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Class notes for Economics - De-globalization
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This contains a lot of notes on de-globalization causes, consequences and how globalization is likely to develop in the future
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Lecture 1CONSEQUENCES OF DE-GLOBALIZATION
1. INFLATION
- Enormous amount of money which is not sustainable
- Usually a very good way to deal with inflation is to raise interest rates
- Why can’t we raise them now?
o Housing market would collapse
o Financial market would collapse
o In the middle of the 1980’s America was a creditor, now it is in trillions of debt
o The banks can incrementally increase interest rates but inflation would persist
2. HIGHER RATES
- Russia is becoming a self-sufficient country, but it will most likely be the same for other
countries and unions (U.E.)
3. RISE IN POVERY
- The best country at poverty alleviation has been China
- Countries which have struggled with poverty will struggle even more
SIDENOTES
- The sanctions of Russia are historically unprecedented. The idea was that they would cause
the economy to implode -> Putin goes down -> war is won; this did not happen
- The ruble is going up in spite of sanctions
- Globalization has not completely changed. It has just started to transition into a different
path
- The role of the wealthy elites (Bill Gates, Steve Jobs, Elon Musk) – they benefit from
globalization the most through the World Bank -> they are under threat from countries
other than America and E.U.
- Oligarchs will not be able to keep their assets if they do something that the Americans or
E.U. will not like so countries like China have been arranging meetings to make sure their
elites can keep their assets.
, Lecture 2
GLOBALIZATION
- It becomes de-globalization
- It started around 1945
- 1990’s started corporate globalization
PROCESS INDICATORS
1. DIFFERENT TRADE FLOWS
- Energy flows differently: E.U. and America are trying to de-couple from Russia’s gas energy;
China and eastern countries are increasing their flows with Russia
- Semi-conductors -> go more towards Taiwan
- Due to these changes, costs go up
- The huge benefit of globalization has been the reduction of costs
o China has been extremely successful due to the low labor costs -> they can produce
a lot for cheap
o China also has the infrastructure and an educated population to produce at high
quality
- While the corporate America have gained enormous profit, the American working class’
livelihood has gone down or stayed the same. They used to produce a lot of things but now
they serve burgers
o Someone who can exploit this fact (like Trump) can win again the presidency
- Inflation is happening due to the disruption of trade flows
WHY WILL INFLATION STAY?
- Banks try to control inflation by increasing interest rates
- Interest rates have been at or below 0 for decades -> the economy has adjusted to these
incredibly low rates
- Housing market’s interest rates have been around 1% -> you pay this interest rate for a very
low mortgage for 30 years -> this made the housing prices go up; if the interest rates go up
now, homeowners will not be able to pay for their houses
o in America you can walk away from the house and the liability for the house will be
transferred to the bank
- for student loans it is the same
- incrementally increasing interest rates will be inevitable in the EU
- the Euro has collapsed against the Dollar due to the raise in interest rates in America
IDEOLOGY
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