ECON 330 Flashcards
Japanese Economic System - Strengths
Major capitalist country combining capitalism and tradition, high savings rate (25% GDP), benefit from indicative planning, work-centric culture
Japanese Economic System - Weaknesses
Based on innovations, not inventions, poor natural resources, a stock market bubble, high real estate prices
Zibatsu
Large conglomerate firms in Japan before 1945, operated in many different economic sectors, broke up at the end of WW2
Keiretsu
Group of allied companies in Japan, usually linked through a bank, central structure of Japanese industrial organization, horizontal (different industries) and vertical (supply chain in a single sector)
New Protectionism
Government policies restricting international trade to help domestic industries. US and Japan relations would have been better if Trump had not pulled the US from the Transpacific Partnership in 2017. Usually tariffs and quotas, very visible, TWO monitors. If unfair, warnings occur, many countries try to do protection without tariff and quota, name is non-tariff non quota, brings unrealistic things to limit production. EG: said Chile can send all the apples but we need 1 month to inspect them.
Oscar Lange’s Model
Factory manager produces each product up to the point where the marginal cost of production equals the price of the product. Model of market socialism
Workers Managed Socialism
System in Yugoslavia from 1950 to 1990, involved workers managing state-owned enterprises. Active in managing or hiring managers. Muslims and Christians ruined country. Michael Titor.
Input Output Model
Macroeconomic analysis based on the interdependencies between different economic sectors or industries, estimating quantities of inputs needed to produce outputs. Developed by Wassily Leontief. Interdependency of sectors.
Material Balancing Method
Central planning based on keeping track of quantities of materials used in the economy and ensuring suppliers balance with demands. Russian method, consistency between input and outputs, arithmetic balancing, not sophisticated but consistent. Stalin didn’t like mathematicians.
Shoguns
Military dictators of Japan who ruled in the name of the emperor, lost power with the Meiji Restoration in 1868, leading to the Westernization and modernization of Japan
Shinto
Traditional religion native to Japan, involving emperor worship until the end of WW2
Moral Hazard
Problem arising from asymmetric information in insurance markets when those who are insured behave recklessly because they are insured
Corporatism
Society with centralized wage bargaining. Authoritarian form involves outcomes ordered by a non-democratic government, while democratic form involves less state influence and more consensus
Wage Solidarism
Idea of equalizing wages across firms and skill and seniority levels. The Gini coefficient declined after Sweden adopted this policy in 1982
Arab Spring
Series of anti-government protests, uprisings, and armed rebellions spread across the Arab world in the early 2010s, began in response to corruption and economic stagnation, influenced by the Tunisian Revolution. Supposed to bring democracy but didnt.
Bretton Woods Conference
Held in 1944, led to the establishment of the International Monetary Fund (IMF), The WTO and the World Bank, led to mostly fixed exchange rates among the world’s leading economies, makes sure countries are fine.
Externalities
Effect one party generates on other parties but does not experience directly. Negative when it generates net costs (supply curve shifts left), positive when it generates net benefits. Solutions: Pigouvian Tax, Uniform Emission Standards, Coase Theorem, Tradeable Emission Permits, Subsidies. EG: nice neighborhood, lemon trees that smell nice make it nice.
Old Traditional Economy
Derived from Karl Polanyi, embedded with a traditional social structure using nonmodern technologies. Household, Reciprocal, and Redistributive forms
Special Enterprise Zones
Areas in coastal cities in South China where foreign capitalists can invest and operate freely, market capitalist within the broader socialist market economy
Basic Characteristics of Swedish Economy System
Classified as a “Social Market Economy” (Welfare economy), income redistribution and social support system, high taxation (Cradle to Grave Security), practiced Corporatism and Wage Solidarism
Town and Village Enterprises
Important form of firms in the Chinese economy, owned by local government units but operating in a free market context. Some are cooperatives, others resemble standard capitalist firms
World Trade Organization
Established in the mid-1990s as the successor to GATT, designed to implement and enforce global free trade agreements
War Communism
Period in Soviet history from 1918 to 1921, post-Bolshevik Revolution. Commanded economic policy without planning, led to severe famine in 1921-22. Right after 1980 to repair damage from Bolshevik Revolution.
New Economic Policy
Market-oriented policy for agriculture and small enterprises in the Soviet Union from 1921 to 1928, established after famines during War Communism, displaced by Stalinist command central planning
Kolkhoz
Russian word for collective farm, income shared among members, common type of agricultural production unit in the former Soviet Union
Sovkhoz
Russian word for state farm, farmers paid a set wage by the state
Dacha
Country or cottage in Russia, used as a summer or vacation home
Perestroika
Russian for “restructuring,” economic reform policy by Mikhail Gorbachev to move from command socialism to a market economy
Glasnost
Russian word meaning openness, policy by Mikhail Gorbachev in the mid to late 1980s to allow free discussion of economic, social, and political problems, and past Soviet history
Taoism
Religion founded in China around 600 BCE by Lao-Tzu, more anti-hierarchical and freewheeling than Confucianism, seen in economic terms as pro-market and advocating for natural flow
Nomenklatura
Russian term for nomenclature, consisted of communist party members, state planning org or managers. Appointed to government jobs, loyalists of the Communist regime. Received perks not recorded as income. At one point all three emerged, new privledged class, later it was mainly oligarchs and mafia.
Gosplan
Central planning agency of the Soviet Union, disbanded in 1991. Gos = state, Gos-Planning
Asiatic Mode of Production
Social economic political system in agricultural Asian countries with strong government control over hydraulic systems and little private ownership of land. Marx viewed these economies as stagnant
Storming
Practice in command-planned economies where enterprises engage in last-minute efforts to meet production quotas, often resulting in poor quality
Ratchet Effect
Phenomenon in command-planned economies where an enterprise’s production quota rises with its production, discouraging firms from exceeding quotas. Produce more bc next time thats the base.
Flying Geese Theory
Idea that East Asian economies advance in formation like flying geese. Developed in the 1930s by Japanese economist Akamatsu. Follow the leader, Koreans thought there a leader Like Japan and they follow. Japan producing lower end and everything in 70s now Korea took that over and is leading too.
Differences Between Maoism and Stalinism
Mao did not exterminate the opposition, believed in rehabilitation. Stalin was an administrator with an eye for detail. Mao allowed former landlords to receive land, Stalin moved resistant kulaks. Mao had equal distribution, Stalin not, Mao anti beauacratic, Stalin was state. Mao peasants were dominant class responsible for revolution, Stalin did industrial workers and hated peasants.
Super-Industrialization Period
Occurred in the Soviet Union from 1928-1940, collectivization and industrialization to catch up with the West, resulted in regional and industrial distortions, over-investment, and neglected costs
Basic Issues in USA and China Conflict
Patents, exchange rate manipulations, Trump’s mercantilism policy of high tariffs on Chinese exports
Geneticists vs. Teleologists - Geneticists
Soviet planners in the 1920s led by Nikolai Bukharin, advocating use of markets and balance between industry and agriculture. Slow
Geneticists vs. Teleologists - Teleologists
Opponents of geneticists, led by E.V. Preobrazhensky, argued planning should direct the economy towards rapid industrialization. Faster.
Consequences of US-China Trade War
Retaliation leads to losses for local producers, higher production costs, higher prices, and overall economic losses for both countries. Political issue that can create a war is Taiwan
USSR Planning Methodology - Strengths
Mobilized resources for industrialization, standardization of production, provided jobs, healthcare, and housing
USSR Planning Methodology - Weaknesses
Bureaucratic production decisions, lack of flexibility and adaptability to economic changes
Problems of Transformation from Socialism to Capitalism (Yeltsin and Putin)
Weak institutions, corruption, war with Georgia, Crimea problems, inflation, decline in middle-class income, new rich not paying taxes
Asymmetric Information
sign contract and begging to behave in hazardous way. EG homie equity line but go to Vegas instead.
