Comparative Advantage

These pictures are from a mug I bought at the Smithsonian American History Museum. The mug pictures the flag that was flown on September 14, 1814 at Fort McHenry in Baltimore to celebrate the critical victory over the British during the War of 1812. The sight of the flag waving "by the dawns early light" inspired Francis Scott Key to write the poem that would eventually become our national anthem. The sticker on the bottom clearly states that the mug was made in china, which along with my previous post highlights the theory of comparative advantage. With a population of nearly 1.4 billion people, China is, as my advisor Dr. Ian Sheldon says, "land scarce, labor abundant", allowing the Chinese to supply extremely cheap labor for the manufacture of goods. The U.S. on the other hand is rich in fertile soil and thus has a very large agriculture industry. While I'm on the econ kick (I am always on an econ kick), I should also highlight the price of a bottle of water at the museum at three dollars and no available drinking fountains. Monopoly anyone?

--Mike