He also argues that the relevant market today is

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Unformatted text preview: r Here to Stay? Thomas Friedman states that “globalization is not just some economic fad, and it is not a passing trend.” He also argues that the “relevant market today is planet Earth.” The basic globalization force that will probably not be overcome—no matter how strong the political forces may be against it—is the human inclination that the founder of modern economics, Adam Smith, noticed more than 200 years ago. Smith said that human beings want to trade with each other. In fact, it is the desire to trade that separates us from all other species, he says. In his words, “Man is an animal that makes bargains: no other ani- Defining Terms 1. Define: a. globalization b. offshoring Reviewing Facts and Concepts 2. Identify two costs and two benefits of globalization. mal does this—no dog exchanges bones with another.” In other words, we want to trade with people. We want to trade with our nextdoor neighbor, the person on the other side of town, the person in the next state, the “The relevant market today is person on the other side planet Earth.” of the country, and —Thomas Friedman finally, the person on the other side of the world. Some economists go on to suggest that this “trading” inclination we possess is a good thing, in that when we trade with people we not only will tolerate them, but have much less reason to fight with them. 3. Why does it make less sense to speak of different economic systems in a global economy than in a world of national economies? 4. What does “changing technology” have to do with globalization? Critical Thinking 5. Why might it be easier to recognize the costs of globalization than the benefits? Applying Economic Concepts 6. If globalization continues over the next few decades, how might your life be different? Section 2 Globalization 51 02 (030-053) EMC Chap 02 11/17/05 4:14 PM Page 52 Economics Vocabulary Chapter Summary Be sure you know and remember the following key points from the chapter sections. Section 1 All nations must answer three economic questions: • What goods will be produced? • How will the goods be produced? • For whom will the goods be produced? The two main economic systems are free enterprise and som. Free enterprise, also known as capitalism or a market economy, is an economic system in which individuals own most, if not all, the resources and control their use. In som, government controls and may own many of the resources. The ideas of Adam Smith, an eighteenth century economist, provided the foundation for capitalism, or free enterprise. Karl Marx, a highly influential economic thinker, proposed an alternative to free enterprise, and helped formulate the vision for som and communism. Section 2 Globalization is a growing integration of the national economies of the world into a single worldwide economy and is closely aligned with free enterprise, freer markets, and greater movement of people and goods. The end of the Cold War, advancing technologies, and governments’ policy changes al...
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