Chapter 3: B & D

In the post-World War II era, what kinds of mercantilist policies has the United States adopted, and in pursuit of what goals?

"Farm production was subsidized heavily and used export subsidies to reduce commodity surpluses; "strategic petroleum reserve" to decrease dependence on OPEC oil; built up stronger cyber capabilities; all in pursuit of enhancing working class and employment and to enhance security"

Brief quotations from the writings of Alexander Hamilton and Friedrich List are given in this chapter. Based on these short bits of writing, compare the ideas of these two political economists with those of two contemporary political economists. What do they have in common that makes them all mercantilists? How do they differ in the policies that they suggest nations take?

"Hamilton believed that free-trade policies were not in the best interest of a young nation; America's infant industries could never compete with Britain's mature industries in manufacturing all the goods and services that Americans demanded. List argued that because Britain had more advanced technology and more efficient labor than the rest of Europe, their goods were more attractive to Europeans than locally produced goods. List also believed that there could be no free trade until states could compete with one another. Thus, the US should protect their infant industries until they were in the same playing level as Britain's. Both Hamilton and List shared a spirit of "patriotic economic nationalism." Ha-Joon Chang and Patricia Goff argue that state protection of certain industries with little to no FDI (mercantile policies) allows the country to grow those industries with their own local companies and preserve "cultural sovereignty". What they have in common that makes them all mercantilists is their agreement on how mercantile policies allow states to grow their infant industries for the economic benefit of the nation-state. Hamilton and List suggest that mass production, imposed taxes on imports and subsidies on exports by state will allow nations to grow their infant industries until they are on a level playing field. Chang and Goff suggest that little to no FDI allows a nation to maintain sovereignty over their industries."

Explain: "bloody hands and the invisible hand often worked in concert." What do they mean? What examples does the textbook provide to illustrate this point?

"This is a view of mercantilists by Kenneth Pomeranz and Steven Topik, who believe that the spread of the free market via commerce depended on a "historic foundation of violence." Examples include slavery to build cheap labor, genocide against indigenous peoples, European powers spreading production of commodities to areas under their control in order to tax them, and Great Britain forcing China (weaker country) to open up opium exports from India."

Which of the following nations have at various times used strongly neo mercantilist policies to achieve economic growth in the post-World War II era?

All of the above(Japan, South Korea, China)

The United States has a strategic stockpile of which resources?

All of the above(oil, vaccines, tantalum)

Zero-sum

An interaction whereby gains by one party creates equal losses for others

Arctic Council

Countries with territory inside the Arctic circle make up the Arctic Council- Canada, the U.S, Russia, Sweden, Denmark, Norway, Iceland, and Finland. These countries are eager to develop its potentially offshore and onshore oil and natural gas fields.

Which political economist stated that "the power of producing is infinitely more important than wealth itself"?

Friedrich List

Alexander Hamilton and Friedrich List both wrote that a strong state is necessary if a nation intends to compete with the manufactured goods of the leading industrial power of its day. The dominant industrial power at the time they wrote was

Great Britain.

Which is the best statement of the relationship between wealth and power according the mercantilist thought?

National wealth creates national power, and national power secures national wealth.

Mercantilism

Promote exports, less about imports, trade generates wealth power to protectionism, trade policy behind

strategic resources

Resources that are vital to an economy and its major industries (such as oil, food, and energy). States seek to control these resources or guarantee their uninterrupted supply as they have important consequences for national security.

Industrial policies

State-directed economic policies designed to guide business investment and development of particular industrial sectors. Such policies may include subsidies for businesses, trade protection, infrastructure spending, and promotion of innovation.

Which of the following U.S. policies before World War II could be considered mercantilist?

The Smoot-Hawley Tariff Act

A mercantilist would most likely agree with which of the following statements about trade?

Trade rules should be grounded in the principle of most favored nation treatment.

Most members of the Arctic Council are eager to exploit oil and natural gas resources in the Arctic region as its ice cover disappears. Which of the following countries is not a member of the Arctic Council?

United Kingdom

Infant industries

new industries or ones that are generally at a disadvantage to similar sectors in different countries. Mercantilism wants to protect these industries until they can compete.

Economic nationalism

promotes and favors state intervention in markets and market regulation to try and generate more money and power.

Some experts believe that the conflict over rare earths between Japan and China in 2010 was really about control over resources in

the South China Seas.

Which period of history is often called the "mercantilist period"?

the period of nation-building in Europe—roughly 1600 to 1850