Chap 11 globalisation backlash

Question 1

Assumption of Rogowski

Answer 1

economic winners are always political winners. in reality, it happens that in some cases economic losers are political winners

Question 2

Pareto improvement

Answer 2

at least someone better off, no one worse off (no losers). international economics perspective, fully aware of distributional consequences but believe pareto improvement possible

Question 3

governments in 1990s options

Answer 3

• protectionism or globalisation without compensation

- should have offered protectionism or globalisation with compensation

Question 4

compensation seen by international economics

Answer 4

just transfer to losers to make trade openness pareto-improving

Question 5

compensation seen by public economics perspective

Answer 5

taxing is the trickiest thing one could try to do (if tax profits, lower investments, if tax labour, less people work. etc)

Question 6

compensation viewed by political economy perspective

Answer 6

people don’t want to be taxed, will do whatever it takes to avoid paying

Question 7

failure of US trade adjustment assistance programme

Answer 7

aimed at individuals losing jobs because of globalisation which is not enough because it affects entire communities

Question 8

compensatory policies supported by major socio economic groups

Answer 8

highly educated people so more flexible w employment, safety nets for loss of jobs, retraining programmes

Question 9

example of city that reinvented itself after globalisation

Answer 9

pittsburg : transformed into a knowledge economy thanks to universities and researchers

Question 10

failures of representation

Answer 10

major parties consensually supported increased international eco integration (often without compensation) even democrats

Question 11

SMD (Single member district) / plurality

Answer 11

elect one representative from district, only a few parties usually just two

Question 12

proportional representation

Answer 12

assign M>1 seats proportional to vote shares, small parties represented

Question 13

Implications of SMD

Answer 13

• prevent small parties from being represented
• channeling discontent requires «insurgent» candidate in intra-party competition
• if intra-party route fails, no space to be heard
• needs a lot of people unhappy to be heard

Question 14

Implications of PR

Answer 14

• make even relatively small parties viable
• easier for discontent to be heard
• escape valve for pressures

Question 15

Political manifestation of backlash in SMD

Answer 15

unexpected/ sudden like Brexit or Trump

Question 16

Explanation of brexit votes

Answer 16

Significant part of variation in Leave vote explained by Change in relative income. Significant part of variation in CRI explained by China shock.
Places economically declining since 1990s voted to leave

Question 17

drivers of political response brexit

Answer 17

• anti-elite
• anti-globalization (take back control)
• anti-immigration (misinterpreted correlation/ welfare state congestion)

Question 18

only group not affected by china shock

Answer 18

retired

Question 19

anti immigration and brexit puzzle

Answer 19

places with more immigrants were more in favour of remaining in the EU

Question 20

counterintuitive insight of immigration and trade

Answer 20

political substitutes from point of view of owners of given factors in advanced economies:

• trade harms scarce factor (labor) so decreases labour production, workers compete for fewer jobs who therefore oppose immigration
• protectionism harms abundant factor (capital) so immigration is favoured because it lowers labor costs as labour production increases & wages rise

Question 21

protectionism as general solution

Answer 21

people blame globalisation and demand protectionism for a lot of economic distress that is not directly related to globalisation itself but technological change

Question 22

protectionism in public mind

Answer 22

general policy tool to address economic downturns

Question 23

popular policy also for non trade shocks

Answer 23

protectionism