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The North American Political Economy “The study of political economy focuses on the related set of economic and political institutions that control the production, distribution, consumption of goods and services.” Hardwick, Shelley, and Holtgrieve, The Geography of North America, Upper Saddle River, NJ, 2008. Page 63. http://money.cnn.com/2009/04/24/news/newsmakers/madoff.for tune/?postversion=2009042412 http://www.collectionscanada.gc.ca/05/0542/054202_f.html Political Structure of North America The United States 50 states and 1 district Capital - Washington, DC Dependent Areas: American Samoa, Baker Island, Guam, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Islands, Navassa Island, Northern Mariana Islands, Palmyra Atoll, Puerto Rico, Virgin Islands, Wake Island Government Type - Constitution-based federal republic Legal System: federal court system based on English common law; each state has its own unique legal system, of which all but one (Louisiana, which is still influenced by the Napoleonic Code) is based on English common law; judicial review of legislative acts. The United States Government – Executive Branch The president is both the chief of state and head of government. President-Barack H. Obama Vice President-Joseph R. Biden The Cabinet appointed by the president with Senate approval elections. The United States Government – Legislative Branch Congress consists of the Senate (100 seats, 2 members are elected from each state by popular vote to serve six-year terms; one-third are elected every two years) and the House of Representatives (435 seats; members are directly elected by popular vote to serve two-year terms) The United States Government – Judicial Branch Includes the Supreme Court (nine justices nominated by the president and confirmed with the advice and consent of the Senate who are appointed to serve for life) United States Courts of Appeal United States District Courts State and County Courts Canada 10 provinces and 3 territories; Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, Saskatchewan, Yukon Territory Capital - Ottawa Government - a parliamentary democracy, a federation, and a Commonwealth realm Legal System -based on English common law, except in Quebec, where civil law system is based on French law. Constitution Act, 1982(1) SCHEDULE B CONSTITUTION ACT, 1982 PART I CANADIAN CHARTER OF RIGHTS AND FREEDOMS Whereas Canada is founded upon the principles that recognize the supremacy of God and the rule of law: Guarantee of Rights and Freedoms 1. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society. Fundamental Freedoms 2. Everyone has the following fundamental freedoms: (a) freedom of conscience and religion (b) freedom of thought, belief, opinion and expression, including freedom of the press and other means of communication. (c) freedom of peaceful assembly; and (d) freedom of association. Canada – Executive Branch Head of state: Queen Elizabeth II, represented by Governor General Michaelle Jean Head of government: Prime Minister Stephen Harper Cabinet: Federal Ministry chosen by the prime minister usually from among the members of his own party sitting in Parliament. Elections: monarchy is hereditary; governor general appointed by the monarch on the advice of the prime minister for a five-year term following legislative elections, the leader of the majority party or the leader of the majority coalition in the House of Commons is automatically designated prime minister by the governor general. Canada – Legislative Branch Parliament consists of the Senate (105 seats; members appointed by the governor general with the advice of the prime minister and serve until reaching 75 years of age) and the House of Commons (308 seats elected by direct, popular vote to serve a maximum of fiveyear terms) Canada – Judicial Branch Includes, Supreme Court of Canada (judges are appointed by the prime minister through the governor general) Federal Court of Canada Federal Court of Appeal Provincial Courts (these are named variously Court of Appeal, Court of Queens Bench, Superior Court, Supreme Court, and Court of Justice) Beverley McLachlin was appointed the chief justice of the Supreme Court of Canada in 2000. She is the first female chief justice in the history of the Supreme Court. She was appointed to the high court in 1989. The Economic Structure of the United States and Canada Dining in economy class on airlines in Canada and the United States http://www.flickr.com/photos/archangeli/3415002403/ http://www.flickr.com/photos/shihwy1/52018201/ Some Economic Similarities Post industrial, high tech economies Wealthy, literate & affluent developed nations Mixed economies, with focus on market-oriented activities World’s largest trading partners (multiple sectoral freetrade agreements dating from the 1960s; NAFTA, 1994, creates continental multi-sectoral free-trade zone) Some Economic Differences Average tax rates, 37% (Canada)VS 27% (USA) USA tends to have a deficit; Canada tends to have a surplus (1% – 3%) USA operates with trade deficit, Canada has a trade surplus Government spending 36% (Canada) VS 31% (USA) Healthcare supported by government (70%Canada VS 50% in USA) Canada has national goods & services tax of 5%, USA does not have such a tax Services funded primarily by the government in Canada include: CBC, health care, higher education. Per hour, Canadians are 82% as productive as US workers. US has more banks (based on English banking model), a fragmented banking system. Canada has fewer banks, but more are nationwide and/or international (based on the Scottish model). Other Differences Canada is major exporter, USA is a major importer Canada has a larger proportion of small to medium sized companies Canada has a smaller high tech sector than the USA On some things we can both agree… http://www.fin.gc.ca/ec2002/mm/ec02pres-e.asp http://www.fin.gc.ca/ec2002/mm/ec02pres-e.asp http://www.fin.gc.ca/ec2002/mm/ec02pres-e.asp The Economic Sectors Primary Secondary Tertiary Quaternary Each of these sectors represent a different stage of production. Primary Level Economic Activities Secondary Level Economic Activities Tertiary Level Economic Activities Quaternary Economic Activities The Economic Base “…the set of economic activities upon which the community relies in order to generate income…” “…basic employment generates non-basic employment…” Hardwick, Shelley, and Holtgrieve, The Geography of North America, Upper Saddle River, NJ, 2008. Page 64 http://www.dec.ny.gov/environmentdec/42592.html Multiplier Effects… In economics, the multiplier effect refers to the idea that the initial amount of money spent by the government leads to an even greater increase in national income. In other words, an initial change in aggregate demand causes a change in aggregate output for the economy that is a multiple of the initial change. The multiplier was initially developed by Ralph George Hawtrey in 1931. It is particularly associated with Keynesian economics; some other schools of economic thought reject, or downplay the importance of multiplier effects, particularly in the long run. The multiplier has been used as an argument for government spending or taxation relief to stimulate aggregate demand. http://www.absoluteastronomy.com/topics/Multiplier_(economics)#encyclopedia : http://www.ingrimayne.com/econ/Keynes/DifferentViews.html Percent employed in the various sectors – General Trends In Canada Agriculture 2% Manufacturing 13% Construction 6% Services 76% Other 3% In the USA Farming, forestry, and fishing 0.7% Manufacturing, extraction, transportation, and crafts 22.9% Managerial, professional, and technical 34.9% Sales and office 25% Other services 16.5% http://www.nationmaster.com/index.php http://thegoldguys.blogspot.com/ Historical Trends in Urbanization in North America Prior to 1800 Towns along Atlantic seaboard – port cities including Baltimore, Boston, Philadelphia, NY, Montreal, eventually Quebec City Towns in the agricultural south – plantations largely selfsufficient and isolated, towns located on v\navigable streams for shipping : Charleston & Savanna 1782 - The Bank of North America, established by the Continental Congress, becomes the first chartered bank in the U.S. http://www.fdic.gov/about/learn/learning/when/1700s.html Period of Frontier Mercantilism - 1840 urbanization level in the US was 9% people worked primarily in agriculture, fishing, mining, furs and timber (i.e., local resource based) manufactured goods and people were imported urban economic base was commerce (trade, transportation, banking etc.) o NY, Philadelphia, Boston, New Orleans, Baltimore, Cincinnati, Quebec City, Montreal were leading cities Rural dominance is still in place until 1840s with the development of the railroads and the onset of industrialization. Industrial function of the cities expands their dominance. Port cites grow in size due to increase in the number of canals, road s and railways. Urban hierarchy slowly begins to evolve. In Canada, this development is slowed due to the lack of available railroads. Migration pattern emerges, rural to urban and immigration increases into cities. Early Industrial Capitalism 1840 - 1885 in 1870 the urbanization level in the US was 23% period of transition from rural to urban economy manufacturing begins in the cities (i.e., a move away from commerce based cities) beginning of the Northeastern metropolitan corridor (Megalopolis), and Great Lakes urbanization B. F. Goodrich Plant – 1870 http://www.flickr.com/photos/businesshistory/9440 17853/ National Industrial Capitalism 1885 - 1935 full transition from agricultural- mercantilism to urbanindustrial economy increasing integration of N. Am. transportation system influx of poor immigrants WW-I and its industrial impact technological advancements (elevator, radio, car, plane) Chicago moves from 5th to 3rd, Los Angeles reaches 100,000 increasing private auto ownership and integration of national markets By 1925, Ford assembly lines were producing a car every 10 seconds. http://www.johndclare.net/America4.htm National transportation systems are complete linking the South, Southwest and Far West. Agricultural lands from Texas to British Columbia are opened. Shift towards industrialization in every sense of the word. Growth in US concentrated in northeast and in Canada in southern Ontario. Accelerated western movement, rapid population increase, heavy immigration, expanding cities. Cities have at their core, manufacturing and export of finished products. Important cities: Toronto – dominates trade to north and west Winnipeg – prairie and western interior of Canada LA – California and west Florida, Appalachia and Carolina Piedmont all experience growth By 1920, half of US population was urban. Biggest growth occurred on West Coast from San Diego to Vancouver. Florida, Texas, the SW and Colorado and Alberta all experience growth. Mature Industrial Capitalism 1935 - 1975 WW-II provided technological and economic stimulus for prolonged growth PA, OH, IN turnpikes built growth of sunbelt (TX, FL, CA, AZ etc.), decline of rustbelt increasing importance of LA, Houston, Dallas, Atlanta Suburbanization o automobile shaped the process, helped by govt. policies (GI bill, subsidized housing, freeways) all contributing to flight from CBD By 1960s, 25% of world population is urban, with 55% of US being urban. Growth & expansion of cities in part due to automobile and development and use of air travel. New transportation cities begin to change urban morphology: urban sprawl, freeway construction, central-city decay, urban renewal, air pollution, suburban growth, planned industrial centers, regional shopping centers, all begin to appear on the landscape. Global Capitalism 1975 or post-industrial era decline of manufacturing, rise of the service sector (information, finance, health, etc.) "counter-urbanization" observed in 1970s was reversed in 1980s 1990’s rural rebound. Non-metropolitan areas gain population primarily due to increased migration into these areas. Sunbelt cities have fastest growth. new work modes (flex hours, telecommuting) continuing decline of the inner city (loss of tax base, jobs) suburbanization of employment Changing Urban Morphology & Urban Models These models attempt to account for the structure of urban places at specific points in time. Urban structure refers to patterns of land use in cities, and these models divide the cities into different zones based on those patterns. These models illustrate changes and shifts in land use accompanying increasing urbanization. Urbanization refers to a process in which an increasing proportion of an entire population lives in cities and the suburbs of cities. Historically, it has been closely connected with industrialization. Concentric Zonal Model – Ernest Burgess, 1924 (sociologist) This model was based on the study of Chicago and was the first model to attempt to explain how and why social groups were distributed as they were within the city. This model introduced the concept that socio-economic status increases with increasing distance from the city center. Also, Burgess based his ideas on the “bid – rent” curve. The idea behind bid-rent is that different functions will pay different costs for land and/or space. The land within the center of town (the downtown area) will be the most expensive because it will generate the most profit (from retailing activities). As you move out from the city center land values will decrease. http://www.yorku.ca/anderson/Images/Chicago20ecology.gif http://www.nndb.com/people/332/000112993/ This model also assumes that there are no barriers (economic or physical) to growth and the city is able to continue to grow outward (on the isotropic plain). Burgess likened the city to an “organism” that would spread naturally across the landscape. The original zones – 1. 2. 3. 4. 5. 6. CBD Zone in transition or inner city Low-class residential (zone of workingmen’s homes) Middle class residential – inner suburbs Better quality middle-class homes – outer suburbs Commuter zone This model fits American cities in the early 20th century but does not work well outside the US. Sector Theory – Homer Hoyt, 1939 (economist) Developed based in the study of 142 major American cities but used Chicago as the major model. Argues that there are distinct zones within the city but these will radiate/expand outward from the CBD along major transportation lines. Accepts that there exists a socio-economic status gradient and that bid-rent functions do define land use. The city is split along transportation lines, with one half of the city dedicated to manufacturing and lower-class residential and the other half containing predominantly residential with zones of lower to higher class housing. Growth occurs along transportation routes as a result of multiplier effect development. Examples – Calgary, Canada :San Francisco, CA http://www.yorku.ca/anderson/Intro%20Urban%20Studies/Unit3/overview.htm http://www.nipc.org/images/chg90-lu.jpg Multiple-Nuclei Model – Chauncy Harris & Edward Ullman, 1945 (geographers) This model differs from the other two as it accounts for more than one city center or CBD. Allows for the development of secondary city centers that are specialized, such as industrial suburbs and secondary CBDs to serve specific outlying populations. Like Hoyt, argues that growth takes place through multiplier effect development as certain types of activities attract other activities. (Airports attract hotels for example). Incompatible activities repel one another (such as heavy manufacturing and high income residential) http://www.uwinnipeg.ca/faculty/ius/iusweb/CRC/images/classnotes_6_figure7.JPG http://www.tristaterealty.com/commercialindustrialland1.9acresparkplacelakevilla,%20lakecounty,%20illinois.html This model accounts for a greater freedom of movement by the population through the use of private cars and improved roads. This increase in movement allows for increase in the specialization of activities. Finally, although the city continues to have a primary CBD, the importance of this CBD is declining and the city is becoming more decentralized. All of these models assume a city with a well diversified economy and viable growth. An extension of Multiple Nuclei Axial and circumferential highways represent an extension of the transportation system. Transportation corridors connect the axial system with all parts of the city. This freeway/beltway network provides "easy and fast access" to all parts of the city by private car, although increasing congestion makes "easy and fast access" a very relative concept. Epicentres (suburban and regional shopping malls and big box development) rival the traditional core. Often they are bigger in terms of retail space and number of functions. There is still a zone of decline (stagnation). Middle class residential areas (MC) have expanded significantly. http://www.uwinnipeg.ca/faculty/ius/iusweb/CRC/crc_studentres_classnotes_6.htm http://www.uwinnipeg.ca/faculty/ius/iusweb/CRC/crc_studentres_classnotes_6.htm Cars, which are relatively inexpensive for the individual, have facilitated the growth of middle class suburbs but there are other factors that have contributed to the spread and expansion of these suburbs: an increase in housing demand, first from returning veterans following WWII, then the baby boomers. This demand was easier to accommodate in "greenfield" suburban development; more flexible mortgage lending terms such as lower down payment requirements which made home ownership accessible to more households; rising incomes relative to costs. More people could afford to own a single detached family home; the entry of more married women into the workforce also increased incomes; new building technology that facilitated tract building in suburban areas at affordable prices. Suburban building developed into an almost "cookie cutter" approach; and, the strengthening of the "North American Dream" - to own one's own house on a plot of land in the suburbs. http://www.uwinnipeg.ca/faculty/ius/iusweb/CRC/crc_studentres_classnotes_6.htm The Evolving Urban Realm http://www.uwinnipeg.ca/faculty/ius/iusweb/CRC/images/classnotes_6_figure9.JPG What has emerged as cities have evolved is a number of large self-sufficient sectors, each focused on a downtown independent of the traditional downtown and the central city. The entire metropolitan area becomes reorganized into a set of independent urban realms. Each urban realm is anchored by a major mixed use downtown core. The various realms are connected by major traffic arterials, often freeways and circumferential links circle the entire realm. The automobile is the major form of transportation. Public transportation (buses, subways) are difficult to introduce because there is no particular focus of employment and services there are many such areas scattered throughout the city. Residential development is generally very low density. In circumstances such as this, ridership on public transportation is so low that fares do not even come close to covering the cost. These cities are designed to accommodate the automobile. http://www.uwinnipeg.ca/faculty/ius/iusweb/CRC/crc_studentres_classnotes_6.htm The Changing Urban System of North America Decentralization of Industry o Rust Belt o Technological Inertia The impact of changes in transportation and infrastructure from suburbanization to telecommuting. Development of “ethnoburbs” as more minorities move to the suburbs. Increasing stagnation of rural areas and areas remote from metropolitan areas without amenities. Beyond Cities and Nations NAFTA On January 1, 1994, the North American Free Trade Agreement between the United States, Canada, and Mexico (NAFTA) entered into force. All remaining duties and quantitative restrictions were eliminated, as scheduled, on January 1, 2008. NAFTA created the world's largest free trade area, which now links 444 million people producing $17 trillion worth of goods and services. http://www.ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta The Government of Canada, the Government of the United Mexican States and the Government of the United States of America, resolved to: STRENGTHEN the special bonds of friendship and cooperation among their nations; CONTRIBUTE to the harmonious development and expansion of world trade and provide a catalyst to broader international cooperation; CREATE an expanded and secure market for the goods and services produced in their territories; REDUCE distortions to trade; ESTABLISH clear and mutually advantageous rules governing their trade; ENSURE a predictable commercial framework for business planning and investment; BUILD on their respective rights and obligations under the General Agreement on Tariffs and Trade and other multilateral and bilateral instruments of cooperation; ENHANCE the competitiveness of their firms in global markets; FOSTER creativity and innovation, and promote trade in goods and services that are the subject of intellectual property rights; CREATE new employment opportunities and improve working conditions and living standards in their respective territories; UNDERTAKE each of the preceding in a manner consistent with environmental protection and conservation; PRESERVE their flexibility to safeguard the public welfare; PROMOTE sustainable development; STRENGTHEN the development and enforcement of environmental laws and regulations; and PROTECT, enhance and enforce basic workers' rights; The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, mostfavored-nation treatment and transparency, are to: a) eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties; b) promote conditions of fair competition in the free trade area; c) increase substantially investment opportunities in the territories of the Parties; d) provide adequate and effective protection and enforcement of intellectual property rights in each Party's territory; e) create effective procedures for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes; and f) establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this Agreement Canada’s exports to its NAFTA partners increased by 173 percent in value from pre-NAFTA levels. Exports to the United States grew from USD116.8 billion to USD316.8 billion, while exports to Mexico reached USD3.9 billion. U.S. exports to Mexico and Canada grew by 157 percent, from USD 142 .0 billion (USD 41.6 billion to Mexico and USD 100.4 billion to Canada) to USD 364.5 billion (USD 134.2 and USD 230.3 billion, respectively). Mexican exports to the U.S. grew by 392 percent, reaching USD212.3 billion. Exports to Canada also grew substantially from USD1.5 to USD5.2 billion, an increase of almost 237 percent. http://www.nafta-sec-alena.org/en/view.aspx?x=343&mtpiID=122 Openning the door to more free trade agreements in North America Canada has free trade agreements with Israel, Chile, and Costa Rica, and has concluded free trade agreement negotiations with the members countries of the European Free Trade Association (EFTA: Iceland, Liechtenstein, Norway and Switzerland). Canada is currently in the process of negotiating free trade agreements with four countries in Central America (El Salvador, Guatemala, Honduras and Nicaragua), Singapore, Korea, and has recently launched free trade agreement negotiations with the Andean Community countries of Colombia and Peru, the Dominican Republic and the Caribbean Community (CARICOM). The United States has free trade agreements with Jordan, Chile, Singapore, Australia, Morocco, Bahrain, the Dominican Republic and five countries in Central America (CAFTA-DR: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Costa Rica has not yet ratified the agreement). The United States has recently signed free trade agreements with Peru, Colombia, Panama, and Korea, and is currently negotiating a free trade agreement with Malaysia. The U.S.-Oman Free Trade Agreement will enter into force upon Oman’s completion of its domestic procedures. Mexico has concluded free trade agreements with Chile, the European Union, the European Free Trade Association, Israel, Bolivia, Colombia, Nicaragua, the Central America Northern Triangle (El Salvador, Guatemala, and Honduras), Costa Rica, Uruguay and Japan. http://www.ustr.gov/sites/default/files/NAFTA-The-Road-Ahead.pd