Economics 65A – The Economics of Globalization

Brandeis University
Fall 2006

Thomas L. Friedman, ’75

Fred and Rita Richman Distinguished Visiting Professor of Economics
&
Chad P. Bown,
Associate Professor of Economics

Syllabus
(updated 31 October 2006)

BACKGROUND

LIMA, PERU (Thomas L. Friedman, New York Times, June 21, 2006) – There are a lot of ways to
describe Latin America's challenge today… I would describe the big question facing Latin Americans this
way: Are they going to emulate India or get addicted to China? This question was, at least implicitly, a
subtext of the recent election here in Peru. But it's true throughout this continent, which has always been
better at mining its resources than mining its people. Let me explain by introducing Gabriel Rozman -- a
Jewish technologist of Hungarian roots who was raised in Uruguay, educated in America and now heads
the Latin American operations of India's biggest software/outsourcing company, Tata Consultancy Services
of Mumbai….

ARTESIA, N.M. (Sheryl Gay Stolberg, New York Times, June 6, 2006) – President Bush tried on Tuesday
to win back the trust of conservatives who have distanced themselves from him on immigration, promising
to ''get this border enforced'' and warning those who enter the country illegally that ''if you get caught, you
get sent home.'' After weeks of embracing ''comprehensive immigration reform'' -- Washington shorthand
for a Senate bill that includes a temporary guest-worker program and a promise of citizenship for some
illegal immigrants -- Mr. Bush shifted his tone in remarks at the Border Patrol training academy here.
Having nudged the Senate into action, Mr. Bush is turning his attention to the House, where Republicans
deride the Senate plan as amnesty and are balking at the idea of compromise….

GENEVA (Tom Wright, New York Times, July 25, 2006) – Two weeks ago, countries in the World Trade
Organization agreed on rules that would make it easier to track two-way and regional trade deals.
Negotiators were concerned that the proliferation of regional deals would detract from efforts, already
faltering, to reach a global trade pact…On Tuesday, those regional deals moved to the forefront after the
collapse for the foreseeable future of global talks that began five years ago in Doha, Qatar… The problem,
economists say, is that while regional deals can help expand trade in the absence of a global agreement,
they are also likely to create … sharper tensions between those involved in the agreement and those left
out. Moreover, the poorest nations, in areas like sub-Saharan Africa, which were supposed to benefit the
most from the latest round of global talks, are likely to lose out since they have the least to offer….

WASHINGTON (Thomas L. Friedman, New York Times, May 3, 2006) – What would OPEC do if it
wanted to keep America addicted to oil? That's easy. OPEC would urge the U.S. Congress to deal with the
current spike in gasoline prices either by adopting the Republican proposal to give American drivers $100
each, so they could continue driving gas-guzzling cars and buy gasoline at the current $3.50 a gallon, or by
adopting the Democrats' proposal for a 60-day lifting of the federal gasoline tax of 18.4 cents a gallon.
Either one would be fine with OPEC. So, to summarize, we now have a Congress proposing to do exactly
what our worst enemies would like us to do -- subsidize our addiction to gasoline by breaking into our kids'
piggybanks to make it easier for us to pay the prices demanded by our oil pushers, so that we will remain
addicted and they will remain awash in dollars. With a Congress like this, who needs Al Qaeda?...

Outsourcing. Free Trade. Immigration. Information Technology. The WTO. Jobs. Oil. The Environment.
Sweatshops. India. China. Africa. Doha. What can economics say about the new (and old) problems and
issues presented by globalization?

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OVERVIEW

Economics 65A is an elective course in the University’s program in Economics. This course examines the
phenomenon of globalization, using economic analysis to explore controversial themes of the globalization
debate – offshoring, sweatshops, child labor, environmental standards and a race to the bottom, intellectual
property protection, cultural diversity, economic development, immigration, etc. This course is also an
elective course for the International and Global Studies (IGS) major.

PREREQUISITES

Economics 65A requires that a student has successfully completed (i.e., with a C or better) Economics 2A
or an equivalent course. This standard will be rigorously applied. Knowledge of the material used in
Economics 2A will be assumed, and we will largely build on what it is you learned in Economics 2A.
Knowledge of high school algebra and geometry is occasionally necessary, but no advanced math is
required.

CLASS MEETINGS

The course meets on Mondays throughout the semester from 2:10-5:00 PM (S1 Block) in Gerstenzang 123.
Attendance at class lectures is mandatory, and attendance will be taken at each lecture. Note that Tuesday,
3 October is a Brandeis Monday.

EXAMS

Seventy percent of your course grade is determined by mandatory examinations – a midterm exam (35%)
and a final exam (35%). There are no make-up exams. The dates of the exams are:

Midterm Exam Monday, October 23rd, 2:10-5:00 PM

Final Exam Tuesday, December 12th, 1:30-4:30 PM

PROBLEM SETS

Thirty percent of your course grade is determined by individual performance on problem sets. Problem sets
will be available to download from the WebCT site one week before they are due, and they are to be
completed on your own (i.e., not in groups). The problem sets must be turned in to a box outside 205
Sachar by 2:00 PM on the following dates (no emailed, faxed, or late problem sets accepted):

PS#1 due Wednesday, September 20th PS#4 due Wednesday, November 8th
PS#2 due Wednesday, October 4th PS#5 due Tuesday, November 21st
PS#3 due Wednesday, October 18th PS#6 due Tuesday, December 5th

GRADING POLICY

Final grades will be awarded on the traditional A+ through E scale. The weighting of grades is as follows:

Six Problem Sets 30%

Midterm Exam 35%
Final Exam 35%
Total 100%

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EXPECTATIONS

We expect students to attend class and to have prepared the relevant material (e.g., completed the assigned
reading) prior to class. The readings provide an adequate level of understanding for students to actively
engage in the course lectures and discussions.

INFORMATION DISSEMINATION

WEB-CT In Economics 65A we will maintain a course website through the University’s WebCT system.
The WebCT site will be the definitive source of the final course schedule and any adjustments to topic
coverage and readings. You will be responsible for checking the website frequently. Finally, all of the
problem sets, answer keys, etc., will be posted on the WebCT site for you to download and print. The
website can be accessed from

http://webct.brandeis.edu/

Most documents from the course website will be found as PDF (portable document format) files. To read
such files you will need to have Adobe Acrobat Reader installed on your computer. All computers in the
computer labs on campus come equipped with the Reader. If it is not already installed on your personal
computer, you can visit Adobe’s website where it is available for free download and installation
(http://www.adobe.com/products/acrobat/readstep.html ).

CONTACT INFORMATION

All administrative elements of the course (questions about readings, problem sets, answer keys, exams,
etc.) will be handled by Professor Bown and the course’s teaching assistants.

Email is the best way to contact Professor Bown outside of class and office hours. Bown’s contact
information and office hours are

Professor Chad P. Bown

Office: Sachar 205
Office Hours: Tuesdays and Wednesdays 2:45-3:45 PM (no appointment necessary)
and by email appointment
Email: cbown@brandeis.edu
Website: http://www.brandeis.edu/~cbown/
Telephone: x64823

SPECIAL ACCOMMODATIONS

If you are a student with a documented disability on record at Brandeis University and wish to have a
reasonable accommodation for this class, please see Professor Bown immediately and in no case later than
two weeks prior to the first exam. Please keep in mind that reasonable accommodations are not provided
retroactively.

ACADEMIC HONESTY

You are expected to be honest in your academic work. This includes completing your problem sets
individually. The University policy on academic honesty is distributed annually as section 5 of the Rights
and Responsibilities handbook. Instances of alleged dishonesty will be forwarded to the Office of Campus
Life for possible referral to the Student Judicial System. Potential sanctions include failure in the course
and suspension from the University. If you have any questions about our expectations, please ask.

Academic Dishonesty will not be tolerated and will be rigorously prosecuted.

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REQUIRED READING AND PREPARATORY MATERIALS

I. Three required texts on sale at the Brandeis University bookstore:

• Friedman, Thomas L. The World Is Flat [Updated and Expanded]: A Brief History of the
Twenty-First Century. New York: Farrar, Strauss and Giroux, 2006 (ISBN: 0-374-29279-5).

• Bhagwati, Jagdish. In Defense of Globalization. USA: Oxford University Press, 2004 (ISBN: 0-
195-30003-3).

• Hanson, Gordon H. Why Does Immigration Divide America? Public Finance and Political
Opposition to Open Borders. Washington, DC: Institute for International Economics, 2005
(ISBN 0-88132-400-0).

II. A set of required electronic articles and chapters from books available for download and printing from
the course WebCT site. With the exception of those marked **, the articles below are also available for
sale at the Brandeis University bookstore in a bound course packet :

• Bagwell, Kyle and Robert W. Staiger (2001) “National Sovereignty in the World Trading
System,” Harvard International Review, Winter, Vol. XXII, No. 4, 54-59.

• Blinder, Alan S. (2006) “Offshoring: The Next Industrial Revolution?” Foreign Affairs 85:2
(March-April): 113-128.

• **Bown, Chad P., Meredith A. Crowley, Rachel McCulloch, and Daisuke Nakajima (2005)
“The U.S. Trade Deficit: Made in China?” Economic Perspectives 29 (4th Quarter): 2-18.

• **Deardorff, Alan (2006) “Comment on Mankiw and Swagel, ‘The Politics and Economics of
Offshore Outsourcing’,” Journal of Monetary Economics 53:5 (July): 1057-1061.

• Edmonds, Eric V. (2005) “Understanding Child Labor: Patterns, Types, and Causes,” (pp. 21-26)
in Economic Perspectives: Ending Abusive Child Labor, Washington, DC: U.S. Dept of State.

• **Elliott, Kimberly Ann and Richard B. Freeman (2005) “White Hats or Don Quixotes?
Human Rights Vigilantes in the Global Economy,” (Chapter 2, pp. 47-97) in Richard B.
Freeman, Joni Hersch and Lawrence Mishel (eds.) Emerging Labor Market Institutions for the
Twenty-First Century. Chicago: The University of Chicago Press.

• Friedman, Thomas L. (2006) “The First Law of Petropolitics,” Foreign Policy, 154 (May-June):
28-36.

• Harrison, Lawrence E. (2006) The Central Liberal Truth: How Politics Can Change a Culture
and Save It from Itself. USA: Oxford University Press.

• Mankiw, N. Gregory and Phillip Swagel (2006) “The Politics and Economics of Offshore
Outsourcing,” Journal of Monetary Economics 53:5 (July): 1027-1056.

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 • Scheve, Kenneth F. and Matthew J. Slaughter (2001) “Public Perceptions and Preferences
about Globalization” (Chapter 2, pp. 13-45) in Globalization and the Perspectives of American
Workers. Washington, DC: Institute for International Economics.

• **Sifry, Micah (2004) “The Rise of Open Source Politics,” The Nation, November 4.

• **Sifry, Micah. (2005) “Hacking Politics: Reviewing Hugh Hewitt's Skewed Book 'Blog',”
Personal Democracy Forum, March 28.

• **Other readings to be announced (TBA) as the course evolves.

III. A set of digitized videos are available through IPTV (and the course WebCT site) and do not need to
be purchased:

• China Rises (Discovery Channel DVD, 2006).

• Is Wal-Mart Good for America? (PBS Frontline DVD, 2004).

• Outsourcing: White Collar Exodus (Films for the Humanities & Sciences DVD, 2005).

• Thomas L. Friedman Reporting: The Other Side of Outsourcing. (Discovery Channel DVD,
2005).

• The Yes Men (MGM DVD, 2004).

IV. A subscription to a daily or weekly source reporting current events in globalization, such as The New
York Times, The Wall Street Journal, The Financial Times, The Economist, etc.

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 COURSE OUTLINE

1. September 11, 2006 [Bown]

Topics:
• Introduction to the Economics of Globalization

Readings and Preparation before Class:

• IPTV DVD, Outsourcing: White Collar Exodus.
• Friedman, The World Is Flat, pp. 3-49
• Bhagwati, In Defense of Globalization, pp. 3-27

2. September 18, 2006 [Friedman, Bown]

Topics:
• The New Era of Globalization and Forces Flattening the World
• Invited Visitor: P.V. Kannan, Chief Executive Officer, 24/7 Customer

Readings and Preparation before Class:

• Friedman, The World Is Flat, pp. 50-258
• IPTV DVD, Thomas L. Friedman Reporting: The Other Side of Outsourcing.

3. September 25, 2006 [Bown]

Topics:
• The View from Economics – This Globalization’s Explanations and Implications

Readings and Preparation before Class:

• Mankiw and Swagel, “The Politics and Economics of Offshore Outsourcing”
• Deardorff, “Comment on Mankiw and Swagel…”
• IPTV DVD, Is Wal-Mart Good for America?

4. October 3, 2006 [Bown]

Note: Tuesday = “Brandeis Monday”

Topics:
• The View from Economics – This Globalization’s Explanations and Implications (cont.)

Readings and Preparation before Class:

• Bown et al., “The U.S. Trade Deficit: Made in China?”
• Bhagwati, In Defense of Globalization, pp. 51-67; pp. 122-134
• IPTV DVD, China Rises: Getting Rich.

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5. October 9, 2006 [Friedman, Bown]

Topics:
• The New Era of Globalization and the Flattening World (cont.)
• Invited Visitor: Gabriel Rozman, President and Head, Tata Consultancy Services (TCS)
Iberoamerica
• Invited Visitor: Lawrence Harrison, Adjunct Lecturer, Fletcher School (Tufts University)

Readings and Preparation before Class:

• Friedman, The World Is Flat, pp. 505-514 (and review pp. 50-258)
• Harrison, The Central Liberal Truth, pp. 1-56

6. October 16, 2006 [Bown]

Topics:
• Public Perceptions and Misperceptions of Globalization
• The Rise of NGOs and Anti-Globalization Activists

Readings and Preparation before Class:

• Scheve and Slaughter, Globalization and the Perceptions of American Workers, pp. 13-45.
• Bhagwati, In Defense of Globalization, pp. 36-48
• Elliott and Freeman, “White Hats or Don Quixotes?...,” pp. 47-97
• Friedman, The World Is Flat, pp. 471-479

7. October 23, 2006

[Midterm Exam during class, 2:10-5:00 PM]

8. October 30, 2006 [Bown]

Topics:
• Globalization and the Most Vulnerable
• What Role for Global Standards?

Readings and Preparation before Class:

• Bhagwati, In Defense of Globalization, pp. 68-72; pp. 73-91; pp. 135-161
• Edmonds, “Understanding Child Labor…”
• IPTV DVD, China Rises: Getting Rich.

9. November 6, 2006 [Friedman, Bown]

Topics:
• Information Technology, Infrastructure and Politics
• Invited Visitor: Micah Sifry, Executive Editor, Personal Democracy Forum
• Invited Visitor: Andrew Rasiej, Founder and Publisher of Personal Democracy Forum;
former candidate for the Office of Public Advocate in New York City
• Invited Visitor: Brian Behlendorf, Founder and CTO of CollabNet

Readings and Preparation before Class:

• Friedman, The World Is Flat, pp. 261-359 (and review pp. 93-126)
• Bhagwati, In Defense of Globalization, pp. 92-105
• Sifry, Micah, “The Rise of Open Source Politics”
• Sifry, Micah, “Hacking Politics: Reviewing Hugh Hewitt's Skewed Book 'Blog'”

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10. November 13, 2006 [Bown]

Topics:
• The Economics of Migration and Immigration

Readings and Preparation before Class:

• Hanson, Why Does Immigration Divide America?, pp. 1-73
• Bhagwati, In Defense of Globalization, pp. 208-220

11. November 20, 2006 [Bown]

Topics:
• Globalization and the “Need” for Domestic Institutional Reform

Readings and Preparation before Class:

• Bhagwati, In Defense of Globalization, pp. 221-239
• Friedman, The World Is Flat, pp. 360 - 390
• Blinder, “Offshoring: The Next Industrial Revolution?”

12. November 27, 2006 [Bown]

Topics:
• Globalization and the “Need” for International Institutions

Readings and Preparation before Class:

• Bagwell and Staiger, “National Sovereignty in the World Trading System”
• Bhagwati, In Defense of Globalization, pp. 240-262
• IPTV DVD, The Yes Men.

13. December 4, 2006 [Friedman, Bown]

Topics:
• The Geo-Politics of Environmental Impacts of Globalization
• Invited Visitor: Glenn T. Prickett, Senior Vice President, Conservation International

Readings and Preparation before Class:

• Friedman, “The First Law of Petropolitics”
• Friedman, The World Is Flat, pp. 457-566

14. December 12, 2006

[Final Exam, 1:30-4:30 PM, Registrar-assigned block]