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31 Cards in this Set

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What are the kinds of capitalism?
• The kinds of capitalism are state-guided (government plays a central role), oligarchic oriented toward the interests of a few players), big-firm (giant enterprises predominate), and entrepreneurial (small innovative firms play a more central role).
What is meant by market logic, materialism, individualism and rational utility maximization?
• Market logic is a form of social organization premised on materialism, individualism, and rational utility-maximization. Materialism is the emphasis of the provision and consumption of goods and services as a social goal and metric of success. Individualism refers to the desirability or practical necessity of organizing a society in which individual’s efforts are geared primarily toward their personal self-interests. Rational utility-maximization refers to the increasing use of material cost-benefit analysis as a means of making practical social decisions.
Why did the post war prosperity come to an end?
• The new mixed capitalist system was too complex and expensive to manage. The non-zero-sum relationship between international integration and domestic benefit had broken down. There were too many dollars in circulation.
What four explanations are offered for the relative rise of East Asia?
• 1) predisposition to work and entrepreneurship, greater savings
• 2) sought an export-led development in contrast with “import substitution” policies
• 3) role of the state, created effective policies and promoted them successfully
• 4) more effective state involving trade, specific state policies to support higher value-added industries which could create new economic niches
What is comparative advantage?
• Comparative advantage is when a country or a different area has some attribute that makes it more favorable. For example, China has cheaper labor than the United States so China has a comparative advantage there.
What is GATT?
• GATT is the General Agreement on Tariffs and Trade. It was created in 1947 and sought to dismantle the institutional and psychological legacies of the inter-war years. This helped lower tariffs and increase flows of merchandise between countries.
How does globalization lead to a space-time compression?
• Globalization has led to many technological advances. This includes the Internet and faster air and surface transport. Trade has grown faster than the economy.
How has the geographic distribution of manufacturing changed in recent decades?
• Manufacturing has been leaving developed countries due to cheaper labor and transport costs and looser business regulations.
What is the network theory of trade?
• The countries at the top of the heap at the beginning of the latest stage of globalization remained the ones that participated in the most profitable stages of manufacture, while those on the bottom did the literally dirtier and cheaper work. The countries at the top of the network had a more diversified trade portfolio in terms of products and partners so they can deal with temporary fluctuations better.
What is meant by a resource curse?
• The resource curse means a country has valuable natural resources with both an authoritarian regime and low growth.
What is NAFTA?
• NAFTA is the North America Free Trade Agreement and it includes the United States, Canada, and Mexico. This helped make trade easier between these countries.
How is agricultural production subsidized?
• Agricultural production is subsidized by a powerful minority within a country, specifically political elites.
What is the wisdom of the crowds?
• Wisdom of the crowds describes when a diverse, independent, and decentralized collective will tend to make better decisions than individuals whose decision-making is plagued by preconceptions, limited information, and idiosyncratic irrationalities.
How does the US dollar have a special role in the global economy?
• The US dollar acts as the world’s money and is the instrument in which the world holds most of its financial wealth. America underwrites the international financial system with its dollar.
What is the Asian reserve accumulation model?
• The Asian reserve accumulation model is when Asian countries use their trade surpluses to absorb the debt upon which America relies, which helps keep their currencies low and exports competitive. Asian countries make the United States dependent on their purchases of its T-bills.
Who owns US government debt?
• China owns nearly one third of US government debt.
What led to the debt explosion of poorer countries in the 70s and 80s?
• Banks, facing the demands for interest from new international depositors, also encouraged borrowing, particularly among those countries with rich resource veins only needing extra investments to join in the boom.
How has the definition of business changed?
• In the 1960s, corporations were consolidating as conglomerates of multiple businesses in multiple industries. Whereas in earlier phases of capitalism’s development, a business was understood as an agglomeration of resources , processes, and market power, designed to provide the economy with a particular product, the era if diversified mergers saw a redefinition in terms of financial concepts: return on investment, price-to-equity ratios, and other notions based on present and predicted cash flows. Businesses increasingly grew by acquiring “profit centers” rather than cultivating lager and more competitive enterprises through internal growth.
How were financial markets deregulated?
• In the 1990s boom, American firms capitalized on a system that depended on for-profit private auditors that were paid by the very firms they were meant to police, to distort financial reports to attract capital.
How is risk socialized and what is leverage?
• Risk brings about innovation, and innovation is often argued to be a principal strength of the capitalist system, enabling society to shed obsolete enterprises, products, or practices in favor of the new-and-improved. Leverage allows investors to make bets with much more money than they actually have.
What is market segmentation?
• Market segmentation is when producers increasingly engage in the practice of breaking down mass markets into smaller sub-groups according to product preferences, and offering slight variations in product features, images, prices, etc. across these different groups.
How can consumption be affected by the movement of exchange rates?
• Purchasing power plays a role here. If the exchange rate goes up, a person’s money has less purchasing power than before. Example, 8 yen for 1 dollar becomes 16 yen for 1 dollar. The person can only buy half as much.
What is entailed in managing a global brand?
• A firm focused on brand management will outsource the physical production and distribution of products, and instead concentrate on product design, promotional campaigns, customer relations, and supply chain management, with the ultimate goal of cultivating consumer demand that is willing to pay a premium for products bearing one’s brand.
What symbolic role can consumption have?
• The symbolic role consumption can have is signaling identity. Capitalism has replaced complex, personally rooted means of forging status and identity with the more impersonal capacity to consume products.
What is world governance and how do world institutions relate to national
governments? Pay attention to the different forms of isomorphism?
• There is no global governance. Capitalism is practiced globally, but ruled nationally. Despite significant convergence on some aspects of corporate governance and even more technical agreements on accounting rules and the like, there are no consistent and uniform rules presiding over global interactions. Governments exercise sovereign power over their jurisdictions, which is to say that they are the ultimate legal authorities within their countries. Some world institutions are the UN, OECD, WB, WTO, IMF, G7, and BIS. Governments make polices, which sometimes following these institutions’ dictates. Types of isomorphism are institutional, rational, coercive, mimetic, and normative.
What is interventionism?
• Interventionism is a means of economic management in which governments intervened in private economic activity with the intent of pushing the economy toward state-defined goals. Interventionism would take many concrete forms, including Keynesian-inspired macroeconomic management, more stringent and actively enforced government regulation, major expansions of the welfare state, the provision of new government-backed economic insurances, and increased public sector employment, investment, and goods and service provision.
Questions about inequality: why should we be concerned or unconcerned with
inequality? How can the world be described as becoming both more and less unequal? What role has globalization played in the dynamics of inequality? What is the Gini coefficient?
• We should be concerned or unconcerned with inequality because we want to know how much of it is acceptable and to what extent is it a tolerable product of global integration. Inequality denotes unevenness in the distribution of resources, wealth, or opportunities. Inequality is different from poverty. Within countries there is more inequality, but between countries there is less inequality. Globalization has helped create this difference in inequality within and between countries. An example is manufacturing jobs. Less in US, more in China. More people in China has money to buy basic goods than before. The Gini coefficient is a statistical measure of income or wealth distribution. It is essentially a ration with values between 0 and 1. The value 0 means a perfect equality where everyone has the same and 1 is perfect inequality.
What challenges do we face in regards to water and the disposal of waste?
• The challenge we face in regards to water is our water resources may become contaminated. Low-lying regions may become submerged. Precipitation may be more variable. Marine life may be affected. We are running out of places to dispose of our waste, both the landfill type and nuclear type.
What is the tragedy of the commons?
• The tragedy of the commons is when one person takes advantage of something, other people begin to do the same, and eventually no one benefits anymore. That something could have benefited them for a longer period of time.
What 3 critical transformations do they call for?
• The first transformation needs to involve some form of pricing and cost management for so-called externalities. The second transformation calls for incentives for either institutions or people within them to take into account medium- to long-term consequences of the environment. The third transformation is to shift from the assumption of non-zero-sum games to ones where enjoyment of a good or service by one person might involve the loss of that possibility to another.
What do they mean by complexity?
• By complexity they mean how the entire economy is like a domino-effect. One problem may end up causing worldwide and unprecedented problems. There is no way of knowing how everything will turn out if something goes wrong.