MIDTERM 3 PT 2 Flashcards
Economic Globalization
Deepening and widening of trade and investment flows around the world so that more and more places are integrated into economic processes that operate beyond the scale of the locality, region or state.
What has enabled globalization?
Cheap, fast transportation and communications
Global capital markets
Freer movement of capital, people (labour), goods, OTH
(Neoliberalism, which came after Keynesian Economics)
Changing roles of state governments and corporations
Fordism & Keynesianism
- A national economy based on standardized, mass production
- Protectionism & tariffs, government regulation
- Class compromise → stable workforce
- Large middle class, more equal society
- (white male) workers with job security are paid decent wages (high wages)
Neoliberalism
An economy based on consumption and the deindustrialization in the Global North.
Free trade, deregulation, globalization, capital mobility
low wages, little job security (“labour flexibility”), few benefits, hard to get EI, lower labour standard
Debt has increased
Neoliberalism
A theory of political economy which proposes:
-human well being is best advanced through
strong private property rights and free trade;
society should be shaped by the market
-the role of the state is to: promote
privatization and create a good climate for
business by lowering taxes, making resources
available, and not imposing environmental
laws or labour regulations
-states should manage and regulate
economies as little as possible based on
the idea that free markets and free trade
lead to economic growth and prosperity
Characteristics of neoliberalism
An economy based on consumption and the deindustrialization in the Global North.
Free trade, deregulation, globalization, capital mobility
Low wages, little job security (“labour flexibility”), few benefits, hard to get EI, lower labour standard
Labour unions crushed; workers disempowered
Debt has increased
Wealth & Income polarization (Inequality ↑↑; middle class ↓)
Ten commandments of neoliberalism
- Trade liberalization
- Privatize public services
- Deregulate business and finance
- Cut public spending and welfare-state policies
- Reduce and flatten taxes
- Encourage foreign investment
- De-unionize
- Export-led development
- Reduce inflation
- Enforce property rights
In neoliberalism, individuals… (moral point)
Individuals are responsible for their own welfare (no social safety net; if you’re poor, it’s your fault and your problem)
The discourse is that neoliberalism increases choice, but others claim that they restrict choice. HOW?
- Consolidation (lots of things are owned by few big companies)
- Can no longer choose public education
- Can no longer choose public transportation
Free Trade Characteristics (6)
- Elimination of tariffs
- Creation of “free trade zones” and taxes
- Reduction or elimination of controls on the movement of capital out of a country (so profits can easily be returned to the base country or a tax-haven)
- Reduction or elimination of subsidies for local businesses (so that overseas firms are more competitive)
- Open up to FDI (usually buying a controlling interest in a firm or setting up a subsidiary)
- Cheap land and skilled, but controlled, labour
Tarrifs
taxes on imported goods
Import Quotas
Limits on the amount of a product that can be imported
Free Trade Zones
Zones where there are small or no tariffs
foreign direct investment (FDI)
Is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
Free Trade
Free trade, also called laissez-faire, a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports). A free-trade policy does not necessarily imply, however, that a country abandons all control and taxation of imports and exports.
