Essay Preview: Economics Case
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Lecture 1: Chinas rise and the Global Picture
Canada needs to allow more investment from the outside. The very fact that we have a net benefit test means that Canada is not wide open.
Amanda lang believes that the Canadian culture is different. We treat failure more negatively versus the Americans.
Mark carney and roger martin believe that the prosperity gap is not driven by culture.
When an economy is growing too quickly, you get inflation. You adjust interest rates to slow the economy if its growing too quickly or too slowly. In an environment where capital is mobile, you cant change interest rates without understanding the effect on exchange rates.
Asia is growing 3 times faster than the developed world. This is from 1980 to 2015.
In 2003, the prediction was that china would overtake japan in 2016. The prediction was also that it would overtake the usa in 2042. However, this is going to happen by 2030.
The rise of Asia and the BRIC countries is inevitable.
The event that really marks the financial crisis is Lehman Brothers.
In 1929 , when the stock markets crashed, the government fucked up in 3 ways. 1) protectionism in order to try to protect domestic companies and jobs. This caused trade wars. These were beggar thy neighbour policies. Canada cannot now go and raise trade barriers unilaterally due to membership in the WTO. 2) in 1929, what governments did was that they tried to balance their books by cutting government spending and raising taxes. This did not happen in todays economy. 3) they let banks fail in the 1930s. the consensus right now is that lehman brothers was a mistake. They wanted to set an example.
It was cheaper for the us government to bail out the banks than let the whole economy collapse.
We didnt do any of the three things we fucked up last time and the economy is better for it but is still in lots of trouble.
When the IMF gives people money, there are conditions that come with the loan. This is called the Washington consensus and you must embrace it. what it calls for is cutting government spending, privatize companies and liberalize trade and investments (allow for free-er markets). China and india were too big to be bullied by the IMF. This is why they werent hurt by having to submit to conditionality.
China is worried about the arab spring. Why? Because the fear might be gone. This is why the jasmine revolution almost took over.