Bu204 – 02 Unit 2

Topics: International trade, Free trade, Positive statement Pages: 2 (778 words) Published: December 19, 2011
1. 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? A positive statement that is made regarding the American Clothing Industry is that workers in Asia often work in sweatshops earning only pennies an hour. A normative statement would be that American workers are more productive therefore earn higher wages. This is a judgmental statement from the view of someone who thinks this is the way things ought to be. b. Would such a policy make some Americans better off without making any other Americans worse off? Explain who and why. The feeling that the government should ban the imports of low-wage Asian clothing would make those companies who pride themselves with the “made in USA” better off knowing that any competitors using Asian imports have to seek other methods. This in turn would make US companies looking to save money on production worse off because their use of cheap labor would throw a wrench in their system. They would be forced to find other alternatives to produce quality clothing made in the US. c. Would low-wage Asian workers benefit from or be hurt by such a policy and why? Low-wage Asian workers would be hurt by such legislation because their jobs would cease to exist. However, this might turn out to be beneficial, forcing companies who outsource their production to pay their employees competitive wages. 2. 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...
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