1
Summary Economics of Safety & Security
“*” means it is an important concept
, 2
Table of Contents
Week 1 ............................................................................................................................................. 4
Scharwzer – 2020 ..................................................................................................................................... 4
Berman – 2022 (chapter 2, pp. 35-41).................................................................................................... 5
Friedman – 1953 (pp. 145-154)............................................................................................................... 6
Hausman – 2012 (chapter 2, pp. 13-17) ................................................................................................. 8
Notes – Lecture 1: Thinking like an economist .................................................................................... 9
Week 2 ........................................................................................................................................... 15
Winter – 2020 (Chapter 1-5)................................................................................................................. 15
Allision & Zelikow – 1999 (pp. 13-26) ................................................................................................. 16
Notes – Lecture 2: Rational choice theory in practice ....................................................................... 17
Course lab 1 ........................................................................................................................................... 20
Week 3 ........................................................................................................................................... 20
Thaler – 2016 (pp. 1577-1582) .............................................................................................................. 20
Sunstein – 2014 ...................................................................................................................................... 22
Winter – 2020 (Chapter 9) .................................................................................................................... 23
Hafner-Burton et al. – 2017 (pp. Supplement 6-13) ........................................................................... 23
Notes – Lecture 3: Challenging the Assumptions ............................................................................... 25
Week 4 ........................................................................................................................................... 31
Binmore – 2007 ...................................................................................................................................... 31
Van Vugt – 2009 ..................................................................................................................................... 33
Putnam – 1988 (pp. 433-441) ................................................................................................................ 34
Notes – Lecture 4: Strategic Games..................................................................................................... 35
Course lab 2 ........................................................................................................................................... 42
Week 5 ........................................................................................................................................... 42
KPMG – 2016 ........................................................................................................................................ 42
Sharman – 2011 (Chapter 1) ................................................................................................................ 43
Findley, Nielson & Sharman – 2013 .................................................................................................... 44
Notes – Lecture 5: Special session; financial crime and terrorist financing .................................... 46
Week 6 ........................................................................................................................................... 52
Poast – 2019............................................................................................................................................ 52
, 3
DiGiuseppe – 2015 ................................................................................................................................. 54
Notes – Lecture 6: Economics of war .................................................................................................. 55
Week 7 ........................................................................................................................................... 57
Masters – 2019 ....................................................................................................................................... 57
Farrell & Newman – 2019 .................................................................................................................... 58
Feldstein & Brauer – 2024 .................................................................................................................... 59
Notes – Lecture 7: Globalization and economic statecraft ................................................................ 60
, 4
Week 1
Scharwzer – 2020
This article explores the emergence of a new geo-economic order where global powers—
specifically the United States, China, and Europe—weaponize economic instruments to secure
international influence and reinforce their power positions.
The Four Dimensions of Geo-economic Change àThe author argues that the relationship
between economic strength and state power is being transformed across four key dimensions:
- Vulnerability of Interdependence à Reciprocal trade and investment dependencies, once
seen as stabilizing, are now viewed as sources of uncertainty and potential blackmail due
to long, vulnerable supply chains.
- Power Asymmetries à Protectionism, the systemic conflict between Western democracies
and authoritarian regimes, and the uneven adoption of digital technologies are creating
deep imbalances in global economic power.
- Security-Economy Nexus à Technological innovation (AI, 5G, quantum computing) and
energy leadership are now directly tied to national security, dictating a state's traditional
foreign policy scope.
- Economic Instruments over Military Action à Due to decreasing social acceptance of
traditional warfare, states increasingly use financial and economic tools—rather than
military force—to project power.
Major Powers and their Strategies àThe article highlights how different nations employ geo-
economic "statecraft":
- United States à Under the Trump administration, the U.S. equated economic security with
national security, using tariffs and investment screenings to force foreign compliance and
block competitors.
- China à Through the Belt and Road Initiative (BRI), China creates economic
dependencies that translate into political influence, such as when Greece blocked an EU
motion on Chinese human rights after Chinese investment in its ports.
- Russia à Russia strategically uses its energy resources and infrastructure, like the Nord
Stream 2 pipeline, to drive wedges between EU and NATO allies.
Challenges for Germany and Europe
Germany is described as particularly vulnerable because it is the most open economy of the G7
states, with a high dependency on both exports and foreign investment. This openness, once a
guarantee of growth, now limits its foreign policy options amidst the escalating rivalry between
the U.S. and China.
The Path Toward European Sovereignty
Summary Economics of Safety & Security
“*” means it is an important concept
, 2
Table of Contents
Week 1 ............................................................................................................................................. 4
Scharwzer – 2020 ..................................................................................................................................... 4
Berman – 2022 (chapter 2, pp. 35-41).................................................................................................... 5
Friedman – 1953 (pp. 145-154)............................................................................................................... 6
Hausman – 2012 (chapter 2, pp. 13-17) ................................................................................................. 8
Notes – Lecture 1: Thinking like an economist .................................................................................... 9
Week 2 ........................................................................................................................................... 15
Winter – 2020 (Chapter 1-5)................................................................................................................. 15
Allision & Zelikow – 1999 (pp. 13-26) ................................................................................................. 16
Notes – Lecture 2: Rational choice theory in practice ....................................................................... 17
Course lab 1 ........................................................................................................................................... 20
Week 3 ........................................................................................................................................... 20
Thaler – 2016 (pp. 1577-1582) .............................................................................................................. 20
Sunstein – 2014 ...................................................................................................................................... 22
Winter – 2020 (Chapter 9) .................................................................................................................... 23
Hafner-Burton et al. – 2017 (pp. Supplement 6-13) ........................................................................... 23
Notes – Lecture 3: Challenging the Assumptions ............................................................................... 25
Week 4 ........................................................................................................................................... 31
Binmore – 2007 ...................................................................................................................................... 31
Van Vugt – 2009 ..................................................................................................................................... 33
Putnam – 1988 (pp. 433-441) ................................................................................................................ 34
Notes – Lecture 4: Strategic Games..................................................................................................... 35
Course lab 2 ........................................................................................................................................... 42
Week 5 ........................................................................................................................................... 42
KPMG – 2016 ........................................................................................................................................ 42
Sharman – 2011 (Chapter 1) ................................................................................................................ 43
Findley, Nielson & Sharman – 2013 .................................................................................................... 44
Notes – Lecture 5: Special session; financial crime and terrorist financing .................................... 46
Week 6 ........................................................................................................................................... 52
Poast – 2019............................................................................................................................................ 52
, 3
DiGiuseppe – 2015 ................................................................................................................................. 54
Notes – Lecture 6: Economics of war .................................................................................................. 55
Week 7 ........................................................................................................................................... 57
Masters – 2019 ....................................................................................................................................... 57
Farrell & Newman – 2019 .................................................................................................................... 58
Feldstein & Brauer – 2024 .................................................................................................................... 59
Notes – Lecture 7: Globalization and economic statecraft ................................................................ 60
, 4
Week 1
Scharwzer – 2020
This article explores the emergence of a new geo-economic order where global powers—
specifically the United States, China, and Europe—weaponize economic instruments to secure
international influence and reinforce their power positions.
The Four Dimensions of Geo-economic Change àThe author argues that the relationship
between economic strength and state power is being transformed across four key dimensions:
- Vulnerability of Interdependence à Reciprocal trade and investment dependencies, once
seen as stabilizing, are now viewed as sources of uncertainty and potential blackmail due
to long, vulnerable supply chains.
- Power Asymmetries à Protectionism, the systemic conflict between Western democracies
and authoritarian regimes, and the uneven adoption of digital technologies are creating
deep imbalances in global economic power.
- Security-Economy Nexus à Technological innovation (AI, 5G, quantum computing) and
energy leadership are now directly tied to national security, dictating a state's traditional
foreign policy scope.
- Economic Instruments over Military Action à Due to decreasing social acceptance of
traditional warfare, states increasingly use financial and economic tools—rather than
military force—to project power.
Major Powers and their Strategies àThe article highlights how different nations employ geo-
economic "statecraft":
- United States à Under the Trump administration, the U.S. equated economic security with
national security, using tariffs and investment screenings to force foreign compliance and
block competitors.
- China à Through the Belt and Road Initiative (BRI), China creates economic
dependencies that translate into political influence, such as when Greece blocked an EU
motion on Chinese human rights after Chinese investment in its ports.
- Russia à Russia strategically uses its energy resources and infrastructure, like the Nord
Stream 2 pipeline, to drive wedges between EU and NATO allies.
Challenges for Germany and Europe
Germany is described as particularly vulnerable because it is the most open economy of the G7
states, with a high dependency on both exports and foreign investment. This openness, once a
guarantee of growth, now limits its foreign policy options amidst the escalating rivalry between
the U.S. and China.
The Path Toward European Sovereignty
