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Welfare State - Lecture Notes.docx

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Criminology and Justice
Timothy Macneill

th Welfare State – February 5 1776 – 1914:  Times of increasing market liberalization  Domestically – o Companies for example could operate free from government regulation and taxes were low on profits  Taxes on dividends are lower than taxes on income  It seems that even in tax law the bourgeoisie wins  Between these time periods there was a period called market liberalization (great inventions happened, they wanted bigger more free markets) o They wants the government to lower taxes o You had a system that was governed by the free market  Karl said this is the first time that Market controlled society  If you made something it was your own private property and you could sell it  Before this these three things were not commodities o Land o Labour o Money  This created a market society  Internationally o Free Trade Doctrine was followed  Where people could trade across boarders without paying tax  Adam Smith has argued that Great Britain would benefit from free trade because of its advanced industries  Later people thought that this was colonial and obvious so they developed the theory of comparative advantage o Comparative Advantage –  In the absences of any barriers to trade all countries will be better off  Such as taxes or quotas Comparative Advantage Example –  We are imagining two economies  No one needs food or water or oil or iPhones  All these people need are shoes and pants to survive Before Specialization Pants Shoes Northland Production 75 50 Southland Production 250 150  The arguments of comparative advantage says that since southland is good at making pants they will make all the pants  Since northland is good at making pants than shoes they should still make all the shoes  So economists use this and say this is what it looks like after specialization After Specialization Pants Shoes Northland Production 0 100 Southland Production 400 100  Notice after specialization no one in Northland has any pants  If you live in a world where you have 400 pairs of pants and 200 pair of pants =  1 pair of pants equals 2 pairs of shoes Then They Trade – Before Trade Pants Shoes Northland Production 0 100 Southland Production 400 100  Each country was better off before they traded After Trade Pants Shoes Northland Production 100 50 Southland Production 300 150  Liberal economists said that everyone is better off with free trade Declining Terms of Trade –  this is what actually seemed to happen  the real world has to be looked at some point  what is really happening is declining terms of trade  he remembered a lot of countries in the world are still colonies  they were set up by military force to come up with primary commodities  noticed that there was a difference between the two different things o manufacturing goods kept going up (TVs and Chocolate Bars) o value of commodities kept going down (all of these colonies are growing it)  as all of the countries are producing coffee beans other countries are competing so the price of coffee is going down  but the price you would pay for Starbucks would be the opposite you would pay more for your coffee at Starbucks  free trade brought more poverty  Result (1) o the markets for primary goods were flooded and were worth less and less compared to manufactured goods o he noticed market fluctuations (with increasingly
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