World Cultures Comparison Project/Paper

World Cultures World Cultures Comparison Project Paper - Pro: Economics by Plaz Template:World Cultures Comparison Project

Only a DRAFT!

May change/be updated - still in progress - may still contain inaccuracies

may contain to-be verbs (Oh no!)

Globalization, in the long run, has a positive impact on both richer and poorer (or developing) nations. Increasing trade between nations helps both parties advance by allowing them each to produce what they are best at and being able to sell those products around the world. In addition, globalization increases competition which prevents lazy monopolies and inefficient means of production. It drives innovation and world peace with a spirit of interdependence. Trade barriers only prevent these benefits from realization and hurt society as a whole. Globalization represents a positive trend which must continue to drive growth to make the world a better place.

Specialization

No one person can do everything, and the same is true for nations as well. For starters, not every nation has enough of every natural resources. The United Stated does not have enough oil to survive efficiently. Sure, if necessary we could end our dependency on oil, but this would be at an enormous cost to our current industries. Alternative fuels are just too expensive, or we would have adopted them already. But the same also holds true for manufacturing.

The United States only has a certain amount of workers and a certain amount of land. It's best to distribute that land to make the most goods as possible for our society. Of course we can't make everything equally well. We would need to make trade-offs and produce more of some things then others. This would decrease total output. Consider, for a minute, a smaller scale. What if each state had to be independent. Where would we get cotton or computers? A computer factory would be needed in every state. Currently, a few factories exist which are well-equipped and very efficient. If one would be needed in every state, much more resources would need to be used to produce the same product. In addition, the cotton plants would have lower yields here because of the colder weather. In total, much less would be produced.

Specialization solves the problem. For example, Pennsylvania can produce large amounts of coal and agricultural goods. We are able to trade these for cotton and computers, which other states produce well. In total, more cotton, coal, computers, and agricultural goods are made each year with the same amount of input.

This same pattern holds true between nations as well. Asians are able to produce televisions more efficiently then we are able to. However, we are not worse off because Americans are very good at producing medicine due to our highly trained workforce. Thus we are able to trade medicine for televisions. This represents the most efficient use of the scarce resources which exist in the world.

Wal-Mart represents another example of the power of maximum efficiency. Wal-Mart, the world's largest retailer and domestic private employer, achieves the lowest price possible through massive operations around the world (via Wikipedia). They are successful because of the principle of economies of scale. They are able to use technology and specialization to remove as much waste from their operation as possible. Consumers must like this efficient, low-cost process because more then one-third of the United State's population visits a Wal-Mart every week (via Wikipedia). Most are not concerned that most production comes from China and other foreign factories. Yes, some people do raise concerns about Wal-Mart's effect on local communities and global industries, however, low prices usually draw people in, and in fact, are for the better.

Trade Barriers

Many who are scared of Wal-Mart and global competition try to lobby governments to pass trade barriers. Trade barriers are both quotas and tariffs. Both are bad ideas and they hamper both consumers, foreign markets, and even domestic production. They artificially increase prices by reducing the number of producers able to sell a product in a certain region. This shows very similar tendencies to installing monopolies, at least among domestic producers.

Throughout history there has been consistent evidence that monopolies are detrimental to society as a whole. They allow a smaller subset of producers to artificially raise prices (Brue 85). Monopolies are not governed by market principles, and therefore are not run for the good of consumers or the economy as a whole (Brue 85). Throughout history, starting with the Sherman Act of 1890, the United States has tried to regulate or break monopolies (Brue 85). Thus, regulations actually trying to create monopolies or monopoly-like situations with domestic producers are inherently flawed.

Thus, globalization serves to increase competition, granting the most efficient operation the business. This trims the excess fat from supply chains, providing for lower prices, which as shown above with Wal-Mart are demanded by consumers.

Innovation

In addition, protective tariffs reduce innovation. Once a producer has a monopoly they no longer need to innovate to stay competitive. There products will continue to be purchased regardless of their quality and features. New technologies will not be created without the drive for innovation.

This dearth of innovation hurts future industries. Over time some jobs are replaced by other jobs. Looking back, many Americans in the past used to be farmers. Today very few happen to be farmers. Does this mean we are worse off? Of course not! American have a higher standard of living then ever. In addition, American are increasing being employed in jobs requiring less manual labor. What happened? New technologies brought around new industries which brought new, higher skilled jobs. Twenty years ago, very few people dreamed of becoming computer programmers. Today, many are employed in computer-related fields.

The same patterns will occur during globalization. Yes some will lose their jobs, but the increased competition creates more new technologies which have the potential to employ large numbers of workers. Thus the benefit of new, higher skilled jobs reduces the pain of losing lower-skilled jobs to foreign nations in the long-run.

Exports

Many countries depend on global trade, for both imports and exports, including the United States. The US has and continues to benefit from exporting our goods (Brue 102). Many agricultural goods are sent out of the United States to nations which do not have as much fertile land as we have. We also sell automobiles, airplanes, and coal to nations around the world. In fact, 42% of our exports go to developing nations, helping to improve their lives through products bot essential and luxury (Brue 103).

Thus we rely, both our consumers and exporters, on free global trade. This trade will come along with globalization and must be encouraged.

Nevertheless, enacting regulations and protectionist policies to protect our domestic markets will only encourage protectionist policies against our exports. Enacting these policies will only start a downward spiral, plunging the world into the past by restricting globalization. This hurts the many US businesses which export goods from the United States.

In addition, we export services. In 1996, service exports exceeded service imports by $80 billion (Brue 765). ?normal service exports -

When tourists and foreign students come to the United States, we actually export services to them whenever they spend money here. When a tourists comes from another nation they are bringing foreign currency and trading it for things from the US like meals and hotel rooms (Choice 82). In addition students coming for education in the United States bring a lot of money with them to spend both on tuition and living expenses (Choice 82). Without global trade these "exports" would not be possible because of the complicated foreign exchange markets.

Conclusion

Thus, global trade, in the long run, has a positive impact on the United States. But lets not forget about developing nations which we provide jobs to. These jobs help make them richer, and in turn, increasingly able to purchase US exports. The global economy helps all of us make our lives better and increases worldwide standards of living. Globalization has and continues to have a positive impact on our lives.

Cut

Support

Thus, the amount of tariffs, and other trade barriers, both internationally and in the United States has gone down in the last 100 years (Brue 115). In fact, many economists consider the Smoot-Hawley Tariff Act of 1930 to be a major cause of the Great Depression (Brue 114). The Smoot-Hawley act attempted to choke off import to help domestic producers. Instead, it raised prices for goods, leading to the recession. Thus artificial or protectionist trade barriers are harmful to a nation's aggregate economy, as well as the global climate.

(more Jeff's section)

Growth

(?cut) Growth is the means which reduces the burden of scarcity (Brue 369). "An economy experiencing growth is better able to meet people's wants and resolve socioeconomic problems" (Brue 369). Growth allows more finished goods to be produced either by increasing imports or making production more efficient (Brue 369). This means we are able to do more with less or the same amount of resources.

Looking back a hundred years, standards of living were much lower (cite). There were no airplanes, requiring long voyages on ships or trains to reach destinations. In fact, the US was even more polluted (CITE!!!) then then it is today. Life expectancy and life quality have both risen. Technological advancement has been the largest source of growth in the United States making up 28% of the increase in productivity according to Edward Denison and projected to 1998 by McConnell and Brue (374). New farming techniques have risen farm output (give ###!!!). Less farmland, and less farmers support more people. Computers take the pain out of rewriting essays.

Growth is keystone of improvement in our lives, and technological advancements are what power it.

In the United States increases in the amount of people willing to work has amounted to a third of our growth (Brue 374). This has been in part because of our open arms towards immigrants. In the 50s, 60s, and 70s, growth was largely due to women joining the regular workforce (Brue 374). Prior to this, discrimination and domestic duties kept women in the house. New technologies permitted millions of women to spend less time cooking and more time producing goods and services. This goes to show what happens when discrimination gets removed.

Discrimination, whether against women, foreigners, or people of color hurts the economy by reducing the amount of labor available (Brue 749). This increases the cost of labor while decreasing productions; both propel the economy backwards. Ending or reducing global trade will only have the same effect.