Or: How not to be scared by fancy words Basic economics Or: How not to be scared by fancy words
Don‘t get scared! Knowledge is not the key if you only have 5 minutes anyway!
Actors Countries: Set regulations for their own economic benefit Companies: Want to make a lot of profit International organizations: Want to set international regulations to benefit their members
Motions that come up This House believes that states should focus on negotiating bilateral trade agreements over large, regional agreements such as the TPP and RCEP This House Believes That developing nations should distribute, as a dividend to citizens, income derived from nature resource extraction THBT WLDs should enforce their labour and environmental standards on the whole production chain on goods imported to their country. This House would temporarily and significantly relax minimum labour standards in times of unusually high unemployment, including workplace health and safety standards, minimum wage, working hours restrictions etc. THW would implement a universal basic income (UBI) THBT international financial institutions (e.g. the World Bank, IMF) should not make economic liberalisation a condition of loans or aid for developing countries
Keep in mind Motions are often connected to: National politics International politics Development Social issues Moral questions Explain incentives of the actors you talk about!
What we will talk about International organizations IMF WTO Basic economic concepts Tariffs Opportunity cost Arguments to make in a debate Are multinational companies beneficial for development? Why do companies (not) change their place of production? Why is a free market (not) beneficial?
International Monetary Fund (IMF) & World Bank (WB) Goals: Stabilizing currencies Development Free Trade Operation: Dominated by WLDs – veto by the US Give out loans Conditions often involve austerity, trade liberalisation
World Trade organization (WTO) Aim: Trade liberalisation Development Operation: Negotiating trade deals and tariffs Non-discrimmination principle between members Dispute settlement
Tariffs High tariffs hard to import things Low tariffs easy to import things Usually countries would try to negociate mutually beneficial tariff deals Problems with that are: Difference in industries hard to say whether an agreement is fair Harder to enforce for smaller countries
Opportunity cost David Beckham is a great lawn mower He can mow his lawn in two hours
Opportunity cost Instead of mowing his lawn, David could spend the two hours filming a commercial and make £10,000 David‘s opportunity cost of mowing his lawn is £10,000 His oc is how much money he cd make by not mowing his lawn
Opportunity cost Neighbour Scotty can mow David's lawn in 4 hours. He could also work at McDonald's for 4 hours and make £8 per hour. Scotty's opportunity cost of mowing David's lawn is £32
Opportunity cost Who is better at mowing the lawn?
Opportunity cost Who is better at mowing the lawn? David Beckham. He can do it in 2 hours rather than 4. He has an absolute advantage in mowing the lawn.
Opportunity cost Who is better at mowing the lawn? David Beckham. He can do it in 2 hours rather than 4. He has an absolute advantage in mowing the lawn. Who has a comparative advantage in mowing the lawn?
Opportunity cost Who is better at mowing the lawn? David Beckham. He can do it in 2 hours rather than 4. He has an absolute advantage in mowing the lawn. Who has a comparative advantage in mowing the lawn? Scotty. He can do it at a lower opportunity cost (£32 versus £10,000).
Opportunity cost Gains from specialization and trade: If David pays Scotty about £50 (more than his McDonald’s salary) to mow his lawn, he can film his commercial. Both are better off than in a situation where the best lawn mower in the world, David Beckham, mowed his lawn.
Are MNCs beneficial for development? Benefits: Investment employment continuing effect Invrastructure & Health (they want to be seen as nice) Already set up industry rather than having to develop something new Harms: Competing with local productions If they get too powerful they can influence politics bad regulations of industry Race to the bottom Exploitation of long regulations environmental and health effects on all of the population
Why do companies (not) change their place of production? Changing: Lower regulations Cheaper labor Security Tariffs to other countries Changing: Cost of moving Cost of educating new workers
Free market Benefits: Enables specialisation (comparative advantage) Lower prices for consumers (resources imported cheaperlower costslower prices) Increased competition between firmsefficiency Enables economies of scale Harms: Structural unemployment short run (shift between industries). Hard for people to specialise in new industries. Environmental harm (if legislation if poor) Uncompetitive economies are at a disadvantage (protectionism required)