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WWII and Pax Americana

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Political Science
POLI 354
Mark Brawley

World War II and Pax Americana : The origins of GATT November 14 th 2011 Trade regime and how it was created and then switch to the monetary regime … Lessons Learned : WW2 was more destructive and spread out. WW1 the fighting was concentrated on the front line. WW2 : land masses Asia, strategic bombing from the air, flow of people etc.  World War 2 disrupted patterns once again  They looked before the regimes of the war, and trying to see what they can do  They will look intra-war period and before ww1 and right after  Then they will find out they screwed up : it was hard to switch the economy to peace time production and how to settle debts . they made economic recovery after the war and stability difficult  Recognition that post World war 1 adjustments were mishandled  And that more planning was needed : more coordination needed when having economic actions  Ahead of the game but also thing during the war : during the war and how do we coordinate our actions instead of worrying about narrow concerns Principles applied to Bind everything together 1. Embedded Liberalism : a term trying to describe what they were doing . to make the domestic economy works and Keynesian domestic interventions, government stimulus packages , delivering jobs and stable. No one wants to risk that. The problem is : the international level, markets and non market forces : specialization of trade, the tariffs slowed down investments and trade, the important engines of growth. How do you reconcile the market capitalism internationally with the domestic changes . The term is about thinking about classical liberal at the intl level : trade is good, but internally you won’t accept laissez faire capitalism and you want to manage some aspects at the domestic level. Markets have to be embedded in scoeity. How do you come up with interl. Regime and have these heavy state interventions how do you balance these things 2. Multilateral regimes : 3. Centered on Institutions : explicit rules and some institutions at the center to deal with the problems. Reflection of what happened in the 1920s because states did not have the stake : the League of Nation ( Germany is excluded, USA is out because did not want to participate) Thinking is- you have to bring in states , participation and making up of rules and forming of the regimes or they will go against it . some did not do a good job in the institutions . 2 way of thinking about that : American thinking of politics – their own experience. How do you arrange the things at home : constitutions that specify the rules and obligations . Participation is critical to make politics work . Specific problems to be avoided  Depressions : they worried about that in sense of the trouble getting out of the war and come back on the peace economy  What had happened in the 1930s : US used the Keynesian politics , but the economy recovers due to the war ( WW2)  Protectionism : using tariffs does not work. Smooth Hawley fails and the fact everyone retaliates – is bad!!! Economic slowdown and losing jobs – it is not the right decision!!!!  War : if you let depression happening an you can have war : Nazi in Germany , bad things happen in states and spill over on you. The planning begins :  International Trade Organization : ITO , Havana 1947 L rules out on paper and so everyone knows what to do . looking at the organizations post WW1 and we need one of these to work on trade. They invented everybody – Soviet Union and the allies, the new independent states free from British and French empire. The American and the British know that is going to be hard with some kind of consensus  We need a plan before we meet : The U.S and Britain prepare by trying to find common ground : common strategy and one voice speaking . they ask from each other in terms of trade and how to make it move forward  US asks for nondiscrimination, no imperial preferences , do not have two sets of tariffs.  UK asks for liberalization : low tariffs for everybody so you need to lower your tariff!!! So you lower!  And this becomes the basis of their actions in the conference : UK will adopt the nondiscrimination if you agree to lower the tariffs (Smooth Hawley did not work and undo the damage)  They go to the conference and they present the set of the ideas but not a lot of reactions : Soviets are not interested, the other countries neither. In the conference Americans, they had included a clause : itl investments should be protected, if the state should seize or nationalize , it is okay but compensate the foreign owner of the property. Soviet Union says NO! We did it – and we are not compensating  They lost on couple of things: the Congress is not happy about the lowering of tariffs and the protection of international investment should be there  No approval of
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