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

3D printing, additive manufacturing, agricultural Revolution, Albert Einstein, Asilomar, autonomous vehicles, business cycle, Cass Sunstein, Climatic Research Unit, Commodity Super-Cycle, conceptual framework, corporate governance, creative destruction, credit crunch, David Attenborough, decarbonisation, dematerialisation, demographic transition, disruptive innovation, 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, Peter Calthorpe, 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.


The Linguist: A Personal Guide to Language Learning by Steve Kaufmann

borderless world, British Empire, discovery of DNA, financial independence, haute cuisine, South China Sea, trade liberalization, urban sprawl

A famous book, The Day We Ran Out of Paper was written in 1981 under a pseudonym by an official of MITI (the Japanese Ministry of International Trade and Industry). The message of this book was that a Japanese newspaper publisher importing foreign newsprint paper was selling out freedom of speech to a foreign conspiracy. Times have changed now, and Japanese paper companies themselves have built paper mills in many countries of the world, including Canada. In the 1980s, under trade liberalization pressure from the United States, the Japanese Telephone Company (NTT) allowed foreign paper producers to bid for the telephone directory paper business. Our company was the first foreign supplier to pass the quality testing. That was the easy part. It was much more difficult to deal with the cozy relationships between Japanese suppliers and customers, often described by the term “Japan Incorporated.”


Hopes and Prospects by Noam Chomsky

"Robert Solow", 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, Nelson Mandela, 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.


pages: 131 words: 41,052

Why Europe Will Run the 21st Century by Mark Leonard

Berlin Wall, Celtic Tiger, continuous integration, cuban missile crisis, different worldview, European colonialism, facts on the ground, failed state, global reserve currency, invisible hand, knowledge economy, mass immigration, non-tariff barriers, North Sea oil, one-China policy, Panopticon Jeremy Bentham, pension reform, reserve currency, Robert Gordon, shareholder value, South China Sea, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, Washington Consensus

After 16 months of deliberations, 26 meetings of the Convention plenary over 52 days, dozens of meetings of working groups, 1,800 speeches, 1,500 written contributions, 6,000 amendments and 21 million euros-worth of expenses,14 they produced a draft Constitution that explicitly rejected the American model. Many people had argued that Europe should develop a presidential or parliamentary system modelled on the nation-state. But these critics were missing the point of the European Union. The reason that people do not turn out in their droves to vote for the European Parliament is not because it has no power. It is because none of the issues in which the EU specializes – trade liberalization, monetary policy, the removal of non-tariff barriers, technical regulation in the environmental and other areas, foreign aid, and general foreign policy co-ordination – appears anywhere on the list of issues that voters care about.15 In fact, none of the policies in the five most important issues for voters in Europe – health care provision, education, law and order, pension and social security policy, and taxation – are set by the European Union.


pages: 421 words: 120,332

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

Bretton Woods, BRICs, business cycle, clean water, Climategate, colonial rule, deglobalization, demographic transition, Deng Xiaoping, energy security, flex fuel, G4S, 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, standardized shipping container, 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.


pages: 913 words: 219,078

The Marshall Plan: Dawn of the Cold War by Benn Steil

Albert Einstein, Alistair Cooke, anti-communist, Berlin Wall, Bretton Woods, British Empire, business cycle, Carmen Reinhart, centre right, currency manipulation / currency intervention, deindustrialization, disintermediation, Dissolution of the Soviet Union, Donald Trump, eurozone crisis, facts on the ground, Fall of the Berlin Wall, full employment, imperial preference, invisible hand, Kenneth Rogoff, kremlinology, land reform, Mikhail Gorbachev, Monroe Doctrine, new economy, open economy, Potemkin village, RAND corporation, Ronald Reagan, structural adjustment programs, the market place, trade liberalization, Transnistria, Winter of Discontent, Works Progress Administration, éminence grise

A British official complained that it meant remaking Europe in the image of America, “God’s own country,” yet three days later the OEEC would back the creation of “a single market in Europe.” Members would agree to cut quantitative import restrictions in half by year’s end, and to collaborate on the creation of a payments union, underwritten with Marshall funds, to eliminate currency barriers to trade. In January 1950, Hoffman would press further, making up to a quarter of ECA aid dependent on progress in trade liberalization and integration. Cripps decried it as “dollar dictatorship.” Even Acheson, ever pragmatic and anxious to sustain solidarity in the face of Soviet threats, opposed such conditionality. But van der Beugel defended Hoffman, noting that “it was again American and not European initiative which pushed Western Europe further on the road to greater cooperation and integration.”15 Seeing the need for a “Marshall Plan” of his own to showcase Soviet economic leadership in eastern Europe, Stalin decreed one.

Given that American economists were aware of this at the time,34 the ECA had to have been as well. Not surprisingly, it used the mechanism sparingly. In Britain, the Attlee Labour government directed 97 percent of counterpart funds to retiring government debt, thereby depriving the ECA of levers it might, even in principle, have applied to change economic priorities in London. The only areas in which British policy was clearly steered from Washington were trade liberalization (which had been a condition going back to wartime Lend-Lease aid) and European Payments Union membership, both of which London initially resisted.35 The aid itself, however, amounting to 1.9 percent of GDP from 1948 to 1951, served to prop up a socialist program of nationalization and industrial control with which the Truman administration, not to mention Republican legislators, strongly disagreed.

Indeed, in August 1949 Britain—virtually dollarless and at odds with Washington over plans for protectionist retreat into the sterling area—reluctantly devalued sterling by 30 percent after its Treasury warned of “another instalment of dollar crisis (even with ERP).”102 Germany and other nations quickly followed (twenty-three within a week), with the intended effect. Dollar deficits dissipated, and recovery picked up steam. British reserves tripled within two years.103 In the context of the early postwar period, however, a time in which most currencies were inconvertible and trade barriers high, global multilateral monetary and trade liberalization, of the sort envisioned at Bretton Woods, was utopian. Within Marshall aid countries, establishing a stable environment in which trust and cooperation could take hold among government, business, and workers was vital to the re-creation of a market economy. Across Marshall countries, U.S. security guarantees and financial support were indispensable to allowing those economies to integrate without engendering unmanageable domestic and foreign conflict.


pages: 767 words: 208,933

Liberalism at Large: The World According to the Economist by Alex Zevin

activist fund / activist shareholder / activist investor, affirmative action, anti-communist, Asian financial crisis, bank run, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, business cycle, capital controls, centre right, Chelsea Manning, collective bargaining, Columbine, Corn Laws, corporate governance, corporate social responsibility, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, desegregation, disruptive innovation, Donald Trump, Edward Snowden, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, Gini coefficient, global supply chain, hiring and firing, imperial preference, income inequality, interest rate derivative, invisible hand, John von Neumann, Joseph Schumpeter, Julian Assange, Khartoum Gordon, land reform, liberal capitalism, liberal world order, light touch regulation, Long Term Capital Management, market bubble, Martin Wolf, means of production, Mikhail Gorbachev, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, new economy, New Journalism, Norman Macrae, Northern Rock, Occupy movement, Philip Mirowski, plutocrats, Plutocrats, price stability, quantitative easing, race to the bottom, railway mania, rent control, rent-seeking, road to serfdom, Ronald Reagan, Rosa Parks, Snapchat, Socratic dialogue, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade liberalization, trade route, unbanked and underbanked, underbanked, unorthodox policies, upwardly mobile, War on Poverty, WikiLeaks, Winter of Discontent, Yom Kippur War, young professional

This swerve away from free trade and towards protection turned out to be as suicidal in the ensuing general election as the Economist predicted. The remarkable fact, however, is that on the eve of the greatest electoral triumph for Liberalism, when it won 400 out of 670 Commons seats, the Economist failed to endorse it. Conservatives, under a Chamberlainite ‘delusion’ the Empire could be bound with reciprocal tariffs, were no longer trustworthy on free trade; sound on trade, Liberals seemed to lack the nerve to defend the Empire, most damningly in Ireland.85 So far as the paper was concerned, the election of 1906 was a choice between the devil and the deep blue sea. Asquith, Ireland and the New Radicalism One of the editors responsible for leading the Economist to this impasse had, paradoxically, just assumed high office in the new Liberal government. Herbert Henry Asquith, as Chancellor of the Exchequer and then as prime minister from 1908, would lead the party during the legislative battles that defined New Liberalism in power.

Conservatives lost over half their seats on a swing of 10.6 per cent. Liberals made gains almost everywhere – even in formerly hostile parts of Lancashire and London – adding 224 more seats since the khaki election of 1900. They now enjoyed an outright majority of 130, and with their Irish Nationalist and Labour allies, this rose to 356 – the widest margin since 1832.5 Yet the 1906 landslide had its origins in more than a negative defence of free trade. Liberals took active steps to win their historic victory, as evidenced by the widespread expectation that it was about to usher in a new era of social reform. Even as the franchise in Britain remained deeply undemocratic up to 1918 – with four and a half million lower class men unable to vote, 500,000 or so plural votes to property owners in the boroughs and counties, and women excluded – after 1885–86, about half the electorate was working-class.6 By the turn of the century, the growing trade union movement was attempting to organize the working class as an independent political force – a development Liberals vigilantly watched and tried to head off.

When Moscow defaulted in 1998, triggering the collapse of Long Term Capital Management – the heavily exposed hedge fund that lost $4.6 billion in four months – the paper defended the computer wizards whose models had failed to foresee this: ‘it is pleasant to mock the Nobel Laureates who helped found LTCM, but much of this mockery clouds the truth’, for ‘the question arises whether recent events are ever likely to be repeated.’44 But it also went on the attack against any who used such examples of ‘market failure’ to criticize, question or hold up globalization, with deputy editor Clive Crook leading the charge.45 Crook was thirty-eight in 1993, but looked ‘more like a teenager in the grey flannel slacks, white oxford-cloth shirt, and blue pullover sweater that are his only known costume’.46 ‘Fearsomely brilliant’, ‘arguing for Free Trade in this gruff Lancashire accent’, he was ‘the Manchester School come to life’; others called him the ‘intellectual Godfather’, with Emmott by turns ‘enthralled’ and ‘intimidated’, as editors asked (on points of doctrine), ‘Is Clive ok with this?’ Penning the feistiest articles in favour of trade liberalization, Crook sensed that 1999 was the moment to ‘come out fighting’ at the World Trade Organization summit in Seattle. Holding high the banner of the WTO, the Economist exhorted the national governments gathered there to make a better sales pitch to citizens whose ‘support for free trade is weak at best’. Trade reform ‘was not irreversible’, after all, and the last round in Uruguay in 1994 urgently needed updating to cover farming, services, finance, telecoms, computing and transport.


pages: 495 words: 138,188

The Great Transformation: The Political and Economic Origins of Our Time by Karl Polanyi

agricultural Revolution, Berlin Wall, borderless world, business cycle, central bank independence, Corn Laws, currency manipulation / currency intervention, David Ricardo: comparative advantage, Fall of the Berlin Wall, full employment, inflation targeting, joint-stock company, Kula ring, land reform, land tenure, liberal capitalism, manufacturing employment, new economy, Panopticon Jeremy Bentham, price mechanism, profit motive, Republic of Letters, road to serfdom, Ronald Reagan, the market place, The Wealth of Nations by Adam Smith, trade liberalization, trade route, trickle-down economics, Washington Consensus, Wolfgang Streeck, working poor, Works Progress Administration

But there are other issues where the conclusions are far from clear. Free international trade allows a country to take advantage of its comparative advantage, increasing incomes on average, though it may cost some individuals their jobs. But in developing countries with high levels of unemployment, the job destruction that results from trade liberalization may be more evident than the job creation, and this is especially the case in IMF “reform” packages that combine trade liberalization with high interest rates, making job and enterprise creation virtually impossible. No one should have claimed that moving workers from low-productivity jobs to unemployment would either reduce poverty or increase national incomes. Believers in self-regulating markets implicitly believed in a kind of Say’s law, that the supply of labor would create its own demand.


pages: 196 words: 53,627

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

affirmative action, business cycle, 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, longitudinal study, low skilled workers, 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.


The New Class War: Saving Democracy From the Metropolitan Elite by Michael Lind

affirmative action, anti-communist, basic income, Bernie Sanders, Boris Johnson, Bretton Woods, business cycle, capital controls, Cass Sunstein, central bank independence, centre right, collective bargaining, commoditize, corporate governance, crony capitalism, deindustrialization, Doha Development Round, Donald Trump, Edward Snowden, future of work, global supply chain, guest worker program, Haight Ashbury, illegal immigration, immigration reform, invisible hand, knowledge economy, liberal world order, low skilled workers, low-wage service sector, manufacturing employment, Mark Zuckerberg, mass immigration, means of production, moral panic, Nate Silver, new economy, offshore financial centre, oil shock, open borders, plutocrats, Plutocrats, Ponzi scheme, purchasing power parity, Ralph Nader, regulatory arbitrage, rent-seeking, Richard Florida, Ronald Reagan, Silicon Valley, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, union organizing, universal basic income, upwardly mobile, WikiLeaks, Wolfgang Streeck, working poor

Their spontaneous protests escalated into months of violence in Paris and other French cities, forcing Macron’s government to abandon the policy.9 Subsequently in 2019 the conservative party in Australia, based in low-density working-class areas, came from behind and defeated a progressive party that pushed environmental regulations that threatened jobs and low living costs in the periphery.10 * * * — LIKE DEBATES ABOUT the environment, debates about trade are battlefields in the class war. The overclass population living in hubs continues to tout the benefits of trade liberalization among high-wage and low-wage countries, including slightly lower prices for consumers for imports from low-wage nations, but much of the Western working class is no longer listening. As manufacturing jobs disappear overseas, disproportionately affecting the livelihoods of the working class in the heartland, more and more disaffected Americans look to leaders who promise to change the trade balance, economic orthodoxy be damned.


pages: 1,213 words: 376,284

Empire of Things: How We Became a World of Consumers, From the Fifteenth Century to the Twenty-First by Frank Trentmann

Airbnb, Anton Chekhov, Ayatollah Khomeini, Berlin Wall, Big bang: deregulation of the City of London, British Empire, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, Cass Sunstein, choice architecture, clean water, collaborative consumption, collective bargaining, colonial exploitation, colonial rule, Community Supported Agriculture, cross-subsidies, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, equity premium, Fall of the Berlin Wall, Fellow of the Royal Society, financial exclusion, fixed income, food miles, full employment, germ theory of disease, global village, haute cuisine, high net worth, income inequality, index card, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kitchen Debate, knowledge economy, labour mobility, libertarian paternalism, Livingstone, I presume, longitudinal study, mass immigration, McMansion, mega-rich, moral panic, mortgage debt, Murano, Venice glass, Naomi Klein, New Urbanism, post-industrial society, post-materialism, postnationalism / post nation state, profit motive, purchasing power parity, Ralph Nader, rent control, Richard Thaler, Right to Buy, Ronald Reagan, school vouchers, Scientific racism, Scramble for Africa, sharing economy, Silicon Valley, Skype, stakhanovite, the built environment, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, urban planning, urban sprawl, Washington Consensus, women in the workforce, working poor, young professional, zero-sum game

Its drawing room included chandeliers, paintings and photos, carpets as well as matting, armchairs and a piano. For his official photograph, Mr de Croos appeared in morning suit, complete with top hat.71 THE DISCOVERY OF THE CONSUMER In Europe, the era of high imperialism (1870s–’90s) took consumption to new heights. In part, this was the result of the fast-advancing global integration of markets, made possible by steamships, imperial expansion and trade liberalization. The price of wheat, sugar, beef, cooking oil and much else plummeted. Cooling technology and canning brought Argentinian steak and Canadian salmon to dining tables in Bordeaux and Bristol. The cost of clothing fell, too. At the same time, European and American labour became more productive, thanks to factory production and new technologies, boosting exports and raising wages. In 1899, a British worker had twice as much spending power as fifty years earlier.

Just as there are terms of trade, we thus need to think about the terms of consumption, terms that change between groups, products and regions. We have already observed how empire altered status. It also redefined the value of place. Ironically, Hobson launched his attack on empire during the heyday of free trade, when the empire had come to matter less to Britons’ welfare than ever before. Trade liberalization – sometimes free, sometimes forced – and steamboats opened up the world for late-Victorian consumers. Victorians enjoyed beef from Argentina, sherry from Portugal and sugar from Brazil. The round of second industrial revolutions in France, Germany and the United States created new markets for finished goods which, again, lay outside the empire. Most colonies were growing, but their share in metropolitan markets was falling: in 1805, one quarter of British imports came from the West Indies; by 1855 it had dropped to 5 per cent.

In the longer perspective, however, the break-up of the Spanish empire after the Napoleonic wars turned out to be a step backwards, as Venezuela and other newly independent states raised their own barriers and export taxes to finance themselves. The conclusion is clear: in the long run, mercantilism was not fit for mass consumption. That was the historic achievement of free trade from the 1840s. The phenomenal spread of tropical goods in the second half of the nineteenth century was driven by two forces: trade liberalization and a massive increase in cash-crop production. Unlike sugar, cocoa resisted industrial-style cultivation. It thrived in shade and needed surrounding plants to protect it from wind and disease. Economies of scale were few. Slavery was not absent – the Portuguese used it on São Tomé and Príncipe, their cocoa islands off West Africa, while the Germans tried ‘scientific’ planting and coerced labour in Cameroon, without much success.


pages: 225 words: 61,388

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

affirmative action, Asian financial crisis, Bob Geldof, Bretton Woods, business cycle, buy and hold, 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: 580 words: 168,476

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

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, business cycle, 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, 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.


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

activist fund / activist shareholder / activist investor, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, business cycle, capital controls, Charles Lindbergh, 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, lateral thinking, 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: 288 words: 64,771

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality by Brink Lindsey

"Robert Solow", Airbnb, Asian financial crisis, bank run, barriers to entry, Bernie Sanders, Build a better mousetrap, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, collective bargaining, creative destruction, Credit Default Swap, crony capitalism, Daniel Kahneman / Amos Tversky, David Brooks, diversified portfolio, Donald Trump, Edward Glaeser, endogenous growth, experimental economics, experimental subject, facts on the ground, financial innovation, financial intermediation, financial repression, hiring and firing, Home mortgage interest deduction, housing crisis, income inequality, informal economy, information asymmetry, intangible asset, inventory management, invisible hand, Jones Act, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, knowledge worker, labor-force participation, Long Term Capital Management, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass immigration, mass incarceration, medical malpractice, Menlo Park, moral hazard, mortgage debt, Network effects, patent troll, plutocrats, Plutocrats, principal–agent problem, regulatory arbitrage, rent control, rent-seeking, ride hailing / ride sharing, Robert Metcalfe, Ronald Reagan, Silicon Valley, Silicon Valley ideology, smart cities, software patent, too big to fail, total factor productivity, trade liberalization, transaction costs, tulip mania, Uber and Lyft, uber lyft, Washington Consensus, white picket fence, winner-take-all economy, women in the workforce

Private-sector unionism has been reduced to a small and declining rump of the workforce. The minimum wage declined steadily, both in real terms and in comparison to the median wage, although there is now a flurry of initiatives to hike it dramatically. At the same time, the old anticompetitive policies that sustained unionism even as they subsidized industry have likewise receded. Price and entry controls were eliminated in the late 1970s and early ’80s while ongoing trade liberalization has steadily whittled away tariffs to almost nothing. The main rent-creating policies that have emerged and grown in recent decades have a much tighter focus on helping out those at the top. As we will describe in the case studies that follow, sometimes these policies directly benefit higher-income individuals at the expense of everyone else. In other cases, rents are created for corporations in skill-intensive industries.


pages: 391 words: 71,600

Hit Refresh: The Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone by Satya Nadella, Greg Shaw, Jill Tracie Nichols

"Robert Solow", 3D printing, Amazon Web Services, anti-globalists, artificial general intelligence, augmented reality, autonomous vehicles, basic income, Bretton Woods, business process, cashless society, charter city, cloud computing, complexity theory, computer age, computer vision, corporate social responsibility, crowdsourcing, Deng Xiaoping, Donald Trump, Douglas Engelbart, Edward Snowden, Elon Musk, en.wikipedia.org, equal pay for equal work, everywhere but in the productivity statistics, fault tolerance, Gini coefficient, global supply chain, Google Glasses, Grace Hopper, industrial robot, Internet of things, Jeff Bezos, job automation, John Markoff, John von Neumann, knowledge worker, Mars Rover, Minecraft, Mother of all demos, NP-complete, Oculus Rift, pattern recognition, place-making, Richard Feynman, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, special economic zone, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, telepresence, telerobotics, The Rise and Fall of American Growth, Tim Cook: Apple, trade liberalization, two-sided market, universal basic income, Wall-E, Watson beat the top human players on Jeopardy!, young professional, zero-sum game

Governor John Kasich of Ohio, in the midst of a bitter 2016 presidential campaign, wrote an op-ed for The Wall Street Journal arguing that a vote against trade is a vote against growth. He pointed out that the Trans-Pacific Partnership (TPP), a major trade agreement that was pending approval in Washington at the time, is about helping large and small companies find growth in Japan, Australia, Canada, Chile, and other Pacific Rim nations that want to increase trade with America. The world needs continued progress on trade liberalization. Kasich pointed out that 40 million U.S. jobs depend on trade. But our trade laws also need to be modernized. In this digital economy, the bits and bytes imported and exported are as critical to trade as the automobiles, agricultural products, and other goods we trade. We need to be able to transfer data across borders in the course of business and to do so without having to locate computing facilities in every territory, while protecting privacy, source code, and other forms of intellectual property.


pages: 272 words: 71,487

Getting Better: Why Global Development Is Succeeding--And How We Can Improve the World Even More by Charles Kenny

"Robert Solow", agricultural Revolution, Berlin Wall, British Empire, Charles Lindbergh, clean water, demographic transition, double entry bookkeeping, experimental subject, Fall of the Berlin Wall, germ theory of disease, Gunnar Myrdal, income inequality, income per capita, Indoor air pollution, inventory management, Kickstarter, Milgram experiment, off grid, open borders, purchasing power parity, randomized controlled trial, structural adjustment programs, The Wealth of Nations by Adam Smith, total factor productivity, Toyota Production System, trade liberalization, transaction costs, very high income, Washington Consensus, X Prize

While trade in arms has had a negative impact on the quality of life of the world’s citizens, trade in products such as vaccines and antibiotics has had a direct and very positive impact on health in developing countries. Even if the link between levels of trade and rapid economic growth appears fragile, trade in goods has been a central factor in reducing the cost of quality of life around the world. It has also freed countries from the Malthusian trap through food imports. This makes the failure of the recent round of World Trade Organization talks on further trade liberalization an undoubted loss. International trade negotiations have had some significant negative implications for the quality of life of the world’s poorest, nonetheless. They have begun to impinge dramatically on the free flow of knowledge and ideas around the world, by strengthening the intellectual property laws that restrict such flows. Copyrights and patents are important policy tools to encourage creativity and innovation, which have been central to the development of technologies that have lowered the cost of quality of life.


Money and Government: The Past and Future of Economics by Robert Skidelsky

anti-globalists, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Basel III, basic income, Ben Bernanke: helicopter money, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, constrained optimization, Corn Laws, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Graeber, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, Donald Trump, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, Financial Instability Hypothesis, forward guidance, Fractional reserve banking, full employment, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, incomplete markets, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, law of one price, liberal capitalism, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, market clearing, market friction, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, mobile money, Mont Pelerin Society, moral hazard, mortgage debt, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, placebo effect, price stability, profit maximization, quantitative easing, random walk, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, rising living standards, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, shareholder value, short selling, Simon Kuznets, structural adjustment programs, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, value at risk, Washington Consensus, yield curve, zero-sum game

Yet, as John Hicks put it in 1974: 158 t h e k e y n e si a n a s c e n da n c y The combination of more rapid technical progress (surely a fact) with the socialist tendencies which increased demand for collective goods (surely also a fact) could have produced such a boom without the added stimulus of Keynesian policies. It is still unclear how much is to be attributed to the one and how much to the other. 39 The post-war trading and monetary regimes undoubtedly facilitated the diffusion of best-practice technology. Keynes’s handiwork can be found in the setting up of both, but the ideas that inspired them – trade liberalization, currency convertibility at fixed exchange rates – were of ancient provenance. What was intended to be restored was the nineteenth-century free trade/gold standard system, improved by experience of the interwar years. This reflected the American conviction that the troubles of that period had been brought about by trade and currency wars. Keynes influenced Harry Dexter White, the architect of the Bretton Woods system, but there were more parochial influences.

This led the USA to acquiesce in the large sterling, franc and deutschmark devaluations against the dollar in 1949; it led to the huge outflow of American dollars on government account (Marshall Aid, military spending in Europe), later supplemented by large private outflows; and it led the United States to promote a European Payments Union, and allow the Union to discriminate against American goods, while also giving Japan privileged entry to the US market. The trend in the balance of payments in turn enabled exchange rates to be gradually stabilized and currencies to become convertible. This promoted trade liberalization, which 159 T h e R i s e , T r i u m p h a n d Fa l l of K e y n e s in turn fuelled economic growth. By the end of the 1960s America’s current account surplus had turned into a deficit. America’s role in the first phase of the golden age was not unfairly summed up by the banker Russell Leffingwell in 1960: Wisely we undertook to set the world to rights. We gave money and know-how to our foreign friends, we made fixed foreign investments, and we policed the world against the Russian and Communist Chinese with foreign bases and foreign based troops and ships and planes.


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

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, Kickstarter, liberal world order, Mikhail Gorbachev, millennium bug, Mohammed Bouazizi, Monroe Doctrine, Nelson Mandela, 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: 256 words: 76,433

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

big-box store, business cycle, clean water, East Village, feminist movement, income inequality, informal economy, invention of the sewing machine, 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

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, Kickstarter, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, microcredit, mutually assured destruction, Naomi Klein, Nelson Mandela, 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

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, lateral thinking, Malacca Straits, Martin Wolf, Naomi Klein, Nelson Mandela, 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: 301 words: 89,076

The Globotics Upheaval: Globalisation, Robotics and the Future of Work by Richard Baldwin

agricultural Revolution, Airbnb, AltaVista, Amazon Web Services, augmented reality, autonomous vehicles, basic income, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, commoditize, computer vision, Corn Laws, correlation does not imply causation, Credit Default Swap, David Ricardo: comparative advantage, declining real wages, deindustrialization, deskilling, Donald Trump, Douglas Hofstadter, Downton Abbey, Elon Musk, Erik Brynjolfsson, facts on the ground, future of journalism, future of work, George Gilder, Google Glasses, Google Hangouts, hiring and firing, impulse control, income inequality, industrial robot, intangible asset, Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, knowledge worker, laissez-faire capitalism, low skilled workers, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, Metcalfe’s law, new economy, optical character recognition, pattern recognition, Ponzi scheme, post-industrial society, post-work, profit motive, remote working, reshoring, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, social intelligence, sovereign wealth fund, standardized shipping container, statistical model, Stephen Hawking, Steve Jobs, supply-chain management, TaskRabbit, telepresence, telepresence robot, telerobotics, Thomas Malthus, trade liberalization, universal basic income

The first technological impulse—steam power—radically reduced transportation costs. This ended the need to make goods close to where they were consumed. Once this change made long-distance trade feasible, the huge price differences across the world made it profitable. Trade in goods boomed from the early 1800s as the steam impulse was augmented by later developments like steel hulls, diesel engines, containerized cargo ships, air cargo, and worldwide trade liberalization. These advances lowered the cost of moving ideas and people as well, but not in a revolutionary way. Strangely enough, as production dispersed across nations in this first phase of globalization, it clustered within nations into factories and industrial districts. This microclustering wasn’t done to save trade costs; it was done to save on communication costs—namely, the cost of moving ideas.


pages: 310 words: 85,995

The Future of Capitalism: Facing the New Anxieties by Paul Collier

"Robert Solow", accounting loophole / creative accounting, Airbnb, assortative mating, bank run, Berlin Wall, Bernie Sanders, bitcoin, Bob Geldof, bonus culture, business cycle, call centre, central bank independence, centre right, Commodity Super-Cycle, computerized trading, corporate governance, creative destruction, cuban missile crisis, David Brooks, delayed gratification, deskilling, Donald Trump, eurozone crisis, financial deregulation, full employment, George Akerlof, Goldman Sachs: Vampire Squid, greed is good, income inequality, industrial cluster, information asymmetry, intangible asset, Jean Tirole, job satisfaction, Joseph Schumpeter, knowledge economy, late capitalism, loss aversion, Mark Zuckerberg, minimum wage unemployment, moral hazard, negative equity, New Urbanism, Northern Rock, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, race to the bottom, rent control, rent-seeking, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley ideology, sovereign wealth fund, The Wealth of Nations by Adam Smith, theory of mind, too big to fail, trade liberalization, urban planning, web of trust, zero-sum game

The solution was a realistically slow process of modest but repeated common endeavours, beginning in 1951 and expanding into the EEC. As with NATO, the central principle of the club was acceptance of reciprocal obligations. To unwind the beggar-thy-neighbour protectionism of the 1930s, another new club was formed: the General Agreement on Tariffs and Trade (GATT). Between 1947 and 1964 it concluded six rounds of reciprocal trade liberalization. Again, the key driver was enlightened self-interest; everyone recognized where protectionism had led. In response to the Great Depression of the 1930s, a further new club of nations was established. The International Monetary Fund (IMF) was a public bank into which a defined membership paid, undertook to abide by a set of rules and supervision, and in return were entitled to loans in the event of crisis.


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

Albert Einstein, Andrew Keen, barriers to entry, Black Swan, business process, call centre, Clayton Christensen, cleantech, cloud computing, commoditize, corporate governance, creative destruction, disruptive innovation, Elon Musk, en.wikipedia.org, future of work, game design, George Gilder, intangible asset, Isaac Newton, job satisfaction, Joi Ito, 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: 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, business cycle, 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, Kickstarter, 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, The Rise and Fall of American Growth, 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: 339 words: 95,270

Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace by Matthew C. Klein

Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, Berlin Wall, Bernie Sanders, Branko Milanovic, Bretton Woods, British Empire, business climate, business cycle, capital controls, centre right, collective bargaining, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, deglobalization, deindustrialization, Deng Xiaoping, Donald Trump, Double Irish / Dutch Sandwich, Fall of the Berlin Wall, falling living standards, financial innovation, financial repression, fixed income, full employment, George Akerlof, global supply chain, global value chain, illegal immigration, income inequality, intangible asset, invention of the telegraph, joint-stock company, land reform, Long Term Capital Management, Malcom McLean invented shipping containers, manufacturing employment, Martin Wolf, mass immigration, Mikhail Gorbachev, money market fund, mortgage debt, New Urbanism, offshore financial centre, oil shock, open economy, paradox of thrift, passive income, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, Scramble for Africa, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Wolfgang Streeck

David Autor, David Dorn, and Gordon Hanson, “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade,” Annual Review of Economics 8 (2016): 205–40; David Autor, David Dorn, and Gordon Hanson, “When Work Disappears: Manufacturing Decline and the Falling Marriage Market Value of Young Men,” American Economic Review: Insights 1, no. 2 (September 2019): 161–78; Justin R. Pierce and Peter K. Schott, “Trade Liberalization and Mortality: Evidence from U.S. Counties,” FEDS Working Paper No. 2016-094, November 2016; Leo Feler and Mine Z. Senses, “Trade Shocks and the Provision of Local Public Goods,” IZA Discussion Paper No. 10231, 2015. 39. FRB, “Summary Measures of the Foreign Exchange Value of the Dollar,” https://www.federalreserve.gov/releases/h10/summary/default.htm. 40. Jean-Noël Barrot et al., “Import Competition and Household Debt,” Federal Reserve Bank of New York Staff Reports No. 821, August 2017. 41.


pages: 288 words: 90,349

The Challenge for Africa by Wangari Maathai

Berlin Wall, Bob Geldof, carbon footprint, carbon-based life, clean water, colonial rule, corporate social responsibility, deliberate practice, F. W. de Klerk, failed state, Fall of the Berlin Wall, Intergovernmental Panel on Climate Change (IPCC), Live Aid, Mahatma Gandhi, Mikhail Gorbachev, Nelson Mandela, Scramble for Africa, sovereign wealth fund, structural adjustment programs, sustainable-tourism, trade liberalization, transatlantic slave trade, urban planning, War on Poverty, Washington Consensus

Perhaps the ultimate irony of the arrival of the Bible and the gun in Africa rests in the fact that it's almost exclusively because of the writings of the missionaries, the colonialists, and the Western social historians—those who largely dismissed the traditions of Africans as primitive tribal customs—that we know anything about many of the cultural practices of precolonial African peoples. When Africans desire to rediscover and reclaim their own culture, they're often obliged to travel to European and American libraries and archives for the information. It isn't unusual to find that foreigners know more about the native peoples than the latter know about themselves. Such is often the fate of the colonized. Africans have been shaped by many experiences: invasion, the slave trade, liberation, discrimination, and apartheid; the arrival of literacy, Christianity, and Islam; and deculturalization and displacement. Some were beneficial and revolutionized the African way of life; others were destructive. All these experiences have touched and shaped the African psyche. Perhaps because of the intensity, frequency, and persistence of these challenges, it has been more difficult for the African spirit to overcome them than it has been for other peoples who experienced similar upheavals.


pages: 537 words: 99,778

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

activist lawyer, Bay Area Rapid Transit, bonus culture, British Empire, clean water, cognitive dissonance, collective bargaining, corporate governance, corporate personhood, crowdsourcing, David Graeber, deindustrialization, different worldview, facts on the ground, glass ceiling, housing crisis, Kibera, late capitalism, mass incarceration, Naomi Klein, Nelson Mandela, 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: 308 words: 99,298

Brexit, No Exit: Why in the End Britain Won't Leave Europe by Denis MacShane

3D printing, banking crisis, battle of ideas, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, British Empire, centre right, Corn Laws, deindustrialization, Doha Development Round, Donald Trump, Etonian, European colonialism, first-past-the-post, fixed income, Gini coefficient, greed is good, illegal immigration, James Dyson, labour mobility, liberal capitalism, low cost airline, low cost carrier, Martin Wolf, mass immigration, Mont Pelerin Society, negative equity, Neil Kinnock, new economy, non-tariff barriers, offshore financial centre, open borders, open economy, price stability, purchasing power parity, quantitative easing, reshoring, road to serfdom, secular stagnation, Silicon Valley, Thales and the olive presses, trade liberalization, transaction costs, women in the workforce

By February 2017, the Swiss parliament had quietly turned the referendum vote into a system of internal management of people movement which allowed European workers into Switzerland and was acceptable to the European Commission in Brussels. Many were aghast at this rapid expansion of the EU from a grouping of states with roughly similar levels of development based broadly on the system of responsible, open-trade liberal capitalism with a social face that put down roots after 1950, despite widely varied political and government systems. Greece was perhaps the most egregious example, though southern Italy would run it a close second. The creation of the euro was meant to have a double effect. It would allow the Single Market to expand, as every economic actor would now stop worrying about currency wars or need to hedge against the uncertainty of what a franc, peseta, lira or drachma would be worth.


pages: 329 words: 102,469

Free World: America, Europe, and the Surprising Future of the West by Timothy Garton Ash

Albert Einstein, battle of ideas, Berlin Wall, BRICs, British Empire, call centre, centre right, clean water, Columbine, continuation of politics by other means, cuban missile crisis, demographic transition, Deng Xiaoping, Doha Development Round, Eratosthenes, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, illegal immigration, income inequality, Intergovernmental Panel on Climate Change (IPCC), James Watt: steam engine, Kickstarter, Mikhail Gorbachev, Nelson Mandela, Peace of Westphalia, postnationalism / post nation state, Project for a New American Century, purchasing power parity, reserve currency, Ronald Reagan, shareholder value, Silicon Valley, Thomas Malthus, trade liberalization, Washington Consensus, working poor, working-age population, World Values Survey

The enemy to be defeated in this war is not a state, a dictator, a terrorist group, or an ideology, but extreme poverty and its accompanying plagues of disease, hunger, and early death. There is a shocking disparity between what the United States has spent on the war in Iraq and the subsequent occupation, and what it spends on development aid to the rest of the world. Let America’s next war be the war on want. A country so large in spirit, so religious, and so rich can surely be won for such a war. Let a campaign of well-administered aid, medicine, debt relief, and trade liberalization be carried to the poorest of the world’s poor. Let the world see again, as it saw once after 1945, just how generous America can be—with a great big Stars and Stripes on every packet. Let Europe be challenged to keep pace, matching packet for packet, this time with our own yellow-and-blue star-spangled banner stuck on the side. Why not? Because there are no votes in it? But that’s up to us, the thousand million.


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, Kickstarter, 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, 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: 350 words: 103,988

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

"Robert Solow", 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.


The King of Oil by Daniel Ammann

accounting loophole / creative accounting, anti-communist, Ayatollah Khomeini, banking crisis, Berlin Wall, Boycotts of Israel, business intelligence, buy low sell high, energy security, family office, Johann Wolfgang von Goethe, Mikhail Gorbachev, Nelson Mandela, oil shock, peak oil, purchasing power parity, Ronald Reagan, trade liberalization, transaction costs, transfer pricing, Upton Sinclair, Yom Kippur War

Moritz), 7–8 Sweet Pain of Love, 218 Swissair Flight 111, 113–14 Swiss Federal Act on International Mutual Assistance in Criminal Matters (IMAC), 126–27, 284n Swiss Office for Police Matters, 128–29 Swiss Penal Code, 115, 152–53 Swiss tax treaty, 120–21, 125–27 Switzerland, 76–78, 125–34 extradition of Marc Rich, 128–34, 149–50 flight of Marc Rich to, 109–11, 113–16, 125–26, 201–2 “Sympathy for the Devil” (song), 7 Syria, 54, 72, 202 Taba Summit, 259 Tachkemoni School, 28 Tanker trade, 84–85, 189–90 Tapies, Antony, 10 Tax evasion and fraud, 8–9, 116–17, 125–28, 136–37, 145–47, 167–71 Texaco, 55–57 Thomajan, Bob, 110 Time (magazine), 137 Tin, 41, 44, 227 Torre de Madrid, 49 Trade liberalization, 267 Trader principle, 180–81 Trafford, John, 75–76, 80, 83, 115 Transaction costs, 85, 176 Trans-Asiatic Oil Ltd., 65–66 “Transfer pricing,” 145 Trau, René, 34, 217 Trillin, Calvin, 33–34 Troland, John, 107, 119 Trust, 40, 78, 86–88 Trust (Fukuyama), 86–87 Tucholsky, Kurt, 25 Tunisia, 14, 53, 63 Turkey, 82 20th Century Fox, 108, 111, 122, 123 20/20 (TV program), 254 UNITA (National Union for the Total Independence of Angola), 183–85 United Nations Human Rights Commission, 199 United Nations Oil-for-Food Programme, 231–32 United Nations Security Council, 191 United States of America v.


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

affirmative action, 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, business cycle, 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, Mitch Kapor, 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’.


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

3D printing, agricultural Revolution, back-to-the-land, banking crisis, banks create money, Bretton Woods, business cycle, 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, 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, WikiLeaks, 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

barriers to entry, Berlin Wall, big-box store, business cycle, 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, 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, Monkeys Reject Unequal Pay, 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: 339 words: 105,938

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

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, hedonic treadmill, 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, longitudinal study, 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.


pages: 311 words: 17,232

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

addicted to oil, 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), Kickstarter, 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.


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

"Robert Solow", Andrei Shleifer, business climate, business cycle, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, Gini coefficient, Gunnar Myrdal, 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.


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

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.


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Unfinished Business by Tamim Bayoumi

algorithmic trading, Asian financial crisis, bank run, banking crisis, Basel III, battle of ideas, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, buy and hold, capital controls, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, currency peg, Doha Development Round, facts on the ground, Fall of the Berlin Wall, financial deregulation, floating exchange rates, full employment, hiring and firing, housing crisis, inflation targeting, Just-in-time delivery, Kenneth Rogoff, liberal capitalism, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, market bubble, Martin Wolf, moral hazard, oil shale / tar sands, oil shock, price stability, prisoner's dilemma, profit maximization, quantitative easing, race to the bottom, random walk, reserve currency, Robert Shiller, Robert Shiller, Rubik’s Cube, savings glut, technology bubble, The Great Moderation, The Myth of the Rational Market, the payments system, The Wisdom of Crowds, too big to fail, trade liberalization, transaction costs, value at risk

In 1995, the loosely organized General Agreement on Tariffs and Trade (the GATT) was replaced by the World Trade Organization (WTO), whose wide membership was further enhanced by the accession of China in 2001 and Russia in 2002. The WTO proved a useful venue for dispute settlement, one of the most formalized parts of global economic cooperation. However, the complexities of a near-universal membership were exposed in the tortuous negotiations of successive rounds of international trade liberalization. This culminated in the seemingly never-ending wrangling over the 2001 “Doha” round. While Doha negotiations were advertised as being about supporting developing countries, they floundered on disagreements on the relative roles of advanced economies and emerging markets in improving the trading system. The loss of interest in policy cooperation was particularly unfortunate as it played out against the rapid growth in the importance of emerging markets in the global economy.


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Deaths of Despair and the Future of Capitalism by Anne Case, Angus Deaton

Affordable Care Act / Obamacare, basic income, Bertrand Russell: In Praise of Idleness, business cycle, call centre, collapse of Lehman Brothers, collective bargaining, Corn Laws, corporate governance, correlation coefficient, crack epidemic, creative destruction, crony capitalism, declining real wages, deindustrialization, demographic transition, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Elon Musk, falling living standards, Fellow of the Royal Society, germ theory of disease, income inequality, Jeff Bezos, Joseph Schumpeter, Kenneth Arrow, labor-force participation, low skilled workers, Martin Wolf, Mikhail Gorbachev, obamacare, pensions crisis, randomized controlled trial, refrigerator car, rent-seeking, risk tolerance, shareholder value, Silicon Valley, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, universal basic income, working-age population, zero-sum game

Hendi, 2018, “Recent trends in life expectancy across high income countries: Retrospective observational study,” BMJ, 362, k2562, https://doi.org/10.1136/bmj.k2562. 21. David Autor, David Dorn, and Gordon Hansen, 2018, “When work disappears: Manufacturing decline and the falling marriage market-value of young men,” NBER Working Paper 23173, revised January; Justin R. Pierce and Peter K. Schott, 2016, “Trade liberalization and mortality: Evidence from U.S. counties,” NBER Working Paper 22849, November. 22. Amy Goldstein, 2017, Janesville: An American story, Simon and Schuster. Chapter 11: Growing Apart at Work 1. Benjamin M. Friedman, 2005, The moral consequences of economic growth, Vintage; Thomas B. Edsall, 2012, The age of austerity: How scarcity will remake American politics, Doubleday. 2.


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The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy by Stephanie Kelton

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, Asian financial crisis, bank run, Bernie Madoff, Bernie Sanders, blockchain, Bretton Woods, business cycle, capital controls, central bank independence, collective bargaining, COVID-19, Covid-19, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, decarbonisation, deindustrialization, discrete time, Donald Trump, eurozone crisis, fiat currency, floating exchange rates, Food sovereignty, full employment, Gini coefficient, global reserve currency, global supply chain, Hyman Minsky, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, Jeff Bezos, liquidity trap, Mahatma Gandhi, manufacturing employment, market bubble, Mason jar, mortgage debt, Naomi Klein, new economy, New Urbanism, Nixon shock, obamacare, open economy, Paul Samuelson, Ponzi scheme, price anchoring, price stability, pushing on a string, quantitative easing, race to the bottom, reserve currency, Richard Florida, Ronald Reagan, shareholder value, Silicon Valley, trade liberalization, urban planning, working-age population, Works Progress Administration, yield curve, zero-sum game

This involved a variety of tools, like tariffs and capital controls, aimed at keeping trade flows stable and national economies at least somewhat insulated from one another. When Bretton Woods ended, the global institutions it created remained. But over time, their governing philosophy shifted: the religion of free trade took over, and the tariffs and capital controls were relaxed in the name of trade liberalization. Western elites decided that fully exposing developing countries to global trade and to the in- and out-rushes of investor money would discipline their economies into becoming better. Protectionism and government intervention became dirty words. The champions of this new framework insisted that free trade would eventually bring full employment and harmonious trade relations across each participating country’s economy.28 Nothing like that has happened, of course.


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Capital in the Twenty-First Century by Thomas Piketty

"Robert Solow", accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, business cycle, 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, twin studies, 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.


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Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze

Affordable Care Act / Obamacare, Apple's 1984 Super Bowl advert, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, Boris Johnson, break the buck, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, dark matter, deindustrialization, desegregation, Detroit bankruptcy, Dissolution of the Soviet Union, diversification, Doha Development Round, Donald Trump, Edward Glaeser, Edward Snowden, en.wikipedia.org, energy security, eurozone crisis, Fall of the Berlin Wall, family office, financial intermediation, fixed income, Flash crash, forward guidance, friendly fire, full employment, global reserve currency, global supply chain, global value chain, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, housing crisis, Hyman Minsky, illegal immigration, immigration reform, income inequality, interest rate derivative, interest rate swap, Kenneth Rogoff, large denomination, light touch regulation, Long Term Capital Management, margin call, Martin Wolf, McMansion, Mexican peso crisis / tequila crisis, mittelstand, money market fund, moral hazard, mortgage debt, mutually assured destruction, negative equity, new economy, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, old-boy network, open economy, paradox of thrift, Peter Thiel, Ponzi scheme, predatory finance, price stability, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, reserve currency, risk tolerance, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, structural adjustment programs, The Great Moderation, Tim Cook: Apple, too big to fail, trade liberalization, upwardly mobile, Washington Consensus, We are the 99%, white flight, WikiLeaks, women in the workforce, Works Progress Administration, yield curve, éminence grise

After the twenty participants had each had their fifteen minutes, the allotted five hours were up. The statements were of varying levels of discipline, relevance and sophistication. The Germans, Australians and Canadians were on point. Sarkozy grandstanded and demanded action on the Doha trade round, despite the fact that France’s defense of European agriculture was one of the greatest obstacles to progress on world trade liberalization. Italy’s Prime Minister Berlusconi had nothing to say about the economy, but he did at least offer warm wishes to the outgoing President Bush. For a “global” forum there were still too many Europeans around the table.27 Brazil and Argentina enjoyed their moment in the spotlight. They had axes to grind and wanted to fire off parting shots in the direction of President Bush. Rather than any substantive discussion, the leaders gave their approval to a laundry list of ninety-five precommitments, including an agreement to a second gathering in the spring.

But rather than translating this vision into positive proposals for the WTO, the Trump administration adopted the tactics the Republicans had used to such effect in Congress. The United States refused to permit the appointment of new arbitrators to WTO panels, threatening to hollow out the institution, making it increasingly dysfunctional and illegitimate. If there was no actual éclat at the WTO meeting in December 2017, the lack of progress on any area of trade liberalization was dismal.108 Lighthizer did not even deign to stay until the end of the conference. The shock delivered by the new administration to global economic institutions was severe. There had been nothing like this since the 1930s and nowhere was this felt more acutely than in Europe. In the early days it was unclear whether the Trump team actually acknowledged the EU as a counterparty or understood that the United States no longer maintained bilateral trade relations with individual European countries.


EuroTragedy: A Drama in Nine Acts by Ashoka Mody

"Robert Solow", Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Basel III, Berlin Wall, book scanning, Bretton Woods, call centre, capital controls, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, credit crunch, Daniel Kahneman / Amos Tversky, debt deflation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, financial intermediation, floating exchange rates, forward guidance, George Akerlof, German hyperinflation, global supply chain, global value chain, hiring and firing, Home mortgage interest deduction, income inequality, inflation targeting, Irish property bubble, Isaac Newton, job automation, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, Kickstarter, liberal capitalism, light touch regulation, liquidity trap, loadsamoney, London Interbank Offered Rate, Long Term Capital Management, low-wage service sector, Mikhail Gorbachev, mittelstand, money market fund, moral hazard, mortgage tax deduction, neoliberal agenda, offshore financial centre, oil shock, open borders, pension reform, premature optimization, price stability, purchasing power parity, quantitative easing, rent-seeking, Republic of Letters, Robert Gordon, Robert Shiller, Robert Shiller, short selling, Silicon Valley, The Great Moderation, The Rise and Fall of American Growth, too big to fail, total factor productivity, trade liberalization, transaction costs, urban renewal, working-age population, Yogi Berra

[He] bestrode our discipline like a colossus.”80 Johnson pointed to an embarrassing void in the economics profession: “little reasoned defense of the fixed exchange rate system has been produced beyond the fact that it exists and functions after a fashion, and the contention that any change would be for the worse.”81 In contrast, he said, the case for flexible exchange rates was undeniable. Friedman, Johnson said, was right. Greater exchange-​ rate flexibility would give countries greater insulation from macroeconomic shocks and would allow national authorities more freedom in the pursuit of domestic policy objectives. Thus, while in 1957 the Treaty of Rome had been in the vanguard of international trade liberalization, in late 1969, Pompidou’s call for permanently fixed exchange rates embedded in a European monetary union was not just an eccentric priority for France, it was mystifyingly opposed to the global trend toward a system of flexible exchange rates. In seeking what appeared to him an easy fix, Pompidou was shirking his true obligation to seek real solutions to France’s long-​term competitiveness problems.

.), 285–286 Teja, Ranjit, 356 Temin, Peter, 38 Term Auction Facility (TAF), 200f, 202–203, 215 Thailand, mid-​2007 financial crisis, 128 Thatcher, Margaret Common Market desire of, 67 on exchange rates, 59, 99 opposition to monetary union, 9, 77, 333 Pöhl’s alliance with, 73 Thomsen, Poul, 261, 285, 413 three (3) percent rule, 88–89b description, 91–92, 95 France and, 112 Germany and, 10, 87–88, 112 Mitterrand and, 87 Tietmeyer, Hans, 48, 83 “Towards a Genuine Economic and Monetary Union” (Van Rompuy), 324 Traa, Bob, 234, 235–236 trade China and, 158, 230f Denmark and, 98 ECB and, 129, 138 Erhard on opening Europe’s borders, 40–41 fixed exchange rates and, 71b France and, 33 Germany and, 148, 157, 170–171 global growth, 19, 156, 158–159, 380 global slowdowns, 128–129, 142–143, 210 Greece and, 130–131 industrial production growth and, 200f 648   i n d e x Italy and, 380 Japan and, 294 Kohl and, 66, 81 Napoleon III/​Société Générale and, 161–162 post-​WWII, 6, 33, 40, 62 Rose’s prediction, 170 shares of principal euro-​area countries, 171f single currency and, 13, 55, 63, 170 Spaak Committee Report on, 29–30 Treaty of Rome and, 31, 55, 61 Wartenberg and, 93 Transparency International, 119 Treasury securities, 291–292 treaties. See individual treaties Treaty of Accession (Greece-​EEC), 131 Treaty of Rome (1957), 5 call for “an ever closer union,” 74 customs union establishment by, 55 France and, 50 Judt’s comment on, 31 Marjolin’s role in, 32, 55, 67 replacement of High Authority, 472 role in flowering of European community, 60 role in international trade liberalization, 40 signing of, 30 successes of, 32 trade ambitions of, 31 Treaty on the European Union. See Maastricht Treaty Trebesch, Christoph, 415 Tremonti, Giulio, 151 Trichet, Jean-​Claude, 216–217, 295 on automatic sanctions, 274 Banque de France governorship, 121 Deauville decision and, 276, 278–280 ECB presidency of, 15 final months of, 298–303 Geithner-​Trichet doctrine, 214 lack of accountability of, 335 letter to Berlusconi, 300–301 letter to Zapatero, 300–301 Maastricht summit participation, 84 Merkel’s support for, 303 raising interest rates in 2011, 293–296 opinion on ECB interest rate, 291 Sarkozy’s argument with, 303 subprime crisis response, 203, 211 support for Atlante, 376 3 percent rule and, 89–90b triggering of financial crisis, 300 Triffin, Robert, 43 Troubled Asset Relief Program (TARP), 216–219 True Finns, 429 Trump, Donald, 404 Tsipras, Alexis, 413, 418, 420–421 Tsoutsoura, Margarita, 185 unemployment in Europe, 100 eurozone rates, 11, 156 exchange rates and, 71b in France, 55, 57–58, 95, 96f in Germany, 65, 81, 95, 96f inflation rates and, 38 interest rates and, 39 in Italy, 96f Maastricht Treaty and, 95 Modigliani’s comment on, 91 monetary/​fiscal austerity and, 68 of youth, in Greece, 232–233 UniCredit bank (Italy), 375–376, 379 United Kingdom belief in European free trade, 98 Cripps’s role as finance minister, 26 debt write-​offs, 415 EEC membership, 44 euro-​area productivity comparison, 169f euro-​skeptical forces in, 334–335 eurozone non-​membership, 136, 173–174 inflation rates, 99 Ireland and, 178, 179 Irish citizens emigration to, 432–433 low inflation rates, 173–174 low innovation in, 176f protests against European encroachment, 153 Maastricht summit participation, 84 R&D/​GDP ratio (1997), 176f rumblings of Brexit, 333–335 role in steadying euro, 138–139 SGP and, 145 single currency, right to opt out, 9, 333–334 United States (U.S.)


pages: 397 words: 112,034

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

affirmative action, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Bretton Woods, business cycle, 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, 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, WikiLeaks, 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.


Worldmaking After Empire: The Rise and Fall of Self-Determination by Adom Getachew

agricultural Revolution, Bretton Woods, British Empire, collective bargaining, colonial exploitation, colonial rule, failed state, financial independence, Gunnar Myrdal, land reform, land tenure, liberal world order, market fundamentalism, means of production, Monroe Doctrine, Mont Pelerin Society, Peace of Westphalia, Ronald Reagan, Scramble for Africa, structural adjustment programs, trade liberalization, transatlantic slave trade

While OPEC functioned in important ways as a model for the kinds of commodity associations other developing nations hoped to create and signaled what the power of collective action in the international sphere might accomplish, the hike in oil prices and the [ 170 ] Ch a pter Fi v e accompanying spike in food prices proved to be particularly painful for the developing world.125 Relatedly, the kinds of trade liberalization advocated by the NIEO were more likely to benefit larger, more industrialized countries like Brazil rather than predominantly rural economies.126 The language of a trade union for the poor nations thus tended to mask the dif­ ferentiated nature of the developing world. Beset with these limitations of the domestic analogy, the NIEO also embodied the central contradiction of anticolonial worldmaking in the age of decolonization, caught as it was between reinforcing state sovereignty and recommending internationalist solutions to the postcolonial predicament.


pages: 401 words: 115,959

Philanthrocapitalism by Matthew Bishop, Michael Green, Bill Clinton

Albert Einstein, anti-communist, barriers to entry, battle of ideas, Bernie Madoff, Bob Geldof, Bonfire of the Vanities, business process, business process outsourcing, Charles Lindbergh, clean water, cleantech, corporate governance, corporate social responsibility, Dava Sobel, David Ricardo: comparative advantage, don't be evil, family office, financial innovation, full employment, global pandemic, global village, God and Mammon, Hernando de Soto, high net worth, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Dyson, John Harrison: Longitude, joint-stock company, knowledge economy, knowledge worker, Live Aid, lone genius, Marc Andreessen, market bubble, mass affluent, microcredit, Mikhail Gorbachev, Nelson Mandela, new economy, offshore financial centre, old-boy network, peer-to-peer lending, performance metric, Peter Singer: altruism, plutocrats, Plutocrats, profit maximization, profit motive, Richard Feynman, risk tolerance, risk-adjusted returns, Ronald Coase, Ronald Reagan, shareholder value, Silicon Valley, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade liberalization, transaction costs, trickle-down economics, wealth creators, winner-take-all economy, working poor, World Values Survey, X Prize

In their Brookings paper, Brainard and Chollett note that some “worry about the proliferation of actors and the oversimplification of messages such as Make Poverty History.” They point to some evidence that “advocacy networks have proven far more effective in instances of humanitarian crisis . . . where the face of human suffering is a powerful motivator for grassroots engagement, than on trade liberalization or dismantling agricultural subsidies, where domestic opposition is strong and the connection to poverty not as clear.” In short, they write, advocacy, including that done by celanthropists, “lends itself to simple and sometimes simplistic messaging but is far less amenable to telling a complicated story.” (Likewise, in his acclaimed book The Bottom Billion, Paul Collier says that the “development buzz” generated by celebrities is “at times a headless heart.”)


pages: 411 words: 114,717

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

3D printing, affirmative action, Albert Einstein, American energy revolution, anti-communist, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, business climate, business cycle, 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, land reform, M-Pesa, Mahatma Gandhi, Marc Andreessen, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, Nelson Mandela, 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: 446 words: 117,660

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future by Paul Krugman

affirmative action, Affordable Care Act / Obamacare, Andrei Shleifer, Asian financial crisis, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, bitcoin, blockchain, Bonfire of the Vanities, business cycle, capital asset pricing model, carbon footprint, Carmen Reinhart, central bank independence, centre right, Climategate, cognitive dissonance, cryptocurrency, David Ricardo: comparative advantage, different worldview, Donald Trump, Edward Glaeser, employer provided health coverage, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, frictionless, frictionless market, fudge factor, full employment, Growth in a Time of Debt, hiring and firing, illegal immigration, income inequality, index fund, indoor plumbing, invisible hand, job automation, John Snow's cholera map, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, large denomination, liquidity trap, London Whale, market bubble, market clearing, market fundamentalism, means of production, New Urbanism, obamacare, oil shock, open borders, Paul Samuelson, plutocrats, Plutocrats, Ponzi scheme, price stability, quantitative easing, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, universal basic income, very high income, working-age population

(In fairness, there’s an academic literature arguing that the underlying economics matter more than I’m suggesting, work that I consider admirable but unpersuasive.) True, for the past eighty years the U.S. has sought to make trade gradually freer; this reflected in part the (very) indirect influence of economic theory, in part the belief that closer economic integration was good for peace and the free world alliance. But the process by which trade liberalization was sought was all about political realism rather than abstract ideals. And what political realism on trade means is that producer interests matter much more than consumer interests, because producers tend to be far more organized and aware of the stakes in any given trade policy. The classic case was sugar, where for many years U.S. import quotas kept prices here several times above world levels.


pages: 437 words: 113,173

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

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 pandemic, 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, Johannes Kepler, Khan Academy, Kickstarter, low cost airline, low cost carrier, low skilled workers, Lyft, Malacca Straits, mass immigration, megacity, Mikhail Gorbachev, moral hazard, Nelson Mandela, 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, The Future of Employment, too big to fail, trade liberalization, trade route, transaction costs, transatlantic slave trade, uber lyft, undersea cable, 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: 464 words: 121,983

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

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, Kickstarter, 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.


pages: 492 words: 118,882

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 cycle, 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, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, 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, large denomination, liquidity trap, London Whale, low skilled workers, M-Pesa, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, 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: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

"Robert Solow", accounting loophole / creative accounting, agricultural Revolution, barriers to entry, business cycle, 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: 496 words: 131,938

The Future Is Asian by Parag Khanna

3D printing, Admiral Zheng, affirmative action, Airbnb, Amazon Web Services, anti-communist, Asian financial crisis, asset-backed security, augmented reality, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Basel III, blockchain, Boycotts of Israel, Branko Milanovic, British Empire, call centre, capital controls, carbon footprint, cashless society, clean water, cloud computing, colonial rule, computer vision, connected car, corporate governance, crony capitalism, currency peg, deindustrialization, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, energy security, European colonialism, factory automation, failed state, falling living standards, family office, fixed income, flex fuel, gig economy, global reserve currency, global supply chain, haute couture, haute cuisine, illegal immigration, income inequality, industrial robot, informal economy, Internet of things, Kevin Kelly, Kickstarter, knowledge worker, light touch regulation, low cost airline, low cost carrier, low skilled workers, Lyft, Malacca Straits, Mark Zuckerberg, megacity, Mikhail Gorbachev, money market fund, Monroe Doctrine, mortgage debt, natural language processing, Netflix Prize, new economy, off grid, oil shale / tar sands, open economy, Parag Khanna, payday loans, Pearl River Delta, prediction markets, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, Ronald Reagan, Scramble for Africa, self-driving car, Silicon Valley, smart cities, South China Sea, sovereign wealth fund, special economic zone, stem cell, Steve Jobs, Steven Pinker, supply-chain management, sustainable-tourism, trade liberalization, trade route, transaction costs, Travis Kalanick, uber lyft, upwardly mobile, urban planning, Washington Consensus, working-age population, Yom Kippur War

Whatever the currency, central banks such as those of Singapore, Australia, and New Zealand have established financial technology (“fintech”) bridges to enable seamless cross-border payments with others quickly getting on board. In Asia, money knows very few borders. Capitalism, Asian Style Asian countries have no doubt that globalization has been their ticket to prosperity. Even as they become less dependent on Western economies, they are pursuing an “open regionalism” of integrating with one another while expanding trade ties far and wide. US backtracking on trade liberalization (even within its own region through NAFTA) has not diminished Asia’s appetite to expand trade with every other world region as well as the United States. Throughout history, “free trade” has been advocated by rising powers with trade surpluses, notably Great Britain in the nineteenth century and the United States in the twentieth. In reality, however, they pursued a neomercantile strategy of import substitution and aggressive government-backed international expansion to achieve their superpower status.


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

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, Kickstarter, liberation theology, McMansion, Nelson Mandela, 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.


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, Kickstarter, 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.


Year 501 by Noam Chomsky

"Robert Solow", anti-communist, Bartolomé de las Casas, Berlin Wall, Bolshevik threat, Bretton Woods, British Empire, business cycle, 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: 468 words: 145,998

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

asset-backed security, bank run, banking crisis, break the buck, Bretton Woods, buy and hold, 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

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, Nelson Mandela, 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

addicted to oil, 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: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

"Robert Solow", Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low skilled workers, M-Pesa, market bubble, means of production, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

The expansion of short-term flows has proven precarious, and was sharply reversed once financial turmoil had engulfed banks. FIG. 47 Private capital flows, emerging and developing countries, $bn Figure 46 further shows that, during this period, substantial current account surpluses have emerged among developing countries. Underlying this phenomenon has been the closer integration of developing countries into the world market as policies of trade liberalization have been generally adopted after the 1980s. Increasing integration has held even for low-income countries in Africa and Asia, judging by exports relative to GDP.28 The trajectory of the current account in the 2000s has varied significantly among developing countries in line with trade specialization and other historically specific factors. However, two broad groups of developing countries stand out.


pages: 614 words: 176,458

Meat: A Benign Extravagance by Simon Fairlie

agricultural Revolution, Albert Einstein, back-to-the-land, Boris Johnson, 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: 547 words: 172,226

Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu, James Robinson

"Robert Solow", Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, banking crisis, Bartolomé de las Casas, Berlin Wall, blood diamonds, BRICs, British Empire, central bank independence, clean water, collective bargaining, colonial rule, conceptual framework, Corn Laws, creative destruction, crony capitalism, Deng Xiaoping, desegregation, discovery of the americas, en.wikipedia.org, European colonialism, failed state, Fall of the Berlin Wall, falling living standards, financial independence, financial innovation, financial intermediation, Francis Fukuyama: the end of history, Francisco Pizarro, full employment, income inequality, income per capita, indoor plumbing, invention of movable type, invisible hand, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kickstarter, land reform, mass immigration, Mikhail Gorbachev, minimum wage unemployment, Mohammed Bouazizi, Paul Samuelson, price stability, profit motive, Rosa Parks, Scramble for Africa, Simon Kuznets, spice trade, spinning jenny, Steve Ballmer, Steve Jobs, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, Washington Consensus, working poor

As long as political institutions remain extractive, growth will be inherently limited, as it has been in all other similar cases. The Chinese experience does raise several interesting questions about the future of Chinese growth and, more important, the desirability and viability of authoritarian growth. Such growth has become a popular alternative to the “Washington consensus,” which emphasizes the importance of market and trade liberalization and certain forms of institutional reform for kick-starting economic growth in many less developed parts of the world. While part of the appeal of authoritarian growth comes as a reaction to the Washington consensus, perhaps its greater charm—certainly to the rulers presiding over extractive institutions—is that it gives them free rein in maintaining and even strengthening their hold on power and legitimizes their extraction.


pages: 596 words: 163,682

The Third Pillar: How Markets and the State Leave the Community Behind by Raghuram Rajan

activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, airline deregulation, Albert Einstein, Andrei Shleifer, banking crisis, barriers to entry, basic income, battle of ideas, Bernie Sanders, blockchain, borderless world, Bretton Woods, British Empire, Build a better mousetrap, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, computer vision, conceptual framework, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, data acquisition, David Brooks, Deng Xiaoping, desegregation, deskilling, disruptive innovation, Donald Trump, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, global supply chain, high net worth, housing crisis, illegal immigration, income inequality, industrial cluster, intangible asset, invention of the steam engine, invisible hand, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, labor-force participation, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South China Sea, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, superstar cities, The Future of Employment, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transaction costs, transfer pricing, Travis Kalanick, Tyler Cowen: Great Stagnation, universal basic income, Upton Sinclair, Walter Mischel, War on Poverty, women in the workforce, working-age population, World Values Survey, Yom Kippur War, zero-sum game

Journal of Monetary Economics 53, no. 5 (July 2006): 981–1019. 25. Shubham Chaudhuri, “What Differences Does a Constitutional Amendment Make? The 1994 Panchayati Raj Act and the Attempt to Revitalize Rural Local Government in India,” in Decentralization and Local Governance in Developing Countries: A Comparative Experience, ed. Pranab Bardhan and Dilip Mookherjee (Cambridge, MA: MIT Press, 2006). 26. Petia Topalova, “Trade Liberalization, Poverty, and Inequality Evidence from Indian Districts,” in Globalization and Poverty, ed. Ann Harrison (Chicago: University of Chicago Press, 2007), 291–336, available at http://www.nber.org/chapters/c0110.pdf; Lakshmi Iyer and Petia Topalova, “Poverty and Crime: Evidence from Rainfall and