readings 2 Flashcards
1
Q
“The Free Trade Paradox” Blinder
A
- convincing most people of the value of free trade is a losing fight
- most Americans’ belief in free trade is a mile wide but an inch deep
- polls show that level of support depends on what is meant by “free trade,” how the question is posed, and when it is asked
- mention of globalization, jobs approval starts to decline
- winners could compensate losers and still have something left - failed to do so
- trade adjustment assistance: offers people who have lost their jobs to foreign competition money for retraining and extra income while they are unemployed (poorly funded, hard to access, reaches few displaced workers)
- in reality, natural trade creates winners and loses, without any gov action but trade agreements are diff deliberate noticeable actions by gov
2
Q
NPR: “Mr. Jones’s Act” David Kestenbaum
A
- ships made in America, crewed by Americans, are expensive to manufacture and expensive to run
- saves some jobs in the shipping industry but makes all kinds of other things cost way more than they did
- quarter-million dollars a job
- cost country over $1 billion every year
- senator jones concerned about his hometown shipbuilding industry pushed congress to pass merchant marine act of 1920
- affects foreign transportation of every product of American industry, industrial expansion of nation
- military readiness: shipbuilding industrial base
- in wartime, need people who know how to make ships - war ships that we use to fight battles, cargo ships for supplies/food/medical
- however, dependent on foreign countries for oil, food, steel, clothes need to use ports of allies
3
Q
“How the WTO Boosts Economics and Opens Societies” Sutherland
A
- transformative impact of World Trade organization in Cambodia, china, and Saudi Arabia
- emphasized joining WTO has played a crucial role in these nations’ economic development and positive change
- argues that terms of WTO membership represents a revolutionary change for countries
- opportunity to establish agendas and priorities, pushing them toward better governance
4
Q
“trading in illusions” rodrik
A
- criticizes prevailing global economic integration agenda
- negative impact on development priorities of poor nations
- emphasis on trade and investment as ultimate measures of success has distorted policymakers’ priorities
- diverting resources from essential areas such as education, public health, and social cohesion
- focus on meeting admission requirements rather than addressing local needs
- total number of 71 standards for creating sound financial systems
- must spend $150 million to implement requirements under just 3 WTO agreements
- china, india, South Korea, Taiwan raised economic growth by liberalizing trade gradually over a period of decades
- integration is result of economic and social development
5
Q
“where sweatshops are a dream” kristoff
A
- challenges common perception of sweatshops as inherently exploitative
- argues that in some of the poorest countries, the real issue is not that sweatshops exploit too many people, but that they don’t exploit enough
- takes readers to garbage dump in a Cambodia where families live in dire conditions and a job in a sweatshop is seen as a dream and way out of poverty
- banning sweatshops would close off a route out of poverty for some
- labor standards and living wages can increase production cost - leading companies to choose more capital-intensive factories in better-off nations rather than labor-intensive factories in poorer countries
6
Q
“shopping for sweat” Silberstein
A
- highlights that Cambodian workers have not substantial benefited from garment industry growth
- reluctance of apparel buyers to pay higher wages
- sourcing departments of apparel firms focus on obtaining low prices making ti difficult for factories to raise wages without jeopardizing their business model
- pay at 33 cents an hour, lower than in many other countries
- despite western apparel companies having codes of conduct on paper, they put immense price pressure on their third world suppliers - making it challenging for factories to meet those codes
7
Q
“poor countries borrowed billions from china. they can’t pay it back” Abi-habib and bradsher
A
- after global economic fallout from COVID 19 worsens - Pakistan, Kyrgyzstan, Sri Lanka, other African nations are seeking debt restructuring, delayed repayments or outright forgiveness of billions of dollars in loans from china
- over past 2 decades, china has aggressively extended its global influence through a massive lending spree
- borrowing countries struggle to meet repayment obligations - if china forgives/restructures loans - risks straining own financial system and displeasing citizens already dealing with economic challenges
- demanding repayment could harm global reputation and diplomatic standing
- already question role in covid outbreak
higher interest rates and shorter maturities, requiring refinancing every couple years - willing to seize assets during sensitive time
- Debt trap diplomacy: knowingly lending more than countries can afford in order to seize strategic assets and expand military/economic footprint
8
Q
“A Hedge Fund, A country, and a big sailboat” kestenbaum, smith
A
- 2001: argentina faced severe economic crisis and defaulted on its debt
- decided to wipe state clean and declared suspension of payment on its government’s debt
- recession, riots, political instability
- group of hedge funds took Argentina to court in NY
- ruled in favor of holdouts, gave leverage and Argentina caved, agreeing to settle
- 14 year saga
- highlights lack of formal system for resolving sovereign debt disputes and challenges countries face when unable to meet financial obligations
9
Q
how does china’s currency move put pressure on US
A
- use of renminbi as economic weapon amid escalating trade tensions with US
- crossed psychologically important level of 7 to the dollar
- weaker currency benefits Chinese exporters making their goods more competitive in US market and undermining impact of US tariffs
- 7 = china’s readiness to allow its currency to depreciate
- mitigate impact of imposed tariffs
- comes with risks for china = may lead to capital outflows as investors and companies seek more stable assets
- past, china devalued currency led to capital flight - had to spend significant reserves to stabilize renminbi
- weaker currency increases bad affects on Chinese consumers, debt burden for companies that borrowed in dollars - raise cost of globally priced commodities like oil
10
Q
“do digital currencies pose a threat to sovereign currencies and central banks” Heller
A
- highlights unique features of digital currencies - emphasizing they are not issued by central banks/backed by governments
- settlement of payment obligation takes place on peer-to-peer basis without intermediation of trusted third party
- 51% attack: bitcoin transactions are validated if majority of miners agree that they are valid, possible for 51 percent of miners to launch coordinated attack
- if owner loses key associated with bitcoin wallet, loses access to asset
- $450 mil stolen from bitcoin exchange that was hacked
11
Q
“dollar diminution and us power” kirscHner
A
- impact of 2007-2008 global financial crisis on US power and international monetary order
- crisis has accelerated underlying trend that were already limiting US power - managing dollar as global currency
- crisis increased US vulnerabilities, reduced international political capacity, contributed to continuing rise of China
- delegitimization of US model of uninhibited finance
- shift in economic philosophy and growing divergence of ideas about organizing financial - challenging previously dominant US financial model
- new heterogeneity of ideas about finance, reduced US influence, increased disagreement among states over international monetary relations
12
Q
“choice facing china as its currency becomes more global” Irwin
A
- IMF decision to include Chinese renminbi in its elite group of currencies has granted china status of a global reserve currency
- provides stability and geopolitical influence
- US 2008 crisis: premier global reserve currency can strengthen during global turmoil, providing stability
- treasury bonds in demand during 2008 caused American interest rates to plummet
- influence in global politics, security
- US wielding economic sanctions as form of financial warfare : Russia, Iran, north Korea
- any bank that facilitates the transfer of money in violation of those sanctions risks being cut off from a global transfer of dollars - being cut off from much of global economy
- US faces limitations in managing its domestic economy due to exorbitant duty - American exporters at disadvantage
- requires sacrifice over certain economic tools
- US has control in some areas (economic sanctions) bc it gives up control in many others (exchange rate, capital flows, legal protections for foreign investors)
