“As we saw in Unit 18, globalization is only partial: the world labour market is far from integrated while capital mobility is high, because money does not need a green card or a work visa to be allowed to ‘work’ in a country”

This alludes to the specific factors model which tells us that certain factors are more mobile than others. It first assumes that a country only has teo factors, capital and labour. THe fact that different factors are mobile increase ineuality

“Inequality is an essential ingredient to capitalism,” or so says Tejvan Pettinger for the economics help forum. It seems to be a disturbing thought, because none of us (at least, I hope not) want to see a world where some people are suffering and few are living in luxury. Yet, what Pettinger says does make sense, because he then proceeds to list two main arguments supporting his case: the profit motive and the work incentive. He argues that the only reason anybody takes an economic action is because they want to make a profit and have a higher income. This quest to have a higher income is what drives inequality and makes it an “essential ingredient”. He also says that the existing wage inequality incentivises a worker to improve his skill and productivity. “If every worker received the same wage regardless of skill and effort, there would be no incentive to learn new skills and work hard at the job. A firm in a capitalist society can pay successful workers a higher wage to reflect their higher productivity. “ I wonder the implications of these observations—Does it mean out efforts to reduce inequality are misguided? does it mean we can never live in a world without any inequality? What would such a world even look like?

https://www.economicshelp.org/blog/2935/economics/inequality-and-capitalism/

Political leaders must be open about the fact that sanctions involve tradeoffs.

This is what we discussed in class. With the advent of globalisation and the increasingly interdependent world, what stops russia from adopting the strategy, "if we go down, we go down together"?

Biden also understands this issue, which is why, I think, he has suggested the strategic release of about 30 million oil barrels from strategic reserves. By increasing the supply of oil, he hopes to reduce the overall price (S increases Price decreases) and show to Russia that the world can and is willing to accept the potential tradeoffs of the sanctions.

Through this situation, we can see the effect of free international financial markets on economies--the entire world is dependent on such a market. If used correctly, I believe it can increase productivity and prompt economic development by increasing investment opportunities for citizens. On the other hand, if all the parties involved chose not to cooperate, it could produce devastating effects, slowing economic growth and increasing unemployment/inequality.

On the contrary, they represent a failure to deter Putin from invading Ukraine

Deterrence. Fear is usually a good way to deter people--even nations--from doing something immoral, something almost unjust. Unfortunately, sanctions by themselves weren't enough to spread fear into Putin's mind. It is true that, perhaps, Putin is a senile old man who should have feared sanctions but didn't, implying that sanctions by themselves aren't ineffective. More likely, however, I see Putin as a diabolical genius and a brilliant strategist; I believe that these sanctions truly might not be an effective form of deterrence.

In looking for alternatives, I came across one that is definitely going to cause controversy: Nuclear weapons. Think about it, what better deterrence than the knowledge that anything done slightly out of order will result in total annihilation of your entire country? In fact, American Political Scientist Kenneth Waltz (who has received honorary doctorates from a multitude of colleges) himself mentions this in his article: "Nuclear weapons have been the second force working for peace in the post-war world. They make the cost of war seem frighteningly high and thus discourage states from starting any wars that might lead to the use of such weapons." If this is done, only madmen will chose to fight a war.

Admittedly, this is a bit severe. I am playing devil's advocate a bit when I say this, because the reality is that a world using nuclear proliferation as a deterrence will inevitably destroy the world. I wonder though, what other options do we have? Surely, if Russia gets away with this and is able to recover, that would prompt other nations like China or North Korea or even other middle eastern nations to go to war. Or, perhaps, war itself is inevitable?

Link: https://www.mtholyoke.edu/acad/intrel/waltz1.htm

I feel like much of the problem with the fragility of Globalisation is in humanity's irrationality. The panic that set in when people realised the true extent of the Coronavirus pandemic caused them to overlook the benefit in choosing a strategy that prioritises the collective good. Can we do anything about it? Perhaps we could develop a model of globalisation that could account for humanity's imperfection, but it would definitely come at its costs. Or, instead of changing globalisation we could just change humanity--much harder than it sounds, admittedly. I wonder which one is better and if we even need to do anything to change this in the first place.

My second question relates more directly to the topic at hand. Ever since the coronavirus pandemic started, we have noticed a surge in a technologically nascent industry: Cryptocurrency. I wonder how crytpocurrency would shape Globalization in the future, and how that would affect trade–especially considering how it has the potential for a decentralised system that could threaten the need for banks and other middlemen in the first place.

An article I read online talks about COVID-19 as a Black Swan event, an event that has three properties:

"It is an outlier and nothing in the past suggests its possibility. It carries an extreme impact. Finally, despite being an outlier, after-the-fact explanations make the event appear explainable and predictable."

I feel like historically, the world has only adapted and grown the theory of Globalisation (among other things) every time any black swan event occured, and this idea of evolution and adaptation is the reason behind humanities successes in technological development. Sure, it has brought up some harmful technology too, such as the atom bomb, however I believe overall Globalization would be further evolved through the Coronavirus pandemic.

Article: https://www.forbes.com/sites/johndrake/2021/11/11/was-covid-19-a-black-swan-event/?sh=47b60e55bd36

This is because they are common good, right? This would mean they are subject to the tragedy of the commons, which is "a problem in economics that occurs when individuals neglect the well-being of society in the pursuit of personal gain". So natural resources, where we have no cost to use them, are exploited because of human greed. Does that mean the only way to solve it is to get rid of humans?

Edit: I realised I forgot to link the article, so here it is: https://www.investopedia.com/terms/t/tragedy-of-the-commons.asp#:~:text=The%20tragedy%20of%20the%20commons%20is%20a%20problem%20in%20economics,common%20resource%2C%20to%20everybody's%20detriment.

This connects to what we learnt last class. My question is, surely there has to be an end to even the increase in resources due to productivity, right? When that happnes, won't we all just die?

there is little relationship between religion and economic success

Well, I did a quick google search and found a study conducted by Dr. Robert J. Barro & Dr. Rachel McCleary (both professors at Harvard) for the National Bureau of Economic Research (NBER), where they conclude that "economic growth responds positively to the extent of religious beliefs, notably those in hell and heaven, but negatively to church attendance. That is, growth depends on the extent of believing relative to belonging." This contradicts what is being said in this chapter because it provides a more well-rounded approach to determing the relationship between religion and economic growth. Perhaps Acemoğlu and Robinson are a bit harsh in outrightly rejecting this–and the other–ideas. It seems to me that there is no one concrete thing that induces economic growth; rather, it is a combination of multiple theories. Would it be a better approach to create a new, wholistic theory than outrightly rejecting preexisting theories ?

Source: https://www.nber.org/papers/w9682

It might be true today that Africans trust each other less than people in other parts of the world. But this is an outcome of a long history of institutions which have undermined human and property rights in Africa.

Back in 2014, I remember the great Narendra Modi saying, "The biggest issue [in India] is trust. Why do we not trust our fellow countrymen?" Never have I heard wiser, truer words. The idea of trust connects to the concepts we learnt in class, wherein trust causes people to put their money in banks rather than spend it themselves. But, I wonder if trusting is what the "rational" man would do? After all, this lack of trust arises when man thinks about himself over the collective whole. Yet, being selfish and doing whats best for you is also a trait of a rational man, a term that, in my head, has a positive connotation. Does this mean rationality is bad?

Rather, people are malleable and emotional actors whose decision making is influenced by contextual cues, local social networks and social norms, and shared mental models.

I wonder what would happen if we lived in a world where everyone was rational. Would there still be poor people? Would there even be people left, or would we have destroyed the world?

I was, and still am, extremely fascinated by the concept of rationality, which was first introduced to me in my sophomore game theory class. Back then, I defined rationality as a purely logical and selfish view of the world. In other words, a rational person would do only what’s best for him and in doing so, would ignore anything driven by emotion. Around the time I took this class, I also read Jon Ronson’s “The Psychopath Test”, a book which prompted a chilling conclusion in my head: A truly rational person is a psychopath.

In this book about psychopathy bred from capitalism, Ronson defines psychopaths as self-centred people without empathy and emotion. In other words, they only care about their self-interest and aren't bothered by silly emotions–they’re guided by pure logic and reason. This sounder all too familiar to me back then. I reconfirmed this definition after rereading an article on it, linked below.

As I look back on this conclusion, I feel as though I am oversimplifying things a bit. Still, I can’t help but think what its possible consequences could be. If we lived a world of rational people, we would actually be living in a world of psychopaths. I think in such a world, those living below the poverty threshold would do one of two things. Either they would give up, finding the efforts to escape futile, and simply become lazy. Or, it could create an infinite loop of people breaking through the threshold, effectively increasing the threshold, prompting more people to try and break it, until it eventually can’t increase anymore. In all honesty, I am just spit balling here, which means the only limit to the possibilities is my imagination. I still wonder what a completely rational world would look like.

Link: https://www.npr.org/transcripts/171271561

Yet the high cost of these loans is often not obvious to borrowers.

Why not? Does this relate to a lack of education? I remember my Grade 9 World History project which was centred around Education--or, the lack thereof--of people living in poverty. It was obvious to me back then that the lack of education keeps families trapped in a vicious cycle of poverty. This idea is concurrent with Abhijit Banerjee's ideas mentioned in the podcast assigned for homework. Could simply increasing access to education for the poor help them escape out of poverty? What are the potential problems? Is there more to this problem than meets the eye?