Economics- background

1. Economics- background A Look at WWI and WWII

2. Things to Remember • Europe, especially Britain, was steadily gaining power through imperialism • Control of resources, wealth, and slaves was an issue of great importance, profit and pride • There were not many places left to take over • The big four (Britain, France, Spain and Portugal) plus other countries, were quickly dividing up the remaining land

3. Definitions • Sustainable Prosperity • How does one make wealth and happiness last? • Corporate Globalization • The expansion of companies into foreign countries in an effort to expand market, product control and make more money

4. WWI • Imperial powers are looking to maintain, and expand, control • Competition for raw resources was a large factor in starting WWI • Approximately 15 million people were killed in the war • Once the war ended, industry production dropped by almost 25% • Many countries restricted international trade in an effort to aid rebuilding internally

5. WWI • Treaty of Versailles • Drafted and signed in an attempt to ensure peace and avoid another war • Harsh penalties, or reparations, were imposed on Germany • Germany had to pay money to Britain, France, Russia and other countries for war damages • John Maynard Keynes warned that these penalties were too harsh and cause Germany to rebel, starting another war

6. Impact on Canada • Following the end of WWI, income tax was introduced to cover the cost of the war • The war cost Canada roughly $2.5 million a day • Canada owed $164 million in war debt to the US • Canadian soldiers pensions were totaling close to $76 million • Unemployment rose because soldiers were no longer needed and weapons were not being manufactured

7. Over in Russia • Once ruled by a czar, an ancient form of monarchy, Russia entered WWI behind the world in economic and technological advancement • Not only was Russia fighting a world war, they were also experiencing internal civil war as well • The people wanted change

8. Communism • A new economic and political model that was supposed to get rid of class distinctions • The government was all powerful • They ruled the economy, development, and the people • A dictator (one who rules totally and, usually, oppressively) took control of the country

9. Meanwhile • The rest of the world is experiencing the Great Depression • Unemployment was very high • Industry created by the war was no longer necessary and many people were out of work • People who had invested in stocks during the war were confident that prices would continue to rise • Tuesday, October 29, 1929 is Black Friday

10. The Great Depression • People who lost money in the stock market crash could no longer pay their bills and those who owed money on loans defaulted on their payments • Those who were owed money could not collect • Reduced demand for consumer goods • Unemployment continued to rise • Economic depression

11. The Great Depression • What do we remember from last class?

12. Causes of WWII • The Treaty of Versailles forced Germany to pay war reparations • The German population was unhappy with this outcome and was looking for political change within the country • Adolf Hitler, and the Nazi party, were elected into power in 1933 • Hitler was slowly gaining territorial power

13. WWII • After taking over Austria, the Rhineland, and Czechoslovakia, on September 1, 1939 Hitler invaded Poland, staring WWII • Britain, France, Australia, New Zealand and Canada declared war in response • When Japan attacked the United States in 1941, they also declared war • Statistics • More than 50 countries and colonies were involved, more than 60 million people fought, an estimated 50 million people died globally

14. Post WWII • How does the world avoid a similar situation to the one following WWI? • The United Nations was formed • Before the war ended, countries were already preparing to stabilize the economy • John Maynard Keynes led the talks at the Bretton-Woods Conference

15. John Maynard Keynes • He believed that a free market system was not the way to go • Leaving the country to the fate of supply and demand did not work • Another solution was needed • The government needed to have some role in the economy, even if it was small • Keynes said their needed to be programs in place to hire workers who had been laid off

16. Friedrich Hayek • Disagreed with Keynes • He mistrusted government control • He did not like any form of control, whether it was total control as in the Soviet Union or partial control as in Western countries following WWII • He believed the government had no place interfering in competition between bu

17. World Bank and IMF • Formed at the Bretton-Woods Conference • These organizations are supported by the United Nations and were started to encourage international trade • They promoted international trade but with rules and regulations • There are positive and negative arguments for both organizations

18. GATT • General Agreement on Tariffs and Trade • A tariff is a bill, charge or cost that one country will impose on another • Trade rules were agreed on for international trade at the Bretton-Woods Conference • GATT attempted to regulate international trade by lowering tariffs and make trading freer

19. Multinational Corporations • Also known as transnational corporations • MNCs or TNCs • Think of as many companies as you can that have a global market

20. Disney • How does Disney represent what we know of multinational corporations? • How does Disney represent corporate globalization?