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Unformatted text preview: . For example, suppose the United States has a comparative Why might a country that produces oil place a tariff or quota on imported oil? Section 2 Trade Restrictions 409 15 (390-427) EMC Chap 15 11/18/05 9:12 AM ? Might Someone in India Grade Your Homework? A person walks into a hospital to have a magnetic resonance imaging (MRI) test. In an MRI test, the area of the body being studied is positioned inside a strong magnetic field. The MRI detects changes in the normal structure and characteristics of organs or other tissues. These changes may indicate diseases caused by trauma, infection, inflammation, or tumors. The information from an MRI scan is often saved and stored on a computer. Then it is sent electronically to someone who studies the scan and reports on what he or she sees. The person who examines the MRI scan can be anywhere in the world. Often the person is located in another country. What happens with MRI scans today might happen with your fivepage essays or homework assign- Page 410 ments in the future. The teacher in high school spends most of the day teaching and discussing the material—economics, history, mathematics. Homework assignments, essays, tests, and all other assignments are scanned into a computer and then electronically sent to graders in India, Ireland, or even Russia. The only proviso is that the grader has to know the material the student is being tested on and reads and writes English. (By the way, this same process is effectively what happens when you write the essay for the SAT. Your essay is scanned into a computer and sent to a grader who can live anywhere in the United States. Well, if your essay can be sent to anyone in the United States, it can also be sent to anyone in the world.) It may just be cheaper to grade this way than to have your teacher take out time to grade your work. Of course, if you had a problem with your grader in India or Ireland, your teacher in your high school would be the one to speak with. He or she could change the grade if need be. The computer and the Internet combine to make some things pos- advantage in the production of wheat, and China has a comparative advantage in the production of weapons. Should the United States specialize in the production of wheat and then trade wheat to China in exchange for weapons? Many Americans would answer no; they maintain it is too dangerous to leave weapons production to another country, whether that country is China, France, or Canada. 410 Chapter 15 International Trade and Economic Development sible that weren’t possible before, such as separating teaching from grading—because the computer and the Internet effectively overcome the hurdle of location. The teacher doesn’t have to be the same person as the grader when the grader can get your work in the time it takes to scan and send a document. In the future, you might just see a greater specialization of tasks than ever experienced before. Instead of a teacher being a teacher and a grader and a recorder of grades, a teacher may just teach. Others will grade, and still others will record grades, and so on. THINK ABOUT IT What work activities are unlikely to be offshored? Is it more likely that an accountant’s work will be offshored or a medical physician’s work? The national-defense argument may have some validity, but even valid arguments may be overused or abused. Industries that are not necessary to the national defense may still argue for trade restrictions placed on imported goods. For example, in the past, the national-defense argument has been used by some firms in the following industries: pens, pottery, peanuts, candles, thumbtacks, tuna fishing, and pencils. It is difficult 15 (390-427) EMC Chap 15 11/18/05 9:12 AM Page 411 to believe that these goods are necessary to the national defense. The Infant-Industry Argument Alexander Hamilton, the first U.S. secretary of the Treasury, argued that “infant,” or new, industries often need to be protected from older, more established foreign competitors until the new industries are mature enough to compete on an equal basis. Today, some persons voice the same argument. The infant-industry argument is clearly an argument for only temporary protection from foreign producers. Critics charge, however, that once an industry is protected from foreign competition, removing the protection is almost impossible. The once-infant industry will continue to argue that it is not yet old enough to go it alone. The Antidumping Argument Dumping is selling goods in foreign countries at prices below their costs and below the prices charged in the domestic (home) market. For example, if Germany sells a German-made car in the United States for a price below the cost to produce the car and at a price below what it sells the car for in Germany, then Germany is said to be dumping cars in the United States. Critics of dumping say that dumpers (in our example, Germany) seek only to get into a market, drive out U.S. competitors, and then raise price...
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