Digressions 2 Flashcards
Heckscher-Ohlin and the Losers of Globalization:
What is the conclusion of this concept?
Compared to the rest of the world, Western Europe and the United States have a relative abundance of high-skilled labor and a relative shortage of low-skilled labor.
==> Trade tends to hurt low-skilled workers in these countries.
This may be temporary, because skills can be acquired but part of the problem is also structural, if not all people can acquire the skills necessary to be employed in the (high-skilled) export sector.
This is one of the reasons for the domesctic problems that are a consequence of globalization
Theoretically, these problems could be adressed because trade expands the two countries’ joint production (and thus consumption) possibilities.
Good distributional policiy then would intervene in market processes in such a way that
A. Incentives to specialize remain unchanged and
B. Potential gains from trade are distributed in a way that makes everyone better off.
In practice this is rarely done.
Exploitation and Lock-Ins in Unproductive Technologies:
Explain this concept in a few sentences.
Exploitation in unproductive technologies refers to the use of inefficient or outdated systems that continue to extract value, often benefiting a select few while stifling innovation or progress. Lock-ins occur when users or organizations become dependent on these technologies, even though better alternatives exist, due to factors like high switching costs, network effects, or entrenched habits. This creates a cycle where the outdated technology remains dominant, preventing the adoption of more efficient or productive solutions.
==> letting short-run market forces guide you towards a technological and skill structure that reflects your short-run comparatice advantage may be dangerous
Taming the Passions: How Early Theorists of Capitalism Looked at Trade and Competition:
What did early theorists of capitalism state what the merit of economic systems are??
One pointed out that a major merit of an economic system, based on specialization and trade, is it s ability to “tame” the passions of men
==> Money making as an innocent pastime and outlet for men’s energies, as an institution that diverts men from the antagonistic competition for power to the somewhat ridiculous and distateful, but essentially harmless accumulation of wealth
Taming the Passions: How Early Theorists of Capitalism Looked at Trade and Competition:
What does the later view state? What does the later view focus on?
The old view is totally different from the later view, which has almost exclusively focused on the ability of competitive markets to achieve efficiency
==> profit-seeking behavior and competition defined a vision of a better society where the darker passions of human beings are kept under control by the pursuit of profit.
- With free trade, according to this view, one need not see an enemy in a stranger, but instead a potential trading partner.
- Competition within context of free markets has an explicitly moral quality because the alternatives are so much worse
What is Ontology?
the study of “what there is” of the nature of being and reality. It studies problems concerning the entities that do exist and their properties.
Examples of ontological questions: What is the nature of existence? What principles govern the properties of matter?
What is Epistemology?
The study of knowledge and justified belief.
Examples of epistemological questions: What are the necessary and sufficient conditions of knowledge? How does one separate ture ideas from false ideas? How does one know what is true?
