The first thing you need to do is analyze your case study. During this stage, you should identify the economic principles involved. This is…

The first thing you need to do is analyze your case study. During this stage, you should identify the economic principles involved. This is important, so be thorough with your investigation.

During the presentation, you should first introduce the case study, and provide a brief outline. Then, you should tell the class what the principles are, and how they apply. Also, depending on your case study you could include suggestions for the company, or party’s involved in the case study.

You are free to use graphs and charts, and these are encouraged especially if you wish to show a comparative analysis, or for making recommendations for the future.

These suggestions could include what the company should do in the future, perhaps to fix a problem they are having. You could even describe the possible options/solutions.

If you recall, economists often disagree so don’t be shy to disagree with a principle, or course of action. However, if you agree or disagree you must say why, and provide evidence for your position.

Finally, you can summarize what you hope, or expect to happen from the situation in the case study, and the advice you present.

Case-study 5:

Should the Winners from Free Trade Compensate the Losers?

What to Expect When You’re Free Trading

By Steven E. Landsburg

All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create moral mandate for taxpayer- subsidized retraining programs?. . . Um, no. Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside? I doubt there’s a human being on earth who hasn’t benefited from the opportunity to trade freely with his neighbors. Imagine what your life would be like if you had to grow your own food, make your own clothes and rely on your grandmother’s home remedies for health care. Access to a trained physician might reduce the demand for grandma’s home remedies, but—especially at her age—she’s still got plenty of reason to be thankful for having a doctor. Some people suggest, however, that it makes sense to isolate the moral effects of a single new trading opportunity or free trade agreement. Surely we have fellow citizens who are hurt by those agreements, at least in the limited sense that they’d be better off in a world where trade flourishes, except in this one instance. What do we owe those fellow citizens? One way to think about that is to ask what your moral instincts tell you in analogous situations. Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives. In what morally relevant way, then, might displaced workers differ from displaced pharmacists or displaced landlords? You might argue that pharmacists and landlords have always faced cutthroat competition and therefore knew what they were getting into, while decades of tariffs and quotas have led manufacturing workers to expect a modicum of protection. That expectation led them to develop certain skills, and now it’s unfair to pull the rug out from under them. Once again, that argument does not mesh with our everyday instincts. For many decades, schoolyard bullying has been a profitable occupation. All across America, bullies have built up skills so they can take advantage of that opportunity. If we toughen the rules to make bullying unprofitable, must we compensate the bullies? Bullying and protectionism have a lot in common. They both use force (either directly or through the power of the law) to enrich someone else at your involuntary expense. If you’re forced to pay $20 an hour to an American for goods you could have bought from a Mexican for $5 an hour, you’re being extorted. When a free trade agreement allows you to buy from the Mexican after all, rejoice in your liberation.

New York Times, July 5, 2012

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