Government Exam 3 Review
According to the reading (Chapter 25: Globalization), what are the chief indicators of the increase of globalization since World War I? What is comparative advantage and how does it contribute to aggregate economic gains for states from trade? How does trade contribute to the economic sources of order in the international system?
"the growing levels of economic flows or transactions across national boundaries demonstrating the market integration associated with globalization" and "international trade has accounted for an increasing proportion of national economic activity in the post-WWII period"
According to the reading (Chapter 20: Global Governance), what are the incentives for global governance through international institutions? How are efforts at global governance confronted by the collective action problem? Once international agreements are established, what types of problems of compliance and enforcement do international organizations face?
1States have incentives for global governance because of negative externalities, high transaction costs, and collective action problems. 2 Overcoming collective action problem in global governance often prove quite difficult for several reasons. First, the problem of distributing the burden of collective goods provision can activate intense struggles among interested parties, both within and between states. The second problem for states or groups of states is one of enforcement, or the punishment for noncompliance. 3 In the absence of a single enforcer, a group of states can provide enforcement. However, each country would like to enjoy the benefits of enforcement without having to pay the cost. Yet if all countries try to shirk the responsibility of providing enforcement, enforcement is under-provided, and would- be aggressors may pursue their goals without fear of reprisal. Given these incentives, establishing credible enforcement is a challenge. In other issue areas, enforcement involves large-scale costs that can make states reluctant to trigger penalties for non-compliant states. For example, if international organizations want to put economic sanctions to punish a country that broke an international agreement o law, sanctions could be costly. Moreover, sanctions sometimes fail to produce the desired behavioral change.
Describe the magnitude of the pollution problem that Delhi, India has been experiencing over the past couple weeks. In what way is level of pollution "extreme"?
2.5 levels of nearly 1000 when a level of 25 is considered hazardous.
What is a bond and what are its key traits? How do extremely deep markets in U.S. treasury bonds and mortgage-backed securities help make the U.S. dollar a key reserve currency? How does this situation allow the U.S. to run big deficits?
A bond is a loan, a promise to repay a fixed amount of money in a fixed period of time. Payment often in two forms: principles and coupons. Traits: price creditor pays to debtor, yield (interest rate), coupon, quality of debt. Serves as source of reserves for banks and central banks all over the world. Excess demand for dollars allows US gov't to run big deficits because the world needs a currency that can be trusted and the dollar is it.
According to the Farrell reading (his interview with Thomas Oatley), how did the Iraq war contribute to the 2008 financial crisis?
America goes to war - borrows money - economic boom - economic crisis.
Describe the terrorist attack in the Sinai Peninsula of Egypt. Why has this region been a center of terrorist activity? What made this attack "unprecedented"?
Attack on Sufi mosque, worst terrorist attack in the history of modern Egypt. Sinai region has low employment, low education. Egypt has used aggressive counterterrorism tactics in the region; combination of marginalization and coercion arguably strengthens support for local militants. It was an attack on Muslims.
What is the basic scientific claim about the causes and extent of climate change? What are the main environmental consequences that scientists fear will result from climate change?
CO2 is a heat trapping gas. CO2 levels have increased since the industrial revolution. Global temperatures will rise.
How might the messages sent by President Trump and President Xi signal a role reversal for the United States and China in regards to international trade? How does this relate to the power transition theory?
China as the defender of global free trade and the US retreating from the system it created. China is the emerging power.
Discuss the main goals of the UN climate conference in Bonn, Germany. What message did the Trump administration give at the conference? How did other American politicians like Jerry Brown send a different message?
Further discuss goals and commitments of the Paris Climate Accord. US sponsored a panel on fossil fuels and nuclear power. Jerry Brown says states and cities will lead climate change in the US.
What is the democratic peace theory? How do the factors that contribute to democracy's influence over foreign policy in general - electoral constraints, institutional constraints on power such as checks and balances, and a shared democratic identity - help to explain, in particular, peaceful relations between democracies?
Claim that military conflict (low levels, including threat to use force; and war) is less likely between two democratic states Democracies will be peaceful toward other democracies, but not peaceful toward autocracies; Electoral constraints raise the political costs associated with war Peace settlements more durable because democracy helps to solve the commitment problem Shared democratic identity: externalizing norms of conciliation and compromise Less public support for using military force against fellow democracy
According to the reading (Chapter 18: Democracy and International Relations), what are the defining features of democracy? Describe historical waves of democracy and the possible causes of these waves such as demonstration effects, neighborhood effects, conditionality of international organizations, and the influence of hegemons.
Competitive or "free and fair" elections have been offered as the defining aspect of democracy Theoretical formulations of prominent democratic theorists defined democracy as "that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of competitive struggles for the people's vote" Democracy is a process that does not guarantee particular policy outcomes Public contestation requires that multiple parties compete in elections but also citizens have the right to freely express themselves, from associations, and receive information from alternative sources in the media (freedom of the press) Democracy must also be inclusive: system must allow universal and equal participation by all segments of society There must be democratic sovereignty! Democratic elections must result in the establishment of truly powerful decision-making bodies such as legislatures and chief executivesaves of democracy transitions away from authoritarian rule tend to be regionally concentrated and occur over a common span of time · 3 primary waves each followed by a partial reverse wave in which democratic governments broke down and were replaced by autocracies 1st wave: lasted most of the 19th century until the beginning of the 20th century leading up to the WWI o partial democratic regimes emerged primarily in EU and the US o democracy remained rare & outnumbered by non-democratic regimes o followed by a reverse wave in the interwar period b/w WWI & WWII 2nd wave of democracy followed WWII: o W. EU saw the emergence of democratic gov in W. Germany, Italy, and Austria supported mostly by American hegemony o Japan also established a democratic government o Brief democratic experiments launched in Latin America o Reverse wave took place in the 1960s and 1970s w/ breakdowns of democratic regimes across Latin America and the emergence of military dictatorships across the region 3rd wave of democracy: took hold beginning in the 1970s with the democratization of Spain, Portugal, and Greece in Europe and then the widespread collapse of military rule in Latin America and its replacement with democracies in the late 1970s and early 1980s o now being followed by a 3rd reverse wave as countries such as Russia have returned to authoritarian rule; Demonstration effects: -Significant mass events that successfully challenge the autocratic regimes create demonstration effects among opposition leaders and mass publics in other countries who then try to emulate the same actions and outcomes Neighborhood effects: -States tend to emulate the level of democracy of their neighboring states. This creates regional environments that are more or less conducive to the emergence of democracy. Influence of hegemons: -The actions of the US and the Soviet Union were instrumental in the spread of democracy or lack thereof during the cold war
What is the Reciprocal Trade Agreements Act (RTAA) and why is it important for understanding the politics of trade policy? Why did the U.S. shift responsibility for trade policy from the legislative to the executive branch?
Congress authorized the president for a fixed period of time to negotiate bilateral trade deals in which principle of reciprocity guided both to a mutual reduction in tariffs. President doesn't have to worry about specific constituencies and will likely favor free trade because it increases the national income.
What is an externality?
Costs or benefits of some transaction by people not involved in a transaction
How does a Senate rule requiring 60 votes to pass a resolution to extend funding to avoid a government shutdown affect the debate over DACA? What does each side in this debate (Democrats and Republicans) want from a deal to protect Dreamers from deportation? If both sides want a deal, why is it still so difficult to reach agreement?
Democrats have leverage and will shut down the government if a deal on DACA isn't done. GOP wants tougher border security. Dems want amnesty. Neither side will budge.
How does the World Trade Organization shape global trade patterns and US trade policy?
Designed to ensure that states uphold existing trade concessions (e.g. tariff cuts) negotiated through WTO Judicial panel can enforce these obligations by authorizing compensation to injured party in form of trade sanctions -Interesting: plaintiff has a lot of discretion on where to impose retaliatory tariffs Political logic: WTO enforcement capacity keeps global economy open by punishing states pursuing protection While successful at preserving existing trade concessions, WTO relatively ineffective over last decade in securing further trade liberalization because limited support in developed world (US, Europe, Japan)
Which group of countries will be the recipients of foreign aid under the Paris Climate Accord? How did this aid help facilitate the construction of this international agreement? And how might this aid help countries fulfill their emission targets?
Developing countries. Ease costs of alternative energies. Compensate for costs of climate change.
What dilemmas did NATO face at the end of the Cold War? What was the case in favor of NATO expansion after the Cold War? What was the case against NATO expansion after the Cold War?
Dilemmas for NATO at the end of the Cold War 1.Loss of mission - Shouldn't end of Warsaw Pact mean the end of NATO Finding new missions: Out-of-region interventions. 2.Pressure from Eastern Europe to enter NATO EE countries determined not be left vulnerable to Russian hegemony again 3.What to do about Russia? How should NATO approach the "new Russia"? Should NATO preemptively contain Russia even though it was no longer communist? Could Russia be a part of NATO? The case for NATO expansion 1. The original goal remains relevant (keep Russia out, U.S. in, and Germany down) a. Neo-containment of an inevitably anti-Western Russia b. Keeps American power bound by allies c. NATO could expand the zone of peace in Europe 2. NATO as a more effective "mini-United Nations" d. Out-of-region interventions allow U.S. and its allies opportunities to use multilateralism to enforce liberal internationalism. But, this may expand rather than bind U.S. power. The case against NATO expansion 1. Loss of mission - NATO was no longer relevant. Soviet Union collapsed! So security in Europe does not need NATO 2. Threatened and antagonized Russia.Treating Russia like an enemy made Russia an enemy
What are the political conflicts in the United States activated by immigration?
Economic, race, politics (shifting basics of power), national security.
What are the four ways that democracy is expected to affect foreign policy?
Electoral Constraints: punish officials for costly policies. Sustaining Commitments: checks and balances make it hard to change the status quo. Externalizing norms of conciliation and compromise: democracies share an identity, provides trust. Transparent Decision Making: facilitated by legislative checks and competitive press.
How is the democratic political system in India part of the reason it is so difficult for politicians to address pollution in that country?
Electoral politics hinder state action to combat pollution. Crop burning is a major cause of pollution, but fear reprisal from farm lobby if they clamp down. Ethnic divisions.
What is the Bretton Woods economic order? What were the main forces that served as an impetus for the U.S. to construct the Bretton Woods order? What are the main organizations that emerged from Bretton Woods?
Emerges in final stages of WWII (1944): US supports creation of international orgs to ensure economic growth through international trade. Came from: Great Depression, emerging battle against communism, increasing support for free trade in the US. Orgs created: GATT (WTO), International Monetary Fund, International Bank Bank for Reconstruction and Development (World Bank).
What are the political challenges associated with American efforts to promote democracy? What are the benefits associated with promoting democracy around the world?
Expands American commitments, more soldiers at risk. Gets rid of dictatorships that can be hurting people.
How does Michael Flynn's guilty plea and cooperation with the Mueller investigation affect that investigation's probe into charges of collusion and obstruction of justice by the Trump administration? Why was a tweet from President Trump that suggested he knew Flynn lied to the FBI and fired him for it such a big deal?
Flynn's plea deal could undercut the claims made by the Trump and his aides that they were misled by Flynn about his discussion with the Russians. The tweet arguably implicated Trump in a crime. It is a change in reasoning for why he had fired Flynn in the first place. The tweet implicated that he knew Flynn had lied to the FBI before he asked Comey to back off on the investigation. This raises questions about obstruction of justice by Trump.
What is inflation? What are its negative consequences? What is deflation and why is it also bad? How do you choke off inflation? How are interest rates, the control of inflation, and the reelection of politicians interrelated? What is the monetary version of the fundamental problem of politics and how does having an independent central bank help to prevent this problem?
Inflation is just rising prices. Erodes value of savings (less purchasing power) and creditor's assets (loans). Falling prices are bad because people wait for lower prices and stall economic activity. You choke off inflation by slowing economic activity by raising interest rates. Politicians wouldn't do policies that seem bad, so the responsibility is given to unelected bureaucratic official (FED chair).
Understand, explain, and give examples of how international institutions shape international politics through the following mechanisms: a) guiding behavior and shaping expectations; b) providing information about state interests and incentives to comply; c) allocating and generating power for states.
Institutions as rules that guide interactions among states Examples Sovereignty as legal recognition (by other states) of a government's right to regulate people (set laws for them) living within their set territorial boundaries Sets the expectations about appropriate behavior (i.e. a country should not violate territory of another country without authorization say from Congress or something). Going back to point 1, a country can point to violation of sovereignty as self-defense if they need to retaliate against another country because that is a legitimate justification laid out by the institution Trade liberalization: grant access of foreign companies access to domestic market. Which means we give other countries access to our markets so that they can profit off of our consumers. There is power in controlling your domestic markets and who you will trade with. General Agreement on Trade wanted to shape trade negotiations and created rules for expansion of globalization of commerce. Whoever controls these large orgs like GATT and WTO gives those controllers much international power
Since globalization creates economic winners and losers, what are the political implications of globalization and how does this help explain the continuation of trade barriers that constrict national income? Who tends to win and who tends to lose in the domestic political conflict over trade policy?
Jobs are lost in sectors that rely disproportionately on resources that are scarce in the US -Example: unskilled labor in manufacturing -Problem: when lose job in manufacturing cannot find work in high tech because do not possess requisite skill level Political implications: -Globalization tends to activate domestic political conflict because some groups win and some groups lose -This powerful reason to explain prevalence of barriers to trade that constrict national income consumers lose because of collective action problem Institutions help to set rules by which winners and losers from trade hash out trade policy -Example: agriculture still receives heavy support because disproportionately represented in the Senate
How does oil compare with other natural resources in terms of its share of energy consumption? What sorts of consequences occur when oil prices go up?
Key energy resource -About 33% of total global energy consumption (natural gas at 24%, coal at 30%) -About 37% of total energy consumption in US (natural gas at 30%, coal at 20%) -Significant portion of global trade (about 15%) When oil prices increase Gas prices go up (more expensive to drive to work, fly in a plane, conduct international trade, and move goods within domestic economy) Can induce global recession: stagflation of 1970s Transfers wealth from key oil-importing countries (US, Europe, Japan, China) to oil-exporting countries (Saudi Arabia, Russia, Venezuela) Single global market for oil Spot and futures markets (trade contracts to deliver barrel of oil at specific date; don't actually physically exchange oil) Important fact in debates about energy independence Even as US imports less, price can still be shocked by developments in Middle East, Russia, and China Total global petroleum consumption at 90.4 million barrels/day Up from 77.5 mbd in 2001 US consumption at 19.0 mbd (2013), down from 19.7 mbd in (2001) Adjustment from run up in prices to 2008 and then from Great Recession
What is the Federal Reserve? How is it different from commercial banks? What are its main functions and policy goals? What are the three key policy instruments of the Fed?
Key government agency tasked with implementing monetary policy o Monetary policy—as government efforts to influence monetary outcomes like inflation, interest rates, the money supply, and exchange rates; It is not tasked with earning profits It is the big bank for all the little banks (chase, wells fargo, etc) Functions: Implementing monetary policy · Central bank of the US · Regulates banking sector · Lender of last resort to banks · Goals: employment and limit inflation (hopefully to 2%) Reserve requirements: set how much cash (reserves) banks must hold, which simultaneously sets how much capital they can lend (Remember: loans are their key source of profits) Higher reserve ratios limit money supply Discount rates: interest rate Fed charges big banks Open market operations: purchase/sale of financial assets like bonds Important example: Quantitative Easing (an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply)
According to the NPR On Point clips, what makes these types of lone wolf attacks so difficult to defend against? How has success in combating large-scale attacks contributed to the frequency and increased vulnerability of small attacks?
Low sophistication. Achieves purpose of ISIS. Still very rare.
What are three important functions of money? What is the relationship between money and interest rates? How do interest rates affect economic activity? What are the political implications of this relationship?
Medium of Exchange: Facilitates trade & specialization. Unit of Account: means to measure the value of things and compare goods and services. Store of Value: allows wealth/value to be held over time.
How did the most recent missile test by North Korea demonstrate substantially increased capabilities of that country's nuclear program? What was the Trump administration's reaction to this latest test (as articulated by Senator Graham in the CNN clip)? Why is it important that North Korea has declared that it "had mastered nuclear-strike capability and become a full-fledged nuclear state"? How might this declaration open the door toward a diplomatic settlement of the crisis?
Missile could hit all of the US mainland. Policy now turns from preventing them from getting weapons to deterrence. Now NoKo may negotiate because it already has weapons.
What are exchange rates? How does the differential in exchange rates between countries affect trade (the price of imports and exports)? Understand the example of the U.S. and the Japanese yen in the 2010s that was offered in lecture. What are the implications of differential exchange rates for U.S.-China relations?
Price of one currency in terms of another. As $ appreciates, can buy more foreign currency (imports go up). As $ depreciates, can buy fewer units of foreign currency (exports go up). September 2011: $ can buy 77 yen. November 2014: $ buys 115 yen. $ has appreciated. China wants to push US dollar up to stimulate more exports to the US. China buys trasuries and mortgages to push value up.
If trade makes states wealthier, why is there resistance to globalization? Understand the Heckscher-Ohlin model of trade theory and the domestic distributional consequences of globalization.
Not all groups see income gains. Doesn't tell us about the size of the piece of the pie.
What policy options might the United States pursue to offset these risks?
Open arms, help from afar, safe zones, end the conflict, shut the gates.
What is a coalition government? Describe German Chancellor Angela Merkel's first attempt to form a coalition government with the Free Democratic Party (FDP) and the Green Party. Why did negotiations fall apart?
Parties joining together to gain 51+% of the government. SPD did not want to be a junior partner to CDU again.
What are the central benefits of democracy? What are some common arguments against democracy?
Pros Constraints Potential for State Repression Promotes Greater Individual Responsibility Democracy Is More Successful Cons Danger of Un-informed Majorities - Are citizens equipped to rule themselves? Inefficiency - Can democratic governments make timely and difficult decisions?
What is the International Monetary Fund? What are its main functions? What is the main source of its influence in the international economy? What is conditionality and how does the IMF use it to promote economic reforms within countries? Why does the U.S. have so much influence within the IMF?
Pool of capital by member countries -Set up to provide international liquidity (didn't work as world relied on $) -Limit exchange rate fluctuations (prevent currency wars from Depression that interrupted trade) -Lender of last resort: help governments in exchange rate crisis stabilize reserves with loans -Conditionality: When countries go bankrupt the IMF imposes strict terms (policy) that they must follow in order to receive money -Votes in the IMF are based on how much a country has financially committed to the IMF. The US has the largest share, so it has the most votes. -Conditionality: demands conditions that change economic condition in country and enhance long term ability to repay IMF loans as multiple disbursements: get partial money, then must implement reforms before getting more -Often imposes real pain: cut tariff barriers, cut budget deficits Ex: raise taxes and cut spending -Power of IMF stems from its willingness to lend when no one else will -Good housekeeping seal of approval necessary for private capital to come back in
According to Urpelainen, what are the pros and cons of the Paris climate accord?
Pros: made a deal with both developed and developing countries, voluntary (more realistic), addresses needs of developing countries. Cons: executing and deepening the deal; current targets won't get the job done.
What are the Cold War origins of the North Atlantic Treaty Organization (NATO)? What did Lord Ismay mean when he said the goal of NATO was "to keep the Russians out, the Americans in, and the Germans down"?
Protect Europe from the Soviet threat. Binding mechanism for American military power. Peace between democratic powers in Europe. Exactly that.
Describe the contours of the supply and demand on the global oil market? Who are the big players? How has new exploration in North America, such as shale oil, changed things?
Saudi Arabia, Iraq, Iran, Russia. US and Canada are now players.
Discuss the interrelationship between Hezbollah's activities in Syria, Israel, and Saudi Arabia in the ongoing struggle for influence over Lebanese politics. What role has the Trump administration played in these developments?
Saudi Crown Prince Mohammed bin Salman's (MBS) target in Lebanon is Hezbollah, the nation's dominant political force, which is backed by the Saudis' rival, Iran. Saudi Arabia sees Hezbollah as Iran's most potent proxy in the region so the Saudis pressured the PM of Lebanon, Hariri, to resign. Hairi is a Sunni politician backed by Saudis and his resignation toppled a coalition government that included Hezbollah, thrusting Lebanon back into the frontline of the Saudi-Iranian regional rivalry. Israel comes into the picture because Iran's rising influence in the region is also a threat to them, so a covert alliance has emerged between the Saudis and Israel. They both see an increasingly well-trained and well-equipped Hezbollah in Lebanon (backed by Iran) as a force for instability in the region.
According to lecture, why does Professor McDonald believe there is no such thing as the democratic peace? What three major critiques does McDonald raise in questioning the logic of the democratic peace theory? What is his alternative explanation for what appears to be a lack of interstate conflict between democracies?
Skepticism of democracy promotion creating peace... 1. Conditions associated with democratic transitions a. I.e. Iraq i. Initial creation of democracy and then collapse into Civil war that created a larger set of problems ii. This suggests that the long term benefits of peace may be outweighed by short term costs of a very deadly short term war 2. Post-WWI phenomenon a. Democratic peace is a post WWI phenomenon 3. American hegemony is responsible for worldwide peace, not the rise in democratic governments.
What is quantitative easing and how did it play a big role in resolving the 2008 economic crisis?
The Fed's strategy of quantitative easing was to buy massive amounts of US treasury bonds by printing new money, which drove up the price for those bonds and lowered long term interest rates. When the long term rates were lowered, almost to nothing, businesses and individuals were encouraged to start borrowing money and spending it again, which stimulated the economy, and helped resolve the crisis.
How does U.S. membership in international organizations like the UN, NATO, and WTO demonstrate the ability of international institutions to solve a fundamental problem of international politics - to create and preserve coercive power and, at the same time, constrain that same power?
The US has the power to take action and to limit others. Source of legitimacy. Can require surrender of sovereignty.
What were the causes of Merkel's difficulties in forming a coalition government? How is the "collapse of the center" reminiscent of problems facing German politics in the 1920s? How is 2017 different from the period leading up to the emergence of Nazi Germany?
The collapse of the center is similar to the 1920s in that the Nazi's captured the center right. In times of crisis and frustration, the political center tends to erode. People leave the center and support parties on the far left or far right, making politics more unstable. 2017 is different in that German politicians can't rely on extreme frustration with international agreements (Versailles Treaty) like they did leading up to the emergence of the Nazi party. It is also different in that Germany's economy is doing really well compared to the 1920s.
Watch the Jon Stewart video clip on the United Nations and explain his critique of the United Nations. Why is this critique "funny but wrong" according to lecture? Why does the United States participate in the United Nations and often abide by its decisions when it could just ignore it instead (because it possesses much greater military capacity than the UN)?
The reason Stewart is wrong is because the UN is effective. Even if International Orgs possess limited capacity to enforce rules on states, they still matter in International Relations Shape expectations about how states should behave by laying down rules- makes states cooperate through incentives or punishments Provide information about state interests and incentives to comply Example: when a country agrees to be inspected in exchange for a drop in sanctions that shows that they are willing to cooperate in the global system, when a country opens up trade barriers like China did that means they are willing to cooperate These actions give information to outside states about the intentions and motivations of certain countries and their willingness to cooperate in global systems Allocate and generate power for states- some countries may have greater holds over the organizations which means they have greater power in influencing the rules that are laid out or the agenda that is set (ie US has great power over UN Security Council which helps it to keep Palestine off of the agenda)
What are institutions? What is the difference between institutions and organizations? What are some examples of institutions in domestic and international politics?
The rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction. Institution refers to both abstract and physical entity whereas organization strictly refers to a physical entity. Examples: Electoral Rules, legislative rules, federalism.
What is the puzzle of the international bond market? Why is it so strong and has such great influence of the financial policies of states?
Think of the international bond market as an actor with abilities and influence. It has become extremely powerful in recent decades due to the lowering of international capital flow barriers. States reduce these barriers because they want to allow foreign investment. But because capital can be moved so easily between states' financial markets, the international bond market can easily reallocate financial power. For example, if the international bond market starts to lose faith in a state's ability to repay its loans (in the form of bonds), then the market will sell bonds denominated in that state's currency, which lowers the price of the bonds, reducing the state's ability to raise funds; in order to avoid that loss of faith, a state may have to increase taxes or cut spending.
Discuss the 2008 financial crisis and the role that the United States played in sparking the crisis. How did the U.S. respond to the crisis and why did the U.S. government bail out the banks? What were the political challenges associated with the bailout and what are some of the consequences for the international economic order for the bailout?
Thomas Oatley on the links between war and financial crisis · He argues that the crisis is tied to war in Iraq · Reflects a big question: how do global events like war shape politics · He argued that the war Brought the US to the brinks of another great depression · Rest of political dysfunction over how to finance rapid military expansion · 3 possibilities of how to finance military expanding o cutting the way into finding new revenue o tax hikes o borrowing · the stalemate over these options created a stalemate that led the US gov to adopt an inefficient strategy · US opts to finance the war through deficit spending; borrowing money · Where does the credit come from? abroad; foreigners · Capital inflows that finance the boom in American economy strengthened the American dollar o Negative consequences for the manufacturing sector o Higher $ raises prices for exports Money put into military doesn't come back to help home economy--but increases the value of US dollar · He argues that inflow of capital has to be an investment somewhere o Sectors protected from international things o Housing market o Inflows encourage riskier lending pressures in the financial sector that eventually bring the entire system down · Willingness for the flow of capital inside the US enables the US to launch a series of wars that American public paradoxically supported but was unwilling to pay for · The dollar's position in the global economy helped financed a war that people didn't want to pay for. Some nations were willing to allow their banks to fail (ie Iceland) Taxpayer money was sent towards large banks that had abused their power and caused the worst economic crisis since the Great Depression
How does this discipline from the global capital markets affect democratic politics? If bond markets constrain national monetary policy because of the threat that capital will move to a different market then do elected officials have the ability to respond to voters' demands?
To reassure creditors, they need to push interest rates up, but that puts the domestic economy into a recession. Nope.
What is the Trifflin dilemma? What are its implications for the U.S. economy? What are its security implications?
Trifflin dilemma: as the global economy grows, it needs more expansion of money supply ($) to facilitate transactions; however, get this expansion via greater US government debt Sustainable? Cannot run deficits indefinitely, just like credit card companies, eventually cut you off Ultimately, inflationary which drives the value of the dollar down But can sustain as long as people still willing to lend money to Treasury: can " measure this appetite through yields (interest rates) in Treasury markets This is why controlling budget deficits is so important after recovery began Example: China pressure on Obama about Obamacare because worried about what to do to deficit Security implication: if China refuses to take on more of our debt this would halt our ability to grow our military US would be forced to rely on only taxes for budget
What is the shale oil revolution? What does it mean for the US to be energy independent and how does the shale oil revolution affect American energy independence? How has the shale oil revolution affected the global price of oil and how have lower oil prices affected geopolitics, especially in the Middle East?
US and Canada producing oil from shale. We can produce our own oil, rely less on other nations. Brought lower prices. Saudi Arabie engaging in a price war, to higher oil prices.
Describe the anti-corruption crackdown initiated by Crown Prince Mohammad bin Salman (MbS). Why do some commentators describe this as a purge?
Variety of wealthiest Saudi officials and entrepeneurs in the country, including one of the world's wealthiest men, Prince Alwaleed bin Talal, arrested as part of anti-corruption round-up. Seen as a power grab by Crown Prince Mohammad bin Salman, who is removing potential opposition as he consolidates power before taking over for his father. Attacked various leaders of power centers - National Guard, economy, government.
Explain how the mobility of capital has increased the discipline of global capital (bond) markets. What happens when foreign capital holders lose confidence in a government's monetary policy? What are some recent examples of this?
When foreign capital holders lose confidence in a government's monetary policy, they tend to sell assets denominated in that currency. Currency depreciates, Government can reassure investors (or bring them back) by offering higher returns i.e. push interest rates up, but...raising interest rates steeply pushes domestic economy into recession. Ex: countries with a fixed exchange rate regime like the Eurozone. They are legally required to preserve the value of their currency. This means that governments in Europe needed to take steps to bring foreign investors back, so they would stop selling those government bonds. How do they do that? They raised interest rates, they raised taxes, they cut government spending, and they put people out of work. All of these measures that were necessary to reassure bond investors depressed domestic economic activity in Europe and put people out of work. In Greece and Spain, unemployment rates are well over 20% because these governments had to adopt such policies to try to protect the value of their government debt. Also Ireland, Portugal, Cyprus, Italy in the Euro crisis.
How and why has Wilsonian foreign policy been a more or less important element within U.S. foreign policy over the years?
Wilson and Versailles. Wilsonianism during the Cold War. Democratization at the end of the Cold War. Democracy promotion after the Cold War. *
What are the three different distributional struggles related to the problem of climate change?
Within countries: coal vs. solar, oil vs. general public. Among countries: developed vs. developing. Across generations.
What were the two contradictory messages that President Trump sent to world leaders during his trip to Asia?
World needs to get behind the US to contain North Korea. US will no longer let countries take advantage of it through "bad" trade.
