Summary: Although globalization (trade and development) tend to make people better off on average, the benefits normally do not accrue equally to everyone. Some groups benefit more than others, creating economic inequality. Today we will begin to study this problem, focusing specifically on the effects that free trade and migration have on it.
Inquiry Question: Have free international financial markets been good or bad for East Asia?
You should have replied to two of your classmates on Schoology, agreeing with one and disagreeing with the other.
Lecture: Lecture on the free trade agreements, migration, and inequality. We will watch these videos. I will explain and answer questions.
Specific Factors Model (4:06)
Factor Price Equalization (5:26)
The Heckscher-Ohlin Theorem (8:02)
Economics of Offshoring (8:36)
Tariffs and Growth in the 19th Century - import substitution (5:39)
Introduction to NAFTA (4:46)
Read: This article on migration.
Annotate the linked text: Make at least three annotations using hypothes.is. In one of your three annotations include a link to an article related to the text and today's inquiry question. Use this rubric to guide you. Use this tutorial if you're not sure how to use hypothes.is.
Annotation #1 (Thoughts): What is the author thinking, trying to say? In this first annotation you should use hypothes.is to highlight a section of the text in which one of the main ideas (thoughts) expressed by the author is clearly stated. Explain how the passage relates to today's inquiry question.
Annotation #2 (Questions): What questions do you have about the text after having read it? In this second annotation you should use hypothes.is to highlight a section of the text in which the author expressed an idea that caused a question to arise in your mind. It could be a question relating to something you would like to research this semester or just something about which you are confused. Explain how the passage relates to today's inquiry question.
Annotation #3 (Epiphanies): Is there something you read in the text that opened up a way of thinking about the world that you had never thought of before but will influence how you think about it now? In this third annotation you should use hypothes.is to highlight a section of the text (an insight) that is an epiphany for you. Explain how the passage relates to today's inquiry question.
Required: Finish the reading and annotations if you did not complete that in class.
Optional: Listen to this podcast.
Carmen Reinhart of the University of Maryland talks with EconTalk host Russ Roberts about the ideas in her book This Time is Different: Eight Centuries of Financial Folly (co-authored with Kenneth Rogoff). They discuss the role of capital inflows in financial crises, the challenges of learning the right lessons, and what is generally true about financial crises over time and place. Reinhart applies these observations to the current crisis, discusses the possibility of the U.S. defaulting on its sovereign debt, and discusses the possibility of financial reforms that might make a difference.