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40 Cards in this Set
- Front
- Back
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What are the three main motivations?
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1. Honor, Status, Standing (Rousseau/Constructivism)
2. Political Power (Hobbes, Realism) 3. Wealth Maximization (Locke, Neo-liberal institutionalism) |
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What are the three forms of social action?
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1. Honor, status, standing forms Status groups (Social recognition from peers and inferiors)
2. political power forms political parties states ( overt or covert violence Relative gains) 3. wealth maximization forms CLASS (Accumulation Exchange Absolute Gains |
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what are the Three critical tasks for organizations of social power
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– Ideas (Concepts for control)
– Interests (political Coalitions) – Institutions (state Capacity) |
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What was the IPE condition post WWI
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UK too weak/ US divide
– No stable security system – Trade protection – No capital flows – No monetary system • Competing interests around economy • Biggest problem: no sense of common social purpose / ideas |
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Economic Issues post WWI
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• The US was too strong economically – Mass production
– Trade surpluses • Trade surpluses had to be recycled, but how? – US trade deficit? Not possible – US lending to the world? Not sustainable |
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WHY DID 1920s US POLICY FAIL?Q: Why didn't the US do more to maintain the "System"?
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Domestic politics is international politics and the reverse
Ideas (social purpose): old ideas until 1933 – Financial orthodoxy (balanced budget) + Trade protection Interests: no dominant faction in US – Wall St vs Main Street; MNCs vs domestic firms Institutions: little state capacity to support an active US overseas policy overseas until after WW II – No strong central bank (1936 - Tripartite Stabilization Accord) – Trade controlled by a protectionist Congress (1934 RTAA) – No intellectual lobbies (think tanks) thus few ideas about foreign policy – No military power to maintain security system |
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What went wrong: Economy?
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• Mass production required:
– Mass consumption (higher worker incomes) – Economic stability (=> more investment) – Political stability (=> more investment) • Investment => higher productivity => higher [mass] incomes => higher consumption => more investment A virtuous cycle • Instead: concentrated wealth, instability, rising debts for agriculture and Europe, rising protection |
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What were the lessons of the depression?
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– International lesson: don’t meddle with the market or it will collapse (ie fixed, freely exchangeable currencies + free trade)
– Domestic lesson: the state must regulate the market to g’tee employment and profits to assure political stability – The compromise: A liberal international economic structure if it was consistent with domestic full employment (thus capital controls + no free trade in agriculture). This = “embedded liberalism” |
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What were security lessons from WWII
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Security Lessons of WWII: • US had to remain engaged
– Occupy Germany and Japan (Shidehara => Yoshida; Stresemann => Adenauer) – Contain (NB not “rollback”) USSR – Rebuild Europe but really decolonize Europe’s empires this time • George Kennan: control global industry |
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What lessons (domestic and internationally) do we learn from depression
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nternational lessons:
• State interference with the international market caused catastrophe – High tariffs, bilateral trade deals, quantitative restrictions – Competitive currency devaluations – Capital controls – Imperial trading blocs • Have fixed, freely exchangeable currencies + free trade Domestic lessons: mess with the market! – Falling prices => rural debt crises and bank failures – Deflation => permanent high unemployment • Unemployment => fascism and/or social unrest – Deflation => no investment and low profits – Wartime production shows that a welfare state is possible (Beveridge Report in UK) • Thus the state must regulate the domestic market to g’tee employment and profits so as to assure political stability |
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What compromise did we learn from great depression?
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Have a liberal international economic structure but only if it was consistent with domestic full employment (thus capital controls + no free trade in agriculture). This = Ruggie’s “embedded liberalism”
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What is the mundell fleming trilemma and what period had what missing?
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fixed exchange rate, capital mobility and political autonomy
Gold standard = no monetary policy autonomy... no central banks; no policy to get full employment Bretton Woods (1950s-73) - no capital mobility.. No capital control in Europe, LDCs, Japan bit in US Today = no fixed exchange rate.. but many LDCs are "pegged" and monetary policy autonomy is weak, operates through exchange rate changes |
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In the three periods (gold standard 19th century, Bretton Woods, and Today) who are the winners and losers?
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19th cent= winners are creditors, losers debtors... created trade defic and local depression
Bretton Woods= debtors win, creditors lose... problem was trade deficit led to exchange rate crisis.. Today= creditors win(mobile factors but most labor loses... Trade deficit leads to unemployment |
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What is triffin's paradox
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theory that when a national currency also serves as an international reserve currency, there could be conflicts of interest between short-term domestic and long-term international economic objectives.
If the Domestic economy of the “key currency” country grows faster/slower than the International economy, which should the Central Bank target? – US + world, 1950s, 60s, today – Germany + EU under EMU / Euro – Central dilemma: Liquidity vs confidence • Exception: the world economy is an “optimal currency area” (rare) |
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What were the origins of BW 1944
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1936 Tripartite Accord (exchange rates agreed to be fixed in advance) => 1940s US-UK talks => big meeting at BW
• IDEAS & SOCIAL PURPOSE: – the two lessons from the Depression – Keynesian macro-economics • GOALS – Stable exchange rates (no currency crises) – Control over global finance (no debt crises) |
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OUTCOME of BRETTON WOODS
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Institutions creating exchange rate liberalism but capital movement controls
1. IMF: fixed exchange rates at $32 = 1 oz gold, and other parities vs $; 1.25% flexibility; “conditionality”; $8.8 bil capital; friendly to closed economies 2. IBRD (World Bank): $10 bil for European reconstruction. 3. BW allowed overvalued Euro currencies for social stability, at first (it meant they didn’t have to reduce real wages to reduce imports in order to avoid a trade deficit...) |
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Describe different BW phases
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phase 1 = • “Dollar Shortage”
• Unilateral US transfers – Marshall Plan – Military Aid – US Multinational firms invest overseas • Capital flight difficult phase 2 = greater internationalization of finance => declining ability to control investment => ↑confidence issues – EURODOLLAR MARKET EMERGES! |
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What's the problem with weakening dollar
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• Problem: if you make the dollar too weak, then LDC debtors can’t pay back their debt
• Result: Oscillation of $ exchange rate as finance and manufacturing fight it out |
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why can you peg exchange rate?
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• Election Argentina → incumbent president wants a loose monetary policy (inflation) →money supply goes up and right →saving rates goes up → interest rates goes down → capital flight out of Argentina to US →sell pesos and buy dollars on FX Market → downward pressure on exchange rate → central bank intervening in FX market… buy pesos and sell dollalrs on FX → reserves run out!... Argentine central bank can’t print dollars → peg is broken …
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What are the basic characterists of realism?
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-The state is a unitary, rational actor. Rational in that it is self-interested and does what is best for itself. Unitary means that the state acts as a unified force—domestic interest groups, individual leaders and international advocacy organizations like Amnesty International or Oxfam have no role in the theory. The state does what is best for itself regardless of who the President is—the President’s desires are irrelevant, because the only consideration ultimately is power-maximization at the state level.
-The international system is a Hobbesian, anarchic (self-help) world. There is no policeman. No one will help you if you get in trouble. |
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What is the security dilemma (which arises out of realist assumptions)?
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Imagine two states that border one another. They don’t know each other, and neither one has any weapons. They’ve never fought. State A decides that it wants to make itself more secure—it doesn’t want to be invaded—so it buys some guns and bombs. Strictly for defensive purposes. But State B doesn’t know the intentions of State A—it just sees guns and bombs over there and it can’t trust that State A will tell the truth about their intentions. So State B feels like it needs to buy some guns too, or it will be vulnerable to attack. It’s buying them only for defensive purposes because it was worried about what State A was doing. State A sees the new guns State B has bought and suddenly State B looks kind of aggressive—they just bought some guns! So State A buys more weapons. This is the idea behind arms races, and it helps underpin a lot of realist thinking.
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What are the basic characteristics of liberalism?
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-A focus on both economics and security.
-Domestic interest groups, companies, international organizations, etc. all have a place in the theory. They shape state decision-making and policy. Schwartz Chapter 8 is an example of this—U.S. international economic policy during the interwar and postwar periods are shaped by domestic interest groups like business lobbies and trade unions. -Cooperation is possible in the world system; institutions can help make cooperation more likely and more beneficial -Focus on absolute gains; the world is positive-sum or variable-sum. |
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Okay, so what about constructivism
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Constructivists argue that the world and the international system are socially constructed—that they are dominated by social norms and mores. Much in the same way that fiat/paper money only has value because we all believe it has value.
constructivists say that we have created anarchy in the world system and now that has consequences for the way politics works, but it was not inevitable in the way that realists assume. |
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Describe the backround to the EU
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Use term EC from 1957 – 1992 and EU 1993 on… Treaty of Rome created EC 1957 focus on eliminating trade barriers… 1999 11 EU members formed an EMU (europe’s economic and monetary union) and agreed to adopt euro… Tried in 1970 to adopt Werner Snake plan but that failed because of unholy trinity… after snake EC launched EMS which had ERM and a ECU… problem EMS is that it only had partial monetaryry union… so 1989 Delors Committee proposed process towards monetary union which was included in 1992 Maastricht Treaty (said coordination MP realignmtn currency exchange rates, creation of a single currency), hard to join treaty… despite 11 joined EMU and kabam countries fucked cause they can’t change exchange rate
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What policy is left out or included in 1980+
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o Don’t have fixed exchange rates
o DO have capital mobility most countries, many instruments o Do have monetary policy autonomy but weak, operates through exchange rates… a lot of currencies peg on each other.. o High unemployment → central bank lowers interest rates → capital outflows → lower exchange rate → more exports → more jobs in tradd sector |
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What were the two deficits European integration contains?
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Democratic deficit: Unified state power without unified mechanisms for accountability?
The Fiscal deficit (not “a” fiscal deficit) Total EU budget = 2% of European GDP vs US @ 20% +/- |
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What efforts were there to stabilize FX rates in Europe
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– 1972 “Snake” – 2.25% bands
– 1979 European Monetary System – “ECU” & Exchange Rate Mechanism (ERM) – 1992 ERM crisis – UK, Italy, Sweden, Spain – 1998 ERM II – permanently fixed FX => Euro |
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Describe what mundell fleming model represents Euro integration (hint theres two)
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internally: 1 (gold standard)... no monetary autonomy
externally: 3...floating fx rates, capital mobility, monetary policy via traded sector |
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What needs to happen in order for Euro to run an OCA
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– Essentially open financial markets (Yes)
– Essentially open goods markets (Mostly, but...) – High internal labor mobility (No) – High fiscal transfers (No) – And – same ideas about proper policy • Result: regional instabilities that are magnified by national political structures |
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according to the TA, what are the problems with the EURO
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o Different economies
o No bail out clause o Not much political power or fiscal union- VERY IMPORTANT • But they do have monetary union o Hoped monetary union would push them into fiscal union o Soros says euro is a patently flawed concept… EU set limited objectives and firm deadlines… knowing full well it would require further steps o This was foreseen |
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What is chain migration and how does it improve those immigrants?
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explains the direction and concentration of migration flows
Moving costs money: “transaction costs” explains the how of migration, and some why • Transaction costs – the costs of ‘doing business’ – Transportation – Language barriers – Cultural barriers – Finding a job • “Chains” lower transaction costs but concentrate immigrants and thus conflicts |
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What is meant by the phrase puppies for yuppies
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young urban professional" or "young upwardly mobile professional")[1][2] is a term that refers to a member of the upper middle class or upper class in their 20s or 30s.[3] It first came into use in the early-1980s and largely faded from American popular culture in the late-1980s, due to the 1987 stock market crash and the early 1990s recession.
Puppie is a poor urban professional (a.k.a. welfie and cheapie). |
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explain immigration in 1950s and 1960s
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Migration 1 = Labor shortages emerge as assembly line production diffuses through the economy
– This makes immigration more politically acceptable Migration 2 =Male “Guest-workers” as the typical phenomenon Women to EPZs = Farmer Dad sends daughter to city to earn $$ • Some sons go off to be managers • Result: 70-80% of EPZ workers are female export processing zone |
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why not free trade everywhere? such as lobbying for free trade or for protection
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best illustrated with prisoner's dilemma... public goods are non excludable and non rival... everyone things that, my presence is not likely to make the difference... why you don't see lobbying efforts for free trade in this country
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What is the Bretton Woods Valley
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o 1960s percent and total immigrants drop off
o after, law changes for families o and yuppie puppies immigration |
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What is chain migration and how does it improve those immigrants?
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explains the direction and concentration of migration flows
Moving costs money: “transaction costs” explains the how of migration, and some why • Transaction costs – the costs of ‘doing business’ – Transportation – Language barriers – Cultural barriers – Finding a job • “Chains” lower transaction costs but concentrate immigrants and thus conflicts |
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What is meant by the phrase puppies for yuppies
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young urban professional" or "young upwardly mobile professional")[1][2] is a term that refers to a member of the upper middle class or upper class in their 20s or 30s.[3] It first came into use in the early-1980s and largely faded from American popular culture in the late-1980s, due to the 1987 stock market crash and the early 1990s recession.
Puppie is a poor urban professional (a.k.a. welfie and cheapie). |
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explain immigration in 1950s and 1960s
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Migration 1 = Labor shortages emerge as assembly line production diffuses through the economy
– This makes immigration more politically acceptable Migration 2 =Male “Guest-workers” as the typical phenomenon Women to EPZs = Farmer Dad sends daughter to city to earn $$ • Some sons go off to be managers • Result: 70-80% of EPZ workers are female export processing zone |
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what are push and pull factors of migration?
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o Pull factors
• Higher wages • Family unification • Low transaction cost • Job availability / land o Push Factors • War/Civil Conflicts • Famine/Natural Disaster/Disease • Lack of available land •Persecution/Oppression/Dictatorship |
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WTO vs Gatt What changed?
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• GATT: manufactures only, slow process for dispute resolution (unanimity)
• WTO: – Agriculture, textiles and garments “unquota’d” – Service trade freed (but on bilateral basis) – Government procurement (public sector capital goods – except aircraft) opened up – Trade related investment (mostly services) legal – Intellectual Property Rights (new economy firms) – Quicker, tougher dispute resolution (majority) |
