Free Trade and American Clothing Industry
. A representative of the American clothing industry recently made the following statement: “Workers in Asia often work in sweatshop conditions earning only pennies an hour. American workers are more productive and as a result earn higher wages. In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing.” Answer the following: (10 points)
a. Which parts of this quote are positive statements? Which parts are normative statements?
b. Would such a policy make some Americans better off without making any other Americans worse off? Explain who and why.
c. Would low-wage Asian workers benefit from or be hurt by such a policy and why? . Referring to the same situation in question 1, but instead of legislation banning the imports, assume that the government enacts a special tax on imported clothing that is so high that the selling price of the imports would be equal to the selling price of the same clothing made in America. This kind of tax is called a tariff and is enacted to protect domestic producers of the same items that can be imported at much lower costs. Answer the following: (10 points)
a. What would shoppers see when they shopped in Wal-Mart and the other “big box” stores that sell so many imported items?
b. Would this tax policy have a better effect, worse effect, or no different effect on American workers than the legislation banning the imports discussed in question 1? What kind of effect would the tax have on the Asian workers?
. A growing economy means that the economy is producing more and more “stuff”, either because it has more resources (workers), or uses those resources more productively (smarter, better workers, working with better machines and systems). A growing economy that produces more and more “stuff” normally means that the people have a higher and higher standard of living. If the government adopts a “free trade” policy towards all imports,
a. Which parts of this quote are positive statements? Which parts are normative statements?
b. Would such a policy make some Americans better off without making any other Americans worse off? Explain who and why.
c. Would low-wage Asian workers benefit from or be hurt by such a policy and why? . Referring to the same situation in question 1, but instead of legislation banning the imports, assume that the government enacts a special tax on imported clothing that is so high that the selling price of the imports would be equal to the selling price of the same clothing made in America. This kind of tax is called a tariff and is enacted to protect domestic producers of the same items that can be imported at much lower costs. Answer the following: (10 points)
a. What would shoppers see when they shopped in Wal-Mart and the other “big box” stores that sell so many imported items?
b. Would this tax policy have a better effect, worse effect, or no different effect on American workers than the legislation banning the imports discussed in question 1? What kind of effect would the tax have on the Asian workers?
. A growing economy means that the economy is producing more and more “stuff”, either because it has more resources (workers), or uses those resources more productively (smarter, better workers, working with better machines and systems). A growing economy that produces more and more “stuff” normally means that the people have a higher and higher standard of living. If the government adopts a “free trade” policy towards all imports,