Lecture 12.docx

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Political Science
M.Hoffmann- Universityof Toronto

POLB80 Last Lecture 12: November 27 2012.h Agenda: IR Forum, IPE and Development, Course Wrap UP th Review Questions: December 11 2012. IC 230, 11-12:30 IR Forum:  Climate Change- There is an UN negotiation on the annual set of climate change negotiations.  Why is it so hard to agree on changing climate change? o Climate Skepticism (98% of Canadians believe in climate change, not really skepticism) o Scope of the Problem (to actually fix climate change to avoid these consequence, large scope of economic, transportation changes, cut 80% of carbon by 2050) o South and North differences and how they differ from how they view this problem (historical vs. Current Perspective, highest Greenhouse gases is from China,); o Absolute vs. Perspective in capita emission (capita emission means per person);  China and US are roughly the same but China has a lot more people. o Producers vs. Consumers (China’s emission is going up because they opened their economy. Most of China’s industry is factory and industry based. These factories are producing emission and consumer goods for the west.  Is the west responsible for emission then? Should we measure emission from who gets to benefit from this emission?  Another reason we have debate on how to frame the issue in the North and the South; o Argument on if he doesn’t reduce then I won’t. It is hard to negotiation on public goods. A stable climate is a public good. Public goods are a term that is non-excludable and non-rivalries. It’s the notion that my use of it doesn’t attract/effect others o The problem of public goods is that it is under provision because if I can’t be excluded from it, no one can maintain it or pay the cost of fixing the public good. If I can use it, I can free ride. We then under provide public goods. There are great incentives to free ride.  They’re trying to distribute the cost and say you’re going to cut 10% of emission etc. Cutting emission is too expensive. It is hard to divide up and it’s a collaboration problem.  What they’re trying to do is negotiation concentrated current costs where we have a promise to defuse future benefits. To defuse future benefits means we can tell who’s going to pay the cost of reducing emission. We can identify who pays the cost); o They are not immediate benefits they are future benefits. We won’t have the effects of our good work if we fix the climate problem.  International treaty is not the only way they response to climate change.  Liberal global economy, understands political economy  Free trade – comparative advantage o Example of comparative advantage: China can produce a truck for 10 dollars and can produce a computer for 5 dollars. US can produce a truck for 15 dollars and produce a computer for 7 dollars. o If we produce things that are comparative and trade things that are absolute, the whole world will be wealthier; o We should remove tariffs and non-tariff barriers because a liberal economics and politics should be separated. They should be separated because that keeping them together introduce extra cost and makes things more expensive. o Free trade makes things better for everyone but is it equal?  When capital is mobile (Marxism) labour is not. There is political reason why we never reached free trade. They want to protect industries. Anything related to defense industries, they want to protect this. There is national security to protect and not have free trade.  Rather than absolute free trade, what are developed are the principles of the WTO. One of the things it does it promotes MFN (Most Favourite Nation status- you all get the best deals) and barriers to free trade.  We have regional free trade organizations (NAFTA, etc.) to go further than WTO and create free trade zones themselves.  Fixed vs. Floating: This is how money can float over borders.  Fixed current exchange rate- means 1 Cnd=1 US dollar or 1 CND=1 oz of gold. You set it by policy. This use to be the case before.  There’s a market for currency for floating money. The demand for that is how much the global market thinks its worth. How currency investors and bankers think its worth. Almost all currency is floating.  There’s no such thing as free trade outside of government. Free market doesn’t mean no rules. You have to a have a medium of
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