International Trade & World Output

The gross amount of product used globally is referred to as the world output. International trade is the exchange of securities or commodities from one country to another.  “Countries with higher income account for about sixty percent of the World’s merchandise trade, while trade between high income and low and middle income countries accounts for nearly thirty four percent of the world merchandise trade” (Motley, 2005). Studies have shown that economies that embrace open trade have, on average, outperformed closed trade economies.

The amount of world output directly influences how much international trade there is. The more that the world’s economic output increases, the more the amount of international trade increases and vice versa. The rate at which International trade grows tends to be greater than that of world output. “Since 1948, world trade has consistently grown faster than world output” (World Trade Organization, n.d.). It is thought that this trend is due to trading good becoming more inexpensive over time.

International trading patterns become broader and broader as time passes.  The most significant amount of trading is done between the combination of high income and middle income countries paired with high income and low income countries. There is a lesser but still substantial amount of trade done between middle and low income countries. Knowing how much trading is going on, especially in poorer countries, helps us to determine which developing counties have and emerging economic market place.  The more interdependent a country is, the easier it is for them to specialize in their own competitive areas. This provides the citizens of the country with more job opportunities and higher profit potential.

If trade seized to exist as we know it, the world would feel a crippling affect and cause illiquidity. As Americans, we could say goodbye to things like coffee, tropical fruits, Italian leather, German lager and Swiss chocolates. We would no longer have Lexus, Ferrari, Jaguar or numerous other foreign automobiles.  

Americans would also not be able to maintain the supply needed to meet the demands of the consumer for petroleum and gas. We would have to release current reserves to starve off short term needs. Without the ability for America in import oil, we would be unable to keep oil prices at an economically viable price. We would be unable to run cars. With the majority of Americans living in the suburbs, access to work will become more difficult, impossible for some.  The economy would be pushed to the brink of collapse with the reduction in air traffic and trucking industry due to a lack of oil.  

20.1 % of are exporting is done to Canada (Economy Watch, n.d.). Without our imports, Canada wouldn’t be able to obtain a lot of the things they import most from the United States as easily. These are products such as trucks, automobiles, aircrafts, spacecrafts, natural gas, crude oil and petroleum excluding light oils (Workman, 2010).  It is convenient for Canada to import products from the U.S. because of how close we are.

On the other hand, if you were to look at the imports of a country like China, the products would be different. China is a major importer of American goods. If we decided to no longer export to China, they wouldn’t be able to obtain our semi-conductors, civilian aircrafts, industrial machines, computer accessories, and steel making material. They would also no longer be receiving soybeans, plastics, raw cotton, copper and aluminum (Workman, 2007).

Globalization has lead to a vast number of countries becoming interdependent upon imports and exports. Without the international trade system, even the world’s economically soundest countries would be debilitated. The U.S. would be unable to obtain many of the items that they currently take for granted. Choices would become limited or nonexistent. Low income countries would be striped of income. International trade is beneficial for all involved and we should feel fortunate to be part of a country that supports it.

Motley, L. (2005, December 9). International Trade: What Is It Really?. Retrieved from http://www.associatedcontent.com/article/15777/international_trade_what_is_it_really_pg2.html?cat=3.

Perry, M. (2011, April 22). The Global Economy’s Remarkable Recovery: World Trade and Output Reach New Record Levels in February. Retrieved from http://blog.american.com/2011/04/the-global-economy%e2%80%99s-remarkable-recovery-world-trade-and-output-reach-new-record-levels-in-february/.

Workman, D. (2010, August 5). Cananda’s Top Imports and Exports with US So Far in 2010. Retrieved from http://www.suite101.com/content/canadas-top-imports-and-exports-with-us-so-far-in-2010-a270542.

Workman, D. (2007, June 28). Top Chinese Exports & Imports.  Retrieved from http://www.suite101.com/content/top-chinese-exports-imports-a24920.

World Trade Organization. (n.d.). Growth, jobs, development and better international relations: how trade and the multilateral trading stsyens help. Retrieved from http://www.wto.org/english/thewto_e/minist_e/min99_e/english/book_e/stak_e_3.htm.

Economic Integration?

Economic integration is a dynamic process that involves the coordination of trade, fiscal or monetary policies. It has both advantages and disadvantages. The goal of regional integration is to enhance the economic outcome of the countries involved. Deciding who whether or not equal power over policies can sometimes be an obstacle that countries run into.

The scale and competition effect removes trade barriers and essentially enlarges the regional market. It is an essential step to any countries endeavor to integrate the regional market.  Companies are able to benefit from the greater scale and increased size of the market. It increases the amount of competition and forces companies to become much more efficient.

The trade and location effect involves a regional agreement upon preferential reduction in tariffs. This results in purchases switching their demand more towards supply from the countries that they are entering into the agreement with. It leaves domestic product as well as imports from countries not included in the agreement at a loss. Essentially, it is trade creation and diversification. Government revenue from tariffs is decreased and alternative source costs can increase or decrease dependent upon supply.  A disadvantage of economic integration is “determining how to deal with economic disruptions and/or redistribution of resources” (Suranovic, 1998).

Increased returns coupled with increased competition are an advantage of regional economic integration. When you have a smaller market, you can run into “a trade-off between economies of scale and competition” (Worldbank, 2005). A larger economy removes the trade-off and makes the existence of bigger companies with greater productivity possible. It also results in lower prices due to increased competition. Governments should keep external tariffs low to allow a higher degree of import competition from outside companies to help smaller businesses compete after the formation of trade blocs.

Suranovic, S. (1998). International Trade Theory and Policy. Retrieved from http://internationalecon.com/Trade/Tch110/T110-2.php.

Worldbank. (2005). Regional Integration: Concepts, Advantages, Disadvantages and Lessons of Experience. Retrieved from http://siteresources.worldbank.org/EXTAFRREGINICOO/Resources/Kritzinger.pdf.

Ebay's Business Model

Ebay Inc. is the provider of an online marketplace where goods and services are sold auction style. They are in the services sector of the catalog & mail order houses industry. Their competitors consist of companies such as Amazon.com and Liberty Media Corporation (Yahoo, 2011). Their online platforms include Ebay.com, StubHub, and Shopping.com (Yahoo, 2011). They operate in over 27 countries and just recently entered into the European Marketplace (CNBC, 6/29/2005).

Their e business model aims to provide customers with an easy inexpensive way to save as well as make money, depending on whether you use Ebay to buy or sell. Ebay gets charges a fixed fee based on the value of the item sold to the seller and receives the money when the sale has been made. Essentially, they are getting paid for their platform.

With regular maintenance and upkeep to the sight, they don’t have to worry about inventories or overhead expenses like the retail change experiences. They have also done an excellent job with their branding and are a well known name in most every household. They have a good marketing position because they are the best of bread when it comes to selling things online. The fact that they were one of the first to implement the idea of creating a platform where people can sell to other people has made them a very innovative and breakthrough company. Their long term success will be decided on their ability to keep their site running effectively and without any issues from spammers or people utilize the website for marketing.

The economy would be one of the larger market influences on this company. A bad economy could benefit Ebay if it meant that people were turning there to supplement their income by selling some of their things or if people were trying to save money on an item and looking for a deal on the site. A bad economy could negatively affect Ebay if it meant that people were not spending as much money and weren’t making as many purchases on their site because they didn’t feel they had the expendable income. 

CNBC, Inc. (May, 29 2005). Ten things You didn’t know about Ebay. Retrieved from http://www.msnbc.msn.com/id/8391726/ns/business-cnbc_tv/t/ten-things-you-didnt-know-about-ebay/#.TkWDcmFOrzY.

Yahoo. (2011).  Industry Center - Catalog & Mail Order Houses. Retrieved from http://biz.yahoo.com/ic/739.html.

Disaffirming a Contract Signed By a Minor

The law states that minors do not have contractual capacity. Minors are defined by being under the age of majority. The age of majority varies from state to state and is usually 18,19, or 21. This gives adults who have signed contracts before the age of minority the ability to disaffirm or refuse to be bound by a contract. However, emancipated minors may be bound by their contracts. The ratification of a contract after the age of majority binds the person to that contract and will no longer allow them to disaffirm the contract. Court approved, insurance, work-related, reality and banking contracts cannot be disaffirmed.

If a person gives there real age when signing a contract, I believe that the companies should be liable for anything disaffirmations because they were aware of what could happen. I think that the fact that disaffirmation is still allowed even if the person lied about their age is a grey area ethically. A company should be responsible for getting proper proof of age when they are setting up a contract with someone. Therefore, they have not covered well enough for themselves and should still be held liable.

Minors have a reasonable length of time after achieving their majority to disaffirm contracts.  I think that within 5 years would be reasonable for a contract that is known about. If someone decided to seek money for a contract at a later time that the person was unaware of or didn’t remember having, I believe that they should be able to disaffirm it when they find out about it, no matter how many years later that is.

Ethically, I don’t believe that it’s right if a child lies about their age and then is still able to disaffirm a contract without consequences. However, we call them minors for a reason. These are young people who haven’t really gotten a chance to learn right from wrong and what types of contracts they should enter and the obligations that come with them. I think that the government protecting our minors from being contractually obligated to a contract agreed to before the age of majority is very ethical. We cannot allow our youth to be taken advantage of. 

Employee Drug Testing

Studies have shown that substance abusers are 33% less productive overall (Patrick Dixon). Patrick Dixon found research showing that “when the State of Ohio introduced random drug testing they found absenteeism dropped 91%, there were 88% less problems with supervisors and 97% decrease in on-the-job injuries”. Employers have a responsibility to ensure that their employees do not pose a safety risk to anyone while on the job. Unless employees’ belong to a union, they have little to no legal protection against being drug tested.

State and local legislature have limited the powers of employers by passing statutes regarding drug testing.  Because of this, many employers have put contractual agreements into place that effect what rights the employee has. However, even if an employer is able to obtain information that an employee is doing drugs, they are still limited as to how they are allowed to respond to their findings. It is believed that drug testing interferes with the EAW principle of guaranteed political right, more specifically, the right to privacy.

I believe that, because drug use can be such a liability to employers, drug testing should be allowed under any circumstances. The continued passage of acts that are limiting actions of employers shows that the majority of American’s would not agree with my statement.

Moral philosophies can be consistent with both arguments. An employee privacy is a right that should be guarded however not doing drugs may potentially affect your work performance is the ethical thing to do.  I think that this issue is present because we do not want people doing illegal drugs, however, when figuring out whether or not someone is doing illegal drugs divulges information about other legal drugs they are taking, privacy is violated. I don’t think that whether or not you are on depression medication or ADHD medication etcetera is any of an employer’s business.   

Dixon, Patrick. (Jan. 26, 2011). Drug Testing in the Workplace. Retrieved from http://www.globalchange.com/drugtest.htm on February 20, 2011.

What constitutes an offer and an acceptance in contract law?

An offer in contract law is expressing the desire to enter into a contract. It must be made with the intentions that the offer will become binding as soon as the offer is accepted. An offer can be revoked anytime before it is accepted as long as the revocation is communicated to the offeree. A contract cannot be revoked if it was in an option contract. The offer should contain all circumstances for the proposal being made. The offeree should have a present intent to contract so it can be made clear that the offeree is serious. Once the offer is made, the offeree cannot change any of the terms of the contract. It must be exactly the same. The offeror can set a deadline as to how long the offeree has to accept the offer. The offeror can also demand a certain method of acceptance to be used.

An acceptance is a response to the offeree that indicated that they approve of the terms of the offer. Once an offer is accepted, a legally binding contract is created. An acceptance must be intentionally made. The offeree must communicate to the offeror that they agree with the terms of the proposed contract. The communication of the acceptance of an offer can be bilateral or unilateral.

Offers can be accepted instantaneously and non-instantaneously. This was the issue in the case of Ellefson v. Megadeth, Inc. Non-instantaneous forms of acceptance are methods utilizing mail, email, and fax. Non-instantaneous forms of acceptance can cause timing issues. The Ellefson case resulted in The Mailbox Rule. The Mailbox Rule states acceptances that are properly address and dispatched take effect as soon as they are sent regardless of whether or not it comes up lost. The Ellefson case has caused more offeror’s to say exactly how long the offeree has to accept by setting a date. However, if an acceptance is sent after a rejection had already been sent, the acceptance does not become binding until received by the offeror. The final exception to The Mailbox Rule is if the contract states that the use of The Mailbox Rule is not allowed.

It was ruled that Ellefson only sent a counter-offer because he could no furnish evidence that he had faxed the acceptance before the 5:00 PM deadline.

What is The Uniform Commercial Code (UCC) & The Uniform Computer Information Transaction Act (UCCITA)?

                Before the UCC and the UCCITA, the government enacted the commerce clause. The commerce clause, which is Article 1, Section 8, Clause 3, of the U.S. Constitution gives Congress the power to regulate commerce between states. The Constitution put limits of state powers but also recognizes a states inherent right to the regulation of domestic commerce. “The exercise by Congress of its regulatory power has increased steadily with the growth and expansion of industry and means of transportation” (Farlex).

The Uniform Commercial Code is a set of laws that are used to govern the commercial transactions that go on in the United States. This code applies to the sale of goods as well are contracts, leases, and loans. The National Conference of Commissioners initially created the UCC. Although it is not a federal law, each of the 50 state’s legislature has either adopted the code verbatim or enacted a modified version.  (U.S. Small Business Administration) The Uniform Computer Information Transaction Act is more specifically focused on computer information transactions than the UCC. The major difference between the UCC and the UCITA is that Article 2 of the UCC only deals with the sale of goods, and disregards the types of contracts specifically referred to in the UCITA. The UCC only applies to transactions where the goods are “identifiable and moveable”(LAWINFO). The UCC also states that it only applies to sales and not licenses.

Legally, when you sell a product, the owner is exchanging all rights to the item for money. When someone is licensing something, they are granting someone permission to certain rights for a price. When a person is licensing something, they are still the owner of it. It is the difference between the complete transfer of rights and the limited transfer of rights. The significant problem with licensing is that it could replace sales all together, “without provision for the public policy goals embodied in copyright law”(National Academy Press).

The NCCUSL decided to propose UCITA as a separate uniform act because when they tried to add a new article to the UCC, the American Law Institute called for revisions in it. The NCCUSL did not think that revisions were necessary so they withdrew from the amendment process and recast it on their own without the ALI. UCITA is still today opposed by many including the Federal Trade Commission and the Attorneys General of over 20 states (Huggins). If the NCCUSL wouldn’t have proposed it be a separate act, they probably would not have been able to get the amendment added to the UCC because of all of the controversy.

Farlex. (n.d.). Commerce Clause. Retrieved on March 4, 2011 from http://legal-dictionary.thefreedictionary.com/Commerce+Clause.

Huggins, James S. (n.d.). UCITA: Uniform Computer Information Transactions Act. Retrieved on March 4, 2011 from http://www.jamesshuggins.com/h/tek1/ucita.htm.

LAWINFO. (n.d.). What is Article 2 of The U.C.C.?. Retrieved on March 4, 2011 from http://resources.lawinfo.com/en/Legal-FAQs/UCC-and-Warranties/Federal/what-is-article-2-of-the-ucc.html.

National Academy Press. (2000). “Licensing” vs. “Buying” Information: Legal and Policy Implications. Retrieved on March 4, 2011 from http://www.cni.org/tfms/2001a.spring/handout/Licensing-DArsenault2001Stf.pdf.