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4- How the Rest Got Rich.doc

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University of Toronto St. George
Political Science
Jeffrey Kopstein

How the Rest Got Rich 4WongCapitalism and bureaucracy have found each other and belong intimately together Weberth17 Century Dutch HegemonythDecline of Spanish dominance end of 16 C1Multiculturalpeople from across the continents were trading goods and knowledge 2Innovationdevelopment of wind turbinessaw mills3Modern Financestock firms companies were able to raise capital by raising stock4TradeDutch East India Company dominated geographically and issued stock to raise more capital shipsleveraged modern finance to create maritime insurance for ships travelling with goodsThe Flute Dutch ship oCheap to produce bc of industrial productionoFewer sailors reqdcheaper to operateoShallow hullcould travel to shallow water ports could trade inland and expand their trade within the continent rather than solely around the continent oLarger cargo capacityAble to reduce costunitEast India Company was able to outcompete the BritishMarket PrincipleIncrease supplydecrease price bc costunit dropsIncrease consumptionachieve economies of scale by reducing pricesIncrease trade and market shareFastforward to Chinese manufacturingo40 million migrant workersoWages of 50 centshro80 of WalMarts global suppliers are located in ChinaoDemonstrates the reduction of per unit cost by reducing wages and leveraging labour Principles of the Market Economy1Assuming demand is constant consumption is a function of pricethe lower the price the better2An increase in supply decreases priceincrease in consumption 3A decrease in supply increases pricedecrease in consumptionAdam SmithInvisible hand of the market1Make things that you have a comparative advantage at2Specialization3Productive efficiencyif everyone just did what they were good at there would be no waste4Universal division of labour facilitated by freetradeOn the Universal Economic Benefits of FreeTradeUnder a system of perfectly free commerce each country naturally devotes its capital and the labour to such employment as are most beneficial to each The pursuit of individual advantage is admirably connected with the universal good of the whole David RicardoCosmopolitical VisionMost of the estate regulations for the promotion of public prosperity are unnecessary and a nation in order to be transformed from the lowest state of barbarism the rest into a state of the highest possible prosperity
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