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Study Guide (8-15)

by mcretsinger@hotmail.com, Nov. 2007

Subjects: fall-2007 good tags

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	What caused the national financial crises faced by many developing countries in the late 1990s? What countries were affected? How were the crises solved? After opening protective barriers, speculation by investors caused a panic of Asian currencies being sold off. East Asia especially Korea, Thailand, Malaysia and Indonesia were the countries affected. International financial organizations and creditor governments gave 120B to Asian nations, Indonesia, Korea, and Thailand to solve the crisis.	What caused the national financial crises faced by many developing countries in the late 1990s? What countries were affected? How were the crises solved? (385-391)
	When and why did international financial markets gain acceptance by almost every government in the world? (394-400) Deregulation, Privatization and foreign investment by multi-national Corporation soared in the early 1970’s to early 1980’s. Technological innovation such as massive computer power and inexpensive telecommunication made it easier and faster to move money and less government control.	When and why did international financial markets gain acceptance by almost every government in the world?
	How does Frieden explain the victory of market-oriented orthodoxy (or monetarism) over Keynesianism? Resulted from powerful economic interests pushing for economic liberation and integration. Technical progress, macroeconomic trends, the explosion of international finance, and the changing composition of business reinforced those who wanted further economic integration. The world moved quickly toward ever more impressive levels of cross-border trade, investment and finance.	How does Frieden explain the victory of market-oriented orthodoxy (or monetarism) over Keynesianism?
	How did George Soros represent “both the achievements and the anxieties of international finance”? He epitomized global markets as he plowed billions of dollars trying to influence governments around the world. He bet billions of against the British government and won. In 1979 he began to spend his money to help undermine Communists governments in Eastern Europe. He started small, buying a few hundred photocopiers for Hungarian institutions to circumvent prohibitions on forbidden literature. During the 1980’s he spent hundreds of millions of dollars to support dissidents in Central and Eastern Europe and the Soviet Union; in 1990 how founded a new Central European University, based in Prague and Budapest. Soros financial and philanthropic activities put him in a unique position to encourage the development of capitalism and democracy in the former Communist countries.	How did George Soros represent “both the achievements and the anxieties of international finance”?
	How did Harry Sonneborn turn McDonald’s into an immensely profitable business? What was the underlying strength of the McDonald’s model? 1956-Harry Sonneborn introduces the company to the real estate business by creating a subsidiary called “The Franchise Realty Corporation” The McDonald’s corporation’s business model is slightly different from that of most food chains. In addition to ordinary franchise fees, supplies, and percentage of sales, McDonald’s also collects rent, partially linked to sales. As a condition of the franchise agreement, the corporation owns the property in which most McDonald’s franchises are located.	How did Harry Sonneborn turn McDonald’s into an immensely profitable business? What was the underlying strength of the McDonald’s model?
	During its rapid expansion in the 1970s and 1980s, how was Wal-Mart able to keep costs and prices so low? Walton was able to keep prices low and still turn a profit through sales volume as well as an uncommon marketing strategy. Wal-mart’s advertising costs generally amounted to 1/3 that of other discount chains; most competitor’s were putting on sales and running from 50-100 advertising circulars per year, but Wal-mart was able to keep its prices low and only ran 12 promotions a year.	During its rapid expansion in the 1970s and 1980s, how was Wal-Mart able to keep costs and prices so low?
	How did Dell’s business strategy differ from other computer manufacturers? They do only direct sales online or via telephone. As a direct seller, Dell’s customers were end users of his products which meant that he averted the conflict that results from customers and end users having different needs. He is able to customize your needs.	How did Dell’s business strategy differ from other computer manufacturers?
	As innovative entrepreneurs, what do Ray Kroc, Sam Walton, and Michael Dell all have in common? What made them successful in shaping the service economy? Clearly their success was made thru unconventional thinking. o Ray Kroc use franchise concepts to open new outlets and expand the business. o Sam Walton negotiated extended credit terms for all his goods when he got started. o Michael Dell negotiated with suppliers to ensure he only paid for components after getting paid for his PCs.	As innovative entrepreneurs, what do Ray Kroc, Sam Walton, and Michael Dell all have in common? What made them successful in shaping the service economy?
	How does the Wal-Mart model of capitalism differ from the earlier model of industrial capitalism in the United States? How has Wal-Mart become so profitable? Manufactures like GE and GM used to be the most powerful because they decided what to make and tried to get retailers to buy it and sell it for them (Push Strategy) Sam Walton’s strategy is “keep costs as low as possible”: buy cheap, sell for less than any other guy and make your profit on high volume and fast turnover. The barcode (inventory control) is Wal-mart’s most valuable tool. o It allows them to know the sales history, inventory status, and supply chain management which allows Wal-mart to stock the right mix of products for each store which many retailers struggle with (Pull Strategy)	How does the Wal-Mart model of capitalism differ from the earlier model of industrial capitalism in the United States? How has Wal-Mart become so profitable?
	What do the concepts “push production” and “pull production” mean? Push – Manufacturers decide what they will produce, then try to get retailers to buy it and sell it for them. Pull – Involves retailers deciding what is being sold. They collect information on what’s being sold then they inform manufacturers what to produce, and when, based on sales.	What do the concepts “push production” and “pull production” mean?
	What factors have made China such a low-cost producer of consumer goods? Why haven’t companies such as Rubbermaid, or manufacturing plants such as Thomson in Circleville, OH, been able to compete with the Chinese? o The backbone of China’s new industrial might is the flood of young Chinese pouring into this industrial province. Teaming up with more than 40M migrant workers, they work and live at the factories making $100 a month or .50 an hour o Artificial devaluation of the yen by the Chinese government Companies such as Rubbermaid, or manufacturing plants such as Thomson on Circleville, OH. are unable to compete with China because the Chinese system has built in advantages that no one in the world has. There currency is undervalued by an estimated 40% and the workers have no rights and are wrongfully treated. The government provides subsidies to Chinese producers at preferential interest rates that may not even have to be re-paid, it’s a rigged system.	What factors have made China such a low-cost producer of consumer goods? Why haven’t companies such as Rubbermaid, or manufacturing plants such as Thomson in Circleville, OH, been able to compete with the Chinese?
	According to Womack, et al, what was the “key to mass production”? What were the strengths and weaknesses of the manufacturing system created by Henry Ford? How did Alfred Sloan and General Motors improve on Ford’s system? The key to mass production was the complete and consistent interchangeability of parts and the simplicity of assembling and attaching them to each other. Strengths o Mass production and mass consumption Weakness o Organizational Problems. He could never devise the organization and management systems he needed to manage effectively the total systems of factories, engineering, operations and marketing systems that mass production called for. Decentralization of global operations	According to Womack, et al, what was the “key to mass production” (24-25)? What were the strengths and weaknesses of the manufacturing system created by Henry Ford (28-37)? How did Alfred Sloan and General Motors improve on Ford’s system? (37-42)
	How did Toyota’s “lean production” system differ from “Fordist” or “mass" production” system in terms of the organization of work, the engineering of autos, relationships with suppliers, and relationships with consumers? The primary goal of the mass production system is to minimize vehicle cost by keeping each machine in the assembly line running at maximum production. The mass production system focuses on a one-dimensional objective, which is the optimization of cost. This one-dimensional focus caused defects to be left in cars as they passed down the assembly line. The Toyota lean production system on the other hand aims to achieve a multi-dimensioned standard of perfection that considers criteria other than cost (such as customer requirements, waste minimization, quality, etc). The lean production system prevents sub-optimization and promotes continuous improvement	How did Toyota’s “lean production” system differ from “Fordist” or “mass production” system in terms of the organization of work, the engineering of autos, relationships with suppliers, and relationships with consumers?
	Why did ISI not work well in many less-developed countries in Asia and Africa ? This policy, known as import-substituting industrialization (ISI) aimed to substitute industrial production for goods that had previously been imported. The principle method was to make domestic manufacturing more profitable and it worked. The less-developed countries in Asia and Africa had little manufacturing and needed even greater protection and subsidies to incubate new industries. In the nations, capitalist were weak and needed more strenuous involvement by the government. Because of this lack of power and low level of development, it was easy for a tiny elite to distort policy in its favor.	When and why did major Latin American nations move to import-substitution industrialization (ISI) (pp. 302-306)? Why did ISI not work well in many less-developed countries in Asia and Africa
	When and where did export-oriented industrialization (EOI) emerge as a development strategy? Would you call this a “free-market” strategy? Why or why not? When: Middle 1960’s Where: South Korea, Singapore, and the British colony of Hong Kong. Those that did (Singapore, Hong Kong, Taiwan) also wholeheartedly embraced a free-market economy simply because the U.S guaranteed them a spot in the market which meant that they did not have to worry about being able to export, but it did not close the market to the rest of the world for exports. They simply assured that their products were guaranteed exportation in the U.S. no matter who else would be exporting	When and where did export-oriented industrialization (EOI) emerge as a development strategy? Would you call this a “free-market” strategy? Why or why not
	How was the General Motors Corporation (GM) initially organized? What made GM cars so popular? Billy Durant started GM and set out to buy all of the small car companies and merge them into one big company. Alfred P. Sloan took over in 1920 and introduced the annual model change making consumers eager to purchase new models. Sloan hired Harley Earl to design these new cars. He customized and designed cars for celebrities in Hollywood. Harley Earl would define GM cars for 3 decades and designed the look of American Prosperity.	How was the General Motors Corporation (GM) initially organized? What made GM cars so popular?
	How did GM run into trouble in the 1970s and 1980s? What was this trouble, and how did GM’s management try to turn the company around? In the 1970’s the world of GM was rapidly changing. Events causing change were: o The Arab Oil Embargo o The Energy Crisis o Gasoline lines o Japanese small car invasion Roger Smith took over GM in 1981. His strategy was to invest heavily on robots and automation to leap frog the Japanese. His plan backfired. The results were the robots were malfunctioning and performing incorrectly. They were not building cars but attacking each other and neighboring fixtures. It was a digital disaster.	How did GM run into trouble in the 1970s and 1980s? What was this trouble, and how did GM’s management try to turn the company around
	Was the closing of plants in Michigan and their relocation to lower-wage states and countries a good long-term strategy for GM? Did it address the major problems with the company? Closing the plants in Michigan was not a good strategy and it did not address GM’s problems. Due to the significant role GM play in the U.S., the strikes and temporary idling of many plants reflected cyclical changes in the global economy.	Was the closing of plants in Michigan and their relocation to lower-wage states and countries a good long-term strategy for GM? Did it address the major problems with the company?
	This documentary was made in 1993. Do you know what happened to GM after it was made? Was the gloomy assessment of the company’s prospects by this documentary warranted? Federal Government charged them with criminal conspiracy and fined the company $5,000. The key officials were fined a magnetic sum of only $1.00. Perhaps in 20years they will be able to rebuild at least part of the electronic trolly system at a cost of $ 50 billion. This is the legacy GM is left with.	This documentary was made in 1993. Do you know what happened to GM after it was made? Was the gloomy assessment of the company’s prospects by this documentary warranted?
	How did the energy path of the United States differ from that of Great Britain in the 19th century? Britain mainly used coal in the 19th century. Britain was the main consumer of coal. America’s energy path differed greatly from that of GB because of its abundant forests and numerous rivers, the U.S relied primarily on wood and water power for early industrial development.	How did the energy path of the United States differ from that of Great Britain in the 19th century?
	How did John D. Rockefeller achieve global dominance in the petroleum industry? How, when, and where was that position challenged? Rockefeller began purchasing crude oil in Pennsylvania, Ohio and West Virginia and began refining it under the name of Standard Oil. Soon he had the largest refining operation in the country and waas absorbing his competitors. The first threat emerged from the Russian empire, where oil was discovered in 1871 in Baku, a region on the Ashpheron Pennisula in teh Caspian Sea established dominance in production and refining. He soon started exporting to Europe. At the same time, oil production in the Dutch East Indies (now Indonesia) was growing at a rapid pace under the commercial control of the Royal Dutch company, which offered still another challenge to Standard’s International dominance	How did John D. Rockefeller achieve global dominance in the petroleum industry? How, when, and where was that position challenged?
	How did the use of petroleum transform: a) agriculture; b) transportation; and c) warfare? (pp. 63-69) Agriculture: o They could produce chemical fertilizer faster o Tractors and other motorized equipment such as Combines used instead of mules, horses and cows. Transportation: o Petroleum refiners transform crude oil into petroleum products such as petrol and diesel which in turn is used to fuel automobiles, airplanes and other means of transportation Warfare: o At the beginning of the 20th century, wars were being fought with mounted cavalry, foot soldiers, horse-drawn artillery, and coal fired warships. Warships and especially submarines were converted to oil or diesel power, thus giving them a longer range and greater speed and tanks and motorized troop carriers began to revolutionize ground warfare.	How did the use of petroleum transform: a) agriculture; b) transportation; and c) warfare?
	What were the key events or turning points in the geopolitics of oil in the global economy, 1950-1980? o There was an excess of supply over demand in the international market that producers found it difficult to keep prices from dropping o Meanwhile the “Seven Sisters” also maintained strict limits on oil production in order to stabilize prices, but as the oil industry expanded many independent oil companies refused to limit production o In 1959, a further element of instability entered the mix with the discovery in Libya. Libyan oil threatened the ability of the major oil companies to limit production and to prevent falling prices. o Colonel Mummar al-Qaddafi was unwilling to abide by the agreements between OPEC and the major oil companies. He soon nationalized most of the oil wells in Libya and took control of pricing.	What were the key events or turning points in the geopolitics of oil in the global economy, 1950-1980?
	Why does Heinberg claim the 1973-2001 period “represented a pivotal but lost opportunity” What does he see as the alarming trend in oil? Is the world about to run out? The oil embargo of 1973 and the global economic turmoil accompanying the Iranian revolution made it clear how dependent the world economy had become upon petroleum, and how dependant the US had become upon oil imports. Moreover, everyone knows that oil was a resource that was nonrenewable and therefore limited in supply. Being that it is coming down to war for oil that is a good sign that we have undoubtedly reached our peak	Why does Heinberg claim the 1973-2001 period “represented a pivotal but lost opportunity” What does he see as the alarming trend in oil? Is the world about to run out?
	How did the United States beat out Great Britain in establishing and solidifying the “special relationship” with Saudi Arabia? What were the key events? o Meeting between FDR and Ibn Saud on the USS Quincy after Yalta Summit – Legendary “oil for security” arrangement o Roosevelt has gift for Ibn Saud, a spare wheelchair, an airliner, a DC3. Saud rejected the Rolls Royce from Great Britain. The British failed to switch the steering wheel, the chauffer on right and Ibn Saud on the left.	How did the United States beat out Great Britain in establishing and solidifying the “special relationship” with Saudi Arabia? What were the key events?
	What was the effect of the “oil system” established in the 1950s? Who did it work for,and against? 50/50 profit sharing granted by Aramco and Ibn Saud and Foreign tax credit (Golden Gimmick) o Oil Companies - System provided stable and cheap supplies of oil; immensely profitable foreign concessions and oil production. o Western consumers – System ushered in long era of cheap oil o Iran – System ushered in 20 years of corrupt dictatorship and rising nationalism o Oil exporters in general – System heralded a gradual shift in balance of power from companies to host countries	What was the effect of the “oil system” established in the 1950s? Who did it work for, and against?
	What explains the rise in crude oil prices in the last 3-5 years? Continued low surplus production capacity, weak petroleum inventories, and strong demand worldwide have all contributed to recent high crude oil prices.	What explains the rise in crude oil prices in the last 3-5 years?
	What are the arguments against the theory of Peak Oil? Do you find them persuasive? What are the possible solutions to the problem of Peak Oil? Peak Oil is a theory about declining world oil production. The main arguments against peak oil are as follows: 1)Reserves have been growing. 2)Current problems, like those of the 1970s, are political in nature. Political problems in Iraq, Iran, Venezuela, and Nigeria may affect prices, but they do not address long-term trends in discoveries. 3) There have been repeated claims in the past that oil is running out, most recently in the 1970s, and none have come to pass. Each time, critics claim, price signals elicited new exploration and discoveries. While no one piece of evidence is conclusive, I find the overall picture here to be suggestive that oil production is close to its peak value and is not likely to increase too much more. Possible solutions to the problem are alternative resources such as ethonol-related demand for agricultural commodoties, fossil fuels, bio-fuels, wind power, hydro power, solar energy, electricity, Plug-In Hybrids, and the Grid.	What does Peak Oil mean? What are the arguments against the theory of Peak Oil? Do you find them persuasive? What are the possible solutions to the problem of Peak Oil?
	What were the keys to South Korea’s economic transformation after 1960? What role did government policy play? (pp. 413-416, 421-422) The country relied heavily on Foreign Direct Investment and on aid from Americans. Integration into the national economy and production for export. A new democratic system was being consolidated and a popularly elected president shared power with a legislature controlled by the oppositions. The government gave cheap loans and tax breaks to exporters. They kept a weak currency to make Korean and Taiwanese products cheap. They continued to protect their own industries.	What were the keys to South Korea’s economic transformation after 1960? What role did government policy play? (pp. 413-416, 421-422)
	How did the industrialization model pursued by East Asian nations differ from import substitution industrialization? Promoted and subsidized manufacturing for foreign markets. Export oriented industry meant opening to the world economy, drawing in foreign investment and loans, producing for foreign markets. Wholehearted integration into the global division of labor.	How did the industrialization model pursued by East Asian nations differ from import substitution industrialization? (pp. 419-423).
	Other than East Asia, what other parts of the world succeeded or began to “catch up” to the developed world in the “new international division of labor”? How and why? (pp.426-434) The central Europeans (and perhaps the Balts) began to catch up with Western Europe in several ways. o One way was political, with the consolidation of democracy and of European-style social welfare states. o Another was institutional, as the legal and political ground work was laid out for capitalism. Financial systems, commercial networks, and regulatory administrations all developed to promote the new economies. These countries entered the economic orbit of the EU. By the end of he century Central Europe was crucial to the European economy as the principal local supplier of low-cost, high skilled labor.	Other than East Asia, what other parts of the world succeeded or began to “catch up” to the developed world in the “new international division of labor”? How and why? (pp.426-434)
	Which parts of the world “fell behind” in the new international division of labor? How does Frieden explain these “developmental disasters”? (pp. 435-456) Afghanistan, Somalia, Liberia, Yemen, and Sierra Leone fell for extended periods into something approaching anarchy, with no established government and an atmosphere of terror and lawlessness, a breakdown of the existing social order with no replacement in sight. Frieden describes it as: there was no established government and an atmosphere of terror and lawlessness. A breakdown of existing social order with no replacement in sight, slow economic growth and genocide of Rwanda. External events, failures of government produced collapses.	Which parts of the world “fell behind” in the new international division of labor? How does Frieden explain these “developmental disasters”? (pp. 435-456)
	What is the “Mundell Dilemma”? How did the strains in international financial markets suggest more basic problems with globalization? What possible solutions are there to alleviating the tensions between global capitalism and global politics? It’s a monetary policy dilemma. There was a crisis of economic governance caused by the mismatched of international financial markets and national regulation and control. The system’s supporters argued that the solution was to bring politics in line with markets. Global markets required global governance-if not global government, at least global economic institutions to all the world economy to function smoothly.	What is the “Mundell Dilemma”? (pp. 460-461) How did the strains in international financial markets suggest more basic problems with globalization? (pp. 463-464) What possible solutions are there to alleviating the tensions between global capitalism and global politics? (pp. 470-472)
	What is a maquiladora? When were they created? How many are there? A Mexican manufacturing export plant. They were created in 1964. There are (4) maquildora's	What is a maquiladora? When were they created? How many are there?
	Who works in the maquiladoras? How are they treated? Approximately how much do they make? Mexican and non-mexican personnel. They make minimum wage determined by the Minimum Wage Commission.	Who works in the maquiladoras? How are they treated? Approximately how much do they make?
	How do the workers in the film feel about their jobs in the Tijuana maquiladoras? Why did they migrate to the border? Why do they stay there? o Suddenly Mexican workers feel that China is their fiercest competitor, sucking their jobs east. They migrate tothe border because they are paid better wages and don't have the means to move.	How do the workers in the film feel about their jobs in the Tijuana maquiladoras? Why did they migrate to the border? Why do they stay there?
	What have been some of the effects of maquiladoras on the local environment? Why don’t workers in these communities flee the conditions they face in their communities? What is the alternative strategy some have attempted to follow? The effects of the physical environment on these workers has also been an area of concern, namely, exposure to toxic chemicals, including lead, sulfuric acid that drain in the rivers, poor ventilation and lighting, excessive noise and heat, vibrations and unsafe machinery. The factories are not regulated by OSHA and don not follow environmental guidelines. Hazardous particulates in the air cause breathing problems and other internal abnormalities similar to the Chernobyl disaster.	What have been some of the effects of maquiladoras on the local environment? Why don’t workers in these communities flee the conditions they face in their communities? What is the alternative strategy some have attempted to follow?
	Who is to blame for violations of Mexican labor and environmental laws? The Mexican government or the multinationals? Why? Both the Mexican government and the MNC’s are responsible for labor laws and relations and if they violate there policies then legal action by the employee is set forth as probable cause for law suit is considered.	Who is to blame for violations of Mexican labor and environmental laws? The Mexican government or the multinationals? Why?
	How would you assess the victories won by local workers, such as in the Sanyo severance case or Chilpancingo toxic waste cleanup? Do these victories provide hope for workers in the border region? I believe the victories provide hope for future workers knowing that the legal action they took superseded the company. These MNC’s must have company policies put into place and follow there policy’s. The victory does provide hope knowing that the company cannot get away with abandoning there employees. More workers would be willing to work for them if the company demonstrates a good place of solvency. No one wants to work for a company and not be compensated. It was a similar situation in the China Blue film.	How would you assess the victories won by local workers, such as in the Sanyo severance case or Chilpancingo toxic waste cleanup? Do these victories provide hope for workers in the border region?
	What were the keys to South Korea’s economic transformation after 1960? What role did government policy play? (pp. 413-416, 421-422) The country relied heavily on Foreign Direct Investment and on aid from Americans. Integration into the national economy and production for export. A new democratic system was being consolidated and a popularly elected president shared power with a legislature controlled by the oppositions. The government gave cheap loans and tax breaks to exporters. They kept a weak currency to make Korean and Taiwanese products cheap. They continued to protect their own industries.	What were the keys to South Korea’s economic transformation after 1960? What role did government policy play? (pp. 413-416, 421-422)

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