intb reading note cards.txt

It was higher quality and lower prices than wool or linen and less expensive than anything the English could make. Indian agriculture was so productive that it was cheaper. Asian agriculture was more than twice as efficient then European agriculture. So the nominal wage was lower in Indian while the real wage was higher.India: high per-acre yields --> low priced foods --> relatively low wages --> comparative advantage England: low per-acre yield --> high-priced food --> relatively high wages --> comparative disadvantage

English, Southeast Asia, East and West Africa, the Middle East and Europe were major export markets. It was light and felt good against the skin, could hold bright colors.

Banned imports of Indian textiles in 1707, to allow their domestic cotton industry to get going.

British victory in the Americas and in India helped them become a cotton textile producing rather than importing country. The new world had a lot of restrictions making it a great export market. The real boom in British cotton textile production came after American independence and the invention of the cotton gin, making much cheaper American cotton. Application of steam power helped Britain out compete India in the world market. Then Britain was for Free Trade....

Population dynamics and the growth of free markets because of late marriages Europeans were able to keep their families smaller. The market-driven storyline of industrialization suggests that the establishment and growth of markets for commodities, land, labor, and capital in Europe enabled European producers to be much more efficient and hence to accumulate sufficient capital to invest in improving agricultural and industrial productivity. While China didn�t have property rights and their population was surging making no possibility for an industrial revolution.

There were limits keeping Chinese population above subsistence levels, their markets arguably functioned better and more efficiently than those in Europe. They could control their population size they just could also feed many because of their more specialized farming skills. The paradox- that in China personal freedoms, market exchange, improved transportation, and population dynamics led not to an industrial revolution but to a biological old regime dead end? (pp. 101-108) Personal freedoms- Chinese would marry and not be able to have sex because they were not allowed children, infanticide to girls so there was an uneven match of men to women. Markets, by the mid-eighteenth century the Chinese state was allowing markets and merchants to handle the movement of grain up to a thousand miles from where it was produced to consumed. They had an extensive water-based transportation system for efficient movement of goods and people throughout the empire .. �paradoxically, the freedom of producers throughout China�s core and peripheral regions, when compared with the limited freedoms of slaves and serfs in European system, constrained China�s ability to continue developing a textile industry in its most highly developed core regions.

It could not have happened without the new source of power: coal-fired steam power. Needed to get ground water out of coal mines, first steam powered� than using them for the vehicles on the ground till using it for the first railroad to the sea, railroads increased, started using steam in other places such as to power looms.

Coal Iron and Steam

Their industries rose along with the percent of GDP they held while other countries production fell. China did not industrialize by putting up cities and what not so the poor got poorer when they could not hold their population. Opium, guns, el Nino famines, and new industrial technologies corresponded to Europeans� colonial ventures, especially railroads, the telegraph, and quinine.

No, they had colonies that supplied them with huge amounts of �free� energy (sugar, cotton, timber, and codfish) as well as the luck of coal near centers of population.

concentrated in India where Indian states were weak and European competitors were few. 1700s - 1800s

operated during the 17th, 18th, and early 19th centuries, carrying slaves, cash crops, and manufactured goods between West Africa, the Caribbean or American colonies and the European colonial powers..

along with Adam Smith (around 1850) thought that populations like the Chinese who could not control their growth would overshoot the capability of the land to support their numbers until �negative� population checks. Believed Europeans avoided those fates by having �preventative� checks on population growth. Right about Europeans, wrong about Chinese; they did control their family size.

was a decisive British East India Company victory� The battle was waged during the Seven Years' War (1756�1763). This is judged to be one of the pivotal battles leading to the formation of the British Empire in South Asia.

a way that Britain got silver flowing out of China rather than into China. Got Indian Opium and got hundreds of thousands of Chinese addicted. Chinese debated whether to legalize it and control it or if it was immoral. Between Great Britain and China, China eventually sued for peace. Signified the beginning of a century of Western aggression against China

Free traders focused on the benefits of access to inexpensive goods, especially the cheap food that repeal of the Corn Laws would bring. British farmers relied on the Corn Laws� high tariffs on imported grain and argued that repeal of the laws would doom British farming. Supporters of the laws invoked the desirability of self-sufficiency in food, the importance of farming to the British way of life, and the painful adjustment that a flood of cheap grain would impose.

In the 1870s most industrial countries joined the gold standard, the countries� currencies became equivalent to gold, interchangeable at a fixed rate with any other gold standard country.

Farmers and miners, farm prices went down by a third, mining prices cut in half but construction costs stayed constant. Anti-gold activists won election after election thinking that Wall St ran the country and if they could get off the gold standard they could compete for prices in the global market. The Populist movement and its people�s party.

Export oriented manufacturers of Europe for a stable payment system, American bankers they managed much of investment by Europeans in the United States. Internationalists wanted stable, gold backed money and fought farmers and miners for it. Almost every major nation was on gold before WWI.

Prices rose, gold became less politically contentious, and countries that had avoided the gold standard flocked to it. By 1910 there was pressure to loosen the countries near embargo on manufactured imports. The shift was reflected in American politics, as the free trade Democrats gained strength and even the protectionist Republicans moderated their stance� like the gold standard, the better it became, the more people protected it. And so support of defenders became more plentiful, and their resolve stiffened, as more and more countries went onto gold and as the world trade and payments expanded.

Many traditional countries stagnated or fell apart. Consumers no longer needed European grain farmers, Latin American money lenders, Chinese artisans or Indian weavers, whole things were made redundant.

Commercial concessions were a throwback to the days of European mercantilism�the colonial power assigned control of a promising region to a commercial concessionaire, whose goal was to maximize profits, not to develop the local economy. Kept the people as slaves, when they knew the locals would eventually get rights the settlers did not want to lose their privileges. Settler opposition to local inclusion in the colonial system often blocked broad-based international economic integration and general economic development. With most inhabitants shut out there was little room for broad-based growth.

Fluctuating prices, the fight between gold and silver countries-The flow of cheap-labor made goods from Asia was depressing wages in the US Wages had to be cut under the gold standard for countries to be competitive, but prices of goods would also go down decreasing the impact. The world�s most populous countries benefitted little. Even countries then grew rapidly the gains were distributed very unevenly. Many people in the most successful countries were left worst off. The international economic order dissolved into the carnage of WWI. The gold standard was cut and many countries closed their borders to trade, to immigration, to investment.

identified by Scottish philosopher David Hume. Changes in prices led to specific (gold) flows that tended to force prices and economies to return to balance. Any gold standard country that spent more than it had (or could borrow) would be forced by the operation of the gold standard to reverse course, reduce wages and spending, and move back to equilibrium.

1776 founding text of classical economics, made specialization, the division of labor, the center piece for his argument. He argued against mercantilists, that self-sufficiency was stupid, that a greater division of labor made society wealthier.

1840-1915.. The Rothschild name is synonymous for wealth, global connections, and diplomatic influence; the paragon of the successful international Jewish banker. Rothschilds tenaciously supported opening the United States economy with the world economy. Tried first to get the US on gold so that it would be reliable, gave half the money needed to see it through and yet the US was still weak on the gold standard. Rothschilds were fervent supporters of world trade. Helped corner the diamond market with De Beers mining company. The Rothschilds used their fortunes and their political influence to support global economic integration, and they derived enormous financial benefits from the worldwide triumph of this commitment to economic openness.

a nineteenth century German political economist and activist, a theoretician of industrialization by protection. List argued that free trade was the ultimate goal but temporary restricted trade was needed to equalize relations among the major powers. He focused on infant industry arguments� �In order to allow freedom of trade to operate naturally, the less advanced nations must first be raised by artificial means to that stage of cultivation to which the English nation has been artificially elevated.�

simple basic idea: a country will export goods that make intensive use of the resources it has in abundance. Countries with lots of land will specialize in producing farm goods whose production requires lots of land. Countries rich in capital will focus on capital-intensive products, especially sophisticated manufactures. Regions with abundant labor will produce labor-intensive goods or crops. This pattern of specialization will lead to analogous trade patterns: land-rich but capital-poor countries will export land-intensive agricultural products and import capital-intensive manufactured products. Swedes expected lands rich in capital to export capital and lands rich in labor to export labor. Does a good job at explaining how international trade and stuff worked during the golden age (1919)� the countries that followed this model grew.

US presidential candidate that shared the view of farmers and miners on the gold standard, against it. Bryan nearly won the presidency in 1896. Ran two more times and lost leaving the US as the only major exporter of farm goods and raw materials still on the gold standard.

The American economy had been the world�s largest, but before the war it was barely engaged with the rest of the world. Ww1 forced all Europe to depend on American capital, markets, and technology and to look to it for political leadership. The US changed form a passive observer of the slow collapse of the classical order to an active leader of attempts to reconstitute it.

US exports more than doubled. American loan of nearly ten billion dollars from government to government for the joint war effort caused two controversies. First, accusations that they were meant to rescue the debts American bankers had arranged, symbolizing the willingness and ability of �merchants of death� to lead the nation to war for reasons of profit. Second, charges and countercharges among Europeans and Americans over moral responsibility for the Great War, and American insistence that the debts are paid in full, in money, when many Europeans believed they had been paid in full, in blood. Devastated Europe and made the US the world�s principle industrial, financial, and trading power. America went from the biggest debtor to the biggest lender, but turned down American membership in the League of Nations.

They wanted to protect themselves from the competing outside manufacturers. Some Americans remained insular and protectionist.

It put men worse off than their grandfathers. He argued that governments should act to stabilize wages and prices, rather than just passively waiting for them to adjust. �In the long run we are all dead.�

Attempts to halt deflation and raise prices were blocked by government commitments to the gold standards. Countries on gold had to let prices take their course. Attempts to print money would lead investors to sell off the (debased) national currency for gold. Gold retarded a government response to the crisis, and it also sped the international transmission of financial shocks. People had to convert money to gold back to another currency, as one sold for another eventually they would run out and have to go off gold. Expectations of devaluation caused bank panics, while bank panics cause devaluation. �The gold standard is the key to understanding the depression� for these same reasons only after abandoning the gold standard.� (p188) �All of it in that quote.

Economic self-sufficiency

Countries across southern, central, and eastern Europe adopted some variant of autarkic fascism. The countries of Latin American converged on autarkic developmentalism. The political economies of other independent developing countries looked strikingly like those of Latin America, as did the more advanced colonies. One after another semi-industrial country embraced the new economic nationalism. EVERY debtor country went the way of fascist or nationalist autarky; every creditor country remained democratic and committed to international economic integration.

The autarkies turned the internal terms of trade in favor of industrial investment, against agriculture and against consumption. Government directed resources out of the export oriented primary producing sectors of the past and into the inward oriented industrial sector of the future and out of the pockets of workers and farmers and into industrial investment. Strict control on foreign trade to keep out competitors, governments defaulted on foreign debts, controls on currency trading�in order to force investors to keep their money at home, left the gold standard, kept their currencies �overvalued�, industries got positive support (loans, subsidies, ect.), industry grew remarkably, took money for industry out of farming and mining, and they pretty much threw all their resources into industry.

for the developing world depression-�era conditions prevailed until the middle 1950s. The depression reduced not only the price but the actual volume of developing country exports as demand in rich regions plummeted. Many took their currencies off gold, depreciated, and introduced inconvertible paper money. Almost all independent developing countries defaulted (on loans that were expected to make fixed interest payments out of drastically reduced export earnings) and imposed controls on the movement of currencies and capital. Many turned their economic structures around. The inward turn had important political ramifications, in place of politically dominant copper producers came new urban groups whose interests were domestic, not international: manufacturers, the middle classes, the labor movement. Developmentalism and nationalism.

named by economist Irving Fisher, debtors could not service their debts when their incomes collapsed and their debt obligations stayed constant. Deflation forced debtors to reduce consumption, and invest, leading to further price declines.

Austria�s largest bank and a longtime Rothschild affiliate, failed when financial and currency pressures began a string of national crises that brought the international monetary and financial system to a halt.

a stereotypical German of the old school, with a stiff high collar. Nazis needed Schacht to bolster their ties with German business leaders; Schacht needed the Nazis to address the country�s economic problems. Schacht became Germany�s commissioner of their national currency, he stopped the printing presses, announced a new rentenmark, backed by real property and exchangeable for old marks at the rate of one trillion to one. Mark�s value held steady for the first time in years. Shachtian economics.

the relative prices of a country's export to import

Rockefeller thought refinery would be a sideline of the produce business, but within a year, as the refining became profitable, he was convinced otherwise. It was the largest, of Cleveland�s refineries in 1865.

In 1863 a new railroad link was placed in Cleveland and refineries were built, most undercapitalized but never Rockefeller�s.

Consolidating nearly all oil refining into one giant combination, eliminating excess capacity, suppress wild fluctuations of price-and, indeed, save the business. That was what Rockefeller and his colleagues meant when they talked of �our plan�

1890s the find of oil in Ohio, Lima-Indiana fields� Rockefeller was poised to make his last great strategic decision- to go directly into oil production. In Lima there was an opportunity for Standard to gain control of its raw materials on a very large scale, to apply its rational management to the production of oil, to balance supplies and inventories against market needs�Standard would be able to insulate itself to a considerable degree against the fluctuations and volatility of the oil market- against the disorder of the �mining camp�

in the history of American industrial development Rockefeller was the single most important figure in shaping the oil industry. He created the vertically integrated petroleum company. He conceived the idea of integration, producer to consumer.

Standard Oil used it prowess to win �drawbacks�, where a competing shipper would pay a dollar per barrel to send his oil by rail. That railroad company would turn around and would give 25 cents, not to the shipper, but to the shipper�s rival, to Standard Oil. This giving Standard Oil a huge financial advantage.

Rockefeller and his partners concluded that the death of one of them would lead to confusion, a trust would get the ownership organized and clarified, with little left to future debate. Everything in the company was measured, the trustees held the shares in the individual companies on behalf of the forty-one shareowners of the Standard Oil Trust.

A new alternative, a new social and political order, even if most of its features had precedents. Governments backed by coalitions of workers and farmers took responsibility for macroeconomic management, social insurance and social security, and labor rights.

By the late 1930s the Swedish government was providing its people something approaching, cradle-to grave social assistance. Their farmer-labor alliance, unusual before 1930s, became a hallmark of the social democratic welfare state. The social democratic solution included the incorporation of labor into politics. The Social Democrats were now allied with one traditional antagonist, farmers, and at peace with another, big business. Social democracy had arrived. The Roosevelt administration had a different political configuration that led to similar outcomes. Created �alphabet soup� in his plans, dozens of groups created social democracy, American style.

A primitive macroeconomic theory based on the ideas of 20th-century British economist John Maynard Keynes. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.

Keynes�s principle weapon of macroeconomic policy was fiscal, deficit spending.

The war on the continent had thrown back the winners� economies 25 years, while those of the losers had lost 40, 50, even 75 years.

Truman made a terrifying speech in 1947, announcing the Truman Doctrine. Three months after the Truman doctrine committed the US to a global effort against the soviets and their allies, secretary of state Marshall launched the economic recovery plan, the Marshall plan. Sent money to Europe to rebuild the economies of the Western Allies; a parallel program sent another half billion dollars to Japan. The Japanese learned new methods, created new industries, searched out markets abroad, and quickly became a major force in international trade. Toyota and Sony were developed at this time. The assembly line was introduced, Europe and Japan introduced new products and technologies, the lag behind America was reduced. American growth was not slow, but Europe and Japan grew much more rapidly.

It involved relatively free trade, stable currency values, and high levels of international investment. GATT took a place allowing countries in GATT to lower tariffs among each other, eventually bringing down the amount of tariffs as well as reduce other trade barriers.

The system let countries run monetary policies in line with their own conditions, even if they differed (within limits) from the policies of others. They wanted controls on short-term international investment so that people could not jump from one country to another until all the countries interest rates were the same. For national governments to pursue their own monetary policies, with fixed exchange rates, they had to make it hard to send short-term investments from one country to another. So the Bretton Woods system presupposed capital controls, taxes or prohibitions on moving money across borders for �speculative� purposes.

One of a group of iconoclastic businessmen who argued for government to assume major financial tasks in a way that later became known as Keynesian. A provincial banker with a high school education was blunt: �a bank cannot finance the building of more factories�. When half of our productive property is idle for lack of consumption� the government can spend money, because the government, unlike the bankers, has the power of taxation and the power to create money and does not have to depend on the profit motive. The only escape from a depression must be by increased spending��

At the depth of the Depression in 1932, Scandinavia and the Low Countries agreed to reduce tariffs among themselves by half over five years. This Oslo Group of small, open western European economies was the nucleus of attempts to rebuild the trading system. Support for these attempts soon came from Roosevelt. The Oslo Group in Western Europe and the United States in the Western Hemisphere were pulling for a rebuilt trading order.

Secretary of state who fervently supported free trade, in 1934 congress passed Huff�s Reciprocal Trade Agreements Act, which permitted the president to negotiate tariff reductions of up to 50% with other countries without congressional approval. Within five years the US had signed twenty trade agreements covering 60% of the nation�s imports.

Monnet brought together some of the most influential business and political figures in Europe as a private Action Committee that created EEC for the Common Market.

He was central to Western Europe�s creation of a common market. In 1950 he came up with a plan to put French and German coal and steel production under a joint authority,, with common regulation and a common market. Monnet�s Sheman Plan dissolved the Gordian knot by pooling the complementary resources of France and Germany under an independent agency. That set up the European Coal and Steel Community (ECSC). From 1952 to 1955 Monnet served as the first president of the ECSC's High Authority. The ECSC inspired the creation of the European Economic Community, or Common Market, in 1957

Germany, US, Italy, Sweden, Japan and Britain now had a common economic, political, and social order and similar standards of living. In 1961 these countries formalized their club as the OECD. OECD is now equivalent to the rich world cup, that led to increased social spending.

Tariff jumping, allowed American (and eventually European and Japanese) producers to supply the French, Brazilian, German, Japanese, or Indonesian markets even behind high trade barriers. They were especially prevalent in Europe.