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Hegemony, Global Capital Flows, and Local Housing Markets: Building Conservative Politics One Brick at a Time |
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Abstract:
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Most analyses of US ?hegemony? dwell on the promotion of ideas and policies by the US state, its associated international institutions, and corporations. This paper instead looks at processes operating behind the backs of actors as a source of US hegemony, defined as a persistent alignment of interests between the US and other polities. During the long 1990s, the US economy benefited from a system of financial arbitrage in which the US economy as a whole borrowed short term, at low interest rates, from the rest of the world, while lending back long term at higher returns to the rest of the world. One macro-economic consequence of this set of flows was a self sustaining housing market boom in the US based on declining real and nominal interest rates. This boom favored employment and GDP growth in the US at the expense of other advanced economies. However, not all other economies suffered equally. The more that housing market financial structures in an economy approximated those of the US (low transaction costs for mortgage refinance, housing equity cash-out, wide-spread homeownership, and mortgage interest tax deductibility), the better that economy performed in GDP and employment terms during the 1990s. While falling interest rates should have benefited all economies, US style housing markets proved better at translating disinflation into new aggregate demand. The result is the consolidation of preferences around a continued low inflation environment, the continuation of US financial arbitrage, and the maintenance of high housing prices. The associated papers detail these processes at a national level. |
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Association:
Name: International Studies Association 48th Annual Convention
URL: http://www.isanet.org
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Citation:
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MLA Citation:
| Schwartz, Herman. "Hegemony, Global Capital Flows, and Local Housing Markets: Building Conservative Politics One Brick at a Time" Paper presented at the annual meeting of the International Studies Association 48th Annual Convention, Hilton Chicago, CHICAGO, IL, USA, Feb 28, 2007 <Not Available>. 2009-05-24 <http://www.allacademic.com/meta/p178599_index.html> |
APA Citation:
| Schwartz, H. , 2007-02-28 "Hegemony, Global Capital Flows, and Local Housing Markets: Building Conservative Politics One Brick at a Time" Paper presented at the annual meeting of the International Studies Association 48th Annual Convention, Hilton Chicago, CHICAGO, IL, USA <Not Available>. 2009-05-24 from http://www.allacademic.com/meta/p178599_index.html |
Publication Type: Conference Paper/Unpublished Manuscript
Abstract: Most analyses of US ?hegemony? dwell on the promotion of ideas and policies by the US state, its associated international institutions, and corporations. This paper instead looks at processes operating behind the backs of actors as a source of US hegemony, defined as a persistent alignment of interests between the US and other polities. During the long 1990s, the US economy benefited from a system of financial arbitrage in which the US economy as a whole borrowed short term, at low interest rates, from the rest of the world, while lending back long term at higher returns to the rest of the world. One macro-economic consequence of this set of flows was a self sustaining housing market boom in the US based on declining real and nominal interest rates. This boom favored employment and GDP growth in the US at the expense of other advanced economies. However, not all other economies suffered equally. The more that housing market financial structures in an economy approximated those of the US (low transaction costs for mortgage refinance, housing equity cash-out, wide-spread homeownership, and mortgage interest tax deductibility), the better that economy performed in GDP and employment terms during the 1990s. While falling interest rates should have benefited all economies, US style housing markets proved better at translating disinflation into new aggregate demand. The result is the consolidation of preferences around a continued low inflation environment, the continuation of US financial arbitrage, and the maintenance of high housing prices. The associated papers detail these processes at a national level. |
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