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Keynes:

Multiplication

of networks and

activities

 Expansion

and stretching of social

relations



Intensification and acceleration of

social

exchanges and activities

 All of this

occurring at the material

level but also

at the level of human

consciousness

Steger:

“Globalization

refers to the expansion

and

intensification of social relations

and

consciousness across world-time

and

world-space”

TPP:

Comparative

advantage:

Somebody has a

comparative advantage at

producing

something if they can produce it at a

lower cost

than anyone else.

 What it

costs someone to produce something is the

opportunity

cost—the value of what is given up.

The magic of

comparative advantage is that everyone has a

comparative

advantage at producing something. The upshot

is quite

extraordinary: Everyone stands to gain from trade.

Even those who

are disadvantaged at every task still have

something

valuable to offer. Those who have natural or

learned

absolute advantages can do even better for

themselves by

focusing on those skills and buying other

goods and

services from those who produce them at

comparatively

low cost.

Challenges:

“This creates

a challenge for free-trade advocates: when within a group a change in economic

circumstances creates winners and losers, it is problematic to find a

non-controversial criterion that allows us to say that the aggregate effect,

i.e. the effect on the group as a whole, is good or bad.”

(Robert

Driskill, “Deconstructing the Argument for Free Trade,” Economics and Philosphy,

2012)

Answers

The losers are

compensated

Kaldor-Hicks

compensation criterion

“this

criterion is satisfied for some change in economic circumstances when the gains

to the winners are sufficiently large that there exists a compensation scheme

from winners to losers that if carried out without use of any resources would

make no one worse off and at least some people better off.”

(Robert

Driskill, “Deconstructing the Argument for Free Trade,” Economics and

Philosphy, 2012)

Kaldor Hicks:

Why is the

Kaldor-Hicks criterion appealing?

It address a

problem: the veto power of the losers

What are the

limitations of the Kaldor-Hicks criterion

Is it

feasible? How can it be implemented? Would a compensation scheme undermine

people's incentives to compete, trade, innovate?

“In this

sense, trade can make everyone better off. But will trade make everyone better

off? Probably not. In practice, compensation for the losers from international

trade is rare.”

More Answers:

The markets

will take care of it… (in the long run…)

i.e.

resources will be re-allocated to more efficient use

E.G.: Apple

and manufacturing.

Accountability:

In a liberal

democracy, accountability rests on the notion

that, in the

public realm, rulers respond to the citizenry

for their

actions (Maloy 2014; Przeworski, Stokes, and

Manin 1999;

Schumpeter 1976).

Government

Constraint:

“Greater

exposure to the world

economy

reduces electoral

accountability

in the world's

democracies”

(Hellwig-Samuels, p.

288)

Authoritarians:

(Donald Trump)

“Authoritarians

prioritize social order and

hierarchies,

which bring a sense of control to a

chaotic world.

Challenges to that order — diversity,

influx of

outsiders, breakdown of the old order —

are

experienced as personally threatening because

they risk upending

the status quo order they equate

with basic

security.”

Democracy:

Voice:

“In developing

countries, (…)

democratization

enfranchises

particularly

low-skilled and unskilled

labor in the

rural and urban informal

sectors”

(Milner and Mukherjee, p.

167)

Benefits:

Free trade

benefits the abundant

factor of

production and harms the

scarce factor

of production

Stopler

Samuelsson:

The intuition,

from the point of view

of a developed

economy that exports

capital

intensive goods

 a) Tariffs

go down; b) domestic firms face

competition

from cheaper imports; c) imports

are cheaper

because they are produced by

cheap foreign

labor; d) importing-competing

firms go bust;

e) export-competing firms do

well; f)

export-competing firms are capitalintensive;

g) thus, there

will be shortage of

capital and

abundance of labor

The intuition,

from the point of view

of a

developing economy that exports

labor

intensive goods

 Low

skilled/unskilled workers stand to benefit

Pols 365 Reading Notes:

Democratic and Economic Globalisation: Helen Milner and

Bumba Mukherjee

1.

Dem. Has a positive effect on trade and capital

account liberalisation.

2.

Neither trade or CAL affect demo.

3.

Trade reforms engender a skill premium in demos

across the dev. World.

4.

Dist. Consequences of trade and financial

liberalisation are costly and pol. Salient.

The China Shock: Learning from labour market adjustment to

large changes in trade: David Autor, Dorn and Gordon Hanson.

1.

1990s economists found that trade did not have

adverse effects in dist. In advance countries for any sector. The decline in

man. Levels from 39% in 1944 to 8.5% in 2015 was nothing new.

2.

The coda in the year 2000:

·

Trade had not been a cont. to declining man.

Employment or wage inequality in dev. Countries.

·

Workers employed in import spec. regions could

easily relocate if displace.

·

Law of one price for skill meant that trade

impacts would be felt by the low skill worker, not by the trade exposed worker.

3.

BUT China: resdist/benign aspect of trade not

stood up.

4.

Trade had benefits (i.e. the rise) but also

dist. Costs and agdj. Costs.

5.

The Rise: China manufacturing exports 2.3% 1991,

18.8% in 2013.

6.

Consequences for US: adjustment costs: overall

employment has fallen, employment gains haven’t materialised. Distribution

costs: reduction in earnings for lower wage employees, ability to exit job has

lessened.

7.

Labours have to be able to relocate if gains are

to be made.

When did globalisation begin? Kevin O’Rourke and Jeffery G.

Williamson:

1.

This reading uses the term globalisation to mean

market integration.

2.

The criteria for globalisation to influence the

economy are: trade creating forces must influence domestic prices. And those

price changes must induce a resource shuffle which in turn means that trade

influences all other aspects of life.

3.

This did not start until the 19th

century, with examples coming from the North South divide in the USA, and the

land owner’s vs labourers in the UK.

Voting in Open Economies: Timothy Hellwig and David Samuels.

1.

No evidence to suggest that openness facilitates

voter responsibility. Voters in open economies are less likely to judge

candidates based on their understanding of economies, and that globalisation

reduces voter’s likeliness to connect economic performance and incumbent

performance. – Austria in the 2002 election vs the 1979 election.

2.

The perceptions of trade and trade constraints

play a part in economic voting in open economies.

3.

Politicians play an instrumental role in shaping

the globalisation/accountability connection – globalisation can encourage

governments to shirk from responsibility. Economy becomes a scape goat.

Perceptions of Competence:

Giacomo Chiozza and Luigi Manzetti:

1.

Under globalisation, governments have reduced

competency, and leaders are evaluated by other standards.

2.

In 2012 voters were more worried about their

countries direction, as well as the future status of the economy. However, a

negative view of the economy did not necessarily result in a negative view of

the leader as long as the overall direction of the country was good.

3.

As countries become more interdependent in terms

of trade and finance, factors that affect the way voter’s decisions will

reflect global as well as local conditions.