PSC 1003 Lecture Notes - Lecture 7: Foreign Exchange Risk, Richard Cobden, Pound Sterling
Document Summary
Challenges to mercantilism: adam smith, wealth of nations, 1776. Wealth = what a nation can produce and consume with available resources. Nations should trade just as people do. Specialization of labor and division of labor trade as path to mutual prosperity. Free trade benefits abundant factors in a society and harms factors. Exposure to trade creates winners and losers in society: rogowski. Exposure to trade predicts societal cleavages among land, labor, and capital based on abundance vs. scarcity. The impossible trinity of macroeconomics aka the mundell dilemma. You can only have two of the three corners at a time, you will lack a third corner each time. Richard cobden and the anti-corn law league. Fa(cid:373)i(cid:374)e i(cid:374) britai(cid:374) a(cid:374)d peel"s de(cid:272)isio(cid:374) to repeal. Benefits of gold standard: simplified international transactions, eliminated foreign exchange risk, rapid growth in trade and investment. British economic hegemony = key to establishing and maintaining free trade.
