Introduction: The purpose of this activity is to reflect on the principle of comparative advantage and better understand how the patterns of global trade are shaped by this fundamental concept. You will watch and read the story of a t-shirt that was manufactured using resources from four separate countries. Next, you will respond to an essay prompt.
***********This blog will be due Friday at Midnight.*********************************
***********This blog will be due Friday at Midnight.*********************************
Steps:
- Read the page that tells the backstory to the Planet Money t-shirt project.
- Watch the five part documentary
- Read the stories behind the t-shirt’s different stages of production:
Essay prompt:
A comparative advantage exists when a particular task can be done or a good can be produced at a lower opportunity cost by one nation than by a potential trading partner. When countries specialize in the goods for which they have a comparative advantage, the allocation of resources (land, labor and capital) between nations is more efficient, allowing for a greater level of overall production and income than what is possible without trade.Carefully explain how the the story of the production of the Planet Money t-shirt demonstrates the principle of comparative advantage.
43 comments:
The operation followed a group of t-shirts starting with growing the cotton in the US. As the video said cotton has been the leading export in America for centuries because of technology, climate, government subsidies, which make production cheaper for US growers, and the ability for producers to spend money to have cotton tested and reported on. All of these combine to make cotton more profitable in the US than in a country like Bangladesh. Labor in a country like Bangladesh is more efficient because the laborers are numerous. There are 4 million people in the garment industry of Bangladesh and as the video said many women seek jobs that will help support their families. But in Bangladesh workers are willing to work for less than Americans, who will make a minimum wage of $7.50 an hour as compared to the approximately $2.66 paid to people like Jasmine in a SINGLE DAY! The cost of labor is far cheaper in Bangladesh, and thus it will be cheaper there than in the US. This makes sense because when you think about things that are always made 100% in the US they are more expensive because the cost per production is greater. Thus, The US has a comparative advantage in Cotton growing and countries like Bangladesh and Colombia have a comparative advantage in labor for manufacturing the shirt.
The idea of comparative advantage is that each country should do whatever it is cheapest to do. In the Planet Money t-shirt campaign, we saw how millions of people are struggling to survive in Bangladesh. Bangladesh takes advantage of the ample workforce who is looking for just enough money to live on in order to cheaply make millions of garments. The process is relatively simple, so that anyone can do it, and the workforce has room to expand. All these factors allow it to make garments for less than any other country, and that is why most countries import their clothes from Bangladesh. Cotton is an easy crop to grow, it can grow practically anywhere, and the best part is that the land doesn't even have to be that fertile. By this logic, most any country could harvest their own cotton, yet the US is the world's largest exporter of cotton. This is a result of the US's particular advantages in growing cotton over other countries. More advanced technology, unique and widely diverse climate regions, and ample land are all factors that allow the US to sell cotton cheaper than any other country. So, by harvesting the cotton in one place and turning it into garments in another place, companies are able to make their products for as little as possible. For most companies, this means selling them for relatively cheap while making a ton of profit. As we know from the supply and demand graph, the cheaper a product is sold at, the higher the demand. Thus, it is the principle of comparative advantage that allows all products to be mass produced, sold, and bought in such abundance that forms the backbone of our economic stability. In other words, comparative advantage is a critical concept that allows the market to prosper as it does.
Comparative advantage is the most effective means to produce goods throughout the planet. Countries do what they do best and produce the best goods. America plants the cotton due to their genetically modified seeds producing the best cotton while countries like Bangladesh and Colombia assemble the shirts for the best value. Although many may argue that buying foreign goods or promoting outsourcing takes away jobs from native people, this idea of comparative advantage is the reason why we have so much, well, stuff. If big corporations like Nike did not outsource to overseas, we would have a lot less shoes circulating throughout the globe and the shoes would be tagged at much higher prices. Those people may hoop and holler all they want, but at the end of the day, they still come home to happily find that their Vietnamese made T-shirts or Chinese assembled electronics do not cost them an arm and a leg. Furthermore, like the video said, these factories actually provide opportunity for residents in the country. Albeit, the conditions could be better, but it is still a way out for girls like Jasmine and better than nothing. Overall, comparative advantage gives countries roles they will excel at and making sure potential is not wasted.
The process of creating the t-shirt begins with the cotton farms where the owners and workers work to grow and pick cotton. The man who owned the farm had formulated a genetic modifier allowing the cotton to grown faster and in greater abundance. Without the idea and formula for this genetic modifier, the cotton used to create the t-shirt might be obtained from a place where the farm was not as technologically advanced or had a suitable climate such as Bangladesh which would waste time. This would slow down production creating a greater opportunity cost. Then it goes to factories which have modern machines spinning and thinning millions of sheets of cotton every day. This is more efficient by allowing the factories that have the technology capable for the job to manufacture the cotton rather than doing it by hand elsewhere. Once the cotton transforms into yarn and is sent to factories, it seems as if the industries are organized and moving at a steady pace due to the abundance of individuals willing to work at such low wages. The woman in Bangladesh has been in the industry since she was young so must be an expert working at the factory and used to the wages although she dreams of earning more. Finally they are shipped to their respective places in the containers and on trains that run from specific places at certain times on a strict schedule. Allowing various nations and places to create a single t-shirt surprisingly saves time and allows these locations to specialize in their particular areas allowing for smoother and faster production without a large opportunity cost.
Planet Money is great example of Comparative because we see United States, Bangladesh, Columbia, and Indonesia working together in order to create a shirt for a great price. United States starts the process for shirts by producing cotton. Due to the United States advance technology, government subsidies, and good climate, we are capable of being the world’s major export for cotton. Being the best exporter of cotton it is cheapest for cotton to make in America and then shipped to other countries. After the cotton is picked, it is sent over to Indonesia, Bangladesh, and Columbia to where it is made from plant to fabric. It is so cheap to make shirts in Bangladesh and other countries because the pay is so cheap (Bangladesh having the lowest in the world). Bangladesh works for less pay in order to feed families and pay off debts such as some of the women in the videos. Columbia may have more pay than Bangladesh but is still a great example of comparative advantage because it is a cheaper alternative to making shirts instead of making them in the United States.
Comparative advantage occurs when one country can produce a good or service at a lower opportunity cost than another. This means a country can produce a good relatively cheaper than other countries. The theory of comparative advantage states that if countries specialize in producing goods where they have a lower opportunity cost – then there will be an increase in economic welfare. We export cotton because the tradeoff for doing so in the US is not so bad. However, other countries do not do so because the opportunity cost is probably massive in those nations, and they would be better off producing something else. The process of producing the shirt seen through the video conveys that exact point.
The planet Money t-shirt campaign is a prime example of what a comparative advantage is. The general concept of a comparative advantage is basically doing it another place for a cheaper price than doing it an another place. This brings out the maxiumum efficiency in the production of something. It the simplistic idealogy of why would it be better to produce something here when it can be so much cheaper if its made there. In order to reach the best income, it is conclusive that a better profit would be made if the cost to make it was lower. Based upon the statistics that the video showed, Bangladesh provided for one of the lowest incomes ever in the t-shirt industry. Comparative advantage is put at the highest efficiency if the cost to pay the workers is less than a 100 a month. The factors of a t-shirt is made at all over parts of the world at the most minimal price. Thus, in conclusion, it allows everyone to buy t-shirts at show a reasonable price because it is made so cheaply.
The only negative outcome I would see that is we, who are buying the t-shirts, are getting the best benefit out of this. The people making these are barely getting paid anything at all to make these shirts.
Comparative advantage exists in this situation because at each stage of the T-Shirt's production process there was a varying amount of capital available. This made each location ideal for its part in the production of the shirts.
The U.S. is an ideal location for growing cotton because of the advanced machines available. Because of the technology available, it is less expensive to produce the cotton in America. Other, less developed countries would need far more people to produce the same amount of cotton because of the differences in technology available.
Bangladesh has an advantage in producing the male t-shirts because it has a large, unskilled labor force. This type of work requires a lot of labor, which would be more expensive in the U.S. because of safety and pollution standards. In Bangladesh, there are people lining up out the door to take someone's job if they are hurt or demand better living conditions.
A comparative advantage is when a good or service can be produced at a lower opportunity cost by one nation than by other nations. The U.S. exports more cotton than any country in the world because it has efficient technology and subsidies granted by the government which makes cotton more profitable in the country. It has a comparative advantage to other countries such as Bangladesh and Columbia. In countries such as Bangladesh and Columbia, there are a lot more laborers but less pay for those laborers. That's why the costs to make t-shirts are much cheaper in these countries. In America, the cost of production is much greater because the cost of labor is greater. So Bangladesh and Columbia have a comparative advantage in the production of the t-shirts while countries like the U.S. have a comparative advantage in producing cotton.
The planet money T-shirt project is a n example of comparative advantage because each if the countries involved have a clear advantage over each other in certain parts of the garment industry. The US has the comparative advantage in cotton growing because it can be grown cheaper and in mass quantities compared to other countries who don't have the same climate and tools available. The actual seeing of the tshirts though is cheaper in developing countries like Bangladesh where the fine line between sweat shops and helping the country is present. This means people will work for dirt every day which would be unacceptable in a country like the US. Thus Bangladesh has a comparative advantage in labor over the US.
Compared to other countries, we are more successful when it comes to producing cheap shirts. Our business offers opportunity to those in less fortunate places and while the wages are not great, it is still better than nothing. We can use the cheap wages in Bangladesh to more efficiently produce t-shirts at a low cost. Jasmine did not have a great life, but does have a better one because of her job. Considering we are the leaders in cotton production, it also makes purchasing raw material cheaper, further lessening the cost per shirt. Because we can produce more with less money, we have the comparative advantage over other competing countries.
The Planet Money t-shirt project is a perfect example of utilizing comparative advantage. The videos go through and demonstrate how each stage of production is produced in different countries in order to be the most productive. The seeds for the cotton are even genetically modified in order to provide the best cotton for the shirts. The shirt starts off being produced in the United States and the US exports the most cotton due to the comparative advantage. Then male t-shirt was put together in Bangladesh where the video goes through the story of Jasmine and how the garment industry has given her family a chance. This Planet Money story demonstrates how comparative advantage gives people a chance for a better life in the future.
The planet world T-shirt is part of a comparative advantage by traveling the whole world in the advantage they have. For example in the beginning, cotton is the main source and U.S. is the biggest advantage for these shirt. While Bangladesh and Indonesia is more proficient in the labor by having more people that wants to work that job and it is cheap labor then the western world. For a business man mentality it is the best way to make money for having the Bangladesh and Colombian people make the t-shirts. Then the shipment is even cheaper then alot of the things the packing and etc.. for the shirt. IN the end U.S. has the advantage for the raw materials while Indonesia, Bangladesh, and Columbia for the process of making a t-shirt. Unfortunately i do not agree for some business man to do this idea, but that's my opinion.
A Comparative advantage will occur when a country can produce a good or service at a lower opportunity cost than another country. When a country is producing the product at a cheaper price than other countries this is happening. The theory of comparative advantage says that when a country specializes in producing goods where they have a lower opportunity cost, this will benefit the country's's economy. The United States exports cotton because it is not expensive for us to produce the good. Yet in other countries where they have a high cost of producing cotton they just import the product instead. Overall, comparative advantage gives countries roles they will excel at and making sure potential is not wasted. A large opportunity cost is gained by allowing various nations and places to create a single t-shirt and surprisingly saves time and allows these locations to specialize in their particular areas allowing for smoother and faster production. The video exemplifies this point through the process of creating a shirt.
Comparative advantage is used effectively in the production of t-shirts as we can see from this video. Each country performs tasks that is the cheapest or easiest for it to perform. The US grows cotton in such a scale that it is the largest exporter of cotton as well. The technological and scientific advancements of the US enable it to be one of the best producers of cotton unlike any other country. This gives the US the comparative advantage in cotton production however not in creating it into yarn. I believe that other countries make the yarn and eventually into fabric and from fabric it is stitched into clothes in India. The reason for it being produced in India is the comparative advantage it provides in cheap labor prices. From there it is shipped to the US for a mere 7 cents giving it an even more advantages in low shipping prices.
Overall the whole process is conducted is parts with each part being done at a site which can produce the product at the cheapest and most effective price.
Producing a product at a relatively cheaper price is an effective way in producing goods. US conduct a mass production of cotton by genetically modifying the seeds to increase yields as well as to help resists to pest. It also helps that our technology has improved over the years, such as using self-manufacturing machines. Then, the shirts are shipped to other countries such as Bangladesh for the actual production. People in poverty are in desperate need of source of income, making people to succumb to 80 dollars per month. Cheaper wages in other countries versus wages in the US makes it a reason to produce in such countries. Consequently, people like Jasmine make only $2.66 per day, barely making her way in the world! In the U. S, shirt’s selling price would be more expensive if it was made in the U.S.A compared to countries like Bangladesh and Colombia. When it all comes down to comparative advantage, production depends on the cheapest means of producing product whether from the help of improved technology (for the sake of shipping/obtaining goods in a cheap way) to paying labors less to produce the product.
The production of Planet Money's t-shirts uses the principle comparative advantage where each step of the production takes place in countries that makes it the cheapest. The cotton is grown in the US where GM cotton seeds and advanced technology makes it possible to export mass amounts of cotton at a cheap price. Then the cotton goes through processing and are eventually made into shirts in Indonesia, Bangladesh, or Columbia. The reason why we outsource to these countries is because labor is extremely cheap there. Workers are paid the lowest wages on earth which explains why t-shirts are relatively low in costs. Although these labors are taken advantaged of by the clothing industries, none of us would be able to buy clothes at this price had we paid everyone of the workers the minimum wage allowed in the United States.
I'm surprised at the amount of work that goes into a single T-shirt. However this is a perfect example of comparative advantage. The shirt is made from products from places who can either provide the resource or labor for the cheapest. However the fact that labor is so mediocre bothers me, despite that being a major reason that the shirts themselves are so cheep. On the other hand, outsourcing work to other countries give these woman and people like them an opportunity to work and make money. What I find extremely interesting is that it is still cheaper to send it to a country like Colombia and give the labor to people who make less than $3 a day despite having to pay to ship the product to several countries across the world.
A comparative advantage exists when a particular task can be done or a good can be produced at a lower opportunity cost by one nation than by a potential trading partner. Bangladesh government takes advantage of the low cost labor that they have in there country. The government uses that to create over millions of clothing and garments. Lets talk about the way the United Sates exports cotton. The US sells cotton to third world countries for a large amount and in return they get garments for cheap price. This is the basic fundamental of comparative advantage which enables the economy of the country to succeed.
The Planet Money T-Shirt project showed comparative advantage because of the way everything was chosen to be manufactured or taken from select places. Cotton was made in the US because the US is the largest exporter and always has been, and therefore can produce cotton the most efficiently. Labor in Columbia and Bangladesh is cheap, and therefore is the most efficient place to assemble the t-shirts. That is how comparative advantage functions, where each country can efficiently and cheaply produce products.
The Planet Money T-Shirt project showed comparative advantage because of the way everything was chosen to be manufactured or taken from select places. Cotton was made in the US because the US is the largest exporter and always has been, and therefore can produce cotton the most efficiently. Labor in Columbia and Bangladesh is cheap, and therefore is the most efficient place to assemble the t-shirts. That is how comparative advantage functions, where each country can efficiently and cheaply produce products.
From Bangladesh to Columbia, I've learned that there is a lot of work, travel, and ironically little money involved into making my favorite dingy Rugrats t-shirt. The concept of comparative advantage is an essential element for keeping the price down on most of all of our favorite goods. Planet Money's t-shirt demonstrates the inter-workings of making a product, as simple as a shirt, through comparative advantage. For example, because the Mississippi Delta cotton farmer has access to the rich soil of the delta that countries like Bangladesh and Columbia do not either have access to or is in use for growing more practical and essential goods, he can sell his cotton far more cheaper. America, in this sense, has the comparative advantage over the nations shown because of our natural recourses, availability of land, as well as our access to genetically modification technologies that allow our cotton to be more sturdy and resistant to famine. On the other hand, Bangladesh and Columbia have the advantage over us in the production of the physical making of the shirt. Lenient labor laws as well as an available and motivated work force give these nations the power to produce goods far more cheaper than America. With an approximated hours for a Bangladesh worker of seventy two hours a week and making only $80 a week, America is not able to compete with such prices, because in this case, a US worker, thanks to the institution of a $7.25 minimum wage, would be making upwards of $500 in a similar work week, causing prices to sky-rocket to make up for profits. Due to this low production cost, naturally big businesses such as Jockey will flock to these underdeveloped nations. This video has taught me that, necessarily, everything is not best to be made in the USA because if it was, and not for the use of comparative advantage in production and trade, I would have payed $70 for my $10 Rugrats t-shirt.
From Bangladesh to Columbia, I've learned that there is a lot of work, travel, and ironically little money involved into making my favorite dingy Rugrats t-shirt. The concept of comparative advantage is an essential element for keeping the price down on most of all of our favorite goods. Planet Money's t-shirt demonstrates the inter-workings of making a product, as simple as a shirt, through comparative advantage. For example, because the Mississippi Delta cotton farmer has access to the rich soil of the delta that countries like Bangladesh and Columbia do not either have access to or is in use for growing more practical and essential goods, he can sell his cotton far more cheaper. America, in this sense, has the comparative advantage over the nations shown because of our natural recourses, availability of land, as well as our access to genetically modification technologies that allow our cotton to be more sturdy and resistant to famine. On the other hand, Bangladesh and Columbia have the advantage over us in the production of the physical making of the shirt. Lenient labor laws as well as an available and motivated work force give these nations the power to produce goods far more cheaper than America. With an approximated hours for a Bangladesh worker of seventy two hours a week and making only $80 a week, America is not able to compete with such prices, because in this case, a US worker, thanks to the institution of a $7.25 minimum wage, would be making upwards of $500 in a similar work week, causing prices to sky-rocket to make up for profits. Due to this low production cost, naturally big businesses such as Jockey will flock to these underdeveloped nations. This video has taught me that, necessarily, everything is not best to be made in the USA because if it was, and not for the use of comparative advantage in production and trade, I would have payed $70 for my $10 Rugrats t-shirt.
Ervin R.
Period 3
A comparative advantage exists when a particular task can be done or a good can be produced at a lower opportunity cost by one nation than by a potential trading partner. Meaning the countries that produce the product(T-Shirt), do what is the cheapest. Planet Money truly is an example of comparative advantage. Honestly, I never knew the process of how they made t-shirts. The video has played the greatest effect on me, knowing how much(hard work) they do to produce the shirts. In the video, it exhibits how the United States start the process of the shirts by growing cotton. On average, 9 million shirts could be made with the cotton grown in Mississippi. In fact, each person in New York could own at least one shirt from the cotton used from Mississippi. Over the past decade, technology has improved. Tractors are able to drive by itself, scientists are capable of making cotton seeds, and new machines have been made for different purposes and uses. In the United States, we have very moderate temperatures unlike some countries in the world. There are not that many countries that could compare to the United States development. Knowing that the United States has advanced technology, we are able to produce cotton to other countries for a very low price. The video was very inspirational and impacting to me and probably everyone else. It really portrays how we should be thankful for what we have because the lifestyle is completely different in Bangladesh. Jasmine exhibits how she can live on $80 a month and still provide for her family and herself. She works 6 days and only has one off day. Though Columbia may have a better pay than Bangladesh, the video is a great example of comparative advantage. It conveys how it is cheaper to make t-shirts in other countries than having it made in the United States.
This video is a perfect example of comparative advantage because here we get to see it in action. At all of the different production points of a simple batch of T-shirts, we see them executed in the most efficient way. Cotton is produced cheapest here, labor is cheapest in Bangladesh, and so forth. With this optimally efficient use of our resources, (almost) everybody wins. Manufacturers take advantage of the cheapest possible materials and labor, which reduces input costs and maximizes total profits. Consumers also take advantage of low input costs because it lowers the sale price of the shirts, which in turn allows them to buy more if they desire. Comparative advantage allows the two sides of the industry to help each other out. Of course, there's a reason why I said ALMOST everybody wins. The bottom line is that people like Jasmine in Bangladesh deserve better. You can't fault businesses for going after the most efficient method, but conditions just need to be better. That way everyone, even Jasmine, can enjoy the prosperity that comes from a simple T-shirt.
As seen through the video, the ability for Bangladesh to produce sorry is very cheap for they have a very large work force abs those workers have done sort of debt or money problem that they must solve. As seen in the case of Jasmine mentioned in the video, she had to pay off the dowry of her sister which is why she got the job. The large labor force and the low pays cause Bangladesh to be the cheapest place to purchase shirts from. Cotton is a very easy crop to produce and it can grow in practically any area and thus it's cheap, so it is really easy for America to produce such a high volume of cotton and seek at a cheap price which uv turn helps them buy shorts from cheap countries like Bangladesh.
A comparative advantage is when a good or service can be produced at a lower opportunity cost by one nation than by other nations, and these Planet Money t-shirts are the perfect example of comparative advantage. The U.S. has the biggest advantage because it is the largest exporter, and has always been, because of the advanced technology, it is not as expensive to produce and handle cotton more efficiently while doing so inexpensively.It can be grown in more mass quantities than most countries because we have the right climate and tools available, as compared to other countries where it would be more expensive for other countries, so that is why it is more beneficial and efficient that the U.S. is the largest exporter for cotton. Labor in Bangladesh is cheap, so that is why it would be most efficient to produce the shirts in this country, and that is where comparative advantage is applied, where labor, production, and etc. is made where it is most inexpensive, efficient,and convenient.
One thing with comparative advantage is that it helps other companies and countries to produce goods that are have an acceptable cost to the supplier and manufacturer. I believe one phenomenon now is where the actual jobs should be since it is cheaper to manufacture goods in other countries and ship them over than to manufacture in the United States for example. Then you can see and influx of jobs moving over seas. If you ever heard of Andrew Carnegie, he is a perfect example of this. Carnegie was the founder of U.S. Steel. It took many things to put into making steel. Instead of buying coal and other supplies from other companies that would charge him high prices, he decided to use a method called Vertical Integration which meant that he bought out all of the necessary components required to make his steel. By owning such companies, he could charge himself low rates so that he wouldn't have to mark up the price of his steel. Many companies look for the best ways to save money. If an opportunity shows where a potential savings can be possible, then it will beneficial to the company. Everyone is trying to save money to maximize profits. Even if that means sending a product all over the world and back to have the cheapest price, then so be it.
The journey of the Planet Money t-shirt shows how relative comparative advantages have proven in effect to a global economy. Before the specialization of areas occurred, nations tried to focus on growth within a region based on the demand for industries. Now, the global market has stressed the opportunity cost for nations to take into account and see where production can take place to ensure proper values and effort into making goods and services available for the public. The shirt shows how the allocation of resources is managed for vast production of cotton fiber in developed regions while processing and creation of shirts rely on developing nations that employ people to manufacture and ship these goods at a more consumer appealing price. If comparative advantage was not utilized, then cotton production would not be employed in the U.S. and as optimized. However, such a policy is the reason why employees like Jasmine and Doris are paid at low wages to create the t-shirts at a minimal cost to the buyer. Thus, there is a tradeoff in relative benefit to both the consumer and the people who work in an industry, like clothing, that utilizes comparative advantage to reach the potential that a global market provides.
The Planet Money T-Shirt project showed comparative advantage because everything was manufactured at ceratin places. To buy the cotton from the U.S. is smart because they are the largest cotton exporter. Going to third world countries helps with labor, since its cheaper to be made. It shows how it is cheaper to make t-shirts in other countries than having it made in the United States. The stores in the US made so much profit because of this.
The Planet Money t-shirt shows a comparative advantage in favor of the US due to the low cost we as a nation pay for the shirts that another nation made. Individuals in Bangladesh and Colombia like Jasmine and Doris make t-shirts everyday and get paid very little compared to how much they should be getting paid. The minimum wage is much more in the US than in other countries and that impacts the workers in the sense that they are not receiving their moneys worth. If Jasmine worked in the US instead of Bangladesh she would be making about three times as much as she is making now. This just shows how much more advanced our nation is compared to the other nations in the world. Even though our minimum wage is much higher than other countries, it bothers me when I hear that individuals in the US are rioting because they should be getting paid double for working when not even thinking about the others in different countries that are going through a much more difficult time than themselves. This just shows how much people care about themselves more than others without knowing that they are blessed and better off than many other people in the world. They forget that they live in such a beautiful country with very few problems and thus they turn towards anger and selfishness against others. The rioting has to stop, or else our country may end up with the same problems as Bangladesh or Colombia.
Planet Money T-shirts shows us the reality of the situations by those who make our shirts. When analyzing this case for comparative advantage it can be seen that each country has their own role in making/manufacturing/producing these shirts. For example, because the Mississippi Delta cotton farmer has access to the rich soil of the delta that countries like Bangladesh and Columbia do not either have access to or is in use for growing more practical and essential goods, he can sell his cotton far more cheaper. America, in this sense, has the comparative advantage over the nations shown because of our natural resources, availability of land, as well as our access to genetically modification technologies that allow our cotton to be more sturdy and resistant to different pesticides and herbicides. In the video, the narrator states that the worst possible thing that could happen in the garment industry, is to pull all of their resources out of Bangladesh. If this situation does ever occur, people like Jasmine will most likely lose their lives because of no income.
Comparative advantage can be defined as the lower relative or comparative cost than that of another producer. The story of production for the Planet Money t-shirt demonstrates comparative advantage from the cotton to the people. The United States holds the comparative advantage of the production of cotton against other countries. Because of our sophisticated machinery and skilled workers, the US is able to produce more and better quality cotton. Other countries, on the other hand,will not be able to produce as much cotton and as good of a quality for the same opportunity cost (theirs is higher). When it comes to machines Indonesia has the best comparative advantage because they invest the most resources and time into their machines. But when it comes to the workers, Bangladesh has the best comparative advantage because of their dependence on the factories for revenue. Simply state, factories have become one of Bangladesh' greatest source of revenue so they must invest more time and resources to this cause. As a result, they charge a lower rate for their services in order to get more demand as a result of the abundance of their workers. Comparative advantage can be discerned with the shipping. For example, if Planet Money had manufactured their products in the US, they would be able to pay less for their shipping but the cost of the manufacturing would have been more. But because they manufactured their t-shirts overseas, they are able to get lower international prices and better specialized products. Planet Money uses comparative advantage to get better quality products at a lower price which enables them to manufacture their shirts with an economic mindset.
Planet Money's t-shirt campaign shows how comparative advantage is used to make a cost-effective shirt. Because shipping rates are relatively cheap for the amount of merchandise being shipped, these countries don't have to worry about losing money on shipping one shirt during different stages of production. The cotton in the U.S. is so technologically advanced that the cost versus amount of produce is a huge ratio that makes our cotton industry more advantageous over using other countries' cotton. However, the garment production labor cost here in the U.S. is greater, so it is more advantageous for us to ship the cotton to areas like Bangladesh and Colombia. This documentary demonstrates that some areas have a comparative advantage over others just because of the price for all of the services and resources.
The video provided how many different sectors allowed for optimum efficiency in making t-shirts. The use of comparative advantage to achieve maximum efficiency is warranted by the fact that resources and production are specified and associated with the places that could best manufacture or produce them. The United States has a comparative advantage against Colombia and Bangladesh when dealing with cotton but Bangladesh and Colombia have a comparative advantage against the United States in labor and manufacturing. This occurs due to the fact that the United States could make much more profit out of cotton and with less cost than Colombia and Bangladesh; vice versa when applied to the previous two countries' manufacturing capabilities.
Comparative advantage is when someone, or a trading partner rather, is willing to get down on their knees for the lowest pay, does all the dirty work at someone else's pleasure, look them in their flag, pretend to like it, and pridefully take the income that comes out of the business because they are in need of money to provides for their families and make a life. Furthermore, in the Planet Money T-shirt campaign, comparative advantage eventually benefits all partners in the act because whether they get "sucked up, laid down, [or] twisted" (Pt.2 Machines), everyone ends up with something beneficial. The US gets shirts, and the labor force in Bangladesh and Colombia get work and a flow of income. It's understandable, however, that in manufacturing, those who like being on top would take advantage of others who are seemingly desperate and almost begging to get pumped with that thick and rejuvenating stream of income.
As the video demonstrates, some countries have to settle with paying their labor force only $80 a month but despite the low wages, they will gladly accept because they provide work for the 4 million in the labor force. This displays one of the principles because that partner can afford to do the work for the lowest price. The comparative advantage seen in this video basically asks "Why pay higher for something (the shirt) that you can push your head through over and over, stretch into, and pull out of when it gets stained and dirty, when you can find thirsty (and hungry), provocative, cash-needy individuals who can spin your yarn just as good for a lower price?" In this idea, the US would have the advantage over the countries listed because they can have their stuff made somewhere else and save money. In addition, the United States is known for exporting the cotton used to make the shirt, since there's nobody else that can make it grow as long and well. At the end of the day, comparative advantage is an idea that simplifies making things and maintains an satisfying process of exchange, whether that's exchanging resources, foods, fluids, or technology. In this example, the US is the entity with the advantage in exporting cotton and Bangladesh and Columbia have the advantage in providing cheap work.
The Planet Money t-shirt project is a perfect example of utilizing comparative advantage. Compared to other countries, we are more successful when it comes to producing cheap shirts. The US has the comparative advantage in cotton growing because it can be grown cheaper and in mass quantities compared to other countries who don't have the same climate and tools available. The US sells cotton to third world countries for a large amount and in return they get garments for cheap price. This is the basic fundamental of comparative advantage which enables the economy of the country to succeed.
The story of Planet Money's t-shirt project demonstrates the principle of comparative advantages by showing that each nation specializes in certain industries. The story behind a shirt is a story about the world. The shirts travel around the world to be made, transported, and delivered to our hands. Through this, we can see that different countries develop certain industries that would cost them the least opportunity costs. First, take the example of cottons planted in the U.S. Rather than harvesting cottons from other parts of the world, the company wants cottons from the U.S. that are grown with genetic alteration to ensure the quality. Compared with cottons from other countries, the cottons from the U.S. are cheaper and with better quality, since we use technology and mass harvesting. In addition, we can see the garment industry in Bangladesh prospers as they become specialized with manufacturing and having cheap labor. Although in a way the company are exploiting poor people in Bangladesh, the opportunity cost of the overall t-shirt making process is lowered. This tough life has also become a social norm for them as they work and dream of a better life. If the industry were to diminish in Bangladesh, the workers and the economy would collapse. From an economic perspective, this efficient use human and natural resources is good for the economy and will maximize utility. However, this principle of comparative advantage may seem immoral at times.
Comparative advantage is basically the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.The planet money's t-shirt campaign is a great example of comparative advantage because of the fact that it is much cheaper to export our cotton supple to make the shirts than paying higher wages to make the shirts ourselves. Both the United States and the countries that make the t shirts (Bangladesh, Indonesia, etc) receive benefits. Because the United States is genetically modifying these cotton crops to a greater quantity, we save money by exporting it to the countries that make the shirts. The t shirt demands increase jobs in countries that have low income. Thus, both sides have a comparative advantage because one side is saving money and the other makes more jobs for those in need.
Comparative advantage is a very efficient method for mass production goods and services throughout the world, especially in producing products that need many different materials from many different places throughout the world. The Planetary Money t-shirt is a prime example of a product that has materials from different places, and creates international cooperation and work in order to produce. The cotton is from the United States, and the factories are in such places like Bangladesh and Columbia. Each country contributes to the production process in the way that is best for them and produces the lowest opportunity cost.
Comparative advantage allows a company to get something done in a cheaper way somewhere else as opposed to doing it in their own countries. Especially looking at more developed countries, they have a better advantage producing goods in less developed countries because of the low wages much like the T-Shirt video demonstrated. In America, our advanced technology and agricultural methods allow us to grow cotton as opposed to a country with less technological innovations. By doing so, we can then ship the cotton to countries that will process and create a T-Shirt for a much lower opportunity cost than what it would have been to produce the entire T-Shirt in the US. Moreover, the surplus of people seeking jobs for a small pay allows large companies to get things done in for a much cheaper cost, for they are using a largely unskilled labor force as shown in the video. All these examples show how the creation of a T-Shirt can be the prime example of a country using comparative advantage in the global economy.
In comparative advantage, a country will do what is cheapest. Following the T-shirts, the beginning was the growing of cotton in the US. Due to climate and technology, cotton has been a big export in the US. Because of this, cotton is more profitable here than in places such as Bangladesh. In Bangladesh, there are numerous laborers making it efficient in the garment industry. People here are not paid as much as Americans, making the cost of things cheaper than in the US. Americans are paid at a minimum wage of $7.50, making products that come out more expensive. With the cost of labor being cheaper in Bangladesh, the products that are completely made here are more expensive. Cotton growing is our main comparative advantage while Bangladesh has a comparative advantage in labor for the shirt industry in America. When a country specializes in a certain area, there is a lower opportunity cost, making the economic welfare better.
These videos and short articles show how much the world economy has changed over the past few decades in regards to how we make our products. A 100 years ago, countries did not rely on each other half as much they do now, greatly in part to comparative advantage. As one can see from reading the articles, the U.S. has a high comparative advantage in the growth of cotton compared to other countries around the world. On the other hand, Bangladesh had a high comparative advantage for making clothing with very cheap labor.
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