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Economics_Ch02 - 02(030-053 EMC Chap 02 4:09 PM Page 30 Why...

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Why It Matters U nderstanding this chapter is important to understanding the world today. Some countries that used to be socialist are currently experimenting with free enterprise, or capi- talism. Their transition away from socialism to capitalism cannot be understood without an under- standing of economic systems. So, in the first section of the chapter you will learn about economic systems—what they do, the major types, and how the two major types differ in the way that they answer key economic questions. Understanding economic systems is a necessary part of understanding globaliza- tion, which is the main topic in this chapter. Globalization is an economic process many countries of the world are undertaking now. It is a process that will probably continue for much of your life. It is important for you to understand what it is, what caused it, and how it will affect you. 30 The end of the Cold War, breakthroughs in technol- ogy, and a movement toward free enterprise have made it possible for more and more people around the globe to trade with each other. As Thomas Friedman says, “The relevant market today is planet Earth.”
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The following events occurred one day in September. 10:13 A.M. The leaders of some of the richest countries in the world were gathering for a meeting in a small town in Switzerland. The topic for discussion: economic globalization. Outside the meeting, hundreds of people from all over the world screamed slogans and held up signs. One of the most common signs read, “Globalization hurts the poor.” One of the chants heard there was, “Hey, Hey, Ho, Ho, Globalization has got to go!” What is globalization? Does it hurt the poor? 6:14 P.M. Ken works as a software engineer for a large firm in New York City. He just walked into his house after a hard day at work. His wife, Alexis, who usually gets home about 7:00, is already at home. She says to Ken, “What’s got you so down? You look as if you lost your job today.” “I did,” says Ken. “The company is sending my job out of the country.” Will globalization lead to some people losing jobs? 7:45 P.M. Diane is watching a television news show. Here is what the TV news reporter is currently saying: “People are somewhat afraid that with glob- alization, their jobs and their livelihoods will be determined by forces outside of their control, per- haps by forces emanating from halfway around the world. This is the scary side of globalization. But on the other hand, some people look upon this new global economy with optimism. They say that with globalization come opportunities—opportunities to end poverty and to turn a turbulent and hostile world into a peaceful one. We’ll just have to wait and see. For WTYX News, this is Tabitha Sherman.” Does everyone agree as to what the benefits and costs of globalization are?
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