POLB80 Last Lecture 12: November 27 2012.h
Agenda: IR Forum, IPE and Development, Course Wrap UP
Review Questions: December 11 2012. IC 230, 11-12:30
Climate Change- There is an UN negotiation on the annual set of climate change
Why is it so hard to agree on changing climate change?
o Climate Skepticism (98% of Canadians believe in climate change, not
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
o Absolute vs. Perspective in capita emission (capita emission means per
China and US are roughly the same but China has a lot more
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
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