InAdam Smith published The Wealth of Nations, probably the most influential book on market economics ever written.
What can policies do to help U. As a monetary policymaker, my main concern is the health of the U. Although the economy turned in a pretty sluggish performance for a long while after the recession, it has shown some real strength over the last few quarters in terms of output growth and productivity.
But along the way, the jobs market performance was surprisingly disappointing—at least, until the last few months. This certainly raised concerns—not only for those looking for work, but also for us at the Fed and for other policymakers around the country.
In the extreme, some would like to see restraints on trade to protect those jobs and halt the globalization trend.
Whether globalization is a threat or an opportunity for the U. Why are most economists in favor of free trade? Consider this analogy with the family: No family tries to make everything that it eats, wears, and enjoys.
Then individual family members can concentrate on becoming good at their jobs in order to pay for what they buy. A nation is no different.
If it costs less to make certain products abroad than it does in the U. Then we can devote our resources to producing and exporting those goods where we have a relative advantage. The result is a twofold benefit—greater efficiency and lower costs for U.
In its broadest sense, outsourcing is simply contracting out functions that had been done in-house, a longtime U. Clearly, outsourcing can result in job losses if the outside supplier is more efficient and uses fewer workers. Offshoring has been referred to as the global cousin of outsourcing.
Instead of turning to domestic providers, firms may decide to purchase a good or service from overseas providers because of lower costs. Offshoring, too, has a long history in U. How much offshoring is going on? But a couple of estimates that have gotten some press recently both suggest that the U.
Those numbers sound high until you put them in the context of all the job turnover that occurs every year in the U. Each year, some 15 million jobs are lost for all kinds of reasons—voluntary employment changes, layoffs, firings, and so on.
And in a growing economy, every year even more jobs are created. Is globalization a threat or an opportunity for the U. The answer to this question will focus on three important issues that are sometimes neglected in the discussion.
First, globalization means that economic activity flows in both directions; although we may lose jobs to foreign workers, we also may gain jobs and boost economic activity.
For example, data suggest that, in terms of office work, the U. Between andU. For example, expanding an overseas network frequently means you have to hire more workers in the U.
According to the Commerce Department, even as the U. There are plenty of other examples. InToyota will employ 2, people building cars in San Antonio. My second point is that open trade creates opportunities in the U.
S by helping foreign economies become stronger. As incomes grow in other countries, so does their demand for goods and services, many of which those countries will not be able to produce—just as the U. This rise in foreign demand for imports is an opportunity for U.
And it would be a shame to miss that opportunity because of trade barriers our policymakers erected. It would mean lost export sales and lost jobs in those sectors.Definitions Welfare state - "A welfare state is a concept of government where the state plays the primary role in the protection and promotion of the economic and social well-being of its citizens.
“Pan-Africanism, as an expression of continental identity and coherence, distinguishes regional integration in Africa from other regions in the developing world” (McCarthy, , p.
14). But the economic arguments for regional co-operation are also particularly strong given the small size of many SSA countries in economic terms. Straw Man Argument: A subtype of the red herring, this fallacy includes any lame attempt to "prove" an argument by overstating, exaggerating, or over-simplifying the arguments of the opposing side.
Such an approach is building a straw man argument. Adam Smith’s "Free Market Mechanism" The following is a simplified version of the economic system Adam Smith believed would emerge once governments ended their oppressive mercantilist policies.
“The big push has returned to favor in the development policy-making, after half a century of exile” (Easterly , p. 3).
education), and key infrastructure (roads, electricity, ports, water and sanitation, The former author (p. 3) points out the fact that the success or failure of an action depends upon the context in which it is.
Sep 08, · Although they favor crackdowns on all sex work as the best means of changing traffickers’ economic incentives, they also present the argument for decriminalization with regulation.