Commanding Heights - Keynes Hayek PDF

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Macroeconomics - Keynes - Hayek - Commanding Heights - The battler for the world economy...

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Commanding Heights Video Viewing Guide Preparation for watching the videos Using the Internet, textbooks, or other research sources briefly identify the following individuals (Where were they from and what did they do?): Ludwig von Mises: _______________________________________________________ ________________________________________________________________________ John Maynard Keynes: ____________________________________________________ ________________________________________________________________________ Friedrich von Hayek: ______________________________________________________ ________________________________________________________________________ John Kenneth Galbraith: ___________________________________________________ ________________________________________________________________________ Milton Friedman: _________________________________________________________ ________________________________________________________________________ Ludwig Erhard: __________________________________________________________ ________________________________________________________________________ Gary Becker: ____________________________________________________________ ________________________________________________________________________ Lawrence Summers: _______________________________________________________ ________________________________________________________________________ Jeffrey Sachs: ____________________________________________________________ ________________________________________________________________________ Nikita Khrushchev: _______________________________________________________ ________________________________________________________________________ Keith Joseph: ____________________________________________________________ ________________________________________________________________________ Lech Walesa: ____________________________________________________________ ________________________________________________________________________ Hernando de Soto (not the guy from the 1400’s): ________________________________________________________________________ ________________________________________________________________________

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Episode One, “The Battle of Ideas” Chapter 1: Prologue – 3:55 Chapter 2: The Old Order Fails – 8:11    

Meet Keynes and Hayek The first era of globalization World war and revolution Keynes foresees disaster

1. How did the Bolsheviks describe capitalism? 2. Why was Keynes opposed to the Treaty of Versailles? Chapter 3: Communism on the Heights – 6:16    

Hayek explores socialism The Austrian School’s critique What Lenin learned Stalin’s totalitarian plan

3. What did von Mises and the Libertarians feel was the greatest flaw of socialism? 4. What are the “commanding heights” of the world’s economies? Who can control them? What is the significance of who controls them? 5. What changes did Stalin make to the Soviet economy once assuming power after Lenin? Chapter 4: A Capitalist Collapse – 8:48    

German hyperinflation American boom and bust Fascism takes hold in Europe Can Keynes save capitalism?

6. What happened in Austria and Germany as a result of wartime reparations? What factors caused this? Chapter 5: Global Depression – 5:25    

Roosevelt improvises Regulating the markets Keynes completes his Theory Keynes’s apostles in America

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide 7. After the US stock market crash of 1929, “the government failed to halt the downward spiral. In fact, it made it worse.” What did the government do? 8. How did Keynes describe the relationship between the failure of capitalism and the rise of fascism? 9. What effect did The General Theory of Money, Employment, and Interest have on the US economy? Explain. 10. How did Keynes influence John Kenneth Galbraith, and what did this mean to US government policy? Chapter 6: Worldwide War – 7:00    

A victory for planning Hayek’s warning Keynes at Bretton Woods World at a crossroads

11. What did Hayek argue in The Road to Serfdom? 12. What were the significant outcomes of Bretton Woods? Chapter 7: Planning the Peace – 6:47    

Britain seeks “fair shares” Churchill’s defeat Labor nationalizes the heights Communism’s rapid gains

13. What changes did Clement Atlee and the Labour Party bring to Great Britain? What sort of philosophical shift did this imply?

Chapter 8: Pilgrim Mountain – 3:43    

Hayek’s Mont Pelerin conference Enter Milton Friedman Democracy and free markets A long fight ahead

14. What was the goal of the first meeting at Mont Pelerin? 15. What did Milton Friedman have to say about freedom?

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Chapter 9: Germany’s Bold Move – 4:11    

The ruins of postwar Germany Price controls vs. inflation Erhard defies the Allies The market economy revives

Chapter 10: India’s Way – 3:51    

Nehru and Gandhi part ways A science of central planning The Mahalanobis equation A socialist model for development

Chapter 11: Chicago Against the Tide – 7:32    

Outside the mainstream The spirit of Chicago Harnessing economic forces The Keynesian high tide

Chapter 12: The Specter of Stagflation – 6:34    

Hayek in eclipse Stagflation besets America Nixon becomes a Keynesian US wage and price controls

16. What did Nixon mean when he declared, “Now I’m a Keynesian?” Chapter 13: A Mixed Economy Flounders – 8:36    

Britain under price controls The “Mad Monk” repents The grocer’s daughter listens Thatcher and Hayek

Chapter 14: Deregulation Takes Off - 7:29

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide   

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America bogged down The airlines and Panamania Deregulating the sandwiches Costs and benefits

Chapter 15: Thatcher Takes the Helm – 3:50   

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The Winter of Discontent Hayek’s birthday present Shock therapy for Britain The lady’s not for turning

Chapter 16: Reagan Rides In – 8:17   

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The double-digit dragon Volcker at the Fed Reagan tightens the reins Tax cuts, deregulation, deficits

Chapter 17: War in the South Atlantic – 1:41   

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Argentina attacks Thatcher gambles all Victory’s dividend An economic sea change

Chapter 18: The Heights Go Up for Sale – 8:08   

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Targeting state-owned industries The economics of coal Breaking the miner’s strike Socialism turn back

Chapter 19: The Battle Decided? – 3:26   

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Idea politicians The whole world watches A century comes full circle The battle decided for good?

17. How did the administrations of Margaret Thatcher and Ronald Reagan signify philosophical changes from their predecessors?

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Episode Two, “The Agony of Reform” Chapter l: Prologue – 3:49   

A perilous interdependence The capitalist revolution Title sequence

Chapter 2: The Ghosts of Norilsk – 4:27    

Slow trains to Siberia The gulag economy The essence of Soviet power Socialism’s influence

1. Describe the Soviet town of Norilsk. How was this town typical of the Soviet economic system? Chapter 3: Behind the Iron Façade – 8:18    

A double agent escapes What Gordievsky knew The true cost of military might No water, no fire, no incentives

2. Who was Oleg Gordievsky? What was his mission? What did he discover? 3. Explain why the Soviet economy suddenly appeared to be under so much pressure. 4. Explain both the meaning and economic significance of the attitude of the mineworker quoted as saying, “The people don’t want to work. They have no incentives.” Chapter 4: India’s Permit Raj – 3:04    

Central planning and corruption Protection vs. innovation The shortage economy Hindustan vs. Toyota

5. Describe the basic characteristics of the Indian economic system. 6. Indians were said to work “around” the system instead of in it. How and for what reasons was this the case?

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide 7. Why did the Indian government institute protectionist policies and what were their effects? Chapter 5: Latin American Dependencia – 2:03    

A shared suspicion of trade Doomed to underdevelopment? Dependency theory explained The cost of closed markets

8. Latin America was a region rich in natural resources, yet doomed to poverty. How could this be the case? 9. Describe the “dependency theory” and the effects this theory had on Latin America’s economies. Chapter 6: Counterrevolution in Chile – 3:30    

The left wins an election Allende is assassinated An economy doesn’t obey orders Seeking a serious blueprint

10. Describe the major economic actions of Salvador Allende Pinochet. Chapter 7: Chicago Boys and Pinochet – 8:16    

What Chicago stood for Cutting the tail off the dog Growth at a high human price A tainted legacy

11. Who were “the Chicago Boys”? What was their role in Latin America? What were the consequences of their involvement? Chapter 8: Heresy in the USSR – 8:08    

A campfire conspiracy Enter Gorbachev The pantyhose commission New pressure from the West

12. What unique perspective did Anatoly Chubais bring to the Soviet Union, and how did his countrymen receive him?

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide 13. Reagan and Thatcher “determined to go on the ideological offensive.” What does this mean? What did they do? What was the effect? 14. Describe the worldwide significance of the fall of the Berlin Wall. Chapter 9: Poland’s Solidarity – 7:32    

Thatcher’s demand The shipyards of Gdansk A longing for freedom The crucial meeting

15. Describe Lech Walesa’s influence on the Polish government and economy. 16. Why did Margaret Thatcher’s visit to Poland have such an impact on the Solidarity movement? Chapter 10: Bolivia at the Brink – 7:07    

Coups and hyperinflation Bolivia confronts the tiger Unreasonable amounts of money Cocktails in La Paz

17. Why did Bolivia experience such problems in the 1980’s with inflation, and why was it so destabilizing to its economy? Chapter 11: Shock Therapy Applied – 4:48    

The bad news all at once Common economic sense The effect on Latin America We did it in a democracy

18. What was “shock therapy” and what impact did it have on Latin American economies? 19. What was so extraordinary about Bolivian’s transition from a command to a market economy? Chapter 12: The Miracle Year – 6:57    

Poland in crisis A phone call ends the Cold War Extraordinary politics Watching the price of eggs

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Chapter 13: Poland in Transition – 2:39    

Privatizing state industries Solidarity loses support The hardest hit had helped most Poland’s entrepreneurial drive

20. What was the “phone call that ended the Cold War” and why did it work? Chapter 14: Gorbachev Tries China – 7:17    

Yavlinsky’s report Gorbachev hesitates Visiting Deng Xiaoping No easy way out

21. Why did Gorbachev shrink from “shock therapy”? Chapter 15: Soviet Free Fall – 4:52   

Hard-liners strike back The Soviet Union disintegrates No one at the controls The boys in pink shorts

22. Why was the Chinese system so attractive to Gorbachev, yet why was he unable to mimic China’s path within the Soviet Union? Chapter 16: Reform Goes Awry – 4:26    

Jump-starting the market The old guard fuels inflation Norilsk in despair Belief undermined

Chapter 17: India Escapes Collapse – 3:16    

Watching Russia go down Bankruptcy ahead Turning against the party Ending the Permit Raj

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide 23. How does Sachs suggest that Russia was different from Poland even after the collapse of the Soviet Union? Chapter 18: Russia Tries to Privatize – 5:33    

Voucher capitalism Bolshevik Biscuits Gaidar sacrificed The Wild East

24. Describe the phenomenon of the Bolshevik Biscuit Factory. How was this to be symbolic of Soviet reform? Chapter 19: Loans for Shares – 6:18    

Up against the Red Directors Filatov of Norilsk Fighting a Communist comeback Yeltsin and the oligarchs

25. Who were “the oligarchs” and what is their significance to the Soviet story? Chapter 20: Closing the Deal – 3:50    

This way or nothing? Potanin takes Norilsk Responsibility comes later Russia defaults; Yeltsin resigns

Chapter 21: A Decade of Radical Change – 7:38    

Poland begins to thrive Mixed results in Latin America India’s new growth Russia moves forward

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Episode Three, “The New Rules of the Game” Chapter 1: Prologue – 6:14    

Unforeseen risks A single market no one controls Title sequence Who will rewrite the rules?

Chapter 2: The Global Idea – 3:52    

1992: America’s economy adrift Governor Clinton campaigns Wall Street’s agenda A meeting of minds

1. Describe the economic rhetoric of the 1992 presidential campaign (Bush, Clinton, Perot). 2. Why was Robert Rubin so focused on the “restoration of fiscal discipline”? Chapter 3: NAFTA: The First Test – 5:28    

Trade becomes the issue That giant sucking sound Clinton shifts his ground Labor betrayed?

3. What was NAFTA? What was its purpose? 4. Why did major unions so vehemently oppose NAFTA?

Chapter 4: Crossing Borders – 3:30    

Investment pours into Mexico An American boom Who wins; who loses? The balance of bargaining power

5. Describe some of the effects that NAFTA has had on Southern Mexico vs. Northern Mexico

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Chapter 5: The Global Market    

Trade goes invisible Markets are us French culture at risk? Pensions must go global

Chapter 6: Emerging Market Hunters – 5:01    

Capturing returns Opening borders No need to be nice Thwarting Marx’s predictions

6. When discussing international trade, capital flows are the biggest “trade” of all. What does this mean, and why is it so important to recognize this? 7. What is CalPERS, and why was it facing a crisis? Chapter 7: Averting a Meltdown: 1994 – 4:56    

Assassinations and revolt Capital gets nervous Fishing in the Caribbean Moral risk in Mexico

8. What do Malaysia’s experiences suggest about capitalism? The Zapatista rebels in Mexico? 9. In 1994, the US faced the “first real-time, worldwide global financial crisis” with the instability of the Mexican peso. Describe the crisis, and what the US government did in response. How successful was this response? Chapter 8: The Global Village – 6:47    

Communication explodes A borderless world Venture’s capital Talent flows, too

10. Describe the impact of the vast improvements in communication technologies on the global economy. 11. What is Narayana Murthy’s definition of “globalization”? 12. Why was Silicon Valley regarded as the “spiritual center of the new global village”?

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Chapter 9: China and the Tigers – 5:35    

David Lee goes home China’s free-trade zones Immigration’s next wave Singapore’s “miracle”

Chapter 10: The Japanese Paradox – 3:01    

Invincibility evaporates Economic contradictions A mountain of bad debt Killing off new ideas

13. How did the Japanese export sector differ from its domestic manufacturing sector? How did their differences contribute to the Japanese slump of the early 1990’s? Chapter 11: Global Contagion Begins – 7:35    

Begging us to borrow Flaws in the system Building the bubble Shorting the baht

14. List and describe the factors that led to the contagion that began in the Thai economy. Chapter 12: Contagion Engulfs Asia    

America doesn’t intervene Indonesia implodes Economic colonialism? Korea at the brink

15. Describe how the Thai experience sent a ripple effect throughout the global economy. What other countries were adversely affected, and how? 16. What does IMF stand for, and what is their job? 17. What did the IMF discover when it traveled to Korea to inspect its central bank’s books? What did they decide to do?

Questions prepared by A. Willis, Arizona Council on Economic Education Outline prepared by Professor Kate Johnson, University of Arizona Edited by Judy Horgash, Chandler High School/Spring 2011

Commanding Heights Video Viewing Guide Chapter 13: Russia Defaults – 2:31    

Markets in denial Countries do go broke Russia defaults Panic in action

Chapter 14: The Crisis Reaches America – 7:07    

Long Term Capital Management Brazil at risk Is it over yet? Thailand after the fall

18. Why was the President of the NY Fed so disturbed by the LTCM hedge fund? What risky strategy did he employ as a result of this concern? Chapter 15: The Global Debate – 2:49 ...