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12/1/15 Communism and Post-communism: Russia Main/Only ruling party: Communist Party controls resources, distribution, industries, etc. Background: -Capitalism had “run its course” and there needed a change. Workers wanted to overthrow capital. *Idea was that workers would rule. Socialism vs. Communism -Karl Marx (1818-1883). Society as he saw it was controlled by capitalists. Capitalists were controlling workers. “Workers will eventually rise up and overthrow Masters, which will be called socialism” Eventually, society will become communist. *Ultimate equality is ultimate goal. Qualities of Communism: Communist Party Rule -Party makes change over time, so State will follow. Party is driver, State is “tool”. *Party and State are separate, but Party controls State. Centrally Planned Economy -State-owned Economies. (ex: When Stalin took over USSR, he began expanding industries like surrounding countries. Centrally planned econ. Worked for a period of time, then success slowly decreased) -Flaw of central Econ: lack of creativity, innovation b/c there’s a quota, strict guidelines, etc. Took away factor of competition. Case-study: Russian Federation -Opposition and Feedback: Helps stabilize gov. and ultimately make desirable by citizens -Between transitions of Presidents, government/economy collapsed. Currency worth very little value, lack of basic needs (i.e. food) for citizens. Western countries figured that since communist USSR wasn’t really working out, capitalism would have to be implemented! -Putin comes to power 1999. Great administrator, unlike past leaders. Price of gas significantly increased, and Putin was able to stabilize economy. Sent troops to quell civil dispute among native groups. Now, there’s no one who can challenge him. He’s built upon a massive amount of his own power. -Oligarchs: control large, large portions of Russia’s wealth. Some of them decided to challenge Putin, so he sent them to jail for live TV to see. -Since 1999- Putin has been sole power/rules for Russia. **There’s a dichotomy between civilians who have deeply-rooted respect for Putin b/c of his econ. Success when he first came to power, and those who criticize him for current events State - Bicameral legislature - Upper house: Federation Council - United Russia (Putin’s political party that has won all elections since 2003) - Highly-centralized controlled by Central Gov. in Moscow. Thought of as legacy of communist-rule power. - The President has power to appoint governors. State and Society - Putin has so much power that it’s very unclear/uncertain as to who will take over next… *Putin has created system of personal rule to secure power using these strategies… 1. Benefits to Build Support. B/c of benefits from gov., peoples’ living standards have increased. Therefore, people have general respect for Putin 2. Rigged Elections. Yes there are elections, yet they seem to favor United Russia (Putin’s Party) 3. Political Repression: “Space for Descent”. Gov. controls everything. They can add/get rid of institutions based on any grounds they have. Political Culture -After 90’s, living standards went down. People exclaimed, “Democracy is to blame for this!” *Support for democratic values is not high in Russia compared to in other countries. -Rising tide of nationalism. -Shock Therapy Political Economy -Oil and gas exports now drive Russia’s economic growth. Has power to threaten other countries w/ raising prices of goods to maintain superiority. 11/10/15 Christian Democracy -Similar to social democrats, b/c they want to fight divide between classes -Reliant on transfer payments (wealth is redistributed) *Used to look to church for guidance, not anymore (NOT religious parties!) -View on capitalism? Pro-capitalism, but want to address inequality. So they support unions, welfare state, high tax and spend, provide transfer payments -Ex: Austria, Belgium, Netherlands, and Germany Corporatism -Groups organized into limited number of hierarchical associations and recognized by state and participate in policy-making process Case study: Fed. Republic of Germany -Unified state in 1871 by Bismarck -Now, biggest econ. In Europe -Post-WWI: Weimar Republic- first democracy but troubled one Political+econ. Problems Nazi Party and Hitler, 1933 -Militaristic/glorifying culture -Anti-semitism -WWII: Occupation of Allies into 4 zones Reduced to 2 during Cold War (East and West Germany). When re-unification happens, still takes a long time for Germany to reincorporate East side. Organized into concentration camps: -Very well organized, well-run despite how immoral and despicable goal was. Nationalism: - Post-WWII: very little nationalism, hesitant about showing love for their country. However, getting better over the years. *Now, Germany wants to show rest of E.U. that they will never be threatened by German hate/anti-semitism, etc. again. The State: -Semi-sovereign character: authority divided between central gov. and 17 federal states (lander) -Bicameralism: - Bundesrat, upper chamber; - Bundestag, lower chamber, selects gov. *Judicial review: make sure laws passed by gov. conform to “basic law” Political Culture: -Reconstructed after WWII, Holocaust, away from Nazism and anti-Semitism -Post-nationalism: bigger than the nation. Ex: Germany has to maintain/withstand peace among all of E.U. *Integration/solidarity among countries - Political Economy: -Steady and fast econ. Growth -Model Deutschland: social market economy (some capitalism handled by state) -As little state intervention as possible, but as much as necessary -Consensus and coordination of private actors 11/05/15 Extreme Market Economy (Capitalist Democracies) Ex: United Kingdom Extreme left-wing parties are absent or very weak (parties catering to labor classes). Exclusively working class party. Socialist parties absent. Class identification is weak (like upper, middle, lower) Market capitalism is strong. Role of gov. in taxation and spending is low. To operationalize extreme market economy: use factors like… class voting and union density Role/Size of Public Sector (taxes and gov. spending as percentage of GDP) Welfare Effort- proportion of GDP on spending Short History of U.K. -Conservatives (Tory) Thatcher ( she was staunchly against unions, so she privatized industrie) -Labor Party (After WWI) Blair ( goal of social democracy, sort of like S)eden -Liberal Democrats/UKIP 2015 Election- Conservative Majority 2010 Election- Conservative/LibDem Coalition Reflection on Reading Iversen and Soskice *Electoral composition (E) Explains government Partisanship (P) which ultimately affects Redistribution (R) ( P = f (E) with f > 0 (SE.1) R = g(P) w)th g > 0. (SE.2) *Middle class has 2 opportunities: ally with poor to potentially “to exploit the rich” or “support the rich to avoid being exploited by the poor.” Nov. 12 2015 Comparing U.K., Sweden, Germany Physical Well-Being -Operationalize by: Poverty rates (percentage of households living below poverty line, which is $23,850/annum. Does NOT include public services or welfare benefits). Informed Decision Making -Operationalize by: Literacy skills: percentage of pop. scoring lowest in International Adult Literacy Survey (IALS). Safety -Operationalize by: Homicide Rates/100,000 *Germany’s homicide rate is 1/3 less than that of U.K. Sweden falls between Germany and U.K. Democracy -Quality of democracy (Sweden is highest) *By comparing factors in different countries, we can discover impact of gov. policies *Note that the way these countries operationalize abstract concepts is different than we’ve learned before. This is because the countries have very similar infant mortality rates, literacy rates, etc. We operationalize these abstract concepts differently to show accurate differences between the countries. Resources to Compare Countries: CIA World Factbook Nation Master Google Data Notes from Reading “Wall Street on the Tundra”, Michael Lewis -Basically, Iceland citizens realized they could earn a living by handling hedge funds/handling currency exchanges, so they turned to that and the fishing industry significantly decreased as a result. -New-investment banking industry resulted in “nine times” Iceland’s previous wealth -By last October: collectively 100 billion in banking losses!! -Icelanders tried to model off of U.S. economics: forex: tried to buy as many “assets as possible with borrowed money, as asset prices onThis resulted in disaster, since most Iceland citizens didn’t really know how to run corporate financing, investment banking, etc. Nov. 3 Notes Western Democracies -3 political primary models among Western countries: Social Democracy: (ex: Sweden)all groups of society (labor, capital, state) are willing to compromise/trust or solidarity (rich will help poor). Key terms: proportional representation, solidarity Extreme Democracy: (Ex: United Kingdom) Christian Democracy: (Ex: Germany) Features of Social Democracy -Strong working class but thoroughly capitalist -Public sector is very strong (provides many jobs, welfare services, high organization of labor force) *Eligibility for welfare state programs is universal (could be bad though, b/c unemployed could take advantage of system) *Welfare state is comprehensive: “cradle to the grave” *Redistributive: fairness between rich and poor *Impact: detach citizen’s standard of living from their job Criticisms of Social Democracy *High taxes, large welfare states, much deficit spending *Large welfare states could undermine work ethic (unemployed could take advantage of system) Major Steps to take in order to become more like Sweden 1. Deregulation 2. Marginal tax rate 3. Private schooling/tax Case Study: Sweden (In book!!) *Real power resides w/ core executive, prime ministers, and their cabinets State and Society -SAP (Swedish Social Democratic Party) Political Culture -Very Individualistic -Equalitarian values (between CEO’s and employees) -Potential dilemma: minorities/immigrants coming in, have different cultures/values that influence their ideas. Political Economy -About half of Swedish citizens are making income from gov. Reflection on Reading “The Real Greek Economy: owners, rentiers, opportunists” by Doxiadis Top reason why Greece is suffering economically: small businesses, family- oriented culture, service-oriented business, opportunist motives are deterrents to creating larger, more efficient with larger scope economy Decrease in taxes Increase in gov. deficits Income rent: something that doesn’t add value. In Greece, whoever gets that income rent is doing nothing to add value, they just get a bonus. (ex: Taxi drivers must earn “medallion” if they want to be employed as a taxi driver, but Uber drivers do not have to do that. Thus, there is no value to “medallion”.) 12/3/15 Communism and Post-Communism: China Case Study: China People’s Republic of China (PRC) 1.3 B people th 4 largest in area nd Averaged 10% econ. Growth since 1980 (very rare econ. Growth) 2 largest econ. In the world History: Ancient Civilization (~4000 yrs.) Over 2300 yrs. of dynastic rule 1911-1916: Collapse of dynastic rule of China *Foreign powers/intervention in China: Major factor/common pattern in China’s history. Competition between 2 major political parties: Nationalist/Guomindang (Chian Kai-shek) and Chinese Communist Party (CCP) (Mao Zedong). Zedong basically convinced Chinese that they needed to break away from Japanese rule after WWII. China Under Mao: -1958-60: The Great Leap Forward: leap into industrialized age, like Russia (farming). -1966-70: Great Proletariat Cultural Revolution: “out with the old, in with the new” in terms of culture. -Reform and Opening- Mao dies, 1976. So Deng Xiaoping comes to power (Mao’s former “right-hand man”). Reform and Opening -Build diff. socialism than Mao’s -Major Econ. Growth -Build socialist market economy-dominated by capitalist markets but also provides major role for the state. Party and State -State is controlled by the Party State and Society -Party wants Middle Class to be a part of their group -Repressive of free expression/countering politics: i.e. Great Firewall censoring of web access -Limited elections -“The Chinese Dream”: Chinese should be major global power, people should have opportunity to become extremely successful, as long as they support the Party Political Culture -Majority of Chinese pop. reports that they support political system -People report “lack of democracy” but believe that political system is satisfactory -Over half report that they’re “satisfied with democracy in China”. Keep in mind that idea of democracy in China is very different from Western democracy guardianship democracy Political Economy - Socialism w/ Chinese characteristics - Emerging challenges: cheap labor ending, how will Chinese power plants adapt? Econ. Downturns will affect China. Still culture of corruption/bribery, thus hampering China’s growth. Problems also include how to maintain econ. Growth and how to regulate major inequality among incomes. Environmental Challenges is also a problem. Nov. 17, 2015 Less Developed Countries Brazil-flawed democracy Nigeria-semi-democracy Iran-authoritarian regimes *Spectrum of democracy: full, flawed, semi, authoritarian Characteristics of flawed democracy Civil and political rights are not fully protected Political parties use patronage to buy votes Greater capacity than weak democracies Stronger societal foundations than weak democracies Large inequalities in distribution of wealth and political power Case Study: Brazil Colonialism by Portugal, 19 century. Led to European elite and African slaves, periods of growth and stagnation Much state intervention in economy/state-led industrialization Based on extractive natural resources leads to periods of growth and decline. Therefore, economy is not diversified when it experiences this stagnation. Quick History! President Vargas initiated state-led industrialization Mid-20 century: repressive military rule. It was part of elite and controlled many resources. However, they achieved great economic growth. “Lost decade”: growth from mid-20 c. was lost during 1980’s. Brazil’s State 3 reps from each of 26 states (81 reps) Upper/lower houses President directly elected for two 4-yr. terms Presidents from worker’s party in the last 15 years: Lula da Silva Dilma Roussef Brazil’s State and Society One of most unequal societies in the world. (How can we tell???) We can operationalize by… Gini Index and percent distribution of wealth “Bolsa Familia”: state will provide welfare/cash if kids in household go to school. Helps support extreme poor. Political Culture Brazilians support need for a strong state Nov. 19, 2015 Semi-Democracy -Based on personality and patron-client relationships -Tend to have weak states w/ little autonomy or capacity. Leads to… Temptation to behave corruptly Difficult to improve health, education, safety Ex: Bangladesh, Pakistan, Nigeria Case-Study: Nigeria -Africa’s most populous country; among top 10 oil exporters - Gained independence from Britain, 1960. -Borders created by British colonialism. Major ethnic and religious diversity, which can cause political dispute -Has not been able to institutionalize economic growth *Independence is based on effects of colonialism Effects of Colonialism -“Divide and Rule”: British “pitted” ethnic groups against each other, to ensure ethnicity was primary societal cleavage/concern in independent Nigeria -Tendency to produce authoritarian leaders to run colonies - Leaders are encouraged to intervene with imports/exports, distr. Of resources, etc. Nigeria-State -Federal System *“Sharia” Law: Quran Law. Body of Islamic Law/legal framework in which public and some private systems are based on Islam. Nigeria-State and Society - Political parties in Nigeria are weak and do a poor job of linking citizens to the state (not just a party in Nigeria!) - Political Culture - Not long history of democracy - Citizens very reliant on gov. - People support democracy, but sometimes wish for military rule again -Culture of corruption is widespread Political Economy -Neither military or civilian gov.’s have established strong, sustained Econ. Development (large level of corruption) -Economy- based on rents -Property rights, market regulation, infrastructure is weak causing less competition, more consolidation -Much of econ. Is based on rents Electoral Authoritarianism -Does have regular elections that seem to be free, fair - Change of gov. Case-Study: Iran -Proud, long history -Shiite vs. Sunni Muslims (Iran is Shiite, Saudia Arabia is Sunni which results in turmoil) - Now, Iran is very institutionalized and controlled by clerics (Theocracy, b/c religious leaders are in control, like Ayatollah Khomeini) -There is an electoral and authoritarian part to gov. Government -President elected for 4-yr. term. -Controls budget and appoints Cabinet, with parliamentary approval. -Women cannot be President. State and Society - 3 major political factions - Reformists: believe Islam and democracy can coexist 11/24/15 Helpful Notes for Final!! *For case studies, there will be many factual questions Ex: In Iran, what does the Reformist Party advocate for? Article on India: -Little distribution of wealth -Richer have gotten richer since liberalization -Everything was in public sector pre-liberalization. Everything was owned by state. -Factories became privatized. -Allowed for investment to come in to country from somewhere else more competition -Privatized natural resources industries, like oil vast increase in wealthy elite -(Local patron-client relationships prevalent in India) -Capitalist system, so it’s not illegal to avoid sharing distribution of wealth with poorer classes Article on Africa: -Despite various setbacks like lack of education, health, women’s rights, etc. everyone has a phone!! everyone has access to communication Kelsey Oliver Review of Midterm: 20. Somalia’s current political situation shows that it lacks: A functioning state (the state’s reach doesn’t get to the borders). You could also argue that it lacks a governable territory. So many groups competing for power, so territory is not governable. 22. The assertion that states evolve in response to the need for the coordination of complex societies would be made by: someone who is a modernization theorist. Marxists: governments are controlled by elites Modernization theory: talks about when state becomes more complex 24. Examples of federal government: Germany (NOT France, China, or Japan) 31. Which of the following is true of political participation that takes place in authoritarian countries? d. In authoritarian countries, participation often takes the form of satire and ridicule that undermines support for the gov. (political participation takes place in authoritarian countries, but sort of underground) 34. Party systems are distinguished from each other by: Number of political parties, ideological breadth (how far distance is between leftist and rightist party), and degree of institutionalization 41. Which of the following does political culture do? It shapes whether citizens feel loyal or rebellious Self-expression approach: how gov. transitions from survival-roles in society, identity, etc. Civic culture approach: congruence between political structure and political culture/citizens (they match to create political stability) 47. Robert Kaplan predicted an upcoming period broad social anarchy due to: Growing instances of statelessness (or lack of social capital) Notes!! Authoritarianism system: one guy, one leader, has absolute power in decision-making Examples: Kim Jung Un (North Korea), Vladmir Putin (Russia), Chavez (Venezuela) 2 problems Autocrats have to manage: 1. Instill authority. 2. Maintain control. Different types of authoritarian systems: 1. Military leaders 2. Coup d’état. 3. Monarchies “How Democracies Emerge” by Sheri Berman (reading) -Preconditionists vs. Universalists -over time, people shifted away from structures of democracy to process of democratic transitions -New Universalists (during Bush presidency): believed democratization was like “shock wave” by getting rid of authoritarian rule (ex: “Muslim Middle- East”) and liberty/freedom would immediately follow for citizens on the other hand… -New Preconditionists argued that democracy only “flourishes” in places with particular conditions/certain developmental path *Zakaria: argues for authoritarian rule In truth: all sorts of countries have been able to transition to democratization 10/13/15 Notes Authoritarianism Authoritarianism vs. Democracy -Ex: Rwanda/Singapore/China *Watch “Hotel Rwanda” Authoritarianism: -When one person/small elite group has all political power -There are no independent courts of law/guarantees to free and fair elections, so citizens cannot hold rulers/”Chronis” accountable= lack of Accountability Post-Cold War -USSR has “tentacles” around world spreading Communism… was this a new wave of Democracy? -BUT, persistence of authoritarianism: Prevalent in parts of Africa, Asia, and Middle East Prevalent in China Prevalent in Russia, Venezuela Russia: in grey zone, cannot really be called democracy (however, # of democratic nations have increased over time) Democracy scale: can be found on pg. 338 in textbook Two Problems for Autocrats: -Problem of authoritarian power sharing: In order to prevent anyone from taking power away from you, you must… 1. Be aware of powers trying to overthrow you (usually not from general public, threatening power usually comes from powerful institution, etc.) 2. Prevent coup d’état’s 3. Repression: people are only power if they’re organized. ( ex: firewall: don’t let people talk about issues, begin to organize.)etc 4 Types of Authoritarian Regimes: 1. Monarchical: Ceremonial vs. Ruling (make policy decisions, like hiring/firing prime ministers). Ex: kings and queens. -Solve problems by… sharing power among family, support of religious leaders/tribes, seek foreign support 2. Military rule: takes control of state. ( Ex: Coup d’état/jun)a -Solve problems by… decision-making council or junta, control sectors of society to build support 3. One-party: don’t allow elections so other political parties can’t compete. ( ex: Communist Party-led China and Laos, Vietn). If there are multiparty elections, the ruling power always wins ( ex: Cambodia, Zimbabwe w/ Mugabi as ruler, Tanzania, Malays)a -Solve problems by… finding elite party members to make policies, receive special privileges, as well as holding “rigged elections” 4. Personal Rule: power for life -Solve problems by… patronage/ethnic/military support Reflection on Reading “ ASIAN VALUES, AUTHORITARIANISM AND CAPITALISM IN SINGAPORE” by SoekFang Sim Ruling party (PAP) seems to know what they’re doing. They seem to respond to people’s demands, except for oppositional politics. -Now, all basic needs are met for people in Singapore, standard of living is great. Why aren’t they asking for more then? -Everything is run on first-based principles. Ruler created oppositional ideology in which he was sure would work. Explaining Authoritarian Persistence in the Middle East: - 10/15/15 Notes Reading for homework: “What Democracy Is… And What It Is Not” by Schmitter and Karl “Modern democracy”: rulers are held accountable for their actions in “public realm by citizens, acting indirectly through the competition and cooperation of their elected representatives” Competitive processes and channels for expression of interests and values (like electoral channel) Democracy: (Democracy index: Full, Flawed, Hybrid, and Authoritarian) Transitions to Democracy: -Greek (demos, people) and (kratos, rule) -2 forms: Direct rule (ruled by the people) vs. Representative Democracy (elected representatives of the peoples’ interests and views). *Min. Standard of Democracy: Virtually all citizens are eligible to vote in free, fair and periodic elections (Schumpeter’s Standard) Other standards include… voting, widely accepted system, freedom of information REMEMBER: there are many types of democracies, don’t just use United States model to define democracy!! 3 Waves of Democratic Transition: Samuel Huntington: 3 Democratic waves ~ begin and recede 1. Patterns of beginning and receding 1 ~ (ex: American & French Revolution: Americans are molding, French get ideas and decide to transition also. Recede begins in 1930s). nd 2 ~ Defeat of Fascism-Post WWII: -Germany, Austria, Japan democratic -Decolonization and independence -Recede: in 1960s- Military rules in many Asian/African states 3 ~ Portugal 1974, then Greece & Spain. This wave moved to Latin America. Military dictatorships turned to democratic in 1980s. Then Asia (India, Philippines, Korea, Turkey, Pakistan) became democratic/parliamentary once again after direct ruler for 2 years. 4 ~ Europe: Berlin Wall fell-Poland, Hungary, Czech, Bulgaria, Romania and Soviet Union. *No Bourgeoisie, no democracy *Why do you need strong enough middle class to demand participation in gov. from ruling autocrats? Has to do w/ distribution of resources in society: elites are able to give middle class participation, b/c they know middle class won’t be able to take control of resources. Otherwise, like in Communist uprising, poorer class will rise up and try to take control of resources. Key word: redistribution Case: Mauritius: -Stable democracy since 1968 -Very diverse country (Indians, Chinese, Creoles, Hindus, Muslims, diff. languages, ethnic groups, etc.) -Despite this diversity, Mauritius is able to maintain democracy… how can they do this? -There are platforms for all ethnic, religious, etc. groups to participate in politics, like opportunity structure -Other factors: Checks and balances proliferate, no standing army ( Other examples of no standing army: Costa Rica, Panama ) Conditions/Factors for Democratic Transition: -Cultural explanations: Countries w/ large Muslim populations are less likely to be democratic; Islam’s theology is not conducive to it, however this is contradicted by Arab Spring. -Econ. Explanations: Certain kinds of econ. Development foster democratic gov. Oil- producing countries of Middle East are wealthy, but not democratic. *When there is oil wealth, citizens will speak out if they feel their basic needs are not being met. ( ex: curse of oil-authoritarian rulers use oil revenues to pacify pu)lic -Other Explanations: Length of democratic stability can depend a lot on econ. Levels ( ex: higher econ. Base means more likely for democratic stability to le)gthen Democratic transitions are also influenced by international environment/transitions ( ex: Eastern Europ). Called *diffusion effect: countries surrounded by democracies find it in their interest to copy their neighbors Does diversity undermine democracy? Contrary to prevailing wisdom, diversity did not hinder democracy ( like in Maurit).s Countries have found ways to protect ethnic minority(ies). ( Ex: majority holds access to power-John F. Kennedy, minority b/c he’s a Catholic, had to focus on listening to people, not p)pe Varieties of Democracies: -Can find in Schmitter & Karl BB* Article -Various concepts, procedures, principles of democracy meeting min. criteria of democratic gov. -Different: systems of democratic gov./electoral rules/party systems *You’ll never be able to identify strict, pure, pristine democracy-there is no hierarchical, overpowering democracy Presidential v. Parliamentary v. Hybrid Democratic Systems -Think about… who voters will vote for. -In France (hybrid system): vote for Prime Minister who is elected for by legislature, and President is elected by people. Electoral Rules -Plurality (U.S./Canada) v. Majority (France) -Proportional representation (PR) rules: once parties attain certain # of votes, they’re awarded seats in legislature based on percentage of votes they receive. -Electoral Rules shape (bias) party systems: 2-party or multi-party *No electoral system is perfect. Democracy, Authoritarianism, and Capabilities -Infant Mortality Rates: much higher in authoritarian than democratic -Literacy Rates: less of a gap, but still higher in democratic than authoritarian Political Economy Notes 10/20/15 Background: Capitalist vs. Social Communist Systems Capitalist: market with little or no intervention from government Political Economics: more about role (or lack of) the state. Ex: U.S. has mixed economy, b/c it’s not exactly free market. Economics: -Allocation of scare resources, goods and services Role and reach (intervention) of states in the market systems varies. Market Systems: Market systems: refers to an economy in which production for profit is intended for and coordinated through private exchanges between buyers and sellers. Advantages: promotes efficiency and productivity -promotes innovation -more conducive to democracy than command economies Disadvantages: -Periods of “boom and bust” (everyone is engaged in buying producing, then periods where everything goes down. Ex: Recession in 2007- 2008) -Tend to generate rising inequality -Create harmful spillover effects or externalities (something that is byproduct that is NOT reflective of price of byproduct. Ex: global warming, pollution when you buy a car) Role of State: Two Extremes Milton Friedman: Two ways to coordinate econ. Activity of millions. -Central planning by government (command economy) -Voluntary cooperation of individuals via the marketplace (laissez- faire) Sates can intervene in market systems to address its shortcomings: regulations and protections *BALANCE between markets and states: The degree to which states should intervene in economy States and Markets Market systems require states to function and cannot exist w/out them. Markets need states to: -Create common currency -State is Umpire; someone needs to make/enforce contracts (rules of the game) -To supply public goods, such as transportation networks and police protection, that markets cannot furnish themselves Balance: State Intervention -In post-WWII period, state intervention became dominant model around the world -Due to recessions in 1970s-new leaders such as President Ronald Reagan (U.S.) and Prime Minister Margaret Thatcher (GB) argued that state intervention was cause of economic disaster Washington Consensus: Neoliberalism “Get the state out of business” Case study: India -1947: India becomes independent, leaders wanted state intervention in econ. -socialist inclinations and ambitions created strong state in which citizens could identify -Abandoned statist economic policies in 1980s. (Privatization and Deregulation) Globalization: refers to increasing flow of money, goods, people, ideas across borders/global development of markets -Global supply chains: components to make product come from many countries being involved -Globalization has varied outcomes, b/c it’s refracted through diff. institutions and governing coalitions: Does it help or hurt? *Reading: “Think Again” on Globalization: -Talks about misconceptions on globalization 1. There had been previous forms of globalization (ex: Silk Road) 2. Won’t be slowed down by econ. Crises/barriers, like terrorists **Look at Forms of State Intervention from textbook! *if interest rate is too low, it raises inflation levels Kelsey Oliver Reflection after reading “From Africa to Kent: following in the footsteps of immigrants” by Trilling How would this situation have played out 50-60 years ago? -Something similar to situation of Syrian refugees DID happen 50-60 years ago with Palestinian refugees going to Israel. -There’s more info. on crises/disasters that people face when trying to cross borders Refugees vs. Economic Migrants -More sympathetic connotation for refugees than for economic migrants With this problem of Refugees/Economic Migrants moving in to other countries what should policy makers do? -More accepting/less accepting? Reflection on Other Reading “Root Causes” by Acemoglu What are fundamental causes of poverty, war? -Geographic vs. Institutional approaches: Question: Why do some countries remain poor while others have prospered? -Geographic Hypothesis (ex: forces of nature: climate ecology or disease) -Institutions Hypothesis (ex: human forces). Other examples include… investment in machinery, human capital, better technologies, therefore countries experience economic prosperity -Some internal factors: 3 Good Characteristics of Good Institutions 1. Property Rights 2. Elites in society are not too powerful, some form of controlling them (If they have unlimited power, they capture society and extract value from masses) 3. Some form of democracy/choice/participation of the masses in policy making. Ex: people demand state for better education Evidence -Euro. Colonization and spread of “good” or “bad” institutions in previously dissimilar societies (reversal of fortune) -Extractive colonies (ex: Congo controlled by Belgium, Heart of Darkness!) vs. Settler colonies (ex: United States, Australia, New Zealand) Case Study: in Zimbabwe: white settlers were excluding rest of masses from their ventures Explanation Why do bad institutions persist? -Because some groups and not others benefit from status quo What about countries that were never colonized? -Could be culture, lack of education from other societies (not one real answer!) *Each society has some factors that prevents/supports it to either remain poor or prosper 10/29/15 Economic and Human Development Reflection from Reading Ch.8 in The Good Society Wealth and Wellbeing -Overall wealth/poverty highly affects lives of citizens -Ex: Being born in Sweden vs. Angola (cholera epidemic) -Why are some countries rich and some countries poor? Economic Development -Process of increasing country’s wealth/diversifying goods and also increasing efficiency of production Human Development -Process of expanding choices people have to lead lives they value -HDI: Human Development Index has 3 components: 1. Health (operationalized by life expectancy 2. Knowledge (operationalized by adult literacy & school enrollments) 3. Living standard (operationalized by purchasing power) HDI In depth: -score between 01 -Ex: Norway (0.955) had highest HDI score; Mozambique (0.313) was lowest. -HDI scores don’t include safety/democratic rights, mostly just measures Knowledge/capabilities approach Case study: South Korea (1950s-2005) -Able to overcome inefficiency of corruption because of… 1. Military understood that surrounding borders caused high tension (China and North Korea), therefore S.K. had to be self-sufficient 2. Military needed capitalist class. 3. Gov. inherited well-functioning schools/established democracy from colony of Japan 4. Considerable foreign aid from U.S. Levels of Development Among Countries -UNDP-HDI Levels: very high/high/medium/low -World Bank: per capita levels: high/upper middle/lower middle -Outliers: e.g. Saudi Arabia Levels of Poverty and Capabilities -Extreme Poverty and Relative Poverty -Sub-Saharan Africa has highest percentage of extremely poor people -Region w/ largest number of absolutely poor is South Asia (Bangladesh, India, Pakistan) -India has more malnourished children than Sub-Saharan Africa States and Development -Strong v. Weak States 1. Can defend territory, maintain order, implement policies effectively, and collect taxes 2. Corruption (ex: Myanmar-people were so isolated, were not able to develop “economic path”) Why different levels of development? -Geography? -Culture? (ex: Max Webber, Protestant work ethic of Europe) -Colonialism? (HaitiFrance. 1700’s, Haiti was colony of France. Purpose=extraction.) -Leadership? -Institutions: economic and political Inclusive vs. extractive institutions What does it mean to be economically developed for our Good Society? *Is high income per capita income associated with higher capabilities? -Physical wellbeing- even low per capita countries have reduced infant mortality -Informed decision making-not all poor countries have poor literacy rates -Safety- Homicide rates=no correlation between poor or rich countries -Democracy- depends, there isn’t really correlation between increase in civil+political participation and rich countries PSC 1001 Notes 10-15-15 Democracy has two types: o Direct Democracy: Rule by the people o Representative Democracy: Elected representatives of the people’s interests and views Virtually all citizens are eligible to vote in free, fair, and periodic elections. (Schumpeter’s Standard) 3 Waves of Democratic Transition: o Samuel Huntington: 3 Democratic waves ~ begin and recede First ~ begin: American/French Revolution / Recede: 1930s Second ~ Defeat of Fascism – Post WWII Germany, Austria, Japan democratic Decolonization and independence Recede: 1960s – Military rules in many Asian/African states Third ~: Portugal 1974, then Greece & Spain The wave moved to Latin America )Ecuador, Peru, Bolivia, Argentina and Brazil); then Asia (India and the Philippines, Korea Turkey and Pakistan) Finally in Europe: Berlin Wall fell- Poland, Hungary, Czechoslovakia, Bulgaria, Romania and finally the Soviet Union itself. Conditions/Factors for Democratic Transition o Cultural Explanations Countries with large Muslim populations are less likely to be democratic; Islam’s theology is not conducive to it. Contradicted by Arab Spring. o Economic Explanations Certain kinds of economic development foster democratic government. Oil-producing countries of Middle East are wealthy but not democratic Curse of oil- authoritarian rulers use oil revenues to pacify public. Others argue that economic development causes democratic stability, not democratization. Rich democracies are more stable. Poor democracies more likely to collapse into authoritarianism. o Diffusion Effect: countries surrounded by democracies find it in their interest to copy their neighbors. Presidential v. Parliamentary v. Hybrid Democratic Systems o Presidential: Separation of Legislative & Executive Presidents do not owe their jobs to the legislature. Presidents are popularly elected and serve for fixed terms, o In Parliamentary democracies, only the legislature is elected by voters Electoral Rules… o Plurality (US/Canada) v Majority (France) o Proportional representation (PR) rules Once parties attain a certain threshold of votes, they are awarded seats in the legislature based on the percentage of votes they receive. o Electoral Rules shape (bias) party systems: two party or multi-party o No electoral system is perfect. 10-20-15 Political Economy o The balance between political and market forces within a country. Market System: refers to an economy in which production for profit is intended for and coordinated through private exchanges between buyers and sellers. o Promotes efficiency o Promotes innovation o More conducive to democracies than command economies o Highly volatile – periods of boom and bust o Tend to generate rising inequality o Create harmful spillover effects or externalities 11-3-15 Three political primary models found among Western countries: o Social Democratic: Sweden Rich democracies in which social democratic parties are dominant (politics) also tend of have proportional representation electoral systems (institutions) and be high welfare state spenders (policy). o Extreme Market: U.K. o Christian Democratic: Germany Social democratic model: Scandinavian countries of Denmark, Norway, Sweden. o Strong working class BUT thoroughly capitalist o But public sector employment is high, with over 20% of workforce employed by the state; it delivers an array of welfare state services. Social Democracy: Features o Eligibility for welfare state programs is universal. o The welfare state is comprehensive; cradle to grave. o Redistributive: reduces inequality between the rich and the poor. o Impact: detaches a citizen’s standard of living from their job. Social Democracy: Criticism o High taxes, large welfare states, deficit spending. o Large welfare states undermine the work ethic. o High taxes punish entrepreneurial risk-taking. PAGE 5- DARON,MOISES, DEMOCRACY