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 Flipgrid, 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.
Balance of Payments (5:56)
Trade Imbalances (8:12)
The Classical Gold Standard (8:39)
The Gold Exchange Standard (7:17)
Bretton Woods (8:24)
Currency Manipulation (5:13)
Read: Read the four articles linked below. Make at least four annotations using hypothes.is (one on each document). One should be an annotation that relates to today's inquiry question. The annotations should be a commentary on a passage in the reading or a link to an article that relates to a passage in the reading.
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.