People and Capital on the Move. Lec 17 – Tuesday, 12 April 2011 J A Morrison. California Teamsters, 12 Feb 2008. Admin. Essay 2 Due this Wednesday, 10 PM Sample Essay Posted IP Wiki Goal: facilitate your discussion, reading, & understanding No posts due this week
People and Capital on the Move
Lec 17 – Tuesday, 12 April 2011
J A Morrison
California Teamsters, 12 Feb 2008
These factors combine to produce goods & services (G&S)
Robert Mundell (1931--)
Rather than transferring finished goods and services across borders, we could, instead, transfer the productive inputs(labor and capital) from one country to another.
From the standpoint of prices of G&S and the returns on factors…It doesn’t matter whether we import/export G&S or the people and capital to produce them.
But that’s in narrow economic terms: prices, wages, returns on capital.In a lot of other respects, though, there are big differences between trade and moving factors around.
Our definition of capital was rather broad: “resources required to produce additional resources.”This definition can be traced back to Adam Smith’s conception of “saving” in The Wealth of Nations (1776).
Smith’s notion was that investing capital into production—by mixing it with labor—would create greater quantities of capital which could then be reinvested.
FDI is more long-term
Associated with “dependency theory”
…And there is a lot more we could say about “speculative capital flows” chasing portfolio investment. We’ll talk about that next week when we turn to money.
Over all fiscal effect is unclear but most likely positive effect for host countries
The social implications of increased migration garner at least as much attention.Sam Huntington has inserted himself at the center of this debate…
“In the end, the results could be similar: the creation of a large, distinct, Spanish-speaking community with economic and political resources sufficient to sustain its Hispanic identity apart from the national identity of other Americans and also able to influence U.S. politics, government, and society.”
– Samuel Huntington, The Hispanic Challenge
“They will bring with them the principles of the government they leave…These principles, with their language, they will transmit to their children. In proportion to their numbers, they will share with us the legislation. They will infuse into it their spirit, warp and bias its direction, and render it a heterogeneous, incoherent mass”
– Thomas Jefferson, Notes on the State of Virginia 1784
(Griffin explains his surreptitious strategy. YouTube)